UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Mark One
[ X ]Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, l996 or
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From _____ to _____ . Commission File Number: 0-20720
LIGAND PHARMACEUTICALS INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Delaware 77-0160744
(State or Other Jurisdiction of (I.R.S. Employer
Incorporated or organization) Identification No.)
9393 Towne Centre Drive 92121
San Diego, CA (Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (619)535-3900
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No ___
As of June 30, 1996 the registrant had 28,110,711 shares of
Common Stock outstanding.
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LIGAND PHARMACEUTICALS INCORPORATED
QUARTERLY REPORT
FORM 10-Q
TABLE OF CONTENTS
COVER PAGE...................................................................1
TABLE OF CONTENTS............................................................2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995....3
Consolidated Statements of Operations for the three and
six months ended June 30, l996 and 1995..................................4
Consolidated Statements of Cash Flows for the three and
six months ended June 30, l996 and 1995..................................5
Notes to Consolidated Financial Statements...............................6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings..............................................11
ITEM 2. Changes in Securities...........................................*
ITEM 3. Defaults upon Senior Securities.................................*
ITEM 4. Submission of Matters to a Vote of Security Holders............11
ITEM 5. Other Information...............................................*
ITEM 6. Exhibits and Reports on Form 8-K...............................12
SIGNATURE...................................................................13
* No information provided due to inapplicability of item.
2
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PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
LIGAND PHARMACEUTICALS INCORPORATED
Consolidated Balance Sheets
(in thousands, except share data)
<CAPTION>
June 30, December 31,
1996 1995
--------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11,228 $ 15,963
Short-term investments 45,473 54,182
Receivable from a related party 1,978 2,286
Other current assets 784 577
---------- -----------
Total current assets 59,463 73,008
Restricted short-term investments 3,746 6,759
Property and equipment, net 11,922 12,272
Notes receivable from officers and employees 536 485
Other assets 1,006 1,070
----------- -----------
$ 76,673 $ 93,594
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,425 $ 3,940
Accrued liabilities 5,636 6,705
Deferred revenue 2,014 2,608
Current portion of obligations under
capital leases 2,551 2,406
---------- -----------
Total current liabilities 12,626 15,659
Long-term obligations under capital leases 8,714 8,585
Convertible subordinated debentures 32,616 31,279
Convertible note 10,000 10,000
Stockholders' equity:
Convertible preferred stock,
$.001 par value; 5,000,000 shares authorized;
none issued -- -- -- --
Common stock, $.001 par value;
80,000,000 shares authorized 28,146,386
shares and 27,800,597 shares issued at
June 30, l996 and December 31, 1995,
respectively 28 28
Paid-in capital 175,102 173,452
Warrant subscription receivable (3,718) (4,524)
Adjustment for unrealized gains (losses) on
available-for-sale securities (266) 217
Accumulated deficit (157,401) (140,281)
Deferred compensation and consulting fees (565) (819)
---------- ------------
13,180 28,073
Less treasury stock, at cost (35,675 shares)(463) (2)
---------- ------------
Total stockholders' equity 12,717 28,071
---------- ------------
$ 76,673 $ 93,594
========== ===========
<FN>
SEE ACCOMPANYING NOTES.
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LIGAND PHARMACEUTICALS INCORPORATED
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share data)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
Revenues:
Collaborative research
and development:
Related parties $ 4,026 $ 2,324 $ 7,262 $ 4,455
Unrelated parties 4,403 2,994 9,878 5,476
Other 61 36 118 36
----------- ----------- ---------- ---------
8,490 5,354 17,258 9,967
Costs and expenses:
Research and development 14,811 9,065 27,081 16,026
Selling, general and
administrative 2,554 2,069 5,172 3,769
Write-off of in-process
technology -- -- 19,869 -- -- 19,869
ALRT contribution -- -- 17,500 -- -- 17,500
------------ ----------- ---------- -------
Total operating expenses 17,365 48,503 32,253 57,164
Loss from operations (8,875) (43,149) (14,995) (47,197)
Interest income 902 726 1,999 1,192
Interest expense (2,067) (926) (4,124) (1,292)
Equity in operations of
joint venture -- -- 1,805 -- -- -- --
------------ ----------- --------- ---------
Net loss $ (10,040) $ (41,544) $ (17,120)$ (47,297)
============ =========== ========== =========
Net loss per share $ (.36) $ (1.87) $ (.61) $ (2.33)
=========== =========== ========== =========
Shares used in computing
loss per share 28,070,756 22,179,926 27,990,368 20,271,040
========== =========== ========== ==========
<FN>
SEE ACCOMPANYING NOTES.
