Press Releases

Ligand Pharmaceuticals Announces First Quarter Results

Conference call begins at 4:30 p.m. Eastern time today


Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) today announced financial results for the first quarter of 2007 and provided additional information concerning the Company's new business model.

Financial Results

The Company sold its commercial oncology products in October 2006 and AVINZA(R) in February 2007. The results of operations related to these products have been reflected as discontinued operations for all reporting periods discussed below.

Total revenues from continuing operations for the three months ended March 31, 2007, were $0.2 million compared with total revenues of $2.9 million for the same period in 2006.

Operating expenses from continuing operations in the first quarter of 2007 were $29.8 million; compared with operating expenses of $17.2 million in the first quarter of 2006. Operating expenses in the first quarter of 2007 include one-time items of $10.2 million related to the Company's restructuring announced in January 2007 and approximately $1.0 million related to the write-off of certain assets either disposed of or no longer used in its ongoing operations. Additionally, the Company recorded stock compensation expense of approximately $1.8 million related to the lowering of the exercise price of outstanding stock options as an equitable adjustment in connection with and following the announcement of the dividend in March 2007.

Net income in the first quarter of 2007 was $274.3 million, or $2.72 per share, compared with a net loss of $142.2 million, or $1.84 per share, in the comparable 2006 quarter. Loss from continuing operations in the first quarter of 2007 was $16.9 million, or $0.17 per share, compared with a loss from continuing operations of $13.7 million, or $0.18 per share, in the comparable 2006 quarter. Income from discontinued operations in the first quarter of 2007 was $291.2 million, or $2.89 per share, compared with loss from discontinued operations of $128.5 million, or $1.66 per share, in the comparable 2006 quarter.

As of March 31, 2007, Ligand had cash, cash equivalents, short-term investments, and restricted investments of $412.1 million. In April, the Company paid a $2.50 per share dividend for a total of $252.7 million.

    Business Update and Highlights

    --  April 30, 2007, named John P. Sharp, Chief Financial Officer.

    --  April 19, 2007, completed the distribution of a one-time cash
        dividend of $2.50 per share to shareholders of record as of
        April 5, 2007. Following the payment of the dividend, the
        Company had approximately $155 million in cash, cash
        equivalents, short-term investments and restricted
        investments. Further, there is $25 million of cash held in
        escrow accounts following the sales of AVINZA and our oncology
        product line to support potential indemnification claims by
        the purchasers of those assets. In addition to the
        announcement of the dividend, the Company authorized a share
        repurchase program of up to $100 million over 12 months.

    --  March 2007, announced changes to the Board of Directors, John
        W. Kozarich appointed Chairman of the Board. John L. Higgins,
        David M. Knott, Elizabeth M. Greetham and Todd C. Davis
        replaced Irving S. Johnson, Carl C. Peck, M.D., John Groom,
        Daniel S. Loeb and Brigette Roberts.

    --  February 2007, announced restructuring of business and staff,
        redefined business focus as an R&D and royalty-driven biotech
        company, and implemented business strategy to create
        shareholder value by generating income from research,
        milestone, royalty and co-promotion revenues resulting from
        our collaborations with pharmaceutical partners.

    --  February 2007, Ligand completed the sale of AVINZA (morphine
        sulfate extended release capsules) and associated assets to
        King Pharmaceuticals, Inc. in exchange for cash and royalties.

"Our progress since the beginning of 2007 has been extraordinary," said John L. Higgins, President and Chief Executive Officer. "We made significant organizational changes and financial decisions this quarter to enhance our performance and return value to shareholders. Ligand's new business model, including continuation of key partnerships, will enable us to leverage our research and development strengths, and focus on our programs that can provide the greatest return."

2007 Operational Forecast

For the remaining three quarters of 2007, excluding stock-based compensation, the Company expects that research and development expenses will be $34 to $35 million and general and administrative expenses will be $12 to $13 million. The R&D expense outlook will fund the completion of our Phase I trial with LGD-4665; costs for preparing to initiate multiple Phase II trials with LGD-4665 in early 2008 including manufacture of drug supply; drug discovery and optimization for four research-stage programs; and preclinical studies for LGD-3303.

