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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1996JUNE 6, 2002
REGISTRATION STATEMENT NO. 333-12603
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- --------------------------------------------------------------------------------333-87110
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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 77-0160744
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
------------------------------
9393 TOWNE CENTRE DRIVE, SAN DIEGO, CALIFORNIA 92121 (619) 535-3900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------------
DAVID(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
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICERRobinson
President and Chief Executive Officer
LIGAND PHARMACEUTICALS INCORPORATED
9393 TOWNE CENTRE DRIVE, SAN DIEGO, CALIFORNIA 92121
(619) 535-3900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------------
COPIES TO:
CRAIG S. ANDREWS, ESQ. JEROME L. COBEN, ESQ.
FAYE H. RUSSELL, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM
JOHN R. COOK, ESQ. 300 SOUTH GRAND AVENUE
BROBECK, PHLEGER & HARRISON LLP LOS ANGELES, CALIFORNIA 90071
550 WEST C STREET, SUITE 1300
SAN DIEGO, CALIFORNIA 92101
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable10275 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.
BROBECK, PHLEGER & HARRISON LLP
12390 El Camino Real
San Diego, California 92130
(858) 720-2500
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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 becomes effective.registration statement.
If the only securities being registered on this Formform are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: /
/[ ]
If any of the securities being registered on this Formform 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 Formform 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 Formform 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)8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,SEC, ACTING PURSUANT TO SAID SECTION
8(a)8(A), MAY DETERMINE.
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EXPLANATORY NOTE
This amendment No. 1 (this "Amendment")The information in this prospectus is beingnot complete and may be changed. We may
not sell these securities until the registration statement filed solely for the
purpose of filing exhibits to the Registration Statement on Form S-3
(Registration No. 333-12603) (the "Registration Statement") originally filed by
Ligand Pharmaceuticals Incorporated 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 JUNE 6, 2002
PRELIMINARY PROSPECTUS
LIGAND PHARMACEUTICALS INCORPORATED
4,252,500 SHARES OF COMMON STOCK
This prospectus relates to the public offering, which is not being underwritten,
of 4,252,500 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 April 19, 2002.
Our common stock is traded on The Nasdaq Stock Market under the symbol "LGND."
On June 3, 2002, the average of the high and low sales prices for our common
stock was $17.18
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THE COMMON STOCK OFFERED INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 3 FOR A DISCUSSION OF SOME IMPORTANT RISKS YOU SHOULD
CONSIDER BEFORE BUYING ANY OF OUR COMMON STOCK.
----------------------------------
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 June 6, 2002
TABLE OF CONTENTS
PAGE
LIGAND PHARMACEUTICALS INCORPORATED......................................1
RISK FACTORS.............................................................3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS....................11
WHERE YOU CAN FIND MORE INFORMATION.....................................11
INFORMATION INCORPORATED BY REFERENCE...................................12
USE OF PROCEEDS.........................................................13
PLAN OF DISTRIBUTION....................................................13
SELLING STOCKHOLDERS....................................................16
LEGAL MATTERS...........................................................18
EXPERTS.................................................................18
i
LIGAND PHARMACEUTICALS INCORPORATED
Our goal is to build a profitable pharmaceutical company that discovers,
develops and markets new drugs that address critical unmet medical needs in the
areas of cancer, men's and women's health, or hormone-related health issues,
skin diseases, osteoporosis, and metabolic, cardiovascular and inflammatory
diseases. We strive to develop drugs that are more effective and/or safer than
existing therapies, that are more convenient (taken orally or topically
administered) and that are cost effective. We plan to build a profitable
pharmaceutical company by generating income from the specialty pharmaceutical
products we develop and market, and from research, milestone and royalty
revenues resulting from our collaborations with large pharmaceutical partners,
which develop and market products in large markets that are beyond our strategic
focus or resources. Our investments in both our specialty products business and
our collaborations, as well as other aspects of our business since our founding,
have been significant. These investments are reflected in the losses we have
recorded over the years and in our accumulated deficit of about $592 million as
of March 31, 2002.