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LIGAND PHARMACEUTICALS INCORPORATED
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
<CAPTION>
Six Months Ended
June 30,
1996 1995
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (17,120) $ (47,297)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization 1,914 945
Amortization of notes receivable from
officers and employees 129 131
Write-off of in process technology -- -- 19,869
Amortization of deferred compensation
and consulting fees 254 365
Accretion of debt discount 1,337 317
Receipt of Company Stock for milestone
revenue payment (438) -- --
Change in operating assets and liabilities:
Other current assets (207) 801
Receivable from a related party 308 (363)
Accounts payable and accrued liabilities (2,584) 20
Deferred revenue (594) (311)
---------- ----------
Net cash used in operating activities (17,001) (25,523)
INVESTING ACTIVITIES
Purchase of short-term investments (35,127) (1,342)
Proceeds from short-term investments 43,352 16,560
Increase in notes receivable from officers
and employees (180) (110)
Increase in deposits and other assets -- -- (211)
Decrease in deposits and other assets 64 32
Purchase of property and equipment (252) (272)
Investment in joint venture -- -- (815)
Net cash acquired in Glycomed acquisition -- -- 10,225
---------- ----------
Net cash provided by investing activities 7,857 24,067
FINANCING ACTIVITIES
Principal payments on obligations under capital
leases and equipment notes payable (1,039) (689)
Net change in restricted cash 3,013 (1,795)
Net proceeds from sale of common stock 2,435 10,212
---------- -----------
Net cash provided by financing activities 4,409 7,728
---------- -----------
Net increase (decrease) in cash and cash equivalents (4,735) 6,272
Cash and cash equivalents at beginning of period 15,963 7,628
---------- ----------
Cash and cash equivalents at end of period $ 11,228 $ 13,900
========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 2,742 $ 504
Acquisition of short-term investments from
Glycomed merger -- -- 41,983
Acquisition of restricted cash from Glycomed merger -- -- 4,715
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Additions to obligations under capital leases $ 1,313 $ 2,781
Warrant subscription receivable issued
with ALRT offering $ -- -- $ 5,850
Stock issued from Glycomed merger $ -- -- $ 41,959
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LIGAND PHARMACEUTICALS INCORPORATED
Notes to Consolidated Financial Statements
(Unaudited)
June 30, 1996
1. BASIS OF PRESENTATION
The consolidated financial statements of Ligand Pharmaceuticals
Incorporated (the "Company") for the six months ended June 30,
1996 and 1995 are unaudited. These financial statements reflect
all adjustments, consisting of only normal recurring adjustments which,
in the opinion of management, are necessary to fairly present the
consolidated financial position as of June 30, 1996 and the
consolidated results of operations for the three and six months
ended June 30, 1996 and 1995. The results of operations for the
periods ended June 30, 1996 are not necessarily indicative of the
results to be expected for the year ending December 31, 1996. For
more complete financial information, these financial statements, and
the notes thereto, should be read in conjunction with the
consolidated audited financial statements for the year ended
December 31, 1995 included in the Ligand Pharmaceuticals
Incorporated Form 10-K filed with the Securities and Exchange
Commission.
In October 1995, the Financial Accounting Standards Board ("FASB")
issued SFAS 123, "Accounting for Stock-Based Compensation",
effective for fiscal years beginning after December 15, 1995. SFAS
123 establishes and encourages the use of the fair value based
method of accounting for stock-based compensation arrangements,
under which compensation cost is determined using the fair value of
stock-based compensation, determined as of the grant date, and is
recognized over the periods in which the related services are
rendered. The statement also permits companies to elect to continue
using the current implicit value accounting method specified in
Accounting Principles Board (ABP) Opinion No. 25 to account for
stock-based compensation. The Company has elected to retain its
current implicit value based method, and will be required to
disclose the pro forma effect of using the fair value based method
to account for its employee stock-based compensation. Pro-forma
disclosures reflecting the effects of the fair value method are not
required for interim financial statements.
In March 1995, the FASB issued Statement No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," which requires impairment losses to be recorded on
longlived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount.