Royalty Programs

The following table provides details of royalties owed to Ligand for its late-stage development or commercialization agreements. For bazedoxifene (Viviant) and bazedoxifene CE (Aprela), eltrombopag (Promacta) and lasofoxifene (Oporia), the Company will receive royalties only if and to the extent any such product candidate is ultimately approved by the FDA (and/or foreign regulatory agency) and successfully marketed.

   Product         Partner     Royalty     Net Sales Royalty Tier

AVINZA        King                 15% First 20 months (until late
                                        October 2008)
                                    5% If sales less than $200M
                                   10% If sales greater than $200M and
                                        up to $250M annually
                                   15% On portion of sales greater
                                        than $250M annually
Bazedoxifene  Wyeth               0.5% Less than $400M annual sales
Bazedoxifene                      1.5% On portion of sales in range of
 (Aprela)(a)                            $400M -$1.0B annually
                                  2.5% On portion of sales greater
                                        than $1B annually
Eltrombopag   GlaxoSmithKline       5% Less than $100M annual sales
                                    7% On portion of sales in range of
                                    8%  On portion of sales in range
                                         of $200M-$400M
                                   10% On portion of sales greater
                                        than $400M
Lasofoxifene  Pfizer                3% All Sales

(a) Royalty rates net of 3% owed to Royalty Pharma.

Program Update

The Company also provided the following update on the status and outlook of its key partnered and internal programs:

    --  TPO Mimetics: Ligand's partner GlaxoSmithKline initiated a
        Phase III trial with eltrombopag (Promacta) for immune
        thrombocytopenic purpura (ITP) in December 2006. In the first
        quarter 2007, GlaxoSmithKiline initiated the REPEAT trial,
        (Repeat ExPosure to Eltrombopag in Adults with Idiopathic
        Thrombocytopenic Purpura) to evaluate a repeated dosing
        schedule of three six-week cycles of eltrombopag (Promacta)
        treatment in patients with chronic ITP. GlaxoSmithKline plans
        to initiate a Phase III trial in 2007 for hepatitis C.

    --  SERMs (selective estrogen receptor modulators): In April 2007,
        Ligand's partner Wyeth announced that the FDA issued an
        approvable letter for bazedoxifene (Viviant) for the
        prevention of postmenopausal osteoporosis. In addition, by the
        end of 2007, Wyeth plans to file an NDA for bazedoxifene
        (Viviant) for the treatment of osteoporosis and an NDA for
        bazedoxifene CE (Aprela) for menopausal symptoms.

    --  SERMs (selective estrogen receptor modulators): Ligand's
        partner Pfizer announced plans to refile an NDA for
        lasofoxifene (Oporia) by the end of 2007. Pfizer expects the
        results from the PEARL study, (Postmenopausal Evaluation and
        Risk Reduction with Lasofoxifene), will address the FDA's
        requirements in terms of its safety and benefits.

    --  SARMs (selective androgen receptor modulators): Ligand's
        partner TAP is continuing its Phase I trial with the LGD-2941
        program for osteoporosis and frailty.

    --  LGD-4665: Ligand continues to advance LGD-4665 (TPO mimetic)
        through its Phase I dose escalation study. The Company expects
        to complete the Phase I study by the end of 2007; to initiate
        chronic, long-term animal toxicity studies by the end of 2007;
        and to initiate multiple Phase II trials for different
        indications in early 2008.

    --  LGD-3303: Ligand is conducting preclinical studies to prepare
        LGD-3303 (SARM product candidate) for an IND filing and the
        initiation of clinical trials in 2008.

    Conference Call

Ligand management will host a conference call today to discuss this announcement and answer questions; the call will begin at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). To participate via telephone, please dial (877) 356-5578 from the U.S. or (706) 679-0565 from outside the U.S. A replay of the call will be available until June 10, 2007 at 5:30 p.m. Eastern time by dialing (800) 642-1687 from the U.S. or (706) 645-9291 from outside the U.S., and entering passcode 7612775. Individual investors can access the Webcast through Ligand's web site at

About Ligand Pharmaceuticals

Ligand discovers and develops new drugs that address critical unmet medical needs of patients in the areas of thrombocytopenia, hepatitis C, 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.

