West Coast Editor
On the heels of FDA approval of its pain drug partnered with Elan Corp. plc, Ligand Pharmaceuticals Inc. found cause to feel even better, raising $69.3 million in gross proceeds from a private placement of 4.25 million shares.
The main purpose of the financing is retirement of debt, said Paul Maier, senior vice president and chief financial officer of San Diego-based Ligand.
“At the end of last year, we had about $40 million in cash, and this will be adequate for our operating needs going forward,” Maier added, saying the firm’s goal is to reach operating profitability this year.
Last month, Ligand and one of its former creditors, Dublin, Ireland-based Elan, won regulatory approval for Avinza (morphine sulfate). The drug is an extended-release, once-daily treatment for chronic, moderate to severe pain. Ligand will market the product in North America. (See BioWorld Today, March 22, 2002.)
Approval of the pain treatment triggered a $5 million milestone payment from Ligand to Elan, to be made in the form of about 302,554 shares of common stock.
In its recent annual report, Ligand noted that “we and our subsidiaries may not have sufficient funds to make required payments due under existing debt,” citing $50 million in debt carried by subsidiary Glycomed, of Alameda, Calif., under convertible subordinated debentures that incur interest semi-annually at 7.5 percent per year and are due in 2003. The debentures are convertible to Ligand stock at $26.52 per share.
Also, as of the end of last year, Ligand had a $2.5 million convertible note outstanding to GlaxoSmithKline plc, of London, due 2002 with interest at prime and convertible into common stock at $13.56 per share.
With Elan, Ligand had outstanding $86.1 million in zero coupon convertible senior notes, due 2008 with an 8 percent per year yield to maturity and convertible into common stock at about $14 per share, but all of the Elan notes have been converted as of the first part of this year, Maier said.
Ligand provided notice to Elan and another corporate partner who have rights to participate in the $69.3 million offering. The rights expire after 10 business days.
“Two companies have rights to maintain their ownership positions in the company, so they have the right to participate if they choose,” Maier said. “It’s totally their decision and we don’t know what they’re going to do.”
Ligand’s stock (NASDAQ:LGND) closed Wednesday at $18.51, down 65 cents.