UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



                                  Mark One

[X] Quarterly Report Pursuant to Section 13 or 15(D) of the
Securities Exchange Act of 1934

For the quarterly period ended March 31, 2001 or

[  ] Transition Report Pursuant to Section 13 or 15(D) of the
Securities Exchange Act of 1934

For the Transition Period From ___ to ___. Commission file number 0-20720



LIGAND PHARMACEUTICALS INCORPORATED
(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiciton of Incorporation or Organization)

77-0160744
(I. R. S. Employer Identification No.)

10275 Science Center Drive San Diego, CA
(Address of Principal Executive Offices)

92121-1117
(Zip Code)

Registrant's Telephone Number, Including Area Code: (858) 550-7500



        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X]     No [  ]

        As of April 30, 2001, the registrant had 59,253,019 shares of common stock outstanding.


 

LIGAND PHARMACEUTICALS INCORPORATED
QUARTERLY REPORT

FORM 10-Q

TABLE OF CONTENTS


COVER PAGE.................................................................1

TABLE OF CONTENTS..........................................................2

PART I. FINANCIAL INFORMATION
- -----------------------------

ITEM 1. Financial Statements

Consolidated Balance Sheets as of March 31, 2001 and December 31,
2000.......................................................................3

Consolidated Statements of Operations for the three months ended
March 31, 2001 (unaudited) and 2000 (unaudited)............................4

Consolidated Statements of Cash Flows for the three months ended
March 31, 2001 (unaudited) and 2000 (unaudited)............................5

Notes to Consolidated Financial Statements
(unaudited)................................................................6

ITEM 2.  Management's Discussion and Analysis of Financial
Condition and Results of
Operations.................................................................9

ITEM 3. Quantitative and Qualitative Disclosures about Market
Risk......................................................................17


PART II. OTHER INFORMATION
- --------------------------

ITEM 1. Legal Proceedings..................................................*

ITEM 2. Changes in Securities and Use of
Proceeds..................................................................18

ITEM 3. Defaults upon Senior Securities....................................*

ITEM 4. Submission of Matters to a Vote of Security Holders................*

ITEM 5. Other Information..................................................*

ITEM 6. Exhibits and Reports on Form 8-K...................19

SIGNATURE..................................................21

*No information provided due to inapplicability of item.



2


 

PART I.   FINANCIAL INFORMATION
ITEM 1.   FINANCIAL STATEMENTS

LIGAND PHARMACEUTICALS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

                                     ASSETS

                                                    March 31,     December 31,
                                                       2001           2000
                                                  -------------   ------------
                                                   (Unaudited)        (As
                                                                   restated -
                                                                  see note 1)
Current assets:
  Cash and cash equivalents...................... $   20,972      $    9,224
  Short-term investments.........................     19,913          14,439
  Funds receivable from Elan ....................         --          10,000
  Accounts receivable, net ......................      4,911           2,824
  Inventories....................................      5,022           5,651
  Other current assets...........................      6,793           2,511
                                                  ----------      ----------
          Total current assets...................     57,611          44,649
Restricted investments...........................      2,733           1,434
Property and equipment, net......................     10,899          10,972
Acquired technology, net ........................     40,163          40,924
Other assets.....................................     14,814          15,443
                                                  ----------      ----------
                                                  $  126,220      $  113,422
                                                  ==========      ==========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
  Accounts payable............................... $    3,890      $    3,827
  Accrued liabilities............................      7,428          12,675
  Current portion of
   deferred revenue..............................      8,541           8,435
  Current portion of
   equipment financing
   obligations ..................................      2,988           3,478
                                                  ----------      ----------
      Total current
       liabilities...............................     22,847          28,415
Long-term portion of
 deferred revenue ...............................      5,557           5,727
Long-term portion of
 equipment financing
 obligations ....................................      4,174           4,788
Convertible subordinated
 debentures......................................     45,320          44,651
Accrued acquisition
 obligation......................................      2,700           2,700
Convertible note.................................      2,500           2,500
Zero coupon convertible
 senior notes....................................     81,350          79,766
                                                  ----------      ----------
          Total liabilities......................    164,448         168,547
                                                  ----------      ----------
Commitments (Note 5)
Stockholders' deficit:
  Convertible preferred stock,
   $0.001 par value;
   5,000,000 shares authorized;
   none issued...................................         --              --
  Common stock, $0.001 par value;
   130,000,000 shares
   authorized at March 31, 2001
   and December 31, 2000;
   59,305,888 shares and
   56,823,716 shares issued at
   March 31, 2001 and
   December 31, 2000, respectively...............         59              57
  Additional paid-in capital.....................    518,579         490,484
  Deferred warrant expense ......................     (1,730)         (2,076)
  Accumulated other
   comprehensive income .........................         81              46
  Accumulated deficit............................   (554,306)       (542,725)
                                                  -----------     -----------
                                                     (37,317)        (54,214)
  Treasury stock, at cost;
   73,842 shares at March 31, 2001
   and December 31, 2000, respectively...........       (911)           (911)
                                                  -----------     -----------
          Total stockholders' deficit ...........    (38,228)        (55,125)
                                                  -----------     -----------
                                                  $  126,220      $  113,422
                                                  ===========     ===========

     See accompaning notes.



3


 

LIGAND PHARMACEUTICALS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)


                                                  Three Months Ended March 31,
                                                    2001            2000
                                                -------------   -------------
                                                                 (As restated
                                                                - see note 1)
Revenues:
   Product sales...............................  $     8,607     $     4,863
   Collaborative research and
    development and other revenues ............        8,428           5,953
                                                ------------    ------------

          Total revenues.......................       17,035          10,816
                                                ------------    ------------
Operating costs and expenses:
  Cost of products sold .......................        2,839           2,080
  Research and development.....................       12,405          12,498
  Selling, general and administrative..........       10,157           7,792
                                                ------------    ------------
          Total operating costs and expenses...       25,401          22,370
                                                 -----------     -----------
Loss from operations...........................       (8,366)        (11,554)
                                                -------------   -------------
Other income (expense):
    Interest income............................          731             741
    Interest expense...........................       (3,445)         (3,461)
    Debt conversion expense ...................           --          (2,025)
    Other, net.................................         (501)            491
                                                 ------------    -----------
            Total other income (expense) ......       (3,215)         (4,254)
                                                -------------   -------------
Loss before cumulative effect of
 a change in accounting principle .............      (11,581)        (15,808)
Cumulative effect on prior years
 (to December 31, 1999) of changing
 method of revenue recognition ................           --         (13,099)
                                                ------------    -------------
Net loss.......................................  $   (11,581)    $   (28,907)
                                                 ============    ============

Basic and diluted per share amounts:
   Loss before cumulative effect of
    a change in accounting principle .......... $       (.20)   $       (.30)
   Cumulative effect on prior years
    (to December 31, 1999) of
    changing method of revenue
    recognition ...............................           --            (.24)
                                                -------------   -------------
   Net loss....................................  $      (.20)    $      (.54)
                                                =============   =============
   Weighted average number of common shares ...   58,854,394       53,803,749
                                                =============   =============

     See accompaning notes.