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. Actual events or results may differ from Ligand's expectations. For example, we may not be able to meet the 2007 operational forecast set forth herein. We also may not receive expected royalties on AVINZA(R) from King Pharmaceuticals or any other partnered products or from research and development milestones. In addition, our partners may change their plans or timetables regarding our partnered products. Any payments expected from third parties may not be received by us due to third party intellectual property or contract restrictions and any amounts received by us may be subject to third party claims. We may not be able to timely or successfully transform the Company or advance any product(s) in our pipeline, for example, LGD-4665 and LGD-3303. In addition, we may have indemnification obligations to King Pharmaceuticals or Eisai in connection with the sales of the AVINZA and oncology product lines. Further, we may not be able to fully complete our reductions in workforce on any particular or expected timeframe, we may not realize the expected operating savings due to our restructuring, we may not be able to successfully or timely complete a transformation of the company, our early stage programs or any specific business or research initiative(s). In addition, we may not be able to successfully implement our strategy, and continue the development of our proprietary programs. 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 available via as well as in Ligand's public periodic filings with the Securities and Exchange Commission at including our form 10-Q filed with the SEC on May 10, 2007. 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.

                  (in thousands, except share data)

                                          Three Months Ended March 31,
                                               2007           2006
                                          ---------------- -----------

  Collaborative research and development
   and other revenues                                $235      $2,914
                                          ---------------- -----------

Operating costs and expenses:
  Research and development                         15,602       8,417
  Selling, general and administrative              14,167       8,811

                                          ---------------- -----------
     Total operating costs and expenses            29,769      17,228

Amortization of deferred gain on sale
 leaseback                                            491           -

                                          ---------------- -----------
Loss from operations                              (29,043)    (14,314)

Other income, net                                   2,960         628
Income tax benefit                                  9,194           -

                                          ---------------- -----------
Loss from continuing operations                   (16,889)    (13,686)
                                          ---------------- -----------

Discontinued operations:
  Product and other revenues                       18,256      48,042
  Operating costs and interest expense            (12,263)   (176,568)
                                          ---------------- -----------
  Income (loss) from discontinued
   operations before income taxes                   5,993    (128,526)
  Gain on sale of AVINZA Product Line
   before income taxes                            310,131           -
  Adjustment to gain on sale of Oncology
   Product Line before income taxes                   (61)          -
  Income tax expense on discontinued
   operations                                     (24,853)        (17)
                                          ---------------- -----------
    Discontinued operations                       291,210    (128,543)

                                          ---------------- -----------
Net income (loss)                                $274,321   $(142,229)
                                          ================ ===========

Basic and diluted per share amounts:
  Loss from continuing operations                  $(0.17)     $(0.18)
  Discontinued operations                            2.89       (1.66)
                                          ---------------- -----------
  Net income (loss)                                 $2.72      $(1.84)
                                          ================ ===========

  Weighted average number of common shares    100,686,308  77,496,969
                            (in thousands)

                                      March 31, 2007 December 31, 2006
                                      -------------- -----------------

Current assets:
  Cash, cash equivalents, short-term
   investments, and restricted cash        $410,230          $210,662
  Other current assets                        5,836            24,895
  Current portion of co-promote
   termination payments receivable           11,881                 -
                                      -------------- -----------------
     Total current assets                   427,947           235,557

Restricted investments                        1,826             1,826
Property and equipment, net                   4,022             5,551
Acquired technology and product
 rights, net                                      -            83,083
Long-term portion of co-promote
 termination payments receivable             81,015                 -
Other assets                                 10,000                36
                                      -------------- -----------------
                                           $524,810          $326,053
                                      ============== =================

Liabilities and Stockholders' Equity
  Current liabilities, excluding
   dividends payable, deferred
   revenue, deferred gain, co-promote
   termination liability, and note
   payable                                  $72,712           $60,936
  Dividends payable                         252,742                 -
  Current portion of deferred revenue,
   net                                            -            57,981
  Current portion of deferred gain            1,964             1,964
  Current portion of co-promote
   termination liability                     13,083            12,179
  Note payable                                    -            37,750
  Long-term portion of co-promote
   termination liability                     81,015            81,149
  Long-term portion of deferred gain         26,729            27,220
  Other long-term liabilities                 6,818             7,177
  Common stock subject to conditional
   redemption                                12,345            12,345
  Stockholders' equity                       57,402            27,352
                                      -------------- -----------------
                                           $524,810          $326,053
                                      ============== =================

Source: Ligand Pharmaceuticals Incorporated