Ligand Prices Offering of $650 Million of Convertible Senior Notes
SAN DIEGO--(BUSINESS WIRE)--
Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) announced
today the pricing of $650 million aggregate principal amount of 0.75%
convertible senior notes due 2023 in a private offering to qualified
institutional buyers pursuant to Rule 144A under the Securities Act of
1933, as amended. Ligand has granted the initial purchasers a 13-day
option to purchase up to an additional $100 million aggregate principal
amount of the notes, solely to cover overallotments, if any.
The notes will be unsecured senior obligations of Ligand. The notes will
pay interest semi-annually at a rate of 0.75% per year. The notes will
mature on May 15, 2023, unless earlier repurchased or converted in
accordance with their terms. The conversion rate for the notes will
initially be 4.0244 shares per $1,000 principal amount of notes, which
is equivalent to an initial conversion price of approximately $248.48
per share of common stock, and is subject to adjustment under the terms
of the notes. The initial conversion price of the notes represents a
premium of approximately 30% to the $191.14 per share closing price of
Ligand’s common stock on May 17, 2018. Prior to November 15, 2022, the
notes will be convertible only upon satisfaction of certain conditions
and during certain periods, and thereafter, the notes will be
convertible at any time until the close of business on the second
scheduled trading day immediately preceding the maturity date. Upon
conversion, Ligand will satisfy its conversion obligation by paying or
delivering, as applicable, shares of its common stock, cash or a
combination of shares of its common stock and cash, at Ligand’s
election. However, Ligand will agree to settle all conversions in cash
until such time as Ligand has a sufficient number of authorized but
unissued shares of its common stock available to settle conversions of
all then-outstanding notes in shares of common stock and has reserved
such shares of common stock for such conversions. Holders of the notes
will have the right to require Ligand to repurchase all or some of their
notes for cash at 100% of their principal amount, plus any accrued and
unpaid interest, upon the occurrence of certain corporate events,
subject to certain conditions. The sale of the notes is expected to
close on May 22, 2018, subject to customary closing conditions.
Ligand intends to use approximately $43.6 million of the net proceeds
from the offering of the notes to pay the cost of certain convertible
note hedge transactions, taking into account the proceeds to Ligand of
certain warrant transactions, each as described below, and intends to
use approximately $49.7 million of the proceeds to repurchase
approximately 260,000 shares of Ligand’s common stock from purchasers of
the notes in privately negotiated transactions, which could increase (or
reduce the size of any decrease in) the market price of Ligand’s common
stock prior to, concurrently with, or shortly after the pricing of the
notes, and could result in a higher effective conversion price for the
notes. Ligand expects to use the remainder of the net proceeds from the
offering of the notes to acquire or invest in complementary businesses,
companies, products and technologies and for working capital and other
general corporate purposes, including, without limitation, research and
development activities to maintain Ligand’s platform technologies and
for development of Ligand’s product candidates being developed
internally. Ligand has no current commitments or obligations with
respect to any acquisitions or other strategic transactions.
Ligand has entered into convertible note hedge transactions with certain
of the initial purchasers or their respective affiliates or other
financial institutions (the “option counterparties”). The convertible
note hedge transactions are expected generally to reduce the potential
dilution to Ligand’s common stock and/or offset any potential cash
payments Ligand is required to make in excess of the principal amount
upon conversion of the notes in the event that the market price of
Ligand’s common stock is greater than the strike price of the
convertible note hedge transactions. Ligand also expects to enter into
warrant transactions with the option counterparties. The warrant
transactions could separately have a dilutive effect if the market price
of Ligand’s common stock exceeds the strike price of the warrant
transactions. To the extent that at the time such obligations are due
Ligand has insufficient authorized shares available to satisfy its
obligations under the warrants in Ligand’s common stock, Ligand would be
required to satisfy those obligations in cash. The strike price of the
warrant transactions will initially be approximately $315.38 per share,
which represents a premium of 65% over the last reported sale price of
Ligand’s common stock on May 17, 2018, and is subject to certain
adjustments under the terms of the warrant transactions.