We currently market four cancer products in the United States: Panretin(R)
gel, ONTAK(R) and Targretin(R) capsules, each of which were approved by the
United States Food and Drug Administration, or FDA, in 1999; and Targretin(R)
gel, which was approved by the FDA in 2000. In Europe, the European Commission
granted a Marketing Authorization, or MA, for Panretin gel in October 2000 and
an MA for Targretin capsules in March 2001. We submitted Marketing Authorization
Applications to the European Agency for the Evaluation of Medicinal Products for
Targretin gel in March 2001 and for ONZAR(TM) (the brand name of ONTAK in
Europe) in December 2001. We also market Avinza(TM), formerly Morphelan(TM), a
pRoduct for the once-daily treatment of moderate-to-severe pain that is expected
to last more than a few days, which we licensed from Elan Corporation plc and
which was approved by the FDA in March 2002. We also continue efforts to acquire
or in-license products, such as ONTAK (acquired in the 1998 acquisition of
Seragen), which have near-term prospects of FDA approval and which can be
marketed by our specialty sales forces. We are developing additional products
through our internal development programs and currently have various products in
clinical development, including marketed products that we are testing for larger
market health problems such as non-small cell lung cancer (NSCLC), B-cell
non-Hodgkin's Lymphoma (NHL), psoriasis and rheumatoid arthritis. The risks that
we face in this specialty products business include risks that our drugs may not
be approved or that marketed drugs may not be approved for larger markets by
regulatory agencies, that the market demand for the drugs could be low, or that
so far we have a relatively small number of products in niche markets.
We have research and development collaborations with numerous global
pharmaceutical companies, including Abbott Laboratories, Allergan, Bristol-Myers
Squibb, Eli Lilly & Co., GlaxoSmithKline, Organon (AKZO-Nobel), Pfizer,
Takeda-Abbott Pharmaceuticals (TAP) and Wyeth (formerly American Home Products).
At the end of 2001, our corporate partners had six Ligand products in human
development, six products moving toward regulatory filings for human clinical
trials, and numerous compounds in research and pre-clinical stages. These
corporate partner products are being studied for the treatment of health
problems with large markets such as osteoporosis, diabetes, contraception and
cardiovascular disease. Three of these partner products are being tested in
pivotal Phase III clinical trials: lasofoxifene, which is being developed by
Pfizer for osteoporosis; and bazedoxifene (formerly TSE-424), which is being
developed by Wyeth both as monotherapy for osteoporosis and in combination with
Wyeth's PREMARIN(R) as hormone replacement therapy (HRT). In March 2002 Royalty
Pharma AG purchased from us rights to a share of future payments from these
three partner products. The risks that we face in our collaborations include the
risks that the projects may not be successful in producing drugs, that
collaborators and others may bring competing drugs to market or divert resources
to other projects, or that the collaborations themselves may not be continued.
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
are used to make proteins inside cells. 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. Panretin gel, Targretin capsules, Targretin gel and
all but one of our corporate partner products currently on human development
track were discovered using our IR technology. A compound discovered using our
STAT technology is moving toward a regulatory filing for human clinical trials
at GlaxoSmithKline.
In late 1998, we assembled a specialty cancer and HIV-center sales and
marketing team for the U.S. market to sell products developed, acquired or
licensed by us. In late 1999, we expanded our U.S. sales force from
approximately 20 to approximately 40 sales representatives to support the launch
of Targretin capsules and Targretin gel and increase market penetration of ONTAK
and Panretin gel. In 2001, we further expanded our sales force to approximately
50 sales representatives, including approximately 20 full-time contract sales
representatives who focus on the dermatology market. In anticipation of the
launch of Avinza in 2002, we also announced in 2001 a strategic decision to form
another sales force of approximately 25 representatives to target general pain
centers not served by our existing representatives. Internationally, through
marketing and distribution agreements with some of our pharmaceutical
distribution partners including Elan, we have established marketing and
distribution capabilities in Europe, as well as Central and South America.
------------------------
Our trademarks, trade names and service marks referenced in this document
include Ligand(R), Avinza(TM), 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.
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RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISKS AND UNCERTAINTIES BEFORE PURCHASING
SHARES OF OUR COMMON STOCK. EACH OF THESE RISK AND UNCERTAINTIES COULD ADVERSELY
AFFECT OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION, AS WELL AS
ADVERSELY AFFECTING THE VALUE OF AN INVESTMENT IN OUR COMMON STOCK
RISKS RELATED TO 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 March 31, 2002, our accumulated deficit was approximately $592
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:
o preclinical testing or human studies may show that our potential products
are ineffective or cause harmful side effects,
o the products may fail to receive necessary regulatory approvals from the
FDA or foreign authorities in a timely manner or at all,
o the products, if approved, may not be produced in commercial quantities or
at reasonable costs,
o the products once approved, may not achieve commercial acceptance, or
o 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 U.S. sales force of
about 80 people, some of whom are contracted from a third party. 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 and 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.
