By Lisa Seachrist

Washington Editor

Ligand Pharmaceuticals Inc. completed its purchase of the joint development venture Allergan Ligand Retinoid Therapeutics Inc. (ALRT) from partner Allergan Inc. for $71.2 million.

The San Diego-based Ligand paid stockholders $7.69 in cash and 0.97 shares of Ligand common stock per ALRT share. In completing the transaction, Ligand paid $25 million in cash and issued 3,166,567 shares of stock. Ligand's common stock was priced at $14.65625, based on the average of the closing price for the trading days between Oct. 23 and Nov. 19. (See BioWorld Today, Sept. 26, 1997, p. 1.)

Ligand's stock (NASDAQ:LGND) closed at $13.12, down $0.81. After the ALRT buyout, Ligand has approximately 36 million shares of common stock outstanding.

"The venture was very successful," said Paul Maier, senior vice president and chief financial officer for Ligand. "This is a situation where everyone — Ligand, Allergan and the shareholder — profits from the transaction."

ALRT was formed in 1994 by Ligand and Allergan to accelerate development of retinoid products previously being pursued in the Ligand-Allergan joint venture. On June 3, 1995, ALRT went public with 3.25 million units at $10 per unit, consisting of one share of callable common stock in ALRT and two warrants for Ligand common stock.

With Ligand purchasing all of the callable stock, ALRT becomes a wholly owned subsidiary that will continue to develop retinoids. Allergan exercised its option to obtain one-half interest in the assets and technologies of ALRT, paying $8.9 million in cash and participating in a lottery with Ligand to divvy up ALRT's approximately 2,000 retinoid compounds.

"It was a little like the NFL draft," Maier said. "We divided the compounds into categories and chose the categories we wished to develop in a predetermined manner. It allowed us to make a clean split of all the assets from ALRT."

Ligand retains the rights to Panretin, a topical gel that has shown positive results in Phase III trials for the treatment of Kaposi's sarcoma. A new drug application for the product is expected to be filed late this year or early next year.

Allergan will receive 15 percent of the North American sales revenue and 10 percent of overseas sales revenue should the product come to market.

An oral form of Panretin is in Phase III clinical studies for the treatment of acute promyelocytic leukemia. Ligand retains the sales rights to that product as well, and Allergan would receive the same royalties.

To further develop retinoids for the treatment of diabetes, Ligand inked a $190 million deal with Eli Lilly and Co., of Indianapolis, which includes the lead retinoid X receptor agonist, Oral Targretin. Ligand has agreed to pay Allergan $4.5 million, plus a third of any milestone payments for Targretin from Lilly, plus 6 percent of net sales or 50 percent of royalties payable to Ligand, whichever is greater. (See BioWorld Today, Oct. 21, 1997, p. 1.)

All other products that Ligand or Allergan develop separately involve royalty payments to the other partner and will vary according to compound.

"The technology in the Lilly collaboration is broader than what was in the ALRT venture," Maier said. "One of the conditions for the Lilly deal was to complete the buyout of ALRT." *

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