AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 2003
REGISTRATION STATEMENT NO. 333-109172
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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LIGAND PHARMACEUTICALS INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
77-0160744
(I.R.S. Employer Identification Number)
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10275 Science Center Drive, San Diego, California 92121-1117
(858) 550-7500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------------------
David E. Robinson
President and Chief Executive Officer
LIGAND PHARMACEUTICALS INCORPORATED
10275 Science Center Drive, San Diego, California 92121-1117
(858) 550-7500
(Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent for Service)
------------------------------------
Copies to:
Faye H. Russell, Esq.
CLIFFORD CHANCE US LLP
3811 Valley Centre Drive, Suite 200
San Diego, California 92130
(858) 720-3500
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [x]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
================================================================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THE PRELIMINARY PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 8, 2003
PRELIMINARY PROSPECTUS
LIGAND PHARMACEUTICALS INCORPORATED
3,483,593 SHARES OF COMMON STOCK
This prospectus relates to the public offering, which is not being underwritten,
of 3,483,593 shares of our common stock, which is held by some of our current
stockholders. These stockholders acquired the shares directly from us in a
private placement completed on September 11, 2003.
Our common stock is traded on The Nasdaq Stock Market under the symbol "LGND."
On October 7, 2003, the average of the high and low sales prices for our common
stock was $12.62.
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THE COMMON STOCK OFFERED INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 7 FOR A DISCUSSION OF SOME IMPORTANT RISKS YOU SHOULD
CONSIDER BEFORE BUYING ANY OF OUR COMMON STOCK.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------------------
The date of this prospectus is ___________, ____
PROSPECTUS SUMMARY
THE FOLLOWING IS A SUMMARY HIGHLIGHTING SELECTED INFORMATION APPEARING ELSEWHERE
IN THIS PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT
TO YOU. THIS PROSPECTUS INCLUDES INFORMATION ABOUT THE SECURITIES WE ARE
OFFERING, AS WELL AS INFORMATION REGARDING OUR BUSINESS AND DETAILED FINANCIAL
DATA. WE ENCOURAGE YOU TO READ THIS PROSPECTUS IN ITS ENTIRETY, INCLUDING THE
DOCUMENTS INCORPORATED BY REFERENCE.
OUR COMPANY
We are a biopharmaceutical company involved in the discovery, development and
commercialization of new drugs that address critical unmet medical needs in the
areas of cancer, pain, men's and women's health or hormone related health
issues, skin diseases, osteoporosis and metabolic, cardiovascular and
inflammatory diseases. Our marketed products and products in development are
designed to be safer, more effective, more convenient (taken orally or topically
administered) and more cost efficient than existing therapies.
We currently market five products and are developing, either exclusively or with
our collaboration partners, 24 selected additional products in development for
multiple therapeutic indications, as summarized in the table below. Our five
marketed products are Avinza(R), ONTAK(R), Targretin(R) capsules, Targretin(R)
gel and Panretin(R) gel. Our efforts are directed toward building a profitable
biopharmaceutical company that generates income from biopharmaceutical products
that we develop and market, and from research, milestone and royalty revenues
from our collaborations with large pharmaceutical partners.
PRODUCT SUMMARY BY THERAPEUTIC AREA (LIGAND AND COLLABORATIVE PARTNERS)
MARKETED PRODUCTS CLINICAL PROGRAMS PRE-CLINICAL PROGRAMS
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(5 PRODUCTS) (4 PHASE III/7 PHASE II/6 PHASE I PRODUCTS IN (7 PRODUCTS IN DEVELOPMENT)
DEVELOPMENT)
Cancer Cancer Aging and frailty
Moderate/Severe Pain Hormone replacement therapy Autoimmune diseases
Osteoporosis Dermatology
Dermatology Diabetes
Diabetes Hormone replacement therapy
Inflammation Inflammatory diseases
Thrombocytopenia Sexual dysfunction
Dyslipidemia
Contraception
OUR MARKETED PRODUCTS
PRODUCT US APPROVED INDICATION EUROPEAN STATUS
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Avinza....................... Once-daily treatment of chronic moderate-to-severe Not applicable
pain
ONTAK........................ Cutaneous T-cell lymphoma MAA withdrawn
Targretin capsules........... Cutaneous T-cell lymphoma MA issued
Targretin gel................ Cutaneous T-cell lymphoma MAA withdrawn
Panretin gel................. Kaposi's sarcoma MA issued
AVINZA. Avinza is marketed for the once-daily treatment of chronic
moderate-to-severe pain to patients who require continuous, around-the-clock
opioid therapy. We launched US sales and marketing of Avinza with distribution
in June 2002 and national promotion in July 2002 following receipt of FDA
approval in March 2002. We licensed exclusive rights to Avinza in the United
States and Canada from Elan Corporation plc in 1998. Avinza is an oral
once-daily morphine product and has a more rapid onset and more stable
pharmocokinetic profile with less peak-to-trough fluctuation than other
competing sustained release products. The sustained-release opioid market was
estimated at $2.8 billion in the United States in 2002.
ONTAK. ONTAK is marketed for the treatment of patients with persistent or
recurrent cutaneous T-cell lymphoma, or CTCL. ONTAK was approved by the FDA and
launched in the United States in February 1999 as our first product for the
treatment of patients with CTCL. ONTAK was the first treatment to be approved
for CTCL in nearly 10 years. ONTAK is currently in three Phase II clinical
trials for the treatment of patients with B-cell Non-Hodgkin's lymphoma.
Clinical trials using ONTAK for the treatment of patients with psoriasis,
rheumatoid arthritis and chronic lymphocytic leukemia, or CLL, have also been
conducted, and further trials are being considered. There are
physician-sponsored Phase II trials ongoing in CLL, peripheral T-cell lymphoma
and graft versus host disease. We believe that these indications provide
significantly larger market opportunities than CTCL. A European MAA for CTCL was
filed in December 2001. In April 2003, we withdrew our MAA in Europe for our
first generation product. It was our assessment that the cost of the additional
clinical and technical information requested by the European Agency for the
Evaluation of Medicinal Products for the first generation product would be
better spent on acceleration of the second generation ONTAK development. We
expect to resubmit the MAA in Europe with the second generation product in 2004
or early 2005.
TARGRETIN CAPSULES. Targretin capsules are marketed for the treatment of
patients with CTCL. We launched US sales and marketing of Targretin capsules in
January 2000 following receipt of FDA approval in December 1999. Targretin
capsules offer the convenience of a daily oral dose administered by the patient
at home. We are developing Targretin capsules for a variety of larger market
opportunities, including non-small cell lung cancer, or NSCLC, and
moderate-to-severe plaque psoriasis. In March 2001, the European Commission
granted marketing authorization for Targretin capsules in Europe for the
treatment of patients with CTCL, and our network of distributors began marketing
the drug in Europe in the fourth quarter of 2001.
TARGRETIN GEL. Targretin gel is marketed for the treatment of patients with
CTCL. We launched US sales and marketing of Targretin gel in September 2000
following receipt of FDA approval in June 2000. Targretin gel offers patients
with refractory, early-stage CTCL a novel, non-invasive, self-administered
treatment topically applied only to the affected areas of the skin. Preliminary
data presented at the American Academy of Dermatology meeting in March 2001
showed that Targretin gel produced an overall response rate of 75% in patients
with untreated, early-stage CTCL. Targretin gel is currently in clinical
development for hand dermatitis, and we released interim Phase I/II data from a
55-patient trial in September 2002.
PANRETIN GEL. Panretin gel is marketed for the treatment of patients with
AIDS-related Kaposi's sarcoma, or KS. Panretin gel was approved by the FDA and
launched in February 1999 as the first FDA-approved patient-applied topical
treatment for AIDS-related Kaposi's sarcoma. Panretin gel represents a
non-invasive option to the traditional management of this disease. Most approved
therapies require the time and expense of periodic visits to a healthcare
facility, where treatment is administered by a doctor or nurse. AIDS-related KS
adversely affects the quality of life of thousands of people in the United
States and Europe. Panretin gel was approved in Europe for the treatment of
patients with KS in October 2000, and was launched through our distributor
network in the fourth quarter of 2001 in Europe.