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. To the extent we enter into co-promotion or
other licensing arrangements, any revenues we receive will depend on the
marketing efforts of others, which may or may not be successful.
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OUR SMALL NUMBER OF PRODUCTS MEANS OUR RESULTS ARE VULNERABLE TO SETBACKS WITH
RESPECT TO ANY ONE PRODUCT.
We currently have only 4 products approved for marketing, one additional
product, Avinza, for which the licensor, Elan, has received approval 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 price for shares of our stock. Setbacks could include problems
with shipping, 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.
Our products include 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 100 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 and required minimum shipping
quantities. As a result, our distributors may carry from two to six months worth
of projected inventory usage. If our distributors were to decide to
substantially reduce the inventory they carry in a given period, our sales for
that period could be substantially lower than historical levels.
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.
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:
o conduct research, preclinical testing and human studies,
o establish pilot scale and commercial scale manufacturing processes and
facilities, and
o 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:
o the pace of scientific progress in our research and development programs
and the magnitude of these programs,
o the scope and results of preclinical testing and human studies,
o the time and costs involved in obtaining regulatory approvals,
o the time and costs involved in preparing, filing, prosecuting, maintaining
and enforcing patent claims,
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o competing technological and market developments,
o our ability to establish additional collaborations,
o changes in our existing collaborations,
o the cost of manufacturing scale-up, and
o the effectiveness of our commercialization activities.
We base our outlook regarding the need for additional funds on many
uncertain variables. Such uncertainties include regulatory approvals, the timing
of events outside our direct control such as product launches by partners, 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.
For example, we are required under the terms of our agreement with Elan, to
spend not less than $7 million through May 2003 to undertake additional clinical
activities related to the commercialization of Avinza, formerly Morphelan(TM).
In the event we do not spend this amount, any shortfall would have to be paid to
Elan. 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 commercialization of our products, to sell some or all of our
technology or assets or to merge with another entity.
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 do not expect to 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 6.3 million shares upon the conversion
of zero coupon convertible senior notes held by Elan, and in January 2001 and
April 2002 we issued 2 million shares and 4.3 million shares of our common
stock, respectively, in private placements. These transactions have resulted in
the issuance of significant numbers of new shares. If adequate funds are not
available, we may be required to delay, reduce the scope of or eliminate one or
more of our drug development programs. 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.
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 have a number of Ligand and partner products
moving toward or currently in clinical trials, the most significant of which are
our Phase III trials for Targretin capsules in non-small cell lung cancer and
three Phase III trials by our partners involving bazedoxifene and lasofoxifene.
Our 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.
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
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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 enrollments. 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.
WE MAY NOT BE ABLE TO PAY AMOUNTS DUE ON OUR OUTSTANDING INDEBTEDNESS WHEN DUE
WHICH WOULD CAUSE DEFAULTS UNDER THESE ARRANGEMENTS.
We and our subsidiaries may not have sufficient funds to make required
payments due under existing debt. If we or our subsidiaries do not have adequate
funds, we will be forced to refinance the existing debt and may not be
successful in doing so. Our subsidiary, Glycomed, is obligated to make payments
under convertible subordinated debentures in the total principal amount of $50
million. The debentures incur interest semi-annually at a rate of 7 1/2% per
annum, are due in 2003 and convertible into our common stock at $26.52 per
share. On June 3, 2002, we completed the redemption of these debentures. In
addition, at April 1, 2002, we had outstanding a $2.5 million convertible note
to GlaxoSmithKline due in 2002 with interest at prime and convertible into our
common stock at $13.56 per share.
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(R) and interferon, which is marketed by a number of
companies, including Schering-Plough's Intron(R) A. Products that will compete
with Avinza include Purdue Pharma L.P.'S OxyContin(R) and MS Contin(R), Janssen
Pharmaceutica Products, L.P.'s Duragesic(R), , Roxane Laboratories, Inc.'s
OramoRph(R) SR and Purepac Phamaceutical Co.'s Kadian(R), each of which is
currently marketed. 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 which was recently approved for marketing. 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.
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
6
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.
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.
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.