Statement 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. The Company adopted Statement
121 in the first quarter of 1996 and such adoption has had no effect
on the Company's financial position and results of operations.
2. ALLERGAN LIGAND RETINOID THERAPEUTICS, INC.
On June 30, 1992, the Company entered into agreements with Allergan,
Inc. ("Allergan") whereby the Allergan-Ligand Joint Venture (the
"Joint Venture") was established to research, develop, license and
commercialize products related to the use of intracellular receptors
in the treatment of certain diseases and disorders.
In December 1994, the Company and Allergan, formed Allergan Ligand
Retinoid Therapeutics, Inc. ("ALRT") to continue the research and
development activities previously conducted by the Joint Venture.
In June 1995, the Company and ALRT completed a public offering of
3,250,000 units (the "Units") with aggregate proceeds of $32.5
million (the "ALRT Offering") and cash contributions by Allergan and
the Company of $50.0 million and $17.5 million, respectively,
providing for net proceeds of $94.3 million for retinoid product
research and development. Each Unit consisted of one share of
ALRT's callable Common Stock and two warrants, each warrant
entitling the holder to purchase one share of the Common Stock of
the Company. Immediately prior to the consummation of the ALRT
Offering on June 3, 1995, Allergan Pharmaceuticals (Ireland) Ltd.,
Inc. made a $6.0 million investmentin the Company's Common Stock.
The Company's $17.5 million cash contribution resulted in a one-time
charge to operations. The Company also recorded a warrant subscription
receivable and corresponding increase in paid-in capital of $5.9
million pursuant to the ALRT Offering. During the first six months
of 1996, $806,000 of the proceeds received from ALRT were applied to the
warrant subscription receivable. In conjunction with the
consummation of the ALRT Offering, all rights held by the Joint
Venture were licensed to ALRT. The Company, Allergan and ALRT
entered into various agreements in connection with the funding of
ALRT. After June 3, 1995, cash received from ALRT pursuant to the
agreements was prorated between contract revenue and the warrant
subscription receivable based on their respective values.
Contributions made by the Company to the Joint Venture related to
the period from January 1, 1995, through June 30, 1995 were
retroactively reimbursed by ALRT and previous equity losses
recognized for the six month period from the Joint Venture
operations were reversed.
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3. MERGER WITH GLYCOMED
In May 1995, Glycomed Incorporated ("Glycomed") became a wholly-
owned subsidiary of the Company pursuant to the merger of a
subsidiary of the Company with and into Glycomed ("the Merger").
Glycomed is a biopharmaceutical company conducting research and
development of pharmaceuticals based on biological activities of
complex carbohydrates. Each outstanding share of Glycomed Common
Stock was converted into 0.5301 shares of Common Stock, resulting
in the issuance of 6,942,911 shares of the Common Stock to Glycomed
shareholders. The Merger was accounted for using the purchase
method of accounting. The excess of the purchase price over the
fair value of the net assets acquired was allocated to in-process
technology and was written off, resulting in a one time non-cash
charge to results of operations of approximately $20.0 million.
The results of operations of Glycomed are included in the Company's
consolidated results of operations from the date of the Merger.
4. PFIZER INC. LITIGATION
In December 1994, the Company filed suit against Pfizer Inc.
("Pfizer") in the Superior Court of California in San Diego County
for breach of contract and for a declaration of future rights as
they relate to droloxifene, a compound upon which the Company
performed work at Pfizer's request during a collaboration between
Pfizer and the Company to develop drugs in the field of
osteoporosis. Droloxifene is an estrogen antagonist/partial agonist
with potential indications in the treatment of osteoporosis and
breast cancer as well as other applications. The Company and
Pfizer entered into a settlement agreement with respect to the
lawsuit in April 1996. Under the terms of the settlement agreement,
the Company is entitled to receive milestone payments if Pfizer
continues development, and royalties if Pfizer commercializes
droloxifene. At the option of either party, milestone and royalty
payments owed to the Company can be satisfied by Pfizer
transferring to the Company shares of the Company's Common Stock
previously purchased by Pfizer, at an exchange ratio of $12.375 per
share. In May 1996, Pfizer transferred to the Company 28,272
shares of the Company's Common Stock for milestone payments which
resulted in revenues of $438,000. According to recent
announcements by Pfizer, droloxifene has entered Phase II clinical
trials for osteoporosis and Phase III clinical trials for breast
cancer.