4


 

LIGAND PHARMACEUTICALS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

                                                   Three Months Ended March 31,
                                                  -----------------------------
                                                       2001            2000
                                                  -------------   -------------
                                                                  (As restated
                                                                  - see note 1)
OPERATING ACTIVITIES
Net loss..........................................  $ (11,581)     $ (28,907)
Adjustments to reconcile
 net loss to net cash
 used in operating activities:
    Accretion of debt
     discount and interest........................      2,253          2,218
    Depreciation and amortization
     of property and equipment....................        936          1,097
    Amortization of acquired technology ..........        761            762
    Debt conversion expense.......................         --          2,025
    Other.........................................        477           (513)
    Changes in operating assets and
     liabilities net of effects from
     sale of manufacturing assets:
      Accounts receivable ........................     (2,087)        (1,026)
      Inventories.................................        629           (176)
      Other current assets .......................     (4,282)           (22)
      Accounts payable and
       accrued liabilities........................       (184)        (2,626)
      Deferred revenue............................        (64)        13,305
                                                    ----------     ---------
          Net cash used in
           operating activities...................    (13,142)       (13,863)
                                                   -----------    -----------
INVESTING ACTIVITIES
Purchases of short-term investments...............     (6,082)        (6,586)
Proceeds from sale of short-term investments......        687             42
Purchases of property and equipment...............       (863)          (327)
Payments on accrued acquisition obligation .......         --           (200)
Increases in other assets.........................       (304)          (382)
Decreases in other assets.........................        933            861
Net proceeds from sale of manufacturing assets ...         --          9,676
Proceeds from sale of investment security ........         --          1,119
                                                   ----------     ----------
          Net cash provided by
           (used in) investing activities.........     (5,629)         4,203
                                                   -----------    ----------
FINANCING ACTIVITIES
Principal payments on equipment
 financing obligations............................     (1,104)        (1,007)
Proceeds from equipment
 financing arrangements ..........................         --            403
(Increase)/decrease in
 restricted investments...........................     (1,299)           287
Net proceeds from issuance
 of zero coupon convertible senior notes..........     10,000             --
Net proceeds from issuance of common stock........     22,922          3,951
                                                    ---------      ---------
          Net cash provided by
           financing activities...................     30,519          3,634
                                                    ---------      ---------
Net increase/(decrease) in cash
 and cash equivalents.............................     11,748         (6,026)
Cash and cash equivalents at
 beginning of period..............................      9,224         29,903
                                                    ---------      ---------
Cash and cash equivalents at
 end of period....................................  $  20,972      $  23,877
                                                    =========      =========
SUPPLEMENTAL DISCLOSURE OF
 CASH FLOW INFORMATION
Interest paid.....................................  $   2,181      $   2,198
SUPPLEMENTAL SCHEDULE OF
 NON-CASH INVESTING AND FINANCING ACTIVITIES
Conversion of zero coupon convertible
 senior notes to common stock.....................  $      --      $  21,022
Issuance of common stock for
 acquired technology .............................      5,000             --
Issuance of common stock for debt
 conversion incentive ............................         --          2,025
Accrual of ONTAK obligation for
 acquired technology .............................         --          5,000

     See accompaning notes.



5


 

LIGAND PHARMACEUTICALS INCORPORATED

Notes to Consolidated Financial Statements

1.    Basis of Presentation

        The consolidated financial statements of Ligand Pharmaceuticals Incorporated (“Ligand” or the “Company”) for the three months ended March 31, 2001 and 2000 are unaudited. These financial statements reflect all adjustments, consisting of only normal recurring adjustments which, in the opinion of management, are necessary to fairly present the consolidated financial position as of March 31, 2001 and the consolidated results of operations for the three months ended March 31, 2001 and 2000. The results of operations for the period ended March 31, 2001 are not necessarily indicative of the results to be expected for the year ending December 31, 2001. For more complete financial information, these financial statements, and the notes thereto, should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2000 included in the Company’s Annual Report on Form 10-K.

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Certain reclassifications have been made to amounts included in the prior period financial statements to conform to the presentation for the period ended March 31, 2001.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the consolidated financial statements. Actual results could differ from those estimates.

New Accounting Pronouncements. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements. SAB No. 101 provides guidance in applying accounting principles generally accepted in the United States to revenue recognition in financial statements, including the recognition of non-refundable up-front fees and milestone payments received in conjunction with contractual arrangements that have multiple performance elements and require continuing involvement. SAB No. 101 requires that such fees be recognized as products are delivered or services are performed that represent the culmination of a separate earnings process.

        The Company received non-refundable up-front fees of $18.8 million in 1997, $2.3 million in 1999, and $4.3 million in 2000. The Company initially recognized those payments as revenue upon receipt, as the fees were non-refundable and the Company had transferred technology or product rights at contract inception or incurred costs in excess of the up-front fees prior to initiation of each arrangement. However, under the provisions of SAB No. 101, non-refundable up-front fees must be deferred upon receipt and recognized as products are delivered or services are performed during the term of the arrangement. The Company implemented SAB No. 101 in the fourth quarter of 2000 as a change in accounting principle, retroactive to January 1, 2000, by deferring and recognizing these up-front payments over the term designated in the arrangement. The cumulative effect of this change to December 31, 1999, which was recorded in 2000, was $13.1 million or $0.24 per share. However, the effect on the quarter ended March 31, 2000 reduced revenue and increased loss before cumulative effect of change in accounting principle by $853,000 or $0.02 per share compared to the results previously reported for the quarter ended March 31, 2000, which have been restated accordingly.