Ligand has been advised by the option counterparties that, in connection
with establishing their initial hedge position with respect to the
convertible note hedge transactions and warrant transactions, the option
counterparties and/or their respective affiliates expect to purchase
shares of Ligand’s common stock and/or enter into various derivative
transactions with respect to Ligand’s common stock concurrently with, or
shortly after, the pricing of the notes. This activity could increase
(or reduce the size of any decrease in) the market price of Ligand’s
common stock or the notes at that time.
Ligand has also been advised by the option counterparties that the
option counterparties or their respective affiliates are likely to
modify their hedge positions by entering into or unwinding various
derivative transactions with respect to Ligand’s common stock and/or
purchasing or selling Ligand’s common stock or other of Ligand’s
securities or instruments, including the notes in secondary market
transactions following the pricing of the notes and prior to the
maturity of the notes.
The option counterparties may choose to engage in, or to discontinue
engaging in, any of these transactions with or without notice at any
time, and their decisions will be in their sole discretion. The effect,
if any, of such activities of the option counterparties, including
direction or magnitude, on the market price of Ligand’s common stock or
the price of the notes will depend on a variety of factors, including
market conditions, and cannot be ascertained at this time.
The notes were offered to qualified institutional buyers pursuant to
Rule 144A under the Securities Act. Neither the notes nor the shares of
common stock issuable upon conversion of the notes, if any, have been
registered under the Securities Act or the securities laws of any other
jurisdiction, and the notes and any such shares may not be offered or
sold absent registration or an applicable exemption from such
registration requirements.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any notes or common stock, nor shall
there be any sale of notes or common stock in any state or jurisdiction
in which such an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any state or
any jurisdiction.
About Ligand Pharmaceuticals
Ligand is a biopharmaceutical company focused on developing or acquiring
technologies that help pharmaceutical companies discover and develop
medicines. We have a diversified portfolio of biotech and pharmaceutical
product revenue streams that are supported by an efficient and low
corporate cost structure. Ligand’s Captisol® platform technology is a
patent-protected, chemically modified cyclodextrin with a structure
designed to optimize the solubility and stability of drugs. OmniAb® is a
patent-protected transgenic animal platform used in the discovery of
fully human mono- and bispecific therapeutic antibodies. Ligand has
established multiple alliances, licenses and other business
relationships with the world's leading pharmaceutical companies
including Novartis, Amgen, Merck, Pfizer, Celgene, Gilead, Janssen,
Baxter International and Eli Lilly.
Forward-Looking Statements
This news release contains forward-looking statements by Ligand that
involve risks and uncertainties and reflect Ligand's judgment as of the
date of this release. Words such as “plans,” “believes,” “expects,”
“anticipates,” and “will,” and similar expressions, are intended to
identify forward-looking statements. These forward-looking statements
include, without limitation, statements regarding: the closing of the
offering, the use of the net proceeds from the offering and potential
share repurchases. Actual events or results may differ from Ligand's
expectations due to risks and uncertainties inherent in Ligand’s
business, including, without limitation: risks and uncertainties
associated with market conditions; and the satisfaction of closing
conditions related to the proposed offering. The failure to meet
expectations with respect to any of the foregoing matters may reduce
Ligand's stock price. Additional information concerning these and other
risk factors affecting Ligand can be found Ligand's public periodic
filings with the Securities and Exchange Commission available at www.sec.gov.
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180518005112/en/
Ligand Pharmaceuticals Incorporated
Todd Pettingill, 858-550-7893
investors@ligand.com
or
LHA
Investor Relations
Bruce Voss, 310-691-7100
bvoss@lhai.com
Source: Ligand Pharmaceuticals Incorporated
Released May 18, 2018