7
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PART I. FINANCIAL INFORMATION
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Since January 1989, the Company has devoted substantially all of
its resources to its intracellular receptor and Signal Transducers
and Activators of Transcription drug discovery and development
programs. The Company has been unprofitable since its inception and
expects to incur substantial additional operating losses for the
next several years, due to continued requirements for research and
development, preclinical testing, regulatory activities,
establishment of manufacturing processes and a sales and marketing
capabilities. The Company expects that losses will fluctuate from
quarter to quarter as a result of differences in the timing of
expenses incurred and the revenues earned from collaborative
arrangements. Some of these fluctuations may be significant. As of
June 30, 1996, the Company's accumulated deficit was $157.4
million.
In May 1995, Glycomed Incorporated ("Glycomed") became into a
wholly owned subsidiary of the Company pursuant to the merger of a
subsidiary of the Company with and into Glycomed ("the Merger").
Glycomed is a biopharmaceutical company conducting research and
development of pharmaceuticals based on biological activities of
complex carbohydrates. Each outstanding share of Glycomed Common
Stock was converted into 0.5301 shares of Common Stock, resulting
in the issuance of 6,942,911 shares of the Common Stock to Glycomed
shareholders. The Merger was accounted for using the purchase
method of accounting. The excess of the purchase price over the
fair value of the net assets acquired was allocated to in-process
technology and was written off, resulting in a one time non-cash
charge to operations of approximately $20.0 million. The results
of operations of Glycomed are included in the Company's results of
operations from the date of the Merger.
In December 1994, the Company and Allergan, Inc. ("Allergan")
formed Allergan Ligand Retinoid Therapeutics, Inc. ("ALRT") to
continue the research and development activities previously
conducted by the Allergan Ligand Joint Venture (the "Joint
Venture"). In June 1995, the Company and ALRT completed a public
offering of 3,250,000 units (the "Units") with aggregate proceeds
of $32.5 million ( the "ALRT Offering") and cash contributions by
Allergan and the Company of $50.0 million and $17.5 million,
respectively, providing for net proceeds of $94.3 million for
retinoid product research and development. Each Unit consisted of
one share of ALRT's callable Common Stock and two warrants, each
warrant entitling the holder to purchase one share of the Common
Stock of the Company. Immediately prior to the consummation of the
ALRT Offering on June 3, 1995, Allergan Pharmaceuticals (Ireland)
Ltd., Inc. made a $6.0 million investment in the Company's Common
Stock. The Company's $17.5 million cash contribution resulted in a
one-time charge to operations. The Company also recorded a warrant
subscription receivable and corresponding increase in paid-in capital
of $5.9 million pursuant to the ALRT Offering. During the first six
months of 1996, $806,000 of the proceeds received from ALRT were applied
to the warrant subscription receivable. In conjunction with the
consummation of the ALRT Offering, all rights held by the Joint
Venture were licensed to ALRT. The Company, Allergan and ALRT
entered into various agreements in connection with the funding of
ALRT. After June 3, 1995, cash received from ALRT pursuant to the
agreements was prorated between contract revenue and the warrant
subscription receivable based on their respective values.
Contributions made by the Company to the Joint Venture related to
the period from January 1, 1995, through June 30, 1995 were
retroactively reimbursed by ALRT and previous equity losses
recognized for the six month period from the Joint Venture
operations were reversed.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 ("1996"), COMPARED WITH THREE
MONTHS ENDED JUNE 30, 1995 ("1995")
The Company had revenues of $8.5 million for 1996 compared to
revenues of $5.4 million for 1995. The increase in revenues is due
to an expanded and amended research and development agreement
entered into in January 1996 with Wyeth-Ayerst Laboratories, the
pharmaceutical division of American Home Products Corporation
("AHP") (which began in September 1994), a full quarter effect of
the collaborative research agreement with Sankyo Company, Ltd.
