EXHIBIT 99.1
Contact: Abe Wischnia
Senior Director, Investor Relations and
Corporate Communications
858-550-7850
LIGAND AND ORGANON REACH AGREEMENT ON TERMINATION AND
RETURN OF RIGHTS ON AVINZA(R) CO-PROMOTION
SAN DIEGO, CA - January 17, 2006 -- Ligand Pharmaceuticals Incorporated
(Pink Sheets: LGND) announced today that it has signed an agreement with Organon
USA, Inc. that terminates the AVINZA(R) co-promotion agreement between the two
companies and returns AVINZA rights to Ligand.
The effective date of the termination agreement is January 1, 2006,
however the parties have agreed to continue to cooperate during a transition
period ending September 30, 2006 to promote the product. That transition period
co-operation includes a minimum number of product sales calls per quarter
(100,000 for Organon and 30,000 for Ligand with an aggregate of 375,000 and
90,000 respectively for the transition period) as well as the transition of
ongoing promotions, managed care contracts, clinical trials and Key Opinion
Leader relationships to Ligand. During the transition period Ligand will pay
Organon an amount equal to 23 percent of AVINZA net sales as reported by Ligand.
Ligand will also pay and be responsible for the design and execution of all
clinical, advertising and promotion expenses and activities.
"We are pleased to reach this agreement on AVINZA with Organon which
better aligns the strategic and financial interests of both parties to the
realities of each party's business and situation today," said David E. Robinson,
Ligand chairman, president and CEO. "This new agreement will give us the
flexibility to explore all strategic alternatives for AVINZA and Ligand with
various potential strategic partners in the coming months."
Michael Novinski, president of Organon USA, Inc., said, "This agreement
aligns with Organon's strategic and financial interests today to better focus
our resources on our current and future product portfolio. At the same time, we
remain committed to a smooth transition in the near term including continued
sales calls and transition activities on AVINZA. We look forward to its
continuing success given our long-term financial interest to earn a return for
our shareholders on our investments in AVINZA over the past three years."
The companies have resolved their disagreement concerning prior
co-promote fees and Ligand will pay Organon $14.75 million by January 30, 2006.
In consideration of the early termination and return of rights under the terms
of the agreement, Ligand will unconditionally pay Organon $37.75 million on or
before October 15, 2006. Ligand will further pay Organon $10.0 million on or
before January 15, 2007, provided that Organon has made its minimum required
level of sales calls. Under certain conditions, including change of control, the
cash payments will accelerate. In addition, after the termination, Ligand will
make quarterly royalty payments to Organon equal to 6.5 percent of AVINZA net
sales through December 31, 2012 and thereafter six percent through patent
expiration, currently anticipated to be November of 2017.
ABOUT AVINZA
AVINZA (oral morphine sulfate extended-release capsules) is the first
true once-a-day treatment for chronic moderate-to-severe pain in patients who
require continuous, around-the-clock opioid therapy for an extended period of
time. Approved by the FDA in March 2002, AVINZA consists of two components: an
immediate-release component that rapidly achieves plateau morphine
concentrations in plasma, and an extended-release component that maintains
plasma concentrations throughout a 24-hour dosing interval. Ligand co-promotes
AVINZA with Organon Pharmaceuticals USA Inc. in the United States.
ABOUT LIGAND
Ligand discovers, develops and markets new drugs that address critical
unmet medical needs of patients in the areas of cancer, pain, skin diseases,
men's and women's hormone-related diseases, osteoporosis, metabolic disorders,
and cardiovascular and inflammatory diseases. Ligand's proprietary drug
discovery and development programs are based on its leadership position in gene
transcription technology, primarily related to intracellular receptors. For more
information, go to www.ligand.com.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the
meaning of section 21E of the Securities Exchange Act of 1934, as amended, that
involve risks and uncertainties and reflect Ligand's judgment as of the date of
this release. These statements include those related to the terms of the
co-promotion termination agreement, future AVINZA sales efforts, the number of
sales calls during the transition period, AVINZA's market position and Ligand's
exploration of strategic alternatives. Actual events or results may differ from
our expectations. For example, there can be no assurance that the expected
number of sales calls will actually be made during the transition period or
thereafter or that those made will lead to additional AVINZA prescriptions, that
AVINZA's position in the market will not decline, that the termination of the
co-promotion agreement will have any beneficial effect on Ligand or on the
exploration of strategic alternatives. Additional information concerning these
and other risk factors affecting Ligand can be found in prior press releases as
well as in public periodic filings with the Securities and Exchange Commission,
available via www.ligand.com. Ligand disclaims any intent or obligation to
update these forward-looking statements beyond the date of this release. This
caution is made under the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995.
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