Ligand Pharmaceuticals Inc. is buying Metabasis Therapeutics Inc. for the bargain-basement price of $3.2 million, much of which will be used to satisfy the latter's liabilities. In exchange, Ligand garners four programs in the clinic and three in preclinical development.

The $3.2 million purchase price - $1.4 of which go for Metabasis' liabilities - doesn't include the financial fruits of the company's labors which will still go to shareholders, at least in part. But the meager purchase price has to be a bitter pill for Metabasis investors to swallow.

The San Diego-based firm's market cap totaled about $32 million, based on Monday's closing price of 91 cents and about 35 million shares outstanding. By that same calculation, Ligand's $2.3 million offer values each Metabasis share at about 6 cents apiece.

Shares of Metabasis (NASDAQ:MBRX) fell 58 percent, or 53 cents, to close Tuesday at 38 cents.

But the buyout is structured to give Metabasis shareholders at least the chance to earn additional money if Ligand succeeds in licensing or selling the MB07133 program for the treatment of hepatocellular carcinoma. Other rewards could stem from any disposition of Metabasis' interest in PeriCor Therapeutics Inc., which is in partnership with Schering-Plough Corp. for the prevention of adverse cardiovascular and cerebrovascular outcomes in patients undergoing coronary artery bypass graft surgery, and for proceeds received for licensing or selling any of Metabasis' other drug development programs or certain platform technologies.

Specific terms call for Metabasis investors to receive about two-thirds of any milestone payments; royalties or saleback proceeds collected from a partnership with the Roche Group for the development of treatments for hepatitis; 50 percent of net proceeds received for licensing or selling Metabasis' beta subtype thyroid hormone receptor program for hyperlipidemia and/or glucagon program for diabetes for any transaction entered into in the six years following the closing; and 40 percent and 30 percent, respectively, of any proceeds from transactions entered into in the seventh and eighth years following closing, and 20 percent of any proceeds from deals entered into in the ninth and 10th years following closing.

Metabasis, which originally spun out of Sicor Inc. in 1999, had raised about $58 million in equity funding before its $35 million initial public offering in 2004. Other fundraisings since include a $41 million private placement in 2005 and $10 million in a warrant exchange in April 2008.

Its struggles began in 2007 when, in one day, the company revealed the Phase IIb failure of lead program CS-917 in diabetes and that Schering-Plough Corp. dropped lead HepDirect product pradefovir in hepatitis B pradefovir. (See BioWorld Today, July 18, 2007.) The Metabasis buy is Ligand's second troubled biotech purchase in the last few months. The San Diego-based firm entered a deal in August to acquire struggling Neurogen Corp. for $11 million in stock plus several potential milestone payments. (See BioWorld Today, Aug. 25, 2009.)

Shares of Ligand (NASDAQ:LGND) fell 3 cents to close Tuesday at $1.88.