Ligand Pharmaceuticals Completes Sale of AVINZA to King Pharmaceuticals
SAN DIEGO--
Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) announced today
the completion of the sale of AVINZA(R) (morphine sulfate
extended-release capsules) and associated assets to King
Pharmaceuticals, Inc. (NYSE:KG) in exchange for cash and royalties.
With the closing of the transaction, Ligand's remaining commercial
operations have transferred to King. Ligand is evaluating methods of
returning cash to the shareholders from this and previous asset sales
by Ligand.
Ligand received $295 million in cash at the closing from King. The
net cash amount represents a purchase price of $246 million which
includes certain inventory-related adjustments, plus approximately $49
million in reimbursement of payments to Organon and others. Of the net
cash proceeds, $15 million are set aside in an escrow account to fund
potential indemnity claims by King under the purchase agreement
between the companies. There will be post-closing fees and expenses
associated with the deal.
In addition to the cash consideration, King will pay Ligand a 15%
royalty during the first 20 months after the closing of the asset
sale. Subsequent royalty payments will be based upon calendar year net
sales. If King's calendar year net sales are less than $200 million,
the royalty payment will be 5% of King's sales for that year. If
King's sales are between $200 million and $250 million, then the
royalty payment will be 10% of sales. If sales exceed $250 million,
the royalty will be 10% of sales up to $250 million and 15% of sales
above $250 million. King also assumed future royalty payments owed to
Organon and all other existing AVINZA royalty obligations.
"The completion of the sale of AVINZA represents a major step in
the transformation of Ligand into a highly focused R&D and royalty
driven pharmaceutical company," said John L. Higgins, President and
Chief Executive Officer. "The proceeds from the sale of AVINZA will
give us the opportunity to return cash to our shareholders and future
royalties from AVINZA will support our research programs as we advance
our product pipeline."
About Ligand
Ligand discovers and develops new drugs that address critical
unmet medical needs of patients in the areas of thrombocytopenia,
cancer, hormone-related diseases, osteoporosis and inflammatory
diseases. Ligand's proprietary drug discovery and development programs
are based on its leadership position in gene transcription technology,
primarily related to Intracellular Receptors.
Caution regarding Forward-Looking Statements
This news release contains certain forward-looking statements by
Ligand that involve risks and uncertainties and reflect Ligand's
judgment as of the date of this release. These statements include
those related to AVINZA royalties, indemnification obligations to King
Pharmaceuticals under the purchase agreement, returning cash to
shareholders, transformation of the Company and our product pipeline.
Actual events or results may differ from Ligand's expectations. For
example, we may not receive expected royalties on AVINZA or we may not
be able to timely or successfully transform the Company or advance any
product(s) in our pipeline. Also, it is possible that the final
inventory adjustment under the purchase agreement with King will be
greater than the estimated adjustment and that our indemnification
obligations could exceed the escrow amount. In addition, the Company's
board of directors has not completed the analyses necessary to
determine the amount and timing of return of cash to shareholders. The
failure to meet expectations with respect to any of the foregoing
matters may reduce our stock price. Additional information concerning
these and other risk factors affecting Ligand's business can be found
in prior press releases as well as in Ligand's public periodic filings
with the Securities and Exchange Commission, which are available at
www.ligand.com. Ligand disclaims any intent or obligation to update
these forward-looking statements beyond the date of this release. This
caution is made under the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995.
Source: Ligand Pharmaceuticals Incorporated
Released February 26, 2007