Ligand Pharmaceuticals Inc. is looking to expand commercial capabilities for two approved drugs after raising $47 million through a private placement of common stock.

"We did this to top up our working capital," Paul Maier, Ligand's senior vice president and chief financial officer, told BioWorld Today. "We're going through a growth phase where our important product revenues are growing quite nicely, and it's prudent for us to make sure we have adequate cash reserves to cover the capital investments we've made in receivables and inventory."

The San Diego company on Friday sold 3.48 million shares to selected institutional and accredited investors, including current shareholders. The $13.51 per-share price reflected an 8 percent discount to Thursday's $14.68 closing bid on the stock.

Maier called the markdown a modest concession given appropriate market conditions that supported a targeted private investment in its public equity. The shares remain unregistered.

On Friday, Ligand's stock (NASDAQ:LGND) slipped 27 cents to close at $14.41.

The company plans to use the net proceeds for working capital priorities, among them to support qualifying second-source contract manufacturers for Avinza (morphine sulfate extended-release capsules) and Ontak (denileukin diftitox). Both products are FDA-approved - Avinza in February 2002 and Ontak in February 1999.

Avinza, a sustained-release opioid for pain, originally was licensed from Dublin, Ireland-based Elan Corp. plc in 1998. Ontak is approved for cutaneous T-cell lymphoma.

"We'll be building inventories of Avinza to support our co-promotion activities and the ramp-up in its sales," said Maier, also mentioning the company's co-promotion arrangement with Organon Pharmaceuticals USA Inc. "This year it will be our largest product."

In Ligand's most recent fiscal quarter ended June 30, the drugs produced sales of $11.6 million and $9.2 million, respectively. Together, they combined for the largest share of the company's total quarterly revenues of $29.1 million. The company also made money on sales of two other approved products, Targretin (bexarotene) for T-cell lymphoma and Panretin (alitretinoin) for Kaposi's sarcoma, an AIDS-related skin cancer.

For the current fiscal year, Ligand has forecast product revenues to range from $125 million to $135 million and total revenues between $160 million and $175 million.

Ligand recorded a $12 million net loss in the quarter, which it ended with 69.3 million shares outstanding and $41.9 million in cash, cash equivalents and short-term investments. Maier said the company expects to achieve a modest operating income by the end of the year, and make the turn into net income and earnings next year.

"This working capital will assist us in implementing all the different programs we have to get there," he added.

Ligand also plans to use the money to complete development of a second-generation formulation of Ontak that would allow for easier distribution and storage of the drug, and for general corporate purposes. Beyond the reformulation activities, its internal research and development efforts include expanding labels for that drug and Targretin.

The company is evaluating Ontak in a Phase II program for chronic lymphocytic leukemia, with additional studies testing the drug in patients with non-small-cell lung cancer and B-cell lymphoma.

Ligand recently completed patient accrual in one of two pivotal Phase III studies of Targretin capsules for non-small-cell lung cancer, and expects to end recruitment in the other by the end of the year. Maier said survival data from the studies could be available as early as next year's third and fourth quarters. Phase II studies of the product in combination with other marketed cancer drugs continue as well. The company also is evaluating a gel formulation of Targretin, which it plans to study in a Phase II/III trial for hand dermatitis next year.

Partners include Eli Lilly and Co., of Indianapolis, and Wyeth, of Madison, N.J. A lead product from the Lilly collaboration, LY-818, has moved through Phase II studies and is scheduled to enter Phase III next year.