Net Loss Per Share. Net loss per share is computed using the weighted average number of common shares outstanding. Basic and diluted net loss per share amounts are equivalent for the periods presented as the inclusion of common stock equivalents in the number of shares used for the diluted computation would be anti-dilutive.

Inventories. Inventories are stated at the lower of cost or market. Cost is determined using the first-in-first-out method. Inventories comprise the following ($,000):

                                    March 31,        December 31,
                                      2001               2000
                                ----------------   ---------------
     Raw materials              $           492    $           498
     Work-in-process                      3,357              4,276
     Finished goods                       1,173                877
                                ---------------    ---------------
                                 $        5,022     $        5,651
                                ===============    ===============


6


 

Other Assets. Other assets comprise the following ($,000):

                                        March 31,        December 31,
                                          2001                2000
                                   ----------------    ---------------
Technology license                 $         4,000     $         4,000
Prepaid royalty buyout, net                  3,604               3,672
Deferred rent                                3,360               3,373
Investment in X-Ceptor                       2,845               3,378
Other                                        1,005               1,020
                                   ---------------      --------------
                                    $       14,814      $       15,443
                                    ==============      ==============

Accrued Liabilities. Accrued liabilities comprise the following ($,000):

                                        March 31,        December 31,
                                          2001                2000
                                   ----------------    --------------
ONTAK obligation (Note 4)           $       -- --       $       5,000
Compensation                                2,830               2,412
Interest                                      980               1,985
Royalties                                   1,560               1,122
Other                                       2,058               2,156
                                   --------------       -------------
                                    $       7,428       $      12,675
                                    =============       =============

Comprehensive Income (Loss). Comprehensive income (loss) represents net income (loss) adjusted for the change during the periods presented in unrealized gains and losses on available-for-sale securities less reclassification adjustments for realized gains or losses included in net income (loss), as well as foreign currency translation adjustments. The accumulated unrealized gains or losses are reported as accumulated other comprehensive income (loss) as a separate component of stockholders’ deficit. Comprehensive loss for the three month periods ended March 31, 2001 and 2000 is as follows ($,000):

                                                  Three Months Ended
                                                       March 31,
                                              2001                  2000
                                       ----------------      ----------------
                                                             (As restated -
                                                               see note 1)

         Comprehensive loss                 $(11,546)             $(28,898)
                                       ================      ================

2.    Zero Coupon Convertible Senior Notes

        On December 29, 2000, the Company issued the final $10 million of notes to an entity affiliated with Elan Corporation, plc (“Elan”) provided for under the September 1998 agreement. These notes are convertible into common stock at $14.16 per share. The proceeds were received on January 2, 2001.

3.     Distribution Agreement

        In February 2001, the Company and Elan entered into a distribution agreement providing for the distribution of certain of the Company’s products in various European and other international territories for a term of 10 years. The Company received a payment at contract inception and additional payments related to subsequent product marketing authorization submission and approval. Additional payments may be received as other product registrations are submitted and approved in the specified territories.

4.    Arrangement with Lilly

        In connection with the agreement between Seragen and Eli Lilly and Company (“Lilly”) under which Lilly assigned to Seragen its sales and marketing rights to ONTAK, Lilly received a $5 million milestone payment from the Company in March 2001 following the achievement of cumulative net sales of ONTAK reaching $20 million in October 2000. The Company issued 412,504 shares of its common stock to Lilly as payment for this $5 million milestone.



7


 

5.    Commitments

        In November 1998, the Company and Elan Corporation, plc (“Elan”) entered into a Development, Licence and Supply Agreement related to Elan’s product Morphelan™. For the rights to Morphelan™ the Company paid Elan certain license fees in 1998 and milestone payments due upon the occurrence of certain events in 1999 and 2000. Elan could receive up to $5 million in cash, or subject to certain conditions, in the Company’s common stock or notes upon approval of Morphelan by the FDA. Elan submitted a NDA for Morphelan to the FDA in May 2000. The Company is also committed to spend not less than $7 million through May 2003 to undertake additional clinical activities related to the commercialization of Morphelan™. In the event the Company does not spend this amount, any short fall would be paid to Elan.

6.     Stockholders’ Equity

        In January 2001, the Company raised net proceeds of approximately $22.4 million in a private placement of 2 million shares of its common stock.



8


 

PART I.    FINANCIAL INFORMATION
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

        This quarterly report may contain predictions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed at “Risks and Uncertainties” below. This outlook represents our current judgment on the future direction of our business. Such risks and uncertainties could cause actual results to differ materially from any future performance suggested below. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements to reflect events or circumstances arising after the date of this quarterly report.

        Panretin® and Targretin® are registered trademarks of Ligand Pharmaceuticals Incorporated, and ONTAK® is a registered trademark of Seragen, Inc., our wholly owned subsidiary.

Overview

        We develop and market drugs that address critical unmet medical needs of patients in the areas of cancer, men’s and women’s health and skin diseases, as well as osteoporosis, metabolic, cardiovascular and inflammatory diseases. Our drug discovery and development programs are based on our proprietary gene transcription technology, primarily related to Intracellular Receptors, also known as IRs, and Signal Transducers and Activators of Transcription, also known as STATs.

        In 1999, we received marketing approval in the United States for Panretin gel, for the treatment of Kaposi’s sarcoma in AIDS patients, ONTAK, for the treatment of patients with persistent or recurrent cutaneous T-cell lymphoma or CTCL, and Targretin capsules, for the treatment of CTCL in patients who are refractory to at least one prior systemic therapy. In June 2000, Targretin gel was granted marketing approval in the United States for the treatment of patients with early stage CTCL. In addition, in May 2000, our strategic partner Elan submitted a new drug application for its product Morphelan for pain management in cancer and HIV patients. We have the exclusive marketing rights to Morphelan in the United States and Canada. In Europe, we were granted a marketing authorization for Panretin gel in October 2000 and for Targretin capsules in March 2001, and have a marketing authorization application under review for Targretin gel. We expect to launch Panretin gel and Targretin capsules in Europe in 2001 after pricing has been approved.