("Sankyo") (which became effective the date of the Merger), and
increased revenue from ALRT. Revenues in 1996 were derived from
the Company's research and development agreements with (i) ALRT of
$4.0 million, (ii) AHP of $1.5 million, (iii) Abbott Laboratories
("Abbott") of $725,000, (iv) Sankyo of $666,000, (v) SmithKline
Beecham Corporation ("SmithKline") of $596,000, (vi) Glaxo-Wellcome
plc ("Glaxo") of $514,000, as well as from milestone revenue from
Pfizer Inc. ("Pfizer") of $438,000 and product sales of Ligand
(Canada) inlicensed products of $60,000. Revenues in 1995 were
derived from the Company's research and development agreements with
(i) ALRT of $2.3 million, (ii) AHP of $1.0 million, (iii) Abbott of
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$625,000, (iv) SmithKline of $608,000, (v) Glaxo $544,000, (vi)
Sankyo of $311,000 and from product sales of Ligand (Canada) in-
licensed products of $36,000.
For 1996, research and development expenses increased to $14.8
million from $9.1 million in 1995. These expenses increased
primarily due to expansion of the Company's research and
development programs, additions of research and development
personnel, and inclusion of the cost of Glycomed's operations for a
full quarter in 1996. Selling, general and administrative expenses
increased to $2.6 million in 1996 from $2.1 million in 1995. The
increase was primarily due to the expansion of the Company's sales
and marketing activities, additions to personnel to support
expanded research and development programs, and legal expenses
related to the Pfizer litigation. Interest income increased to
$902,000 in 1996 from $726,000 in 1995. The increase in interest
income was a result of an increase in cash balances due to the
Merger, increased research revenues, and additional equity
investments, offset by net usage of cash to support expansion
activities. Interest expense increased to $2.1 million in 1996 from
$926,000 in 1995. The increase was primarily due to interest
required under Glycomed's Convertible Subordinated Debentures
("Debentures"), accretion of debt discount of the Debentures and
additional capital lease obligations used to finance equipment.
The 1995 equity gain in operations of the Joint Venture of $1.8
million was due to the dissolution of the Joint Venture and the
reversal of losses recognized in the Joint Venture from January
1995.
One time charges of $19.9 million and $17.5 million were incurred
in 1995 due to the Merger and the ALRT Offering respectively.
SIX MONTHS ENDED JUNE 30, 1996 ("1996"), COMPARED WITH SIX MONTHS
ENDED JUNE 30, 1995 ("1995")
The Company had revenues of $17.3 million for 1996 compared to
revenues of $10.0 million for 1995. The increase in revenues is
due to the, new, expanded and amended collaborative agreements
previously discussed, a full six-month effect of the collaboration
with SmithKline (which began in February 1995), and increased
revenue from ALRT. Revenues in 1996 were derived from the
Company's research and development agreements with (i) ALRT of $7.3
million, (ii) AHP of $4.4 million, (iii) Abbott of $1.4 million,
(iv) Sankyo of $1.4 million, (v) SmithKline of $1.2 million, (vi)
Glaxo of $1.1 million, as well as from milestone revenue from
Pfizer of $438,000, and product sales of Ligand (Canada) in-
licensed products, of $118,000. Revenues in 1995 were derived from
the Company's research and development agreements with (i) ALRT of
$4.4 million, (ii) AHP of $2.0 million, (iii) Glaxo of $1.1 million
(iv) Abbott of $1.2 million, (v) SmithKline of $910,000, (vi)
Sankyo of $311,000 and from products sales of Ligand (Canada) in-
licensed product of $36,000.
For 1996, research and development expenses increased to $27.1
million from $16.0 million in 1995. These expenses increased
primarily due to expansion of the Company's research and
development programs, additions of research and development
personnel, and inclusion of the cost of Glycomed's operations for a
full six months in 1996. Selling, general and administrative
expenses increased to $5.2 million in 1996 from $3.8 million in
1995. The increase was primarily attributable to legal expenses
related to the Pfizer litigation, expansion of the Company's sales
and marketing activities, and additions to personnel to support
expanded research and development programs. Interest income
increased to $2.0 million in 1996 from $1.2 million in 1995. The
increase in interest income was a result of an increase in cash
balances due to the Merger, increased research revenues and
additional equity investments, offset by net usage of cash to
support expansion activities. Interest expense increased to $4.1
million in 1996 from $1.3 million in 1995. The increase was
primarily due to interest required under the Debentures, accretion
of debt discount of the Debentures and additional capital lease
obligations used to finance equipment.
