DUBLIN, Ireland — Elan Corp. plc will invest up to US$130 million in Ligand Pharmaceuticals Inc. under a strategic agreement slated to bring San Diego-based Ligand to profit. The deal could lead to Elan holding up to 20 percent of Ligand's stock. (See BioWorld News Bulletin, Sept. 30, 1998.)
Ligand develops small-molecule pharmaceuticals with novel patterns of receptor-specific selectivity for unmet needs in oncology and in niche areas of men's and women's health. The company, which reported a net loss of US$17.4 million on turnover of US$9.5 million for the first six months of the year, is also involved in drug development programs with several major pharmaceutical companies.
According to a company statement, Ligand may use part of the investment from Elan to fund final payments associated with its recent acquisition of Seragen Inc. and the assets of contract services company Marathon Biopharmaceuticals LLC, both of Hopkinton, Mass.
The Ligand deal is substantially larger than Elan's typical minority investment in small biotechnology companies. "We do view this more as a long-term strategic approach," said Eric Liebler, strategic planning director at Dublin-based Elan. "We do not today have a leadership position in oncology and we have therefore chosen to invest in Ligand, who does," he said. Elan's other minority investments, he said, usually are linked to a specific technology and generally involve smaller companies at an earlier stage of development.
Elan initially has committed US$50 million to the deal, subject to regulatory approvals. The investment comprises a purchase, in two tranches, of US$20 million of Ligand's common stock, at US$11.65 per share, and US$30 million of Zero Coupon Convertible Senior Notes, due 2008 with an 8 percent per annum yield to maturity. Subject to certain undisclosed conditions, Elan will, at Ligand's request, purchase additional notes with an issue price of up to $80 million prior to December 31, 1999.
The move follows the winding down in August of Targon Corp., a joint venture Elan established two years ago with Cytogen Corp., of Princeton, N.J., for the rapid development of cancer products. Elan regained ownership of its proprietary solid oral dosage form of morphine for the oncology and HIV pain market segments, which it had previously licensed to Targon. Ligand now has received exclusive rights to market the product, called Morphelan, in the U.S. and Canada. Morphelan is currently in Phase III trials. Elan said it aims to file a new drug application next year and to launch the product the year after. *