EXHIBIT 99.1
CONTACT:
Paul V. Maier
Senior Vice President
and Chief Financial Officer
858-550-7573
Abe Wischnia
Senior Director of Investor Relations
and Corporate Communications
858-550-7850
LIGAND TO RESTATE FINANCIAL RESULTS
AUDIT COMMITTEE COMPLETES ACCOUNTING REVIEW
SAN DIEGO, CA - May 20, 2005 - Ligand Pharmaceuticals Incorporated
(Nasdaq: LGNDE) today announced that it will restate its consolidated financial
statements as of and for the years ended December 31, 2002 and 2003 and as of
and for the quarters of 2003 and the first three quarters of 2004. Accordingly,
such consolidated financial statements should not be relied upon. In addition,
the previously announced Audit Committee review has been completed.
The Audit Committee and management, in consultation with the Company's
current independent registered public accounting firm, independently reviewed
the Company's revenue recognition practices and policies for product sales for
2002 and 2003 and each of the three quarters in the period ended September 30,
2004. Both reviews focused on whether the Company had properly recognized
revenue on product shipments to distributors under SFAS 48 - "Revenue
Recognition when Right of Return Exists" and SAB No. 104 -"Revenue Recognition."
Based on the results of the reviews, it was determined that the Company had not
met the criteria under SFAS 48 and SAB 104 to recognize revenue upon shipment.
As a result of this error, the Company has determined to restate its
financial results and anticipates reporting its results using a revenue
recognition model that reflects sell-through
accounting. Under sell-through accounting, revenue is not recognized until after
the product has been subsequently shipped from the wholesalers.
The Audit Committee review found no evidence of improper or fraudulent
actions or practices by any member of management or that management acted in bad
faith in adopting and administering the Company's historical revenue recognition
policies.
"We are committed to using appropriate revenue recognition for our
products and we are working to diligently complete the restatement of our
consolidated financial statements and make the applicable regulatory filings,"
said Paul V. Maier, Ligand's senior vice president and chief financial officer.
The Company is also continuing its work to review the accounting and
classification of its sales of royalty rights in its consolidated statements of
operations.
The filing of the Company's Form 10-K annual report for the year ended
December 31, 2004 and the Company's Form 10-Q quarterly report for the quarter
ended March 31, 2005 will be further delayed pending the anticipated completion
of the restated consolidated historical financial statements. Because of the
delay in filing these Forms 10-K and 10-Q, the Company is not in compliance with
the NASDAQ Stock Market's continued listing requirement set forth in Marketplace
Rule 4310(c)(14). The Company received a NASDAQ Staff Determination Letter dated
May 18, 2005 regarding the Company's failure to timely file the March 2005 Form
10-Q. A NASDAQ Listing Qualifications Panel previously agreed to continue the
listing of the Company's securities on the NASDAQ National Market provided that
the Company files these Forms 10-K and 10-Q on or before July 29, 2005.
Under the PCAOB's Audit Standard No. 2, the circumstance of a
restatement is a strong indicator that a material weakness exists in the
Company's internal control over financial
reporting. In addition to the material weakness which is expected to result from
the restatement, additional control deficiencies may be identified during the
process which individually or in the aggregate may constitute an additional
material weakness.
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 (IRs).
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 review of the company's
accounting and accounting policies, revenue recognition models, sale of royalty
rights, changes to or restatement of consolidated financial statements,
modification of policies, audit of consolidated financial statements, new
determinations and calculations, time to complete the review and audit and
internal controls over financial reporting and continued NASDAQ listing. Actual
events or results may differ materially from Ligand's expectations. There can be
no assurance that the review or subsequent processes or filings will be timely
completed or that NASDAQ listing will be continued, that any modifications or
changes
can be timely or effectively implemented or implemented before any delisting
proceeding is concluded by the NASDAQ Stock market, that other errors or
internal control deficiencies or weaknesses will not be identified during the
preparation and audit of the consolidated financial statements nor that
adjustments for other periods will not be required. In addition, our financial
results and stock price may suffer as a result of this review and any subsequent
determinations from this process or any actions taken by NASDAQ or other
regulatory bodies as a result of this process. Additional information concerning
these and other risk factors affecting Ligand's business can be found in prior
press releases as well as in Ligand's public periodic filings with the
Securities and Exchange Commission, available via Ligand's web site at
http://www.ligand.com. Ligand disclaims any intent or obligation to update these
forward-looking statements beyond the date of this release.
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