2
SALES AND MARKETING
As of June 30, 2003, our marketing and selling organization consisted of
approximately 120 people. Since 1998, we had assembled a 25-person sales force
for the United States focused on specialty cancer sales and selling ONTAK,
Targretin capsules, Targretin gel and Panretin gel. We have also formed a
separate sales force of approximately 70 representatives to market only Avinza
by targeting pain specialists and general pain centers not currently served by
our specialty cancer representatives. Since a relatively small number of
physicians are responsible for writing a majority of prescriptions in our target
markets, we believe that the size of our sales force is appropriate to reach our
target physicians.
In addition, in February 2003 we entered into an agreement with Organon
Pharmaceuticals USA Inc., a business unit of Akzo Nobel N.V., under which we
co-promote Avinza with Organon's primary care, hospital (anesthesiology) and
specialty (pain centers) sales forces, which together consist of more than 700
sales representatives.
COLLABORATIVE RESEARCH AND DEVELOPMENT PROGRAMS
We are currently involved in the research phase of research and development
collaborations with Eli Lilly and TAP Pharmaceuticals. Collaborations in the
development phase are being pursued by Abbott Laboratories, Allergan,
GlaxoSmithKline, Organon (Akzo-Nobel), Pfizer and Wyeth (formerly American Home
Products). Currently, our corporate partners have 11 Ligand products in human
development, three products moving toward regulatory filings for human clinical
trials and numerous compounds in research and pre-clinical stages. These
products are being studied for the treatment of health problems in large markets
such as osteoporosis, diabetes, contraception and cardiovascular disease. Three
of these partner products are being tested in three separate pivotal Phase III
clinical trial programs: lasofoxifene, which is being developed by Pfizer for
osteoporosis and breast cancer prevention; and bazedoxifene (formerly TSE-424),
which is being developed by Wyeth both as monotherapy for osteoporosis and in
combination with Wyeth's Premarin as hormone replacement therapy, or HRT.
PROPRIETARY TECHNOLOGY PLATFORM
Internal and collaborative research and development programs are built around
our proprietary science technology, which is based on our leadership position in
gene transcription technology, a technology for regulating how genes control
cellular activity. Our proprietary technologies involve two natural mechanisms
that regulate gene activity: hormone-activated intracellular receptors, or IRs,
a type of sensor or switch inside cells that turns genes on and off and alters
the production of proteins in response to hormones, and Signal Transducers and
Activators of Transcription, or STATs, another type of protein production
switch. Targretin capsules, Targretin gel, Panretin gel and all but one of our
corporate partner products currently on human development track were discovered
using our IR technology.
PRODUCT PIPELINE SUMMARY
We are developing several proprietary products for which we have worldwide
rights for a variety of cancers, skin diseases and other indications, as
summarized in the table below. Many of the indications being pursued may present
larger market opportunities for our currently marketed products. Our clinical
development programs are primarily based on products discovered through our IR
technology, with the exception of ONTAK, which was developed using Seragen's
fusion protein technology, and Avinza, which was developed by Elan. Five of the
products in our proprietary product development programs are retinoids,
discovered and developed using our proprietary IR technology. Our research is
based on both our IR and STAT technologies. In addition to our proprietary
product pipeline, our collaborative partners have multiple products in human
development, as well as numerous compounds in research and pre-clinical stages.
3
PRODUCT PIPELINE SUMMARY (CONTINUED)
PRODUCT CLINICAL INDICATION DEVELOPMENT COMMERCIALIZATION RIGHTS
STATUS
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OUR MARKETED PRODUCTS AND DEVELOPMENT PROGRAMS
Avinza..................... Chronic pain (moderate-to-severe) Marketed United States and Canada
ONTAK...................... Cutaneous T-cell lymphoma Marketed Worldwide
Peripheral T-cell lymphoma Phase II
Chronic lymphocytic leukemia Phase II
B-cell Non-Hodgkin's lymphoma Phase II
Psoriasis (severe) Phase II
Targretin capsules......... Cutaneous T-cell lymphoma Marketed Worldwide
Non-small cell lung cancer Phase III
(combination and monotherapy)
Psoriasis (moderate to severe) Phase II
Advanced breast cancer Phase II
Renal cell cancer Phase II
Targretin gel.............. Cutaneous T-cell lymphoma Marketed Worldwide
Hand dermatitis Phase II
Psoriasis Phase II
Panretin gel............... Kaposi's sarcoma Marketed Worldwide
Panretin capsules.......... Kaposi's sarcoma, bronchial metaplasia Phase II Worldwide
LGD 1550................... Advanced cancers Phase II Worldwide
Acne, psoriasis Pre-clinical
LGD 1331................... Acne, prostate cancer, androgenetic Pre-clinical Worldwide
alopecia, hirsutism
Glucocorticoid agonist..... Inflammation, cancer Pre-clinical Worldwide
Mineralocorticoid receptor
modulators.............. Congestive heart failure, hypertension Research Worldwide
OUR COLLABORATIVE RESEARCH AND DEVELOPMENT PROGRAMS
Lasofoxifene............... Osteoporosis and breast cancer prevention Phase III Pfizer
Bazedoxifene (TSE424)...... Osteoporosis Phase III Wyeth
Bazedoxifene + Premarin.... Hormone replacement therapy Phase III Wyeth
ERA 923.................... Breast cancer Phase II Wyeth
NSP 989.................... Contraception, hormone replacement therapy Phase I Wyeth
NSP 989 combo.............. Contraception Phase I Wyeth
GW 516 (501516)............ Dyslipidemia Phase I GlaxoSmithKline
LY 929..................... Type II diabetes, dyslipidemia Phase I Lilly
LY 818..................... Type II diabetes Phase II Lilly
SB-497115.................. Thrombocytopenia Phase I GlaxoSmithKline
LY 674..................... Dyslipidemia, atherosclerosis Phase I Lilly
LGD 2226/back-ups.......... Sexual dysfunction--hypogonadism IND Track TAP
LY YYY..................... Type II diabetes, dyslipidemia IND Track Lilly
LY WWW..................... Dyslipidemia IND Track Lilly
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4
Our principal executive offices are located at 10275 Science Center Drive, San
Diego, California 92121, and our telephone number is (858) 550-7500. Our website
is located at WWW.LIGAND.COM. The information on our website is not a part of
this prospectus.
Our trademarks, trade names and service marks referenced in this document
include Ligand(R), Avinza(R), ONTAK(R), Panretin(R) and Targretin(R). Each other
trademark, trade name or service mark appearing in this document belongs to its
holder.
Reference to Ligand Pharmaceuticals Incorporated, "Ligand," the "Company," "we"
or "our" include Ligand's wholly owned subsidiaries, Glycomed Incorporated,
Ligand Pharmaceuticals (Canada) Incorporated, Ligand Pharmaceuticals
International, Inc., and Seragen, Inc.
RECENT DEVELOPMENTS
UPDATES ON PATIENT ENROLLMENT IN PIVOTAL STUDIES OF TARGRETIN CAPSULES IN LUNG
CANCER
On August 14, 2003, we announced that we had exceeded our 600-patient
enrollment goal in the first of two pivotal Phase III studies of Targretin
capsules in front-line combination therapy to treat advanced NSCLC, and on
September 18, 2003, we announced that we had exceeded our 600-patient enrollment
goal in the second of these studies.