One time charges of $19.9 million and $17.5 million were incurred
in 1995 due to the Merger and the ALRT Offering respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations through private and public
offerings of its equity securities, collaborative research
revenues, capital and operating lease transactions, issuance of
convertible notes, product sales and investment income. From
inception through June 1996, the Company has raised $121.2 million
from sales of equity securities: $43.0 million from the Company's
initial public offering in November 1992 (of which $7.5 million
was provided by the Company's collaborators) and an aggregate of
$78.2 million from private placements (of which $64 million was
provided by the Company's collaborators, $11.4 million was provided
through venture capital financing and $2.8 million was provided by other
investors).
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As of June 30, 1996, the Company had acquired an aggregate of $17.1
million in laboratory and office equipment, and $3.8 million in
tenant improvements, substantially all of which has been funded
through capital lease and equipment note obligations and which
includes laboratory and office equipment acquired in the Merger.
In addition, the Company leases its office and laboratory
facilities under operating leases. In July 1994, the Company
entered into a twenty-year lease related to the construction of a
new laboratory facility, which was completed and occupied in August
1995. In May 1996, the Company signed a master lease agreement to
finance future capital equipment up to $2.5 million.
Working capital decreased to $46.8 million as of June 30, 1996,
from $57.3 million at the end of 1995. The decrease in working
capital resulted from an increase in cash from collaborative
research agreements, offset by an increase in research and
development program expenses, the related increase in selling,
general and administrative expenses as described above, semi-annual
interest payments due on the Debentures and interest paid on the
convertible note. For the same reasons, cash and cash equivalents,
short-term investments, and restricted cash decreased to $60.4
million at June 30, 1996 from $76.9 million at December 31, 1995.
The Company primarily invests its cash in United States government
and investment grade corporate debt securities.
The Company believes that its available cash, cash equivalents,
marketable securities and existing sources of funding will be
adequate to satisfy its capital requirements through 1998. The
Company's future capital requirements will depend on many factors,
the pace of scientific progress in research and development
programs, the magnitude of these programs, the scope and results of
preclinical testing and clinical trials, the time and costs
involved in obtaining regulatory approvals, the costs involved in
preparing, filing, prosecuting, maintaining and enforcing patent
claims, competing technological and market developments, the
ability to establish additional collaborations, changes in the
existing collaborations, the cost of manufacturing scale-up and the
effectiveness of the Company's commercialization activities.
RISKS AND UNCERTAINTIES
The Company's potential products are in various stages of
development. Substantially all of the Company's revenues to date
have been derived from its research and development agreements with
major pharmaceutical collaborators. Prior to generating product
revenues, the Company must complete the development of its
products, including several years of human clinical testing, and
receive regulatory approvals prior to selling these products in the
human health care market. No assurance can be given that the
Company's products will be successfully developed, regulatory
approvals will be granted, or patient and physician acceptance of
these products will be achieved. There can be no assurance that
Ligand will successfully commercialize, manufacture or market its
products or ever achieve or sustain product revenues or
profitability.
The Company faces those risks associated with companies whose
products are in various stages of development. These risks
include, among others, the Company's need for additional financing
to complete its research and development programs and commercialize
its technologies. The Company expects to incur substantial
additional research and development expenses, including continued
increases in personnel and costs related to preclinical testing,
clinical trials and sales and marketing expenses related to the
product sales in Canada. The Company intends to seek additional
funding sources of capital and liquidity through collaborative
arrangements, collaborative research or through public or private
financing. There is no assurance such financing will be available
to the Company when required or that such financing would be
available under favorable terms.
The Company believes that patents and other proprietary rights are
important to its business. The Company's policy is to file patent
applications to protect technology, inventions and improvements to
its inventions that are considered important to the development of
its business. The patent positions of pharmaceutical and
biotechnology firms, including the Company, are uncertain and
involve complex legal and technical questions for which important
legal principles are largely unresolved.
While the Company believes that its current collaborators have
sufficient economic motivation to continue their funding and
development efforts under these collaborations, there can be no
assurance that these collaborations will continue or be performed
by the parties or that they will be successful.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
In December 1994, Ligand filed suit against Pfizer in the Superior
Court of California in San Diego County for breach of contract and
for a declaration of future rights as they relate to droloxifene, a
compound upon which the Company performed work at Pfizer's request
during a collaboration between Pfizer and the Company to develop
drugs in the field of osteoporosis. Droloxifene is an estrogen
antagonist/partial agonist with potential indications in the
treatment of osteoporosis and breast cancer as well as other
applications. The Company and Pfizer entered into a settlement
agreement with respect to the lawsuit in April 1996. Under the
terms of the settlement agreement, the Company is entitled to
receive milestone payments if Pfizer continues development, and
royalties if Pfizer commercializes droloxifene. At the option of
either party, milestone and royalty payments owed to the Company
can be satisfied by Pfizer transferring to the Company shares of
the Company's Common Stock previously purchased by Pfizer, an
exchange ratio of $12.375 per share. According to recent
announcements by Pfizer, droloxifene has entered Phase II clinical
trials for osteoporosis and Phase III clinical trials for breast
cancer.