        We are also currently involved in the research phase of research and development collaborations with Eli Lilly and Company, SmithKline Beecham Corporation, Organon Company and Bristol-Myers Squibb Company. Collaborations in the development phase are being pursued by American Home Products, Abbott Laboratories, Glaxo-Wellcome plc, and Allergan, Inc. We receive funding during the research phase of the arrangements and milestone and royalty payments as products are developed and marketed by our corporate partners. In addition, in connection with some of these collaborations, we received non-refundable up-front payments.

        We have been unprofitable since our inception. We expect to incur substantial additional operating losses until the commercialization of our products generates sufficient revenues to cover our expenses. We expect that our operating results will fluctuate from quarter to quarter as a result of differences in the timing of expenses incurred and revenues earned from product sales and collaborative research and development arrangements. Some of these fluctuations may be significant.

Results of Operations

Three Months Ended March 31, 2001 (“2001”), as compared with Three Months Ended March 31, 2000 (“2000”)

        Total revenues for 2001 were $17.0 million, an increase of $6.2 million, as compared to 2000 revenues of $10.8 million. Net loss for 2001 was $11.6 million or $.20 per share, a decrease of $17.3 million as compared to the 2000 net loss of $28.9 million or $.54 per share including the cumulative effect of the change in accounting principle of $13.1 million related to the 2000 implementation of SAB No. 101. For additional details, please see note 1 of the notes to consolidated financial statements. Excluding the impact of this change in accounting principle, net loss for 2001 decreased by $4.2 million as compared to 2000 net loss of $15.8 million or $.30 per share. The principal factors causing these changes are discussed below.

        Product sales for 2001 were $8.6 million as compared to $4.9 million in 2000 as a result of a 28% increase in sales of ONTAK from $3.7 million in 2000 to $4.8 million in 2001, a 192% increase in sales of Targretin capsules from $800,000 in 2000 to $2.3 million in 2001, and $1.4 million in sales of Targretin gel and Panretin gel in 2001 compared to $200,000 in 2000. Targretin capsules and Targretin gel were approved for marketing in the U.S. in December 1999 and June 2000, respectively.



9


 

        ONTAK sales again increased in the first quarter ended March 31, 2001 from increased penetration of private oncology practices and increased focus of the oncology sales force on ONTAK and Targretin capsules. Products sold for use in post-marketing clinical trials as well as price increases contributed to the quarter-to-quarter sales increase. Targretin capsules and gel continued to improve market penetration with the support of a new dermatology sales force put in place during the first quarter 2001.

        Collaborative research and development and other revenues for 2001 were $8.4 million, an increase of $2.5 million as compared to 2000. The increase was due to higher 2001 milestones of $3.5 million as compared to $1 million in 2000.

        Cost of products sold increased from $2.1 million in 2000 to $2.8 million in 2001 reflecting higher unit sales.

        Research and development expenses of $12.4 million in 2001 were virtually flat with 2000, reflecting reduced initial registration activities offset by increased spending in studies related to the use of our products in potential new indications.

        Selling, general and administrative expenses were $10.2 million in 2001, up from $7.8 million in 2000. The increase was due primarily to increased selling and marketing costs associated with the division of our U.S.-based sales force between oncology and dermatology audiences and the consequent total increase of 10 representatives, post-marketing clinical trials, and other expenses to support increased sales efforts, offset in part, by decreases in general and administrative spending.

        Total other income (expense) of $(3.2) million in 2001 compared favorably to $(4.3) million in 2000. In 2000, the debt conversion expense of $2 million related to the incentive provided to Elan for their conversion of $20 million issue price of outstanding convertible notes in March 2000, was partially offset by a gain of $437,000 on the sale of the Marathon assets and a gain of $426,000 on the sale of an investment security.

        We have federal, state, and foreign income tax net operating loss carryforwards and federal and state research tax credit carryforwards which are available within the limitation set forth in Internal Revenue Code 382 and 383.

Liquidity and Capital Resources

        We have financed our operations through private and public offerings of our equity securities, collaborative research and development and other revenues, issuance of convertible notes, capital and operating lease transactions, equipment financing arrangements, product sales and investment income.

        Working capital was $34.8 million at March 31, 2001, as compared to $16.2 million at December 31, 2000. Cash, cash equivalents, short-term investments, restricted investments and the funds receivable from Elan totaled $43.6 million at March 31, 2001, as compared to $35.1 million at December 31, 2000. We primarily invest our cash in United States government and investment grade corporate debt securities.

        Significant cash inflows in 2001 included proceeds of $22.4 million of net cash received in a private placement of 2 million shares of our common stock and $10 million from the proceeds on the final note issued to Elan. Significant cash outflows included $13.1 million of net cash used to finance operating activities in 2001, as compared to $13.9 million in 2000.

        Our subsidiary, Glycomed, is obligated to make payments under convertible subordinated debentures in the total principal amount of $50 million. The debentures pay interest semi-annually at a rate of 7 ½% per annum, are due in 2003 and convertible into our common stock at $26.52 per share. In addition, at March 31, 2001, we also had outstanding a $2.5 million convertible note to GlaxoSmithKline due in 2002 with interest at prime and convertible into our common stock at $13.56 per share as well as $81.4 million in zero coupon convertible senior notes to Elan, due 2008 with an 8% per annum yield to maturity and convertible into our common stock at approximately $14 per share.

        Certain of our property and equipment is pledged as collateral under various equipment financing arrangements. As of March 31, 2001, $7.2 million was outstanding under such arrangements with $3.0 million classified as current. Our equipment financing arrangements have terms of four to seven years with interest ranging from 6.75% to 11.02%. We lease our office and research facilities under operating lease arrangements with varying terms through August 2015.

        We may be required to make a milestone payment of $5 million to Elan and are required to spend $7 million through May 2003 for clinical expenditures under the Morphelan license agreement. For additional details, please see note 5 of the notes to consolidated financial statements.



10


 

        We believe our available cash, cash equivalents, short-term investments and existing sources of funding will be adequate to satisfy our anticipated operating and capital requirements through at least the next 12 months. Our future operating and capital requirements will depend on many factors, including: the effectiveness of our commercialization activities; the pace of scientific progress in our research and development programs; the magnitude of these programs; the scope and results of preclinical testing and clinical trials; the time and costs involved in obtaining regulatory approvals; the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims; competing technological and market developments; the ability to establish additional collaborations or changes in existing collaborations; and the cost of manufacturing.