These randomized trials are known as SPIRIT I and II (Studies Providing
Investigational Research in Targretin). SPIRIT I is being conducted at 94 sites
worldwide and is designed to evaluate whether adding Targretin to front-line
cisplatin/vinorelbine chemotherapy extends the lives of patients with advanced
NSCLC. SPIRIT II is being conducted at 165 sites worldwide, more than 80% of
which are in North America, and is designed to evaluate whether adding Targretin
to front-line carboplatin/paclitaxel chemotherapy extends the lives of patients
with advanced NSCLC.
5
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISKS AND UNCERTAINTIES BEFORE PURCHASING OUR
SECURITIES. EACH OF THESE RISKS AND UNCERTAINTIES COULD ADVERSELY AFFECT OUR
BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION, AS WELL AS THE VALUE OF AN
INVESTMENT IN OUR SECURITIES.
RISKS RELATED TO US AND OUR BUSINESS
OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION INVOLVES A NUMBER OF
UNCERTAINTIES, AND WE MAY NEVER GENERATE SUFFICIENT REVENUES FROM THE SALE OF
PRODUCTS TO BECOME PROFITABLE.
We were founded in 1987. We have incurred significant losses since our
inception. At June 30, 2003, our accumulated deficit was approximately $651
million. To date, we have received the majority of our revenues from our
collaborative arrangements and only began receiving revenues from the sale of
pharmaceutical products in 1999. To become profitable, we must successfully
develop, clinically test, market and sell our products. Even if we achieve
profitability, we cannot predict the level of that profitability or whether we
will be able to sustain profitability. We expect that our operating results will
fluctuate from period to period as a result of differences in when we incur
expenses and receive revenues from product sales, collaborative arrangements and
other sources. Some of these fluctuations may be significant.
Most of our products in development will require extensive additional
development, including preclinical testing and human studies, as well as
regulatory approvals, before we can market them. We cannot predict if or when
any of the products we are developing or those being co-developed with our
partners will be approved for marketing. There are many reasons that we or our
collaborative partners may fail in our efforts to develop our other potential
products, including the possibility that:
>> preclinical testing or human studies may show that our potential products
are ineffective or cause harmful side effects;
>> the products may fail to receive necessary regulatory approvals from the
FDA or foreign authorities in a timely manner, or at all;
>> the products, if approved, may not be produced in commercial quantities or
at reasonable costs;
>> the products, once approved, may not achieve commercial acceptance;
>> regulatory or governmental authorities may apply restrictions to our
products, which could adversely affect their commercial success; or
>> the proprietary rights of other parties may prevent us or our partners from
marketing the products.
WE ARE BUILDING MARKETING AND SALES CAPABILITIES IN THE UNITED STATES AND EUROPE
WHICH IS AN EXPENSIVE AND TIME-CONSUMING PROCESS AND MAY INCREASE OUR OPERATING
LOSSES.
Developing the sales force to market and sell products is a difficult, expensive
and time-consuming process. We have developed a US sales force of about 95
people. We also rely on third-party distributors to distribute our products. The
distributors are responsible for providing many marketing support services,
including customer service, order entry, shipping, billing and customer
reimbursement assistance. In Europe, we will rely initially on other companies
to distribute and market our products. We have entered into agreements for the
marketing and distribution of our products in territories such as the United
Kingdom, Germany, France, Spain, Portugal, Greece, Italy and Central and South
America and have established a subsidiary, Ligand Pharmaceuticals International,
Inc., with a branch in London, England, to coordinate our European marketing and
operations. Our reliance on these third parties means our results may suffer if
any of them are unsuccessful or fail to perform as expected. We may not be able
to continue to expand our sales and marketing capabilities sufficiently to
successfully commercialize our products in the territories where they receive
marketing approval. With respect to our co-promotion or licensing arrangements,
for example our co-promotion agreement for Avinza, any revenues we receive will
depend substantially on the marketing and sales efforts of others, which may or
may not be successful.
6
OUR SMALL NUMBER OF PRODUCTS MEANS OUR RESULTS ARE VULNERABLE TO SETBACKS WITH
RESPECT TO ANY ONE PRODUCT.
We currently have only five products approved for marketing and a handful of
other products/indications that have made significant progress through
development. Because these numbers are small, especially the number of marketed
products, any significant setback with respect to any one of them could
significantly impair our operating results and/or reduce the market prices for
our securities. Setbacks could include problems with shipping, distribution,
manufacturing, product safety, marketing, government licenses and approvals,
intellectual property rights and physician or patient acceptance of the product.
SALES OF OUR SPECIALTY PHARMACEUTICAL PRODUCTS MAY SIGNIFICANTLY FLUCTUATE EACH
PERIOD BASED ON THE NATURE OF OUR PRODUCTS, OUR PROMOTIONAL ACTIVITIES AND
WHOLESALER PURCHASING AND STOCKING PATTERNS.
Excluding Avinza, our products are small-volume specialty pharmaceutical
products that address the needs of cancer patients in relatively small niche
markets with substantial geographical fluctuations in demand. To ensure patient
access to our drugs, we maintain broad distribution capabilities with
inventories held at approximately 150 locations throughout the United States.
Furthermore, the purchasing and stocking patterns of our wholesaler customers
are influenced by a number of factors that vary with each product, including but
not limited to overall level of demand, periodic promotions, required minimum
shipping quantities and wholesaler competitive initiatives. As a result, the
level of product in the distribution channel may average from two to six months'
worth of projected inventory usage. If any or all of our major distributors
decide to substantially reduce the inventory they carry in a given period, our
sales for that period could be substantially lower than historical levels.
OUR DRUG DEVELOPMENT PROGRAMS WILL REQUIRE SUBSTANTIAL ADDITIONAL FUTURE FUNDING
WHICH COULD HURT OUR OPERATIONAL AND FINANCIAL CONDITION.
Our drug development programs require substantial additional capital to
successfully complete them, arising from costs to:
>> conduct research, preclinical testing and human studies;
>> establish pilot scale and commercial scale manufacturing processes and
facilities; and
>> establish and develop quality control, regulatory, marketing, sales and
administrative capabilities to support these programs.
Our future operating and capital needs will depend on many factors, including:
>> the pace of scientific progress in our research and development programs
and the magnitude of these programs;
>> the scope and results of preclinical testing and human studies;
>> the time and costs involved in obtaining regulatory approvals;
>> the time and costs involved in preparing, filing, prosecuting, maintaining
and enforcing patent claims, competing technological and market
developments;
>> our ability to establish additional collaborations;
>> changes in our existing collaborations;
>> the cost of manufacturing scale-up; and
>> the effectiveness of our commercialization activities.
We currently estimate our research and development expenditures over the next 3
years to range between $200 million and $275 million. However, we base our
outlook regarding the need for funds on many uncertain variables. Such
uncertainties include regulatory approvals, the timing of events outside our
direct control such as product launches by partners and the success of such
product launches, negotiations with potential strategic partners and other
factors. Any of these uncertain events can significantly change our cash
requirements as they determine such one-time events as the receipt of major
milestones and other payments.
7
While we expect to fund our research and development activities from cash
generated from internal operations to the extent possible, if we are unable to
do so we may need to complete additional equity or debt financings or seek other
external means of financing. If additional funds are required to support our
operations and we are unable to obtain them on terms favorable to us, we may be
required to cease or reduce further development or commercialization of our
products, to sell some or all of our technology or assets or to merge with
another entity.
SOME OF OUR KEY TECHNOLOGIES HAVE NOT BEEN USED TO PRODUCE MARKETED PRODUCTS AND
MAY NOT BE CAPABLE OF PRODUCING SUCH PRODUCTS.
To date, we have dedicated most of our resources to the research and development
of potential drugs based upon our expertise in our IR and STAT technologies.
Even though there are marketed drugs that act through IRs, some aspects of our
IR technologies have not been used to produce marketed products. In addition, we
are not aware of any drugs that have been developed and successfully
commercialized that interact directly with STATs. Much remains to be learned
about the location and function of IRs and STATs. If we are unable to apply our
IR and STAT technologies to the development of our potential products, we will
not be successful in developing new products.