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, United States 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
7
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 patent 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 United States
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.
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, CoPharma manufactures ONTAK for us and RP Scherer
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
8
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, since January 1, 2000, the daily last reported sale
price of our common stock on the Nasdaq National Market has been as high as
$25.43 and as low as $7.85. Future announcements concerning us or our
competitors may impact the market price of our common stock. These announcements
might include:
o the results of research or development testing of ours or our competitors'
products,
o technological innovations related to diseases we are studying,
o new commercial products introduced by our competitors,
o government regulation of our industry,
o receipt of regulatory approvals by competitors,
o our failure to receive regulatory approvals for products under development,
o developments concerning proprietary rights,
o litigation or public concern about the safety of our products, or
o intent to sell or actual sale of our stock held by our corporate partners.
9
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.
Sales of substantial amounts of our common stock in the public market could
seriously harm prevailing market prices for our common stock. 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 SHARES OTHER THAN THROUGH THE SALE OF YOUR
SHARES OF COMMON STOCK.
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 in the foreseeable future. Accordingly, other
than through a sale of your shares, you will not receive a return on your
investment in our common stock, and you should not rely on an investment in our
common stock if you require dividend income.
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.
10
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,
and also at the SEC's public reference rooms in New York, New York and Chicago,
Illinois. 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.
11
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 until our offering is
completed:
o Our annual report on Form 10-K for the fiscal year ended December 31, 2001.
o Our quarterly report on Form 10-Q for the quarterly period ended March 31,
2002.
o Our current reports on Form 8-K filed April 1, 2002, April 4, 2002 and
April 12, 2002.
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.
o The description of our preferred stock purchase rights, contained in our
registration statement on Form 8-A filed on September 25, 1996. This Amendment does not contain30, 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.
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. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. THE SELLING STOCKHOLDERS ARE NOT AUTHORIZED TO MAKE AN
OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY
DATE OTHER THAN THE DATE ON THE FRONT OF THE DOCUMENT.
12
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 all 4,252,500 shares on behalf of the selling
stockholders. We issued all of the shares to the selling stockholders in a
private placement transaction. 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. 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,
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.
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.
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 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 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
13
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 financial statement schedule includedarrangements 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 Registration Statement, which
are unchangedapplicable 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, 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
Exchange Act and the associated rules and regulations under the 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:
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
financialo 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, 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 schedule includedof 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) April 19, 2004, (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 of 1933 or (iii) such time as all shares
covered by this prospectus have been sold pursuant to and in accordance with the
registration statement.
14
SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by each of the
selling stockholders. 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 Registration Statement.number of our outstanding
shares of common stock.
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.
SHARES BENEFICIALLY
OWNED PRIOR TO THIS OFFERING
---------------------------------------------
PERCENTAGE OF COMMON NUMBER OF SHARES OF
NAME OF STOCK OUTSTANDING COMMON STOCK
SELLING STOCKHOLDER NUMBER REGISTERED HEREBY
- ----------------------------------- -------------------- -------------------- --------------------
Banque Carnegie Luxembourg 222,000 * 62,000
Banque Carnegie Luxembourg FCP Funds 343,352 * 238,000
Biocentive Limited 31,000 * 31,000
Caduceus Capital II, L.P. 150,000 * 150,000
HBM Bioventures (Cayman) Ltd. 300,000 * 300,000
Interdynamic Fund - BioMed Tech 31,000 * 31,000
Merlin BioMed, L.P. 50,000 * 50,000
Merlin BioMed II, L.P. 28,000 * 28,000
Merlin BioMed III, L.P. 16,000 * 16,000
Merlin BioMed International, Ltd. 94,000 * 94,000
Moore Global Investments, Ltd. 420,000 * 420,000
Nordea Global Biotech Fund 57,000 * 30,000
Nordea Medica Life Science Fund 70,000 * 60,000
Putnam Funds Trust - Putnam New 206,100 * 32,100
Century Growth Fund
Putnam New Opportunities Fund 564,500 * 564,500
15
3
Putnam Variable Trust - Putnam VT New 112,300 * 112,300
Opportunities Fund
Putnam Variable Trust - Putnam VT 5,840 * 900
Voyager Fund
Putnam Voyager Fund II 429,000 * 67,000
Putnam World Trust II - Putnam New 4,000 * 4,000
Opportunities (U.S. Aggressive Growth
Equity) Fund (Dublin)
PW Eucalyptus Fund, L.L.C. 345,000 * 345,000
PW Eucalyptus Fund, Ltd. 45,000 * 45,000
Remington Investment Strategies, LP 80,000 * 80,000
Saks MedScience Fund 30,000 * 30,000
SF Capital Partners Ltd. 125,000 * 125,000
UBS O'Connor LLC F/B/O O'Connor PIPES 400,000 * 400,000
Corporate Strategies Ltd.