Financial Condition

March 31, 2001, as compared with December 31, 2000

        Funds receivable from Elan decreased by $10 million reflecting the receipt of cash proceeds in January 2001 on the final note issued by Elan.

        Restricted investments increased by $1.3 million primarily due to a guarantee collateralization on a long-term contract to purchase electric power at rates substantially lower than those presently paid.

        Accrued liabilities decreased by $5.2 million reflecting the issuance of our common stock in satisfaction of the Lilly milestone obligation for ONTAK discussed in note 4 of the notes to consolidated financial statements.

        Stockholders’ deficit decreased by $16.9 million due primarily to the proceeds of the private placement described in note 6 of the notes to consolidated financial statements and the issuance of common stock to Lilly described in note 4 of the notes to consolidated financial statements, offset in part by the 2001 net loss of $11.6 million.

Risks and Uncertainties

        The following is a summary description of some of the many risks we face in our business. You should carefully review these risks in evaluating our business, including the businesses of our subsidiaries. You should also consider the other information described in this report.

Our product development and commercialization involves a number of uncertainties and we may never generate sufficient revenues from the sale of products to become profitable.

        We were founded in 1987. We have incurred significant losses since our inception. At March 31, 2001, our accumulated deficit was $554.3 million. To date, we have received the majority of our revenues from our collaborative arrangements and only began receiving revenues from the sale of pharmaceutical products in 1999. To become profitable, we must successfully develop, clinically test, market and sell our products. Even if we achieve profitability, we cannot predict the level of that profitability or whether we will be able to sustain profitability. We expect that our operating results will fluctuate from period to period as a result of differences in when we incur expenses and receive revenues from product sales, collaborative arrangements and other sources. Some of these fluctuations may be significant.

        Most of our products in development will require extensive additional development, including preclinical testing and human studies, as well as regulatory approvals, before we can market them. We do not expect that any products resulting from our product development efforts or the efforts of our collaborative partners, other than those for which marketing approval has already been received, will be available for sale until the second half of the 2001 calendar year at the earliest, if at all. There are many reasons that we or our collaborative partners may fail in our efforts to develop our other potential products, including the possibility that:

We are building marketing and sales capabilities in the united states and europe which is an expensive and time-consuming process.



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        Developing the sales force to market and sell products is a difficult, expensive and time-consuming process. We have developed an U.S. sales force of approximately 50 people, some of which are contracted from a third party, and we rely on third parties to distribute our products. The distributor is responsible for providing many marketing support services, including customer service, order entry, shipping and billing, and customer reimbursement assistance. In Europe, we will rely initially on other companies to distribute and market our products. We have entered into agreements for the marketing and distribution of our products in territories such as the United Kingdom, Germany, France, Spain, Portugal, Greece, Italy, and Central and South America. We may not be able to continue to expand our sales and marketing capabilities sufficiently to successfully commercialize our products in the territories where they receive marketing approval. To the extent we enter into co-promotion or other licensing arrangements, any revenues we receive will depend on the marketing efforts of others, which may or may not be successful.

Some of our key technologies have not been used to produce marketed products and may not be capable of producing such products.

        To date, we have dedicated most of our resources to the research and development of potential drugs based upon our expertise in our IR and STATs technologies. Even though there are marketed drugs that act through IRs, some aspects of our IR technologies have not been used to produce marketed products. In addition, we are not aware of any drugs that have been developed and successfully commercialized that interact directly with STATs. Much remains to be learned about the location and function of IRs and STATs. If we are unable to apply our IR and STAT technologies to the development of our potential products, we will not be successful in developing new products.

Our drug development programs will require substantial additional future capital.

        Our drug development programs require substantial additional capital to successfully complete them, arising from costs to:

        Our future operating and capital needs will depend on many factors, including:

        For example, we are required under the terms of our agreement with Elan, to spend not less than $7 million through May 2003 to undertake additional clinical activities related to the commercialization of Morphelan. In the event we do not spend this amount, any shortfall would have to be paid to Elan. If additional funds are required to support our operations and we are unable to obtain them on terms favorable to us, we may be required to cease or reduce further commercialization of our products, to sell some or all of our technology or assets or to merge with another entity.

Our products must clear significant regulatory hurdles prior to marketing.

        Before we obtain the approvals necessary to sell any of our potential products, we must show through preclinical studies and human testing that each product is safe and effective. Our failure to show any product’s safety and effectiveness would delay or prevent regulatory approval of the product and could adversely affect our business. The clinical trials process is complex and uncertain. The results of preclinical studies and initial clinical trials may not necessarily predict the results



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from later large-scale clinical trials. In addition, clinical trials may not demonstrate a product’s safety and effectiveness to the satisfaction of the regulatory authorities. A number of companies have suffered significant setbacks in advanced clinical trials or in seeking regulatory approvals, despite promising results in earlier trials. The FDA may also require additional clinical trials after regulatory approvals are received, which could be expensive and time-consuming, and failure to successfully conduct those trials could jeopardize continued commercialization.

        The rate at which we complete our clinical trials depends on many factors, including our ability to obtain adequate supplies of the products to be tested and patient enrollment. Patient enrollment is a function of many factors, including the size of the patient population, the proximity of patients to clinical sites and the eligibility criteria for the trial. Delays in patient enrollment may result in increased costs and longer development times. In addition, our collaborative partners have rights to control product development and clinical programs for products developed under the collaborations. As a result, these collaborators may conduct these programs more slowly or in a different manner than we had expected. Even if clinical trials are completed, we or our collaborative partners still may not apply for FDA approval in a timely manner or the FDA still may not grant approval.

We may not be able to pay amounts due on our outstanding indebtedness when due which would cause defaults under these arrangements.

        We and our subsidiaries may not have sufficient funds to make required payments due under existing debt. If we or our subsidiaries do not have adequate funds, we will be forced to refinance the existing debt and may not be successful in doing so. Our subsidiary, Glycomed, is obligated to make payments under convertible subordinated debentures in the total principal amount of $50 million. The debentures incur interest semi-annually at a rate of 7 ½% per annum, are due in 2003 and convertible into our common stock at $26.52 per share. In addition, at March 31, 2001, we had outstanding a $2.5 million convertible note to GlaxoSmithKline due in 2002 with interest at prime and convertible into our common stock at $13.56 per share. We also had outstanding $81.4 million in zero coupon convertible senior notes to Elan, due 2008 with an 8% per annum yield to maturity and convertible into our common stock at approximately $14 per share. Glycomed’s failure to make payments when due under its debentures would cause us to default under the outstanding notes to Elan.