WE MAY REQUIRE ADDITIONAL MONEY TO RUN OUR BUSINESS AND MAY BE REQUIRED TO RAISE
THIS MONEY ON TERMS WHICH ARE NOT FAVORABLE OR WHICH REDUCE OUR STOCK PRICE.
We have incurred losses since our inception and may not generate positive cash
flow to fund our operations for one or more years. As a result, we may need to
complete additional equity or debt financings to fund our operations. Our
inability to obtain additional financing could adversely affect our business.
Financings may not be available at all or on favorable terms. In addition, these
financings, if completed, still may not meet our capital needs and could result
in substantial dilution to our stockholders. For instance, in February and March
2002 we issued to Elan an aggregate of 6.3 million shares upon the conversion of
zero coupon convertible senior notes held by Elan, and in April 2002 and
September 2003 we issued an aggregate of 7.7 million shares of our common stock
in private placements. These transactions have resulted in the issuance of
significant numbers of new shares. In addition, in November 2002 we issued in a
private placement $155.3 million in aggregate principal amount of our 6%
convertible subordinated notes due 2007, which could be converted into
25,149,025 shares of our common stock.
If adequate funds are not available, we may be required to delay, reduce the
scope of or eliminate one or more of our research or drug development programs,
or our marketing and sales initiatives. Alternatively, we may be forced to
attempt to continue development by entering into arrangements with collaborative
partners or others that require us to relinquish some or all of our rights to
technologies or drug candidates that we would not otherwise relinquish.
OUR PRODUCTS FACE SIGNIFICANT REGULATORY HURDLES PRIOR TO MARKETING WHICH COULD
DELAY OR PREVENT SALES. EVEN AFTER APPROVAL, GOVERNMENT REGULATION OF OUR
BUSINESS IS EXTENSIVE.
Before we obtain the approvals necessary to sell any of our potential products,
we must show through preclinical studies and human testing that each product is
safe and effective. We and our partners have a number of products moving toward
or currently in clinical trials, the most significant of which are our Phase III
trials for Targretin capsules in NSCLC and three Phase III trials by our
partners involving bazedoxifene and lasofoxifene. Failure to show any product's
safety and effectiveness would delay or prevent regulatory approval of the
product and could adversely affect our business. The clinical trials process is
complex and uncertain. The results of preclinical studies and initial clinical
trials may not necessarily predict the results from later large-scale clinical
trials. In addition, clinical trials may not demonstrate a product's safety and
effectiveness to the satisfaction of the regulatory authorities. A number of
companies have suffered significant setbacks in advanced clinical trials or in
seeking regulatory approvals, despite promising results in earlier trials. The
FDA may also require additional clinical trials after regulatory approvals are
received, which could be expensive and time-consuming, and failure to
successfully conduct those trials could jeopardize continued commercialization.
8
The rate at which we complete our clinical trials depends on many factors,
including our ability to obtain adequate supplies of the products to be tested
and patient enrollment. Patient enrollment is a function of many factors,
including the size of the patient population, the proximity of patients to
clinical sites and the eligibility criteria for the trial. For example, each of
our Phase III Targretin clinical trials will involve approximately 600 patients
and may require significant time and investment to complete, including
enrollment of patients and the gathering and analyzing of data. Delays in
patient enrollment may result in increased costs and longer development times.
In addition, our collaborative partners have rights to control product
development and clinical programs for products developed under the
collaborations. As a result, these collaborators may conduct these programs more
slowly or in a different manner than we had expected. Even if clinical trials
are completed, we or our collaborative partners still may not apply for FDA
approval in a timely manner or the FDA still may not grant approval.
In addition, the manufacturing and marketing of approved products is subject to
extensive government regulation, including by the FDA, Drug Enforcement Agency
(or DEA) and state and other territorial authorities. The FDA administers
processes to assure that marketed products are safe, effective, consistently of
uniform, high quality and marketed only for approved indications. For example,
while our products are prescribed legally by some physicians for unapproved
uses, we may not market our products for such uses. Failure to comply with
applicable regulatory requirements can result in sanctions up to the suspension
of regulatory approval as well as civil and criminal sanctions.
WE FACE SUBSTANTIAL COMPETITION WHICH MAY LIMIT OUR REVENUES.
Some of the drugs that we are developing and marketing will compete with
existing treatments. In addition, several companies are developing new drugs
that target the same diseases that we are targeting and are taking IR-related
and STAT-related approaches to drug development. The principal products
competing with our products targeted at the cutaneous t-cell lymphoma market are
Supergen/Abbott's Nipent and interferon, which is marketed by a number of
companies, including Schering-Plough's Intron A. Products that compete with
Avinza include Purdue Pharma L.P.'s OxyContin and MS Contin, Janssen
Pharmaceutica Products, L.P.'s Duragesic, Elan's Oramorph SR, Faulding's Kadian
and generic sustained release morphine sulfate. Many of our existing or
potential competitors, particularly large drug companies, have greater
financial, technical and human resources than us and may be better equipped to
develop, manufacture and market products. Many of these companies also have
extensive experience in preclinical testing and human clinical trials, obtaining
FDA and other regulatory approvals and manufacturing and marketing
pharmaceutical products. In addition, academic institutions, governmental
agencies and other public and private research organizations are developing
products that may compete with the products we are developing. These
institutions are becoming more aware of the commercial value of their findings
and are seeking patent protection and licensing arrangements to collect payments
for the use of their technologies. These institutions also may market
competitive products on their own or through joint ventures and will compete
with us in recruiting highly qualified scientific personnel.
THIRD-PARTY REIMBURSEMENT AND HEALTH CARE REFORM POLICIES MAY REDUCE OUR FUTURE
SALES.
Sales of prescription drugs depend significantly on the availability of
reimbursement to the consumer from third party payers, such as government and
private insurance plans. These third party payers frequently require drug
companies to provide predetermined discounts from list prices, and they are
increasingly challenging the prices charged for medical products and services.
Our current and potential products may not be considered cost-effective, and
reimbursement to the consumer may not be available or sufficient to allow us to
sell our products on a competitive basis. For example, we have current and
recurring discussions with insurers regarding reimbursement rates for our drugs,
including Avinza. We may not be able to negotiate favorable reimbursement rates
for our products or may have to pay significant discounts to obtain favorable
rates. Only one of our products, ONTAK, is currently eligible to be reimbursed
by Medicare. Recently-enacted changes by Medicare to the hospital outpatient
payment reimbursement system may adversely affect reimbursement rates for ONTAK.
9
In addition, the efforts of governments and third-party payers to contain or
reduce the cost of health care will continue to affect the business and
financial condition of drug companies such as us. A number of legislative and
regulatory proposals to change the health care system have been discussed in
recent years, including price caps and controls for pharmaceuticals. These
proposals could reduce and/or cap the prices for our products or reduce
government reimbursement rates for products such as ONTAK. In addition, an
increasing emphasis on managed care in the United States has and will continue
to increase pressure on drug pricing. We cannot predict whether legislative or
regulatory proposals will be adopted or what effect those proposals or managed
care efforts may have on our business. The announcement and/or adoption of such
proposals or efforts could adversely affect our profit margins and business.
WE RELY HEAVILY ON COLLABORATIVE RELATIONSHIPS AND TERMINATION OF ANY OF THESE
PROGRAMS COULD REDUCE THE FINANCIAL RESOURCES AVAILABLE TO US, INCLUDING
RESEARCH FUNDING AND MILESTONE PAYMENTS.
Our strategy for developing and commercializing many of our potential products,
including products aimed at larger markets, includes entering into
collaborations with corporate partners, licensors, licensees and others. These
collaborations provide us with funding and research and development resources
for potential products for the treatment or control of metabolic diseases,
hematopoiesis, women's health disorders, inflammation, cardiovascular disease,
cancer and skin disease, and osteoporosis. These agreements also give our
collaborative partners significant discretion when deciding whether or not to
pursue any development program. Our collaborations may not continue or be
successful.
