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Executive Summary

LIGAND's REVISED IPO INCLUDES $7.5 MIL. INVESTMENT BY ALLERGAN AND GLAXO as part of the proposed 3 mil. share initial public offering. Ligand's amended offering, outlined in an Oct. 6 preliminary prospectus, scales back both the number of shares being offered and the price per share from the original levels proposed last April. Ligand is now hoping net proceeds will total $30 mil. at an assumed offering price of $11 per share, compared to the $40 mil. goal projected earlier this year. The new offering also includes commitments from R&D partners Allergan and Glaxo to purchase 474,383 and 237,192 shares, respectively, worth a combined $7.5 mil. During the interim between the original proposed offer and the amended version, Ligand has raised $22.5 mil. in equity investments from new corporate partners, improved its cash position from $2.1 mil. to $23 mil. and boosted its workforce by 50% -- from 79 employees to 119 -- including the recent appointments of four executives. The new execs, all of whom joined Ligand within the last month, include: VP-Clinical Research George Gill, MD, previously senior director of clinical research at ICI Pharmaceutical; VP-Regulatory Affairs Howard Holden, PhD, whose prior position was senior director of worldwide regulatory affairs at Parke-Davis Pharmaceutical Research; VP-R&D Planning Lloyd Flanders, PhD, also joining from Parke-Davis where he was VP-new product development for cardiovascular projects; and VP and Chief Financial Officer Paul Maier, formerly a VP and treasurer at ICN. Allergan will own approximately 16.4% of Ligand's outstanding common stock after the offering. In addition, Allergan CEO William Shepherd is a member of Ligand's board of directors. Allergan and Ligand formed a joint venture in July; each firm initially will contribute $15 mil. toward the discovery and development of retinoid drugs for the treatment of cancer, skin and eye diseases ("The Pink Sheet" July 6, T&G-12). The post-offering stakes of Ligand's other corporate partners, Glaxo and Pfizer, will be 6.8% and 10%, respectively. Glaxo joined forces with Ligand in September to develop cardiovascular disease treatment and prevention products ("The Pink Sheet" Sept. 14, T&G-6). Ligand signed an agreement with Pfizer for osteoporosis treatments in May 1991. A fourth agreement, with E. Merck, signed this October, allows Ligand to screen, at its expense, E. Merck's collection of steroid, flavonoid, and isoflavonoid compounds. Ligand has exclusive development and marketing rights in the U.S., Canada, and certain Asian countries for any product based on leads identified by Ligand among E. Merck's compounds. The German pharmaceutical firm will receive a payment for each compound screened, milestone payments during development and royalties. Co-development of "compounds of mutual interest" is also possible, Ligand said. The San Diego-based start-up is also licensing exclusive worldwide rights to a new transcription factor technology from Rockefeller University. Ligand believes the new receptor-activated factors of transcription (RAFTS) afford "the potential to develop small organic molecules which can be administered orally to mimic or block the actions" of interferon alpha and interferon gamma.

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