We may require additional money to run our business and may be required to raise this money on terms which are not favorable to our existing stockholders.

        We have incurred losses since our inception and do not expect to generate positive cash flow to fund our operations for one or more years. As a result, we may need to complete additional equity or debt financings to fund our operations. Our inability to obtain additional financing could adversely affect our business. Financings may not be available on acceptable terms. In addition, these financings, if completed, still may not meet our capital needs and could result in substantial dilution to our stockholders. For instance, the zero coupon convertible senior notes outstanding to Elan are convertible into common stock at the option of Elan, subject to some limitations, and in January 2001 we issued 2 million shares of our common stock in a private placement. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one or more of our drug development programs. Alternatively, we may be forced to attempt to continue development by entering into arrangements with collaborative partners or others that require us to relinquish some or all of our rights to technologies or drug candidates that we would not otherwise relinquish.

We face substantial competition.

        Some of the drugs that we are developing and marketing will compete with existing treatments. In addition, several companies are developing new drugs that target the same diseases that we are targeting and are taking IR-related and STAT-related approaches to drug development. Many of our existing or potential competitors, particularly large drug companies, have greater financial, technical and human resources than us and may be better equipped to develop, manufacture and market products. Many of these companies also have extensive experience in preclinical testing and human clinical trials, obtaining FDA and other regulatory approvals and manufacturing and marketing pharmaceutical products. In addition, academic institutions, governmental agencies and other public and private research organizations are developing products that may compete with the products we are developing. These institutions are becoming more aware of the commercial value of their findings and are seeking patent protection and licensing arrangements to collect payments for the use of their technologies. These institutions also may market competitive products on their own or through joint ventures and will compete with us in recruiting highly qualified scientific personnel.

Our success will depend on third-party reimbursement and may be impacted by health care reform.

        Sales of prescription drugs depend significantly on the availability of reimbursement to the consumer from third party payors, such as government and private insurance plans. These third party payors frequently require drug companies to



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provide predetermined discounts from list prices, and they are increasingly challenging the prices charged for medical products and services. Our current and potential products may not be considered cost-effective and reimbursement to the consumer may not be available or sufficient to allow us to sell our products on a competitive basis.

        In addition, the efforts of governments and third-party payors to contain or reduce the cost of health care will continue to affect the business and financial condition of drug companies such as us. A number of legislative and regulatory proposals to change the health care system have been discussed in recent years. In addition, an increasing emphasis on managed care in the United States has and will continue to increase pressure on drug pricing. We cannot predict whether legislative or regulatory proposals will be adopted or what effect those proposals or managed care efforts may have on our business. The announcement and/or adoption of such proposals or efforts could adversely affect our profit margins and business.

We rely heavily on collaborative relationships and termination of any of these programs could reduce the financial resources available to us.

        Our strategy for developing and commercializing many of our potential products, including products aimed at larger markets, includes entering into collaborations with corporate partners, licensors, licensees and others. These collaborations provide us with funding and research and development resources for potential products for the treatment or control of metabolic diseases, hematopoiesis, women’s health disorders, inflammation, cardiovascular disease, cancer and skin disease, and osteoporosis. These agreements also give our collaborative partners significant discretion when deciding whether or not to pursue any development program. Our collaborations may not continue or be successful.

        In addition, our collaborators may develop drugs, either alone or with others, that compete with the types of drugs they currently are developing with us. This would result in less support and increased competition for our programs. If products are approved for marketing under our collaborative programs, any revenues we receive will depend on the manufacturing, marketing and sales efforts of our collaborators, who generally retain commercialization rights under the collaborative agreements. Our current collaborators also generally have the right to terminate their collaborations under specified circumstances. If any of our collaborative partners breach or terminate their agreements with us or otherwise fail to conduct their collaborative activities successfully, our product development under these agreements will be delayed or terminated.

        We may have disputes in the future with our collaborators, including disputes concerning which of us owns the rights to any technology developed. For instance, we were involved in litigation with Pfizer, which we settled in April 1996, concerning our right to milestones and royalties based on the development and commercialization of droloxifene. These and other possible disagreements between us and our collaborators could delay our ability and the ability of our collaborators to achieve milestones or our receipt of other payments. In addition, any disagreements could delay, interrupt or terminate the collaborative research, development and commercialization of certain potential products, or could result in litigation or arbitration. The occurrence of any of these problems could be time-consuming and expensive and could adversely affect our business.

Our success depends on our ability to obtain and maintain our patents and other proprietary rights.

        Our success will depend on our ability and the ability of our licensors to obtain and maintain patents and proprietary rights for our potential products and to avoid infringing the proprietary rights of others, both in the United States and in foreign countries. Patents may not be issued from any of these applications currently on file or, if issued, may not provide sufficient protection. In addition, disputes with licensors under our license agreements may arise which could result in additional financial liability or loss of important technology and potential products.

        Our patent position, like that of many pharmaceutical companies, is uncertain and involves complex legal and technical questions for which important legal principles are unresolved. We may not develop or obtain rights to products or processes that are patentable. Even if we do obtain patents, they may not adequately protect the technology we own or have licensed. In addition, others may challenge, seek to invalidate, infringe or circumvent any patents we own or license, and rights we receive under those patents may not provide competitive advantages to us. Further, the manufacture, use or sale of our products may infringe the patent rights of others.

        Several drug companies and research and academic institutions have developed technologies, filed patent applications or received patents for technologies that may be related to our business. Others have filed patent applications and received patents that conflict with patents or patent applications we have licensed for our use, either by claiming the same methods or compounds or by claiming methods or compounds that could dominate those licensed to us. In addition, we may not be aware of all patents or patent applications that may impact our ability to make, use or sell any of our potential products. For example, United States patent applications may be kept confidential while pending in the Patent and Trademark Office, and patent applications filed in foreign countries are often first published six months or more after filing. Any conflicts resulting



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from the patent rights of others could significantly reduce the coverage of our patents and limit our ability to obtain meaningful patent protection. If other companies obtain patents with conflicting claims, we may be required to obtain licenses to those patents or to develop or obtain alternative technology. We may not be able to obtain any such license on acceptable terms or at all. Any failure to obtain such licenses could delay or prevent us from pursuing the development or commercialization of our potential products.