In addition, our collaborators may develop drugs, either alone or with others,
that compete with the types of drugs they currently are developing with us. This
would result in less support and increased competition for our programs. If
products are approved for marketing under our collaborative programs, any
revenues we receive will depend on the manufacturing, marketing and sales
efforts of our collaborators, who generally retain commercialization rights
under the collaborative agreements. Our current collaborators also generally
have the right to terminate their collaborations under specified circumstances.
If any of our collaborative partners breach or terminate their agreements with
us or otherwise fail to conduct their collaborative activities successfully, our
product development under these agreements will be delayed or terminated.
We may have disputes in the future with our collaborators, including disputes
concerning which of us owns the rights to any technology developed. For
instance, we were involved in litigation with Pfizer, which we settled in April
1996, concerning our right to milestones and royalties based on the development
and commercialization of droloxifene. These and other possible disagreements
between us and our collaborators could delay our ability and the ability of our
collaborators to achieve milestones or our receipt of other payments. In
addition, any disagreements could delay, interrupt or terminate the
collaborative research, development and commercialization of certain potential
products, or could result in litigation or arbitration. The occurrence of any of
these problems could be time-consuming and expensive and could adversely affect
our business. Challenges to or failure to secure patents and other proprietary
rights may significantly hurt our business. Our success will depend on our
ability and the ability of our licensors to obtain and maintain patents and
proprietary rights for our potential products and to avoid infringing the
proprietary rights of others, both in the United States and in foreign
countries. Patents may not be issued from any of these applications currently on
file, or, if issued, may not provide sufficient protection. In addition,
disputes with licensors under our license agreements may arise which could
result in additional financial liability or loss of important technology and
potential products and related revenue, if any.
Our patent position, like that of many pharmaceutical companies, is uncertain
and involves complex legal and technical questions for which important legal
principles are unresolved. We may not develop or obtain rights to products or
processes that are patentable. Even if we do obtain patents, they may not
adequately protect the technology we own or have licensed. In addition, others
may challenge, seek to invalidate, infringe or circumvent any patents we own or
license, and rights we receive under those patents may not provide competitive
advantages to us. Further, the manufacture, use or sale of our products may
infringe the patent rights of others.
10
Several drug companies and research and academic institutions have developed
technologies, filed patent applications or received patents for technologies
that may be related to our business. Others have filed patent applications and
received patents that conflict with patents or patent applications we have
licensed for our use, either by claiming the same methods or compounds or by
claiming methods or compounds that could dominate those licensed to us. In
addition, we may not be aware of all patents or patent applications that may
impact our ability to make, use or sell any of our potential products. For
example, US patent applications may be kept confidential while pending in the
Patent and Trademark Office and patent applications filed in foreign countries
are often first published six months or more after filing. Any conflicts
resulting from the patent rights of others could significantly reduce the
coverage of our patents and limit our ability to obtain meaningful patent
protection. While we routinely receive communications or have conversations with
the owners of other patents, none of these third parties have directly
threatened an action or claim against us. If other companies obtain patents with
conflicting claims, we may be required to obtain licenses to those patents or to
develop or obtain alternative technology. We may not be able to obtain any such
licenses on acceptable terms, or at all. Any failure to obtain such licenses
could delay or prevent us from pursuing the development or commercialization of
our potential products.
We have had and will continue to have discussions with our current and potential
collaborators regarding the scope and validity of our patents and other
proprietary rights. If a collaborator or other party successfully establishes
that our patent rights are invalid, we may not be able to continue our existing
collaborations beyond their expiration. Any determination that our patent rights
are invalid also could encourage our collaborators to terminate their agreements
where contractually permitted. Such a determination could also adversely affect
our ability to enter into new collaborations.
We may also need to initiate litigation, which could be time-consuming and
expensive, to enforce our proprietary rights or to determine the scope and
validity of others' rights. If litigation results, a court may find our patents
or those of our licensors invalid or may find that we have infringed on a
competitor's rights. If any of our competitors have filed patent applications in
the United States which claim technology we also have invented, the Patent and
Trademark Office may require us to participate in expensive interference
proceedings to determine who has the right to a patent for the technology.
We have learned that Hoffmann-La Roche Inc. has received a US patent and has
made patent filings in foreign countries that relate to our Panretin capsules
and gel products. We filed a patent application with an earlier filing date than
Hoffmann-La Roche's patent, which we believe is broader than, but overlaps in
part with, Hoffmann-La Roche's patent. We believe we were the first to invent
the relevant technology and therefore are entitled to a patent on the
application we filed. The Patent and Trademark Office has initiated a proceeding
to determine whether we or Hoffmann-La Roche are entitled to a patent. We may
not receive a favorable outcome in the proceeding. In addition, the proceeding
may delay the Patent and Trademark Office's decision regarding our earlier
application. If we do not prevail, the Hoffmann-La Roche patent might block our
use of Panretin capsules and gel in specified cancers.
We have also learned that Novartis AG has filed an opposition to our European
patent that covers the principal active ingredient of our ONTAK drug. We are
currently investigating the scope and merits of this opposition. If the
opposition is successful, we could lose our ONTAK patent protection in Europe
which could substantially reduce our future ONTAK sales in that region. We could
also incur substantial costs in asserting our rights in this opposition
proceeding, as well as in other interference proceedings in the United States.
We also rely on unpatented trade secrets and know-how to protect and maintain
our competitive position. We require our employees, consultants, collaborators
and others to sign confidentiality agreements when they begin their relationship
with us. These agreements may be breached, and we may not have adequate remedies
for any breach. In addition, our competitors may independently discover our
trade secrets.
11
RELIANCE ON THIRD-PARTY MANUFACTURERS TO SUPPLY OUR PRODUCTS RISKS SUPPLY
INTERRUPTION OR CONTAMINATION AND DIFFICULTY CONTROLLING COSTS.
We currently have no manufacturing facilities, and we rely on others for
clinical or commercial production of our marketed and potential products. In
addition, certain raw materials necessary for the commercial manufacturing of
our products are custom and must be obtained from a specific sole source. Elan
manufactures Avinza for us, Cambrex manufactures ONTAK for us and Cardinal
Health and Raylo manufacture Targretin capsules for us.
To be successful, we will need to ensure continuity of the manufacture of our
products, either directly or through others, in commercial quantities, in
compliance with regulatory requirements and at acceptable cost. Any extended and
unplanned manufacturing shutdowns could be expensive and could result in
inventory and product shortages. While we believe that we would be able to
develop our own facilities or contract with others for manufacturing services
with respect to all of our products, if we are unable to do so our revenues
could be adversely affected. In addition, if we are unable to supply products in
development, our ability to conduct preclinical testing and human clinical
trials will be adversely affected. This in turn could also delay our submission
of products for regulatory approval and our initiation of new development
programs. In addition, although other companies have manufactured drugs acting
through IRs and STATs on a commercial scale, we may not be able to do so at
costs or in quantities to make marketable products.
The manufacturing process also may be susceptible to contamination, which could
cause the affected manufacturing facility to close until the contamination is
identified and fixed. In addition, problems with equipment failure or operator
error also could cause delays in filling our customers' orders.
OUR BUSINESS EXPOSES US TO PRODUCT LIABILITY RISKS OR OUR PRODUCTS MAY NEED TO
BE RECALLED, AND WE MAY NOT HAVE SUFFICIENT INSURANCE TO COVER ANY CLAIMS.
Our business exposes us to potential product liability risks. Our products also
may need to be recalled to address regulatory issues. A successful product
liability claim or series of claims brought against us could result in payment
of significant amounts of money and divert management's attention from running
the business. Some of the compounds we are investigating may be harmful to
humans. For example, retinoids as a class are known to contain compounds which
can cause birth defects. We may not be able to maintain our insurance on
acceptable terms, or our insurance may not provide adequate protection in the
case of a product liability claim. To the extent that product liability
insurance, if available, does not cover potential claims, we will be required to
self-insure the risks associated with such claims. We believe that we carry
reasonably adequate insurance for product liability claims.
