Ligand Pharmaceuticals Incorporated (NASDAQ: LGND)
announced today the pricing of $650 million aggregate principal
amount of 0.75% convertible senior notes due 2023 in a private
offering to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended. Ligand has granted
the initial purchasers a 13-day option to purchase up to an
additional $100 million aggregate principal amount of the notes,
solely to cover overallotments, if any.
The notes will be unsecured senior obligations of Ligand. The
notes will pay interest semi-annually at a rate of 0.75% per year.
The notes will mature on May 15, 2023, unless earlier repurchased
or converted in accordance with their terms. The conversion rate
for the notes will initially be 4.0244 shares per $1,000 principal
amount of notes, which is equivalent to an initial conversion price
of approximately $248.48 per share of common stock, and is subject
to adjustment under the terms of the notes. The initial conversion
price of the notes represents a premium of approximately 30% to the
$191.14 per share closing price of Ligand’s common stock on May 17,
2018. Prior to November 15, 2022, the notes will be convertible
only upon satisfaction of certain conditions and during certain
periods, and thereafter, the notes will be convertible at any time
until the close of business on the second scheduled trading day
immediately preceding the maturity date. Upon conversion, Ligand
will satisfy its conversion obligation by paying or delivering, as
applicable, shares of its common stock, cash or a combination of
shares of its common stock and cash, at Ligand’s election. However,
Ligand will agree to settle all conversions in cash until such time
as Ligand has a sufficient number of authorized but unissued shares
of its common stock available to settle conversions of all
then-outstanding notes in shares of common stock and has reserved
such shares of common stock for such conversions. Holders of the
notes will have the right to require Ligand to repurchase all or
some of their notes for cash at 100% of their principal amount,
plus any accrued and unpaid interest, upon the occurrence of
certain corporate events, subject to certain conditions. The sale
of the notes is expected to close on May 22, 2018, subject to
customary closing conditions.
Ligand intends to use approximately $43.6 million of the net
proceeds from the offering of the notes to pay the cost of certain
convertible note hedge transactions, taking into account the
proceeds to Ligand of certain warrant transactions, each as
described below, and intends to use approximately $49.7 million of
the proceeds to repurchase approximately 260,000 shares of Ligand’s
common stock from purchasers of the notes in privately negotiated
transactions, which could increase (or reduce the size of any
decrease in) the market price of Ligand’s common stock prior to,
concurrently with, or shortly after the pricing of the notes, and
could result in a higher effective conversion price for the notes.
Ligand expects to use the remainder of the net proceeds from the
offering of the notes to acquire or invest in complementary
businesses, companies, products and technologies and for working
capital and other general corporate purposes, including, without
limitation, research and development activities to maintain
Ligand’s platform technologies and for development of Ligand’s
product candidates being developed internally. Ligand has no
current commitments or obligations with respect to any acquisitions
or other strategic transactions.
Ligand has entered into convertible note hedge transactions with
certain of the initial purchasers or their respective affiliates or
other financial institutions (the “option counterparties”). The
convertible note hedge transactions are expected generally to
reduce the potential dilution to Ligand’s common stock and/or
offset any potential cash payments Ligand is required to make in
excess of the principal amount upon conversion of the notes in the
event that the market price of Ligand’s common stock is greater
than the strike price of the convertible note hedge transactions.
Ligand also expects to enter into warrant transactions with the
option counterparties. The warrant transactions could separately
have a dilutive effect if the market price of Ligand’s common stock
exceeds the strike price of the warrant transactions. To the extent
that at the time such obligations are due Ligand has insufficient
authorized shares available to satisfy its obligations under the
warrants in Ligand’s common stock, Ligand would be required to
satisfy those obligations in cash. The strike price of the warrant
transactions will initially be approximately $315.38 per share,
which represents a premium of 65% over the last reported sale price
of Ligand’s common stock on May 17, 2018, and is subject to certain
adjustments under the terms of the warrant transactions.
Ligand has been advised by the option counterparties that, in
connection with establishing their initial hedge position with
respect to the convertible note hedge transactions and warrant
transactions, the option counterparties and/or their respective
affiliates expect to purchase shares of Ligand’s common stock
and/or enter into various derivative transactions with respect to
Ligand’s common stock concurrently with, or shortly after, the
pricing of the notes. This activity could increase (or reduce the
size of any decrease in) the market price of Ligand’s common stock
or the notes at that time.
Ligand has also been advised by the option counterparties that
the option counterparties or their respective affiliates are likely
to modify their hedge positions by entering into or unwinding
various derivative transactions with respect to Ligand’s common
stock and/or purchasing or selling Ligand’s common stock or other
of Ligand’s securities or instruments, including the notes in
secondary market transactions following the pricing of the notes
and prior to the maturity of the notes.
The option counterparties may choose to engage in, or to
discontinue engaging in, any of these transactions with or without
notice at any time, and their decisions will be in their sole
discretion. The effect, if any, of such activities of the option
counterparties, including direction or magnitude, on the market
price of Ligand’s common stock or the price of the notes will
depend on a variety of factors, including market conditions, and
cannot be ascertained at this time.
The notes were offered to qualified institutional buyers
pursuant to Rule 144A under the Securities Act. Neither the notes
nor the shares of common stock issuable upon conversion of the
notes, if any, have been registered under the Securities Act or the
securities laws of any other jurisdiction, and the notes and any
such shares may not be offered or sold absent registration or an
applicable exemption from such registration requirements.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any notes or common stock, nor
shall there be any sale of notes or common stock in any state or
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any state or any jurisdiction.
About Ligand Pharmaceuticals
Ligand is a biopharmaceutical company focused on developing or
acquiring technologies that help pharmaceutical companies discover
and develop medicines. We have a diversified portfolio of biotech
and pharmaceutical product revenue streams that are supported by an
efficient and low corporate cost structure. Ligand’s Captisol®
platform technology is a patent-protected, chemically modified
cyclodextrin with a structure designed to optimize the solubility
and stability of drugs. OmniAb® is a patent-protected transgenic
animal platform used in the discovery of fully human mono- and
bispecific therapeutic antibodies. Ligand has established multiple
alliances, licenses and other business relationships with the
world's leading pharmaceutical companies including Novartis, Amgen,
Merck, Pfizer, Celgene, Gilead, Janssen, Baxter International and
Eli Lilly.
Forward-Looking Statements
This news release contains forward-looking statements by Ligand
that involve risks and uncertainties and reflect Ligand's judgment
as of the date of this release. Words such as “plans,” “believes,”
“expects,” “anticipates,” and “will,” and similar expressions, are
intended to identify forward-looking statements. These
forward-looking statements include, without limitation, statements
regarding: the closing of the offering, the use of the net proceeds
from the offering and potential share repurchases. Actual events or
results may differ from Ligand's expectations due to risks and
uncertainties inherent in Ligand’s business, including, without
limitation: risks and uncertainties associated with market
conditions; and the satisfaction of closing conditions related to
the proposed offering. The failure to meet expectations with
respect to any of the foregoing matters may reduce Ligand's stock
price. Additional information concerning these and other risk
factors affecting Ligand can be found Ligand's public periodic
filings with the Securities and Exchange Commission available at
www.sec.gov. 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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version on businesswire.com: https://www.businesswire.com/news/home/20180518005112/en/
Ligand Pharmaceuticals IncorporatedTodd Pettingill,
858-550-7893investors@ligand.comorLHA Investor RelationsBruce Voss,
310-691-7100bvoss@lhai.com
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