Ligand Pharmaceuticals Incorporated has entered into a definitive merger agreement to acquire Pharmacopeia, in a deal valued up to $70 million. The transaction is structured as a stock-for-stock exchange and in addition, Pharmacopeia stockholders will be entitled to a Contingent Value Right (CVR). The CVRs will entitle holders under certain circumstances to a cash payment of an aggregate of $15 million for all Pharmacopeia stockholders.

"We are very excited about combining Pharmacopeia with Ligand," said John L Higgins, president and chief executive officer of Ligand Pharmaceuticals. "Ligand stockholders will gain access to numerous royalty partnerships, additional pipeline assets, drug discovery resources and cash and NOLs. Pharmacopeia's shareholders will receive a substantial amount of equity in a well capitalized company with lucrative potential royalties, an expanded pipeline and financial liquidity."

Higgins added, "We are committed to running a company that has a broad array of royalty assets and pipeline programmes, backed by a strong balance sheet and staunch spending discipline. This is a unique opportunity for Ligand and Pharmacopeia shareholders. Both companies have similar growth strategies, and our respective drug discovery platforms are a great marriage of biology and chemistry resources. The acquisition of Pharmacopeia will complement and accelerate our product development programmes, strengthen our research capability and increase our potential royalty streams."

Joseph A Mollica, chairman of the Board and Interim president and chief executive officer of Pharmacopeia, stated, "Pharmacopeia's portfolio of programmes is an excellent complement to Ligand's pipeline and over the next decade we believe the combined company will have important product introductions. On behalf of our Board, I would like to thank all of our employees for the dedication they have shown in pursuit of our scientific goals and the value they have created for our shareholders. We are excited about this transaction and look forward to sharing in the potential upside of the combined businesses by joining forces with a strong company like Ligand."

"We are impressed with the quality of Pharmacopeia's drug partnerships," Higgins continued. "The addition of Pharmacopeia's impressive partnership roster of leading pharmaceutical companies, including Schering Plough, Bristol Myers Squibb, Wyeth, GlaxoSmithKline, Celgene and Cephalon will provide a number of new opportunities to create value for our shareholders. We look forward to carefully evaluating our options for maximizing the value of Pharmacopeia's DARA programme. By combining the two companies, we expect to achieve considerable cost savings by consolidating certain administrative and operating functions, as well as reducing the expenses through rigorous evaluation of our spending priorities."

Goldman Sachs acted as financial advisor to Ligand and Cowen and Company acted as financial advisor to Pharmacopeia. Latham & Watkins LLP served as legal advisors to Ligand and Dechert LLP served as legal advisors to Pharmacopeia.

Pharmacopeia is a clinical development stage biopharmaceutical company dedicated to discovering and developing novel small molecule therapeutics to address significant medical needs.

Ligand discovers and develops new drugs that address critical unmet medical needs of patients with thrombocytopenia, hepatitis C, hormone-related diseases, osteoporosis, inflammatory diseases and anemia.