WE USE HAZARDOUS MATERIALS WHICH REQUIRES US TO INCUR SUBSTANTIAL COSTS TO
COMPLY WITH ENVIRONMENTAL REGULATIONS.
In connection with our research and development activities, we handle hazardous
materials, chemicals and various radioactive compounds. To properly dispose of
these hazardous materials in compliance with environmental regulations, we are
required to contract with third parties at substantial cost to us. Our annual
cost of compliance with these regulations is approximately $600,000. We cannot
completely eliminate the risk of accidental contamination or injury from the
handling and disposing of hazardous materials, whether by us or by our
third-party contractors. In the event of any accident, we could be held liable
for any damages that result, which could be significant. We believe that we
carry reasonably adequate insurance for toxic tort claims.
OUR STOCK PRICE MAY BE ADVERSELY AFFECTED BY VOLATILITY IN THE MARKETS.
The market prices and trading volumes for our securities, and the securities of
emerging companies like us, have historically been highly volatile and have
experienced significant fluctuations unrelated to operating performance. For
example, in 2002, the intraday sale price of our common stock on The Nasdaq
National Market was as high as $20.50 and as low as $4.64. Future announcements
concerning us or our competitors as well as other companies in our industry and
other public companies may impact the market price of our common stock. These
announcements might include:
12
>> the results of research or development testing of ours or our competitors'
products;
>> technological innovations related to diseases we are studying;
>> new commercial products introduced by our competitors;
>> government regulation of our industry;
>> receipt of regulatory approvals by our competitors;
>> our failure to receive regulatory approvals for products under development;
>> developments concerning proprietary rights;
>> litigation or public concern about the safety of our products; or
>> intent to sell or actual sale of our stock held by our corporate partners.
AS A NEW INVESTOR, YOU MAY EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.
The offering price of our common stock may be substantially higher than the net
tangible book value per share of our common stock. If you purchase common stock
in this offering from a selling stockholder for the per-share purchase price of
$12.62, which is the average of the high and low sales prices per share of the
common stock on October 7, 2003 as reported on The Nasdaq Stock Market, you will
incur immediate dilution in net tangible book value of approximately $14.29 per
share, based on our net tangible book value of $(1.67) per share at June 30,
2003.
FUTURE SALES OF OUR SECURITIES MAY DEPRESS THE PRICE OF OUR SECURITIES.
Sales of substantial amounts of our securities in the public market could
seriously harm prevailing market prices for our securities. These sales might
make it difficult or impossible for us to sell additional securities when we
need to raise capital.
YOU MAY NOT RECEIVE A RETURN ON YOUR SECURITIES OTHER THAN THROUGH THE SALE OF
YOUR SECURITIES.
We have not paid any cash dividends on our common stock to date. We intend to
retain any earnings to support the expansion of our business, and we do not
anticipate paying cash dividends on any of our securities in the foreseeable
future.
OUR SHAREHOLDER RIGHTS PLAN AND CHARTER DOCUMENTS MAY HINDER OR PREVENT CHANGE
OF CONTROL TRANSACTIONS.
Our shareholder rights plan and provisions contained in our certificate of
incorporation and bylaws may discourage transactions involving an actual or
potential change in our ownership. In addition, our board of directors may issue
shares of preferred stock without any further action by you. Such issuances may
have the effect of delaying or preventing a change in our ownership. If changes
in our ownership are discouraged, delayed or prevented, it would be more
difficult for our current board of directors to be removed and replaced, even if
you or our other stockholders believe that such actions are in the best
interests of us and our stockholders.
13
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus may contain forward-looking statements that involve
substantial risks and uncertainties regarding future events or our future
performance within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You
can identify these statements by forward-looking words such as "may," "will,"
"expect," "intent," "anticipate," "believe," "estimate" and "continue" or
similar words. You should read statements that contain these words carefully
because they discuss our future expectations, contain projections of our future
results of operations or of our financial condition or state other
"forward-looking" information. We believe that it is important to communicate
our future expectations to our investors. However, there may be events in the
future that we are not able to accurately predict or control. The factors listed
in the section captioned "Risk Factors," as well as any cautionary language
included in this prospectus or incorporated by reference, provide examples of
risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Before you invest in our common stock, you should be aware that the occurrence
of the events described in the "Risk Factors" section and elsewhere in this
prospectus could have a material adverse effect on our business, operating
results and financial condition. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by these statements.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public on the SEC's
website at http://www.sec.gov.
14
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information filed with the SEC will
update and supersede this information. We incorporate by reference the documents
listed below and any future filings we make with the SEC under Section 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934 from the date of the
initial registration statement until the completion of the offering of the
securities covered by this prospectus:
o Our annual report on Form 10-K for the fiscal year ended December 31, 2002,
o Our quarterly reports on Form 10-Q for the quarterly periods ended March
31, 2003 and June 30, 2003,
o Our current reports on Form 8-K filed February 25, 2003, April 2, 2003, May
15, 2003, September 12, 2003, and October 3, 2003,
o The description of our common stock, contained in our registration
statement on Form 8-A filed on November 21, 1994, including any amendments
or reports filed for the purpose of updating such descriptions, and
o The description of our preferred stock purchase rights, contained in our
registration statement on Form 8-A filed on September 30, 1996, including
any amendments or reports filed for the purpose of updating such
descriptions.
The reports and other documents that we file after the date of this
prospectus will update and supersede the information in this prospectus.
Notwithstanding the foregoing, reports or documents or portions thereof
furnished to but not filed with the SEC and not otherwise incorporated by
reference are not and will not be incorporated by reference into this
registration statement.
You may request a copy of these filings, at no cost, by writing or
telephoning us at:
Ligand Pharmaceuticals Incorporated
Attn: Investor Relations
10275 Science Center Road
San Diego, California 92121-1117
(858) 550-7500
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY RELATED PROSPECTUS SUMMARY. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. YOU SHOULD NOT
ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY RELATED PROSPECTUS SUMMARY
IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE DOCUMENT.
15
DILUTION
The net tangible book value of Ligand at June 30, 2003 was $(116,137,000),
or approximately $(1.67) per share of common stock. Net tangible book value per
share represents the amount of our tangible assets less total liabilities,
divided by the number of our outstanding shares of common stock.
Net tangible book value dilution per share represents the difference
between the amount per share paid by purchasers of shares of common stock from
selling stockholders in the offering made hereby and the pro forma net tangible
book value per share of common stock immediately after completion of the
offering. Assuming that the sales of 3,483,593 shares of common stock in the
offering are made at an offering price of $12.62 per share, which is the average
of the high and low sales prices per share of the common stock on October 7,
2003 as reported on The Nasdaq Stock Market, and that we will receive none of
the net proceeds therefrom, the purchasers of common stock from the selling
stockholders would experience an immediate dilution in net tangible book value
of $14.29 per share, as illustrated in the following table:
Assumed public offering price per share...................... $ 12.62
Net tangible book value per share as of June 30, 2003 (1).. $(1.67)
Pro forma dilution per share to new investors................ $ 14.29
-------------------
(1) Because the shares being offered and sold by the selling stockholders are
issued and outstanding and we will receive none of the proceeds from the
offering of the common stock by the selling stockholders, net tangible book
value per share will not change as a result of such offering.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of our
common stock by the selling stockholders.
