Ligand Pharmaceuticals Incorporated and Metabasis Therapeutics, Inc have entered into a definitive merger agreement under which Ligand will acquire all of the outstanding shares of Metabasis.

Under the transaction, Metabasis stockholders will receive a cash payment at the closing of the transaction of approximately US$ 3.2 million, less Metabasis' estimated net liabilities at closing and an amount to be deposited in the stockholders' representative's fund (Metabasis currently estimates the closing payment to be approximately US$ 1.8 million in cash). In addition, Metabasis stockholders will receive for each Metabasis share four tradable Contingent Value Rights (CVRs) that will be registered on a Form S-4 registration statement to be filed by Ligand with the Securities and Exchange Commission. The CVRs will entitle Metabasis stockholders to cash payments as frequently as every six months as cash is received by Ligand from proceeds from the sale or partnering of any of the Metabasis drug development programs, among other triggering events. Ligand has committed to spend at least $8 million in new research and development funding on the Metabasis programmes within 42 months following the closing of the transaction.

The Ligand and Metabasis Boards of Directors have unanimously voted in favour of the transaction. Stockholders of Metabasis representing approximately 29 per cent of the outstanding shares of Metabasis have signed voting agreements in support of the transaction. Merriman Curhan Ford acted as financial advisor to Metabasis with respect to this transaction.

"This transaction utilizes a creative structure that we believe is potentially highly beneficial to the stockholders of both companies," said John L Higgins, president and chief executive officer of Ligand Pharmaceuticals. "Ligand obtains numerous high-quality partnered and development-stage programmes that will increase our revenue potential and expand our pipeline of proprietary assets. In exchange, the non-partnered Metabasis programmes will be advanced by a company with strong and proven research credentials, with the goal of generating cash proceeds payable directly to Metabasis stockholders. If any or all of the Metabasis programmes are financially successful, stockholders at both companies will benefit meaningfully from their shared participation in the programmes."

Mark D Erion, president, chief executive officer and chief scientific officer of Metabasis, stated, "Metabasis has built a pipeline of product candidates and drug development programmes that have the potential to one day yield new therapies for metabolic and chronic liver diseases, but due to our limited financial and operational resources, we are unable to independently realize their full potential value. Ligand's strong research and business development capabilities, coupled with its solid financial position and its commitment to additional research and development funding as part of this transaction, gives Metabasis' portfolio of programs the potential to deliver significant future value to Metabasis' stockholders."

Metabasis is a biopharmaceutical company that has discovered novel drugs for metabolic diseases using its proprietary technology and its knowledge of processes and pathways within the liver that are useful for liver-selective drug targeting and treatment of metabolic diseases.
Ligand discovers and develops new drugs that address critical unmet medical needs of patients with muscle wasting, frailty, hormone-related diseases, osteoporosis, inflammatory diseases, anaemia, asthma, rheumatoid arthritis and psoriasis.