Ursus Capital, L.P. 35,600 * 35,600
Ursus Offshore, Ltd. 41,100 * 41,100
Vertical International Limited 343,750 * 343,750
Vertical Ventures Investments, LLC 206,250 * 206, 250
Winchester Global Trust Company 310,000 * 310,000
Limited as Trustee for Caduceus ------- -------
Capital Trust
TOTAL: 5,095,792 4,252,500
========= =========
* Indicates less than 1%
16
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon by
Brobeck, Phleger & Harrison LLP, San Diego, California. Attorneys associated
with Brobeck, Phleger & Harrison LLP own a total of 8,827 shares of our common
stock.
EXPERTS
The consolidated financial statements for the years ended December 31, 2001
and 2000 incorporated in this prospectus by reference from our Annual Report on
Form 10-K for the year ended December 31, 2001 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.
The consolidated financial statements incorporated by reference in our
Annual Report on Form 10-K for the year ended December 31, 1999 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm 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.
17
4,252,500 SHARES
LIGAND PHARMACEUTICALS INCORPORATED
COMMON STOCK
----------------------------------
Prospectus
----------------------------------
JUNE 6, 2002
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 Registrantregistrant in connection with the sale
of the Common Stockcommon stock being registered. All the amounts shown are estimates,
except for the SEC registration fee and the NASD filing fee.
Registration fee.......................................................... $ 15,747
Listing fee............................................................... 17,500
NASD fee.................................................................. 5,164
Blue Sky fees and expenses................................................ 15,000SEC registration fee................................. $6,639.18
---------
Printing and engraving expenses........................................... 90,000expenses ..................... 5,000
---------
Nasdaq additional listing fee........................ 22,500
---------
Legal fees and expenses................................................... 150,000expenses.............................. 50,000
---------
Accounting fees and expenses.............................................. 50,000expenses......................... 25,000
---------
Transfer Agentagent and Registrar fees......................................... 15,000registrar fee .................... 5,000
---------
Miscellaneous expenses.................................................... 16,589
-------
Total........................................................... $375,000
=======expenses............................... 10,000
---------
TOTAL $124,139.18
===========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a)Under Section 145 of the Delaware General Corporation Law, permitswe have broad
powers to indemnify our directors and officers 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 officers and directors of Ligand under certain conditions and
subject to certain limitations. Section 145 of the Delaware General Corporation
Law also provides that a corporation has the power to purchase and maintain
insurance on behalf of its officers and directors against any liability asserted
against such person and incurred by him or her in such capacity, or arising out
of his or her status as such, whether or not the corporation would have the
power to indemnify him or her against such liability under the provisions of
Section 145 of the Delaware General Corporation Law.
(b) Article VII, Section 1 of the Bylaws of Ligand provides that Ligand
shall indemnify its officers, directors, employees and agents to the full extent
permitted by the General Corporation Law of Delaware. The rights to indemnity
thereunder continue as to a person who has ceased to be a director, officer,
employee or agent and inure to the benefit of the heirs, executors and
administrators of the person. In addition, expenses incurred by a director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding by reason of the fact that he or she is or was a
director or officer of Ligand (or was serving at Ligand's request as a director
or officer of another corporation) shall be paid by Ligand in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by Ligand as authorized by the relevant section of the Delaware
General Corporation Law.
(c) As permitted by Section 102(b)(7) of the Delaware General Corporation
Law, Article V, Section (A)2 of Ligand's Certificate of Incorporation provides
that a director of Ligand shall not be personally liable for monetary damages or
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to Ligand or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived any
improper personal benefit.
(d) Article V, Section (A)1 of Ligand's Certificate of Incorporation
provides that the liability of the directors of Ligand for monetary damages
shall be eliminatedall persons to the fullest extent permissible under CaliforniaDelaware
law.