        We have had and will continue to have discussions with our current and potential collaborators regarding the scope and validity of our patent and other proprietary rights. If a collaborator or other party successfully establishes that our patent rights are invalid, we may not be able to continue our existing collaborations beyond their expiration. Any determination that our patent rights are invalid also could encourage our collaborators to terminate their agreements where contractually permitted. Such a determination could also adversely affect our ability to enter into new collaborations.

        We may also need to initiate litigation, which could be time-consuming and expensive, to enforce our proprietary rights or to determine the scope and validity of others’ rights. If litigation results, a court may find our patents or those of our licensors invalid or may find that we have infringed on a competitor’s rights. If any of our competitors have filed patent applications in the United States which claim technology we also have invented, the Patent and Trademark Office may require us to participate in expensive interference proceedings to determine who has the right to a patent for the technology.

        We have learned that Hoffmann-La Roche Inc. has received a United States patent and has made patent filings in foreign countries that relate to our Panretin® capsules and gel products. We filed a patent application with an earlier filing date than Hoffmann-La Roche’s patent, which we believe is broader than, but overlaps in part with, Hoffmann-La Roche’s patent. We currently are investigating the scope and validity of Hoffmann-La Roche’s patent to determine its impact upon our products. The Patent and Trademark Office has informed us that the overlapping claims are patentable to us and has initiated a proceeding to determine whether we or Hoffmann-La Roche are entitled to a patent. We may not receive a favorable outcome in the proceeding. In addition, the proceeding may delay the Patent and Trademark Office’s decision regarding our earlier application. If we do not prevail, the Hoffmann-La Roche patent might block our use of Panretin®capsules and gel in specified cancers.

        We also rely on unpatented trade secrets and know-how to protect and maintain our competitive position. We require our employees, consultants, collaborators and others to sign confidentiality agreements when they begin their relationship with us. These agreements may be breached and we may not have adequate remedies for any breach. In addition, our competitors may independently discover our trade secrets.

We rely on third-party manufacturers to supply our products and thus have little control over our manufacturing resources.

        We currently have no manufacturing facilities and we rely on others for clinical or commercial production of our marketed and potential products. To be successful, we will need to manufacture our products, either directly or through others, in commercial quantities, in compliance with regulatory requirements and at acceptable cost. Any extended and unplanned manufacturing shutdowns could be expensive and could result in inventory and product shortages. If we are unable to develop our own facilities or contract with others for manufacturing services, our revenues could be adversely affected. In addition, if we are unable to supply products in development, our ability to conduct preclinical testing and human clinical trials will be adversely affected. This in turn could also delay our submission of products for regulatory approval and our initiation of new development programs. In addition, although other companies have manufactured drugs acting through IRs and STATs on a commercial scale, we may not be able to do so at costs or in quantities to make marketable products.

        The manufacturing process also may be susceptible to contamination, which could cause the affected manufacturing facility to close until the contamination is identified and fixed. In addition, problems with equipment failure or operator error also could cause delays in filling our customers’ orders.

Our business exposes us to product liability risks or our products may need to be recalled and we may not have sufficient insurance to cover any claims.

        Our business exposes us to potential product liability risks. Our products also may need to be recalled to address regulatory issues. A successful product liability claim or series of claims brought against us could result in payment of significant amounts of money and divert management’s attention from running the business. Some of the compounds we are investigating may be harmful to humans. For example, retinoids as a class are known to contain compounds which can cause birth defects. We may not be able to maintain our insurance on acceptable terms, or our insurance may not provide adequate protection in the case of a product liability claim. To the extent that product liability insurance, if available, does



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not cover potential claims, we will be required to self-insure the risks associated with such claims.

We are dependent on our key employees, the loss of whose services could adversely affect us.

        We depend on our key scientific and management staff, the loss of whose services could adversely affect our business. Furthermore, we may need to hire new scientific, management and operational personnel. Recruiting and retaining qualified management, operations and scientific personnel is also critical to our success. We may not be able to attract and retain such personnel on acceptable terms given the competition among numerous drug companies, universities and other research institutions for such personnel.

We use hazardous materials which requires us to incur substantial costs to comply with environmental regulations.

        In connection with our research and development activities, we handle hazardous materials, chemicals and various radioactive compounds. To properly dispose of these hazardous materials in compliance with environmental regulations, we are required to contract with third parties at substantial cost to us. We cannot completely eliminate the risk of accidental contamination or injury from the handling and disposing of hazardous materials, whether by us or by our third-party contractors. In the event of any accident, we could be held liable for any damages that result, which could be significant.

Our stock price may be adversely affected by volatility in the markets.

        The market prices and trading volumes for our securities, and the securities of emerging companies like us, have historically been highly volatile and have experienced significant fluctuations unrelated to operating performance. Future announcements concerning us or our competitors may impact the market price of our common stock. These announcements might include:

Future sales of our common stock may depress our stock price.

        Sales of substantial amounts of our common stock in the public market could seriously harm prevailing market prices for our common stock. These sales might make it difficult or impossible for us to sell additional securities when we need to raise capital.

You may not receive a return on your shares other than through the sale of your shares of common stock.

        We have not paid any cash dividends on our common stock to date. We intend to retain any earnings to support the expansion of our business and we do not anticipate paying cash dividends in the foreseeable future. Accordingly, other than through a sale of your shares, you will not receive a return on your investment in our common stock.

Our shareholder rights plan and charter documents may prevent transactions that could be beneficial to you.

        Our shareholder rights plan and provisions contained in our certificate of incorporation and bylaws may discourage transactions involving an actual or potential change in our ownership, including transactions in which you might otherwise receive a premium for your shares over then-current market prices. These provisions also may limit your ability to approve transactions that you deem to be in your best interests. In addition, our board of directors may issue shares of preferred stock without any further action by you. Such issuances may have the effect of delaying or preventing a change in our ownership.



