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Ligand Closes GBP 32.8m Acquisition of UK Structure-Based Drug Discovery Specialist Vernalis
Thursday 11 October 2018

11 October 2018 - US-based drugmaker Ligand Pharmaceuticals Inc. (NASDAQ: LGND) has closed the acquisition of the entire issued and to be issued shares of UK-based Vernalis plc (LSE: VER) through a UK scheme of arrangement, the company said.

Vernalis is a structure-based drug discovery biotechnology company with a pipeline of partnered programmes and ongoing collaborations.

Ligand's portfolio now contains more than 178 shots on goal.

Under the terms of the acquisition, Ligand paid Vernalis shareholders approximately USD 42.3m, offset by approximately USD 32m of net cash on hand at Vernalis, after deal costs.

Ligand paid Vernalis shareholders GBP 0.062 per share in cash.

On March 15, 2018 Vernalis announced that as part of its then-ongoing strategic review, it had decided to commence a formal sales process with Evercore serving as financial advisor.

As part of its strategic review Vernalis has substantially completed the closure of its US commercial operations and remains on track to have completed this by 30 September 2018. If Ligand's offer is approved by Vernalis shareholders, the transaction is expected to close in October 2018.

This deal would bring Ligand a portfolio of more than eight fully-funded partnered programmes, or shots on goal, including programs in the respiratory, oncology and CNS sectors. Partners include Corvus, Verona, Celgene, Servier, Menarini, Tris and CTI.

A 70-person R and D team based in Cambridge, England focused on fragment- and structure-based drug discovery and partnering, with an active portfolio of collaboration agreements generating over USD 8m per year of service revenue matched by a comparable level of costs, and partnerships that have the potential to generate additional near-term shots on goal.

Ligand would gain an ongoing collaboration partners include Servier, Daiichi Sankyo, Lundbeck, Asahi Kasei and an undisclosed Japanese partner.

It would also gain an established compound library and additional early-stage, unpartnered programs in oncology, CNS and other areas that will provide business development out-licensing and corporate formation opportunities.

Expected cash on hand as of June 30, 2018 is GBP 27.3m or approximately USD 36m. Ligand estimates incurring additional deal costs of approximately USD4 m, resulting in USD 32m of net cash to Ligand from the transaction.

Ligand also gains a United Kingdom-based operations that would provide a platform to more efficiently pursue investment and acquisition opportunities in Europe and the United Kingdom.

Beyond 2018, research business revenue is expected to approximate expenses with longer-term milestones and royalties being accretive to future Ligand earnings.

MTS Securities, LLC and finnCap Ltd. are serving as financial advisors and Latham Watkins LLP is serving as legal advisor to Ligand in this transaction.
Date Published: 11/10/2018
Target: Vernalis plc
Country: UK
Deal Size: 43m (USD)
Sector: Pharmaceuticals
Type: Corporate acquisition
Financing: Cash
Status: Closed
Buyer: Ligand Pharmaceuticals
Buyer Advisor: MTS Securities , finnCap , Latham Watkins