Accordingly, toOur amended and restated by-laws provides for the extent California law applies,indemnification of
officers, directors and third parties acting on our behalf if such person acted
in good faith and in a director will not be liable
for monetary damages for breach of duty to Ligand or its stockholders in any
action brought by or in the right of Ligand. However, a director remains liable
to the extent required by law (i) for acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law, (ii) for acts or
omissions that a director believesmanner reasonably believed to be II-1
4
contraryin and not opposed to
our best interest, and, with respect to any criminal action or proceeding, the
best interests of Ligand or its stockholders or that involve the
absence of good faith on the part of the director, (iii) for any transaction
from which a director derived an improper personal benefit, (iv) for acts or
omissions that show a reckless disregard for the director's dutyindemnified party had no reason to Ligand or
its stockholders in circumstances in which the director was aware, or should
have been aware, in the ordinary course of performing a director's duties, of a
risk of serious injury to Ligand or its stockholders, (v) for acts or omissions
that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to Ligand or its stockholders, (vi) for any
act or omission occurring prior to the date when the exculpation provision
became effective and (vii) for any act or omission as an officer,
notwithstanding that the officer is also a director or thatbelieve his or her actions,
if negligent or improper, have been ratified by the directors. The effectconduct was unlawful.
We maintain directors and officers insurance providing indemnification for
certain of the
provisions in the Certificate of Incorporation is to eliminate the rights of
Ligandour directors and its stockholders (through stockholders' derivative suits on behalf of
Ligand) to recover monetary damages against a directorofficers for breach of duty as a
director, including breaches resulting from negligent behavior in the context of
transactions involving a change of control of Ligand or otherwise, except in the
situations described in clauses (i) through (vii) above. These provisions will
not alter the liability of directors under federal securities laws.
(e) Pursuant to authorization provided under the Certificate of
Incorporation, Ligand hascertain liabilities.
We also entered into indemnification agreements with each of
its presentbetween us and certain of its former directors. Ligand has also entered into
similar agreements with certain of Ligand's executive officers who are not
directors. Generally, the indemnification agreements attempt to provide the
maximum protection permitted by Delaware and California law as it may be amended
from time to time. Moreover, the indemnification agreements provide for certain
additional indemnification. Under such additional indemnification provisions,
however, an individual will not receive indemnification for judgments,
settlements or expenses if he or she is found liable to Ligand (except to the
extent the court determines he or she is fairly and reasonably entitled to
indemnity for expenses), for settlements not approved by Ligand or for
settlements and expenses if the settlement is not approved by the court. The
indemnification agreements provide for Ligand to advance to the individual any
and all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding. In order to
receive an advance of expenses, the individual must submit to Ligand copies of
invoices presented to him or her for such expenses. Also, the individual must
repay such advances upon a final judicial decision that he or she is not
entitled to indemnification. Ligand's Bylaws contain a provision of similar
effect relating to advancement of expenses to a director or officer, subject to
an undertaking to repay if it is ultimately determined that indemnification is
unavailable.
(f) There isour
directors and officers, liability insurance nowwhich may be sufficiently broad to permit
indemnification of our officers and directors for liabilities arising under the
Securities Act.
In connection with our April 2002 private placement, the Company agreed to
indemnify the selling stockholders and its controlling persons, as defined in
effect which
insures directorsthe Securities Act, against liabilities, including legal fees, that the selling
stockholders or their controlling persons may incur under the Securities Act,
the Exchange Act, or any other federal or state statutory law or regulation, or
at common law or otherwise in connection with this registration statement,
including the prospectus, financial statements and officersschedules, and amendments and
supplements to those documents, except liabilities related to misstatements or
omissions made in the registration statement in conformity with written
information furnished to the Company by or on behalf of the Company.selling stockholders
expressly for use in the registration statement or prospectus or any breach or
violation of the representations and warranties of the selling stockholders
under the purchase agreements between the Company and the selling stockholders
dated as of April 17, 2002.
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.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A)EXHIBITS.
(a) EXHIBITS.
EXHIBIT NO. DESCRIPTION
- ------- ----------------------------------------------------------------------------------------------- -----------
1.1 Underwriting Agreement.
3.14.1 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, PreferencePreferences 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, including any amendments or reports filed for the
purposes of Ligand Pharmaceuticals Incorporated.
+5.1updating such descriptions.
5.1(1) Opinion of Brobeck, Phleger & Harrison LLP
with respect to the securities being
registered.