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PART I.    FINANCIAL INFORMATION
ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        At March 31, 2001 our investment portfolio includes fixed-income securities of $17.8 million. These securities are subject to interest rate risk and will decline in value if interest rates increase. However, due to the short duration of our investment portfolio, an immediate 10% change in interest rates would not have a material impact on our financial condition, results of operations or cash flows. Declines in interest rates over time will, however, reduce our interest income while increases in interest rates over time will increase our interest expense.

        We generally conduct business, including sales to foreign customers, in U.S. dollars. As a result we have very limited foreign currency exchange rate risk. The effect of an immediate 10% change in foreign exchange rates would not have a material impact on our financial condition, results of operations or cash flows.



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PART II.    OTHER INFORMATION
ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS

        During the three-month period ended March 31, 2001, we issued the following securities:

        On December 29, 2000, we issued $10 million issue price of zero coupon convertible notes to an affiliate of Elan Corporation, plc, for which we received payment on January 2, 2001. The notes are convertible at any time prior to November 9, 2008 into our common stock at a conversion price of $14.16, as such price may be adjusted under the terms of the notes. The notes were issued to a single entity under a claim of exemption under Regulation S promulgated by the SEC or, alternatively, under Section 4(2) of the Securities Act.

        On January 10, 2001, we issued 2 million shares of our common stock in an unregistered transaction to selected institutional and accredited investors, including several current Ligand investors, for aggregate consideration of $24 million. In connection with the placement of the shares, we paid $1.5 million in cash compensation to the placement agent. We subsequently registered the resale of all of these shares on a Form S-3 registration statement (No. 333-53992), filed on January 19, 2001 and declared effective on January 26, 2001. The shares were issued under a claim of exemption under Regulation D promulgated by the SEC or, alternatively, under Section 4(2) of the Securities Act.

        Neither transaction involved a public offering. Appropriate legends were affixed to the notes and stock certificates, as applicable, issued in such transactions. We believe each transferee had adequate access to information about us to make an informed investment decision and each transferee is an accredited investor within the meaning of Rule 501 of Regulation D.



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ITEM 6 (A)   EXHIBITS

Exhibit 3.2 (1) Bylaws of the Company, as amended (Exhibit 3.3)
Exhibit 3.3 (2) Amended Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock of Ligand Pharmaceuticals Incorporated.
Exhibit 3.5 (6) Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Company dated June 14, 2000.
Exhibit 4.1 (8) Specimen stock certificate for shares of Common Stock of the Company.
Exhibit 4.2 (3) Preferred Shares Rights Agreement, dated as of September 13, 1996, by and between Ligand Pharmaceuticals Incorporated and Wells Fargo Bank, N.A. (Exhibit 10.1)
Exhibit 4.3 (4) Amendment to Preferred Shares Rights Agreement, dated as of November 9, 1998, between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (Exhibit 99.1).
Exhibit 4.5 (7) Indenture, dated as of December 23, 1992 by and between Glycomed Incorporated and Chemical Trust Company of California. (Filed as Exhibit 4.3).
Exhibit 4.6 (5) First Supplement Indenture, dated as of May 18, 1995 by and among the Company, Glycomed Incorporated and Chemical Trust Company of California. (Filed as Exhibit 10.133).
Exhibit 10.233 Second Amendment to the Research, Development and License Agreement, dated as of September 2, 1994, between the Company and American Home Products Corporation (with certain confidential portions omitted).
Exhibit 10.234 Fourth Amendment to the Research, Development and License Agreement, dated as of September 2, 1994, between the Company and American Home Products Corporation (with certain confidential portions omitted).
Exhibit 10.235 Distributorship Agreement, dated February 29, 2001, between the Company and Elan Pharma International Limited (with certain confidential portions omitted).
Exhibit 10.236 Second Amendment to the Development, Licence and Supply Agreement dated November 9, 1998, between the Company and Elan Corporation, plc.
Exhibit 10.237 Form of Stock Purchase Agreement dated as of January 5, 2001, between the investors listed on Exhibit A and the Company.

__________________________________

(1) This exhibit was previously filed as part of, and is hereby incorporated by reference to the numbered exhibit filed with the Company’s Registration Statement on Form S-4 (No. 333-58823) filed on July 9, 1998.
(2) This exhibit was previously filed as part of, and is hereby incorporated by reference to the same numbered exhibit filed with the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 1999.
(3) This exhibit was previously filed as part of, and is hereby incorporated by reference to the numbered exhibit filed with the Company’s Registration Statement on Form S-3 (No. 333-12603) filed on September 25, 1996, as amended.
(4) This exhibit was previously filed as part of, and is hereby incorporated by reference to the numbered exhibit filed with, the Registration Statement on Form 8-A/A Amendment No. 1 (No. 0-20720) filed on November 10, 1998.
(5) This exhibit was previously filed as part of, and is hereby incorporated by reference to the numbered exhibit filed with the Registration Statement on Form S-4 (No. 33-90160) filed on March 9, 1995, as amended.
(6) This exhibit was previously filed as part of, and is hereby incorporated by reference to the same numbered exhibit filed with the Company’s Annual Report on Form 10-K for the period ended December 31, 2000.
(7) This exhibit was previously filed as part of, and is hereby incorporated by reference to the numbered exhibit filed with the Registration Statement on Form S-3 of Glycomed Incorporated (Reg. No. 33-55042) filed on November 25, 1992, as amended.
(8) This exhibit was previously filed as part of, and is hereby incorporated by reference to the same numbered exhibit filed with the Company’s Registration Statement on Form S-1 (No. 33-47257) filed on April 16, 1992 as amended.


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ITEM 6 (B)    REPORTS ON FORM 8-K

The following reports on Form 8-K were filed by the Company during the first quarter of 2001:

Date of Filing Description
January 4, 2001 Item 5 and 7, Other Events - Ligand Completes $10 Million Takedown of Elan Funding.
January 8,2001 Item 5 and 7, Other Events - Ligand Raises $24 Million in Private Placement of Common Stock.


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LIGAND PHARMACEUTICALS INCORPORATED

March 31, 2001





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.






Date: May 7, 2001                      

      Ligand Pharmaceuticals Incorporated



By: /S/ PAUL V.MAIER                      
       Paul V. Maier
       Senior Vice President, Chief Financial Officer





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