PLAN OF DISTRIBUTION
We are registering on the registration statement of which this prospectus
forms a part all 3,483,593 shares of our common stock on behalf of the selling
stockholders. We issued all of the shares to the selling stockholders in a
private placement transaction completed in September 2003. The selling
stockholders named in the table below or pledgees, donees, transferees or other
successors in interest selling shares received from a named selling stockholder
as a gift, pledge, partnership distribution or other non-sale related transfer
after the date of this prospectus may sell the shares from time to time. The
selling stockholders will act independently of us in making decisions regarding
the timing, manner and size of each sale. The sales may be made on The Nasdaq
Stock Market or in the over-the-counter market or otherwise, at prices and at
terms then prevailing or at prices related to the then-current market price, or
in negotiated transactions. The selling stockholders may effect these
transactions by selling the shares to or through broker-dealers. Except as
otherwise provided in the Stock Purchase Agreements by which we originally
issued the shares, the shares may be sold by one or more of, or a combination
of, the following:
o a block trade in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction,
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its account under this prospectus,
o an exchange distribution in accordance with the rules of the
respective exchange,
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers,
16
o an over-the-counter distribution in accordance with the rules of The
Nasdaq National Market,
o in privately negotiated transactions, and
o in options transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in the resales.
Except as otherwise provided in the Stock Purchase Agreements by which we
originally issued the shares, the selling stockholders may enter into hedging
transactions with broker-dealers or other financial institutions in connection
with distributions of the shares or otherwise. In connection with these
transactions, broker dealers or other financial institutions may engage in short
sales of the shares in the course of hedging the positions they assume with
selling stockholders. Except as otherwise provided in the Stock Purchase
Agreements by which we originally issued the shares, the selling stockholders
also may sell shares short and redeliver the shares to close out such short
positions. The selling stockholders may enter into option or other transactions
with broker-dealers which require the delivery to the broker-dealer of the
shares. The broker-dealer may then resell or otherwise transfer such shares
covered by this prospectus (as supplemented or amended to reflect such
transaction). The selling stockholders also may loan or pledge the shares to a
broker-dealer or other financial institution. The broker-dealer or such other
financial institution may sell the shares so loaned, or upon a default the
broker-dealer may sell the pledged shares under this prospectus (as supplemented
or amended to reflect such transaction). Broker-dealers or agents may receive
compensation in the form of commissions, discounts or concessions from selling
stockholders. Broker-dealers or agents may also receive compensation from the
purchasers of the shares for whom they act as agents or to whom they sell as
principals, or both. Compensation as to a particular broker-dealer might be in
excess of customary commissions and will be in amounts to be negotiated in
connection with the sale. Broker-dealers or agents and any other participating
broker-dealers or the selling stockholders may be deemed to be underwriters
within the meaning of Section 2(11) of the Securities Act of 1933, as amended,
in connection with sales of the shares. Accordingly, any such commission,
discount or concession received by them and any profit on the resale of the
shares purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act. Because selling stockholders may be deemed
to be underwriters within the meaning of Section 2(11) of the Securities Act,
the selling stockholders will be subject to the prospectus delivery requirements
of the Securities Act. In addition, any securities covered by this prospectus
which qualify for sale in compliance with Rule 144 promulgated under the
Securities Act may be sold under Rule 144 rather than under this prospectus. The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities. There is no underwriter
or coordinating broker acting in connection with the proposed sale OF shares by
the selling stockholders.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Securities Exchange Act of
1934, as amended, persons engaged in the distribution of the shares may be
limited in their ability to engage in market activities with respect to such
shares. In addition, each selling stockholder will be subject to applicable
provisions of the Securities Exchange Act and the associated rules and
regulations under the Securities Exchange Act, including Regulation M, which
provisions may limit the timing of purchases and sales of shares of our common
stock by the selling stockholders. We will make copies of this prospectus
available to the selling stockholders and have informed them of the need to
deliver copies of this prospectus to purchasers at or prior to the time of any
sale of the shares.
We will file a supplement to this prospectus, if required, to comply with
Rule 424(b) under the Securities Act, upon being notified by a selling
stockholder that any material arrangements have been entered into with a
broker-dealer for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer. Such supplement will disclose:
17
o the name of each such selling stockholder and of the participating
broker-dealer(s),
o the number of shares involved,
o the price at which such shares were sold,
o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable,
o that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus, and
o other facts material to the transaction.
In addition, upon being notified by a selling stockholder that a donee or
pledgee intends to sell more than 500 shares, if required we will file a
supplement to this prospectus.
We will bear all costs, expenses and fees in connection with the
registration of the shares, other than fees and expenses, if any, of counsel or
other advisers to the selling stockholders. In addition, the selling
stockholders will bear all commissions and discounts, if any, attributable to
the sales of the shares. The selling stockholders may agree to indemnify any
broker-dealer or agent that participates in transactions involving sales of the
shares against various liabilities, including liabilities arising under the
Securities Act. We have agreed to indemnify the selling stockholders against
various liabilities in connection with the offering of the shares, including
liabilities arising under the Securities Act. The selling stockholders have
agreed to indemnify us, our directors and officers who sign the registration
statement of which this prospectus forms a part, and control persons against
various liabilities in connection with the offering of the shares, including
liabilities arising under the Securities Act.
We have agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective until the
earlier of (i) September 11, 2005, (ii) the date on which the selling
stockholders may sell all shares covered by this prospectus without restriction
pursuant to Rule 144(k) under the Securities Act or (iii) such time as all
shares covered by this prospectus have been sold pursuant to and in accordance
with the registration statement.
18
SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by each of the
selling stockholders. These stockholders acquired the shares directly from us in
a private placement completed in September 2003. This registration statement
also shall cover any additional shares of common stock which become issuable in
connection with the shares registered for sale hereby by reason of any stock
dividend, stock split, recapitalization or other similar transaction effected
without the receipt of consideration which results in an increase in the number
of our outstanding shares of common stock.
The investment advisor for UBS Juniper Crossover Fund LLC is a joint
venture between OrbiMed Advisors LLC and an affiliate of UBS Securities, Inc.
UBS Securities, Inc. is a current advisor to the Company on financial matters
and transactions and acted as the placement agent for the private placement of
the shares acquired by the selling stockholders. Among other matters, UBS
Securities, Inc. also acted as the initial purchaser for the offering of our 6%
Convertible Subordinated Notes Due 2007 that was completed in November 2002.
None of the selling stockholders has had a material relationship with us
within the past three years other than as a result of the ownership of the
shares or other securities of ours.
We do not know when or in what amounts the selling stockholders may offer
shares for sale. The selling stockholders may decide not to sell all or any of
the shares that this prospectus covers. The shares offered by this prospectus
may be offered from time to time by the selling stockholders named below.
Because the selling stockholders may offer all or some of the shares pursuant to
this offering, and because there are currently no agreements, arrangements or
understandings with respect to the sale of any of the shares that the selling
stockholders will hold after completion of the offering, we cannot estimate the
number of shares that the selling stockholders will hold after completion of the
offering.
The percentages of common stock beneficially owned and being offered are
calculated based on 69,355,579 shares of common stock issued and outstanding as
of July 31, 2003.