10.1 Preferred Shares Rights Agreement, dated as23.1 Consent of September 13, 1996 by and between
Ligand Pharmaceuticals Incorporated and Wells Fargo Bank, N.A.
+23.1Deloitte & Touche LLP, Independent Auditors
23.2 Consent of Ernst & Young LLP, Independent Auditors.
+23.2Auditors
23.3(1) Consent of Brobeck, Phleger & Harrison LLP (containedLLP. Included in their opinionthe
Opinion of Brobeck, Phleger & Harrison LLP filed as Exhibit 5.1).
+24.15.1
24.1 Power of Attorney (see page II-4).
- ---------------
+ Previously-----------------
(1)......Previously filed.
II-2
5
(B) FINANCIAL STATEMENT SCHEDULES INCLUDED SEPARATELY IN THE REGISTRATION
STATEMENT.
None
All other schedules are omitted because they are not required, are not
applicable or the information is included in the Consolidated Financial
Statements or notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrantregistrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant'sregistrant'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 Statementregistration 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
Companyregistrant pursuant to the foregoing provisions, described in Item 15, or otherwise, the Companyregistrant
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
Companyregistrant of expenses incurred or paid by a director, officer, or controlling
person of the Companyregistrant 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 Companyregistrant 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.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus 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.
II-3
6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Companyregistrant
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 Amendment No. 1 to
Registration Statement on Form S-3registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on the 21st day of October 1996.June 6, 2002.
LIGAND PHARMACEUTICALS INCORPORATED
By: /s/ DAVID E. ROBINSON
-------------------------------------------
David E. Robinson
Chairman,-----------------------------------
David E. Robinson, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment
No. 1 to Registration Statement on Form S-3 has been signed below by the following persons in the
capacities and on the dates indicated.indicated:
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ -----------------
/s/ David E. Robinson Chairman,June 6, 2002
- -----------------------------------------
David E. Robinson President and October 21, 1996
- ------------------------------------------ Chief Executive Officer
(David E. Robinson)
(Principal Executive Officer)
/s/ Paul V. Maier June 6, 2002
- -----------------------------------------
Paul V. Maier Senior Vice President
and Chief October 21, 1996
- ------------------------------------------ Financial Officer and
(Paul V. Maier) Treasurer
(Principal Financial and Accounting Officer)
* June 6, 2002
- -----------------------------------------
Henry F. Blissenbach Director
October 21, 1996* June 6, 2002
- ------------------------------------------
(Henry F. Blissenbach)-----------------------------------------
Alexander D. Cross Director
* June 6, 2002
- -----------------------------------------
Michael A. Rocca Director
October 21, 1996* June 6, 2002
- ------------------------------------------
(Alexander D. Cross)-----------------------------------------
John Groom Director
* June 6, 2002
- -----------------------------------------
Irving S. Johnson, Ph.D. Director
October 21, 1996* June 6, 2002
- ------------------------------------------
(John Groom)
* Director October 21, 1996
- ------------------------------------------
(Irving S. Johnson)
* Director October 21, 1996
- ------------------------------------------
(William-----------------------------------------
Carl C. Shepherd)
* /s/ David E. Robinson October 21, 1996
- ------------------------------------------
(David E. Robinson)(Attorney-in-fact)Peck Director
II-4* By: /S/ PAUL V. MAIER
------------------------------------
Paul V. Maier
Attorney-in-Fact
7
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------ -----------
1.1 Underwriting Agreement.
3.14.1 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, including any amendments or reports filed for the
purposes of Ligand Pharmaceuticals Incorporated.
+5.1updating such descriptions.
5.1(1) Opinion of Brobeck, Phleger & Harrison LLP
with respect to the securities being
registered.
10.1 Preferred Shares Rights Agreement, dated as23.1 Consent of September 13, 1996 by and between
Ligand Pharmaceuticals Incorporated and Wells Fargo Bank, N.A.
+23.1Deloitte & Touche LLP, Independent Auditors
23.2 Consent of Ernst & Young LLP, Independent Auditors.
+23.2Auditors
23.3(1) Consent of Brobeck, Phleger & Harrison LLP (containedLLP. Included in their opinionthe
Opinion of Brobeck, Phleger & Harrison LLP filed as Exhibit 5.1).
+24.15.1
24.1 Power of Attorney (see page II-4).
- ---------------
+ Previously-----------------
(1)......Previously filed.