SHARES OWNED PRIOR
TO THIS OFFERING
---------------------------------------
NUMBER OF SHARES OF
NAME OF PERCENTAGE OF COMMON COMMON STOCK
SELLING STOCKHOLDER NUMBER STOCK OUTSTANDING REGISTERED HEREBY
------------------- ------ --------------------- -----------------
Acqua Wellington Opportunity I Limited 500,000 * 500,000
Shirlaw House
87 Shirley Street
Nassau, Bahamas
Adage Capital Partners, L.P. 592,593 * 592,593
200 Clarendon Street
52nd Floor
Boston, MA 02116
Eaton Vance Variable Trust 20,000 * 14,000
c/o OrbiMed Advisors LLC
767 Third Avenue
30th Floor
New York, NY 10017
19
SHARES OWNED PRIOR
TO THIS OFFERING
---------------------------------------
NUMBER OF SHARES OF
NAME OF PERCENTAGE OF COMMON COMMON STOCK
SELLING STOCKHOLDER NUMBER STOCK OUTSTANDING REGISTERED HEREBY
------------------- ------ --------------------- -----------------
Eaton Vance Worldwide Health Sciences 2,150,000 3.1 1,350,000
c/o OrbiMed Advisors LLC
767 Third Avenue
30th Floor
New York, NY 10017
Eaton Vance Emerald Worldwide Health 69,000 * 47,000
Sciences
c/o OrbiMed Advisors LLC
767 Third Avenue
30th Floor
New York, NY 10017
S.A.C. Capital Associates, LLC 560,000 * 525,000
c/o S.A.C. Capital Advisors, LLC
72 Cummings Point Road
Stamford, CT 06902
S.A.C. Healthco Fund, LLC 375,000 * 375,000
c/o S.A.C. Capital Advisors, LLC
72 Cummings Point Road
Stamford, CT 06902
UBS Juniper Crossover Fund LLC 80,000 * 80,000
c/o OrbiMed Advisors LLC
767 Third Avenue
30th Floor
New York, NY 10017
--------- ---------
TOTAL: 4,346,593 3,483,593
========= =========
* Indicates less than 1%
20
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon by
Clifford Chance US LLP, San Diego, California.
EXPERTS
The consolidated financial statements as of December 31, 2002 and 2001, and
for the years ended December 31, 2002, 2001 and 2000, incorporated in this
prospectus by reference from our Annual Report on Form 10-K for the year ended
December 31, 2002 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference
(which report expresses an unqualified opinion and includes an explanatory
paragraph referring to a change in accounting principle), and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM WHAT IS
IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS FROM WHAT
IS IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS IS NOT AN
OFFER TO SELL, NOR IS IT AN OFFER TO BUY, THESE SECURITIES IN ANY STATE IN WHICH
THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS
COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY CHANGE AFTER THAT
DATE.
21
3,483,593 SHARES
LIGAND PHARMACEUTICALS INCORPORATED
COMMON STOCK
----------------------------------
Prospectus
----------------------------------
_____________, _____
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the registrant in connection with the sale
of the common stock being registered. All the amounts shown are estimates,
except for the SEC registration fee.
SEC registration fee................................. $3,553.78
Printing and engraving expenses...................... 5,000.00
Legal fees and expenses.............................. 15,000.00
Accounting fees and expenses......................... 5,000.00
Transfer agent and registrar fee..................... 30,000.00
Miscellaneous expenses............................... 10,000.00
------------
TOTAL $68,553.78
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 145 of the Delaware General Corporation Law, we have broad
powers to indemnify our officers, directors and third parties acting on our
behalf against liabilities they may incur in such capacities, including
liabilities under the Securities Act.
Our amended and restated certificate of incorporation provides for the
indemnification of all of our officers, directors and third parties acting on
our behalf to the fullest extent permissible under Delaware law.
Our amended and restated by-laws provide for the indemnification of
officers, directors and third parties acting on our behalf if such person acted
in good faith and in a manner reasonably believed to be in and not opposed to
our best interest, and, with respect to any criminal action or proceeding, the
indemnified party had no reason to believe his or her conduct was unlawful.
We maintain directors and officers insurance providing indemnification for
certain of our directors and officers for certain liabilities.
We also entered into indemnification agreements between us and our
directors and officers, which may be sufficiently broad to permit
indemnification of our officers and directors for liabilities arising under the
Securities Act.
In the Stock Purchase Agreements between us and the selling stockholders
dated as of September 10, 2003 entered into in connection with our September
2003 private placement, the selling stockholders agreed to indemnify us and our
directors, officers and controlling persons, as defined in the Securities Act,
against certain liabilities, including liabilities arising under the Securities
Act, in connection with matters specifically provided in writing by the selling
stockholders for inclusion in the Registration Statement.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling us pursuant to
the foregoing provisions, we have been informed that in the opinion of the SEC
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
II-1
ITEM 16. EXHIBITS.
(A) EXHIBITS.
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 Instruments defining the rights of stockholders.
Reference is made to our Form 8-A registration
statement filed on November 21, 1994 (incorporated
into this registration statement by reference), the
Amended and Restated Certificate of Incorporation
(incorporated into this registration statement by
reference to Exhibit 3.2 to our Form S-4 registration
statement filed on July 9, 1998), the Bylaws
(incorporated into this registration statement by
reference to Exhibit 3.3 of our Form S-4 registration
statement, filed on July 9, 1998), the Amended
Certificate of Designation of Rights, Preferences and
Privileges of Series A Participating Preferred Stock
(incorporated into this registration statement by
reference to Exhibit 3.3 to our quarterly report on
Form 10-Q for the period ended March 31, 1999) and
our Form 8-A registration statement filed on
September 30, 1996 (incorporated into this
registration statement by reference to Exhibit 4.1
filed with our registration statement filed on April
16, 1992), including any amendments or reports filed
for the purposes of updating such descriptions
4.2(1) Form of Stock Purchase Agreement dated as of September 10, 2003
between the Company and the investors listed on Exhibit A.
5.1(1) Opinion of Clifford Chance US LLP
23.1 Consent of Deloitte & Touche LLP, Independent Auditors
23.2(1) Consent of Clifford Chance US LLP. Included in the Opinion of
Clifford Chance US LLP filed as Exhibit 5.1
24.1(1) Power of Attorney
(1) Previously filed
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-2
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on October 8, 2003.
LIGAND PHARMACEUTICALS INCORPORATED
By: /S/ DAVID E. ROBINSON
----------------------------------
David E. Robinson, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/S/ DAVID E. ROBINSON October 8, 2003
-----------------------------------------
David E. Robinson President and Chief Executive Officer
(Principal Executive Officer)
/S/ PAUL V. MAIER October 8, 2003
-----------------------------------------
Paul V. Maier Senior Vice President
and Chief Financial Officer
(Principal Financial and Accounting Officer)
* October __, 2003
-----------------------------------------
Henry F. Blissenbach Director
* October __, 2003
-----------------------------------------
Alexander D. Cross Director
* October __, 2003
-----------------------------------------
John Groom Director
* October __, 2003
-----------------------------------------
Irving S. Johnson, Ph.D. Director
* October __, 2003
-----------------------------------------
John W. Kozarich Director
* October __, 2003
-----------------------------------------
Carl C. Peck Director
* October __, 2003
-----------------------------------------
Michael A. Rocca Director
* By: /S/ PAUL V. MAIER
-----------------------------------
Paul V. Maier
Attorney-in-Fact
II-4
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 Instruments defining the rights of stockholders.
Reference is made to our Form 8-A registration
statement filed on November 21, 1994 (incorporated
into this registration statement by reference), the
Amended and Restated Certificate of Incorporation
(incorporated into this registration statement by
reference to Exhibit 3.2 to our Form S-4 registration
statement filed on July 9, 1998), the Bylaws
(incorporated into this registration statement by
reference to Exhibit 3.3 of our Form S-4 registration
statement, filed on July 9, 1998), the Amended
Certificate of Designation of Rights, Preferences and
Privileges of Series A Participating Preferred Stock
(incorporated into this registration statement by
reference to Exhibit 3.3 to our quarterly report on
Form 10-Q for the period ended March 31, 1999) and
our Form 8-A registration statement filed on
September 30, 1996 (incorporated into this
registration statement by reference to Exhibit 4.1
filed with our registration statement filed on April
16, 1992), including any amendments or reports filed
for the purposes of updating such descriptions
4.2(1) Form of Stock Purchase Agreement dated as of September 10, 2003
between the Company and the investors listed on Exhibit A.
5.1(1) Opinion of Clifford Chance US LLP
23.1 Consent of Deloitte & Touche LLP, Independent Auditors
23.2(1) Consent of Clifford Chance US LLP. Included in the Opinion of
Clifford Chance US LLP filed as Exhibit 5.1
24.1(1) Power of Attorney
(1) Previously filed
II-5