ITEM 4 SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on May 21,
1996. The following elections and proposals were approved at the
Company's Annual Meeting:
Votes Votes Votes Votes Broker
For Against Withheld Abstaining Nonvote
1. Election of a Board of
Directors. The total number
of votes cast for, or
withheld for each nominee
was as follows:
Henry F. Blissenbach 21,410,367 -- -- 1,542,958 -- -- -- --
Alexander D. Cross, Ph.D. 21,410,367 -- -- 1,542,958 -- -- -- --
John Groom 21,412,622 -- -- 1,540,703 -- -- -- --
Irving S. Johnson, Ph.D. 21,409,502 -- -- 1,543,823 -- -- -- --
David E. Robinson 21,361,654 -- -- 1,591,671 -- -- -- --
William C. Shepherd 21,412,172 -- -- 1,541,153 -- -- -- --
2. Amendment of 1992 Stock
Option/Stock Issuance Plan
to increase the authorized
number of shares of Common
Stock from 5,628,457 to
6,428,457 18,311,193 3,709,437 5,102,347 67,749 864,946
3. Amendment of the 1992
Employee Stock Purchase
Plan, to increase the
authorized number of
shares of Common Stock
available for issuance
under such plan from
141,500 to 166,500. 20,861,563 1,331,881 5,102,347 66,592 693,289
4. Ratification of the
appointment of Ernst &
Young LLP as the
independent auditors for
the fiscal year ending
December 31, 1996. 22,899,828 22,143 5,102,347 31,354 -- --
11
<PAGE>
ITEM 6 (A) EXHIBITS
Exhibit 10.149 Successor Employment Agreement, signed May 1,
1996, between the Company and David E. Robinson.
Exhibit 10.150 Master Lease Agreement, signed May 30, 1996,between the
Company and USL Capital Corporation.
Exhibit 10.151(1) Settlement Agreement and Mutual Release of all Claims,
signed April 20, 1996 between the Company and Pfizer Inc.
(with certain confidential portions omitted).
Exhibit 10.152(1) Letter Amendment to Abbott Agreement dated, March 14, 1996,
between the Company and Abbott Laboratories(with certain
confidential portions omitted).
ITEM 6 (B) REPORTS ON FORMS 8-K
None.
(1) Certain confidential portions of the Exhibit were omitted by
means of blacking out the text (the "Mark"). This Exhibit has been
filed separately with the Secretary of the Commission without the Mark
pursuant to the Company's Application Requesting Confidential Treatment
under Rule 406 under the Securities Act of 1933, as amended.
12
<PAGE>
LIGAND PHARMACEUTICALS INCORPORATED
June 30, 1996
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Ligand Pharmaceuticals Incorporated
Date: August 14, 1996 By /s/Paul V. Maier
----------------------------- -----------------------------------
Paul V. Maier
Vice President and Chief Financial
Officer
13
<PAGE> 1
EXHIBIT 10.149
SUCCESSOR
EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective as of May 1, 1996, is
made by and between
Ligand Pharmaceuticals Incorporated, a Delaware
corporation (hereinafter the
"Company"), and David E. Robinson (hereinafter
"EXECUTIVE") on this 1st of May,
1996.
R E C I T A L S
WHEREAS, the Company and EXECUTIVE wish to set
forth in this Agreement
the terms and conditions under which EXECUTIVE is to be
continued to be employed
by the Company; and
WHEREAS, the Company wants to be assured that
EXECUTIVE will be
available to the Company for an additional three (3)
years after May 1, 1996.
NOW, THEREFORE, the Company and EXECUTIVE, in
consideration of the
mutual promises set forth herein, agree as follows:
ARTICLE 1
TERM OF AGREEMENT
1.1 Commencement Date. EXECUTIVE's employment
with the Company shall
commence on May 1, 1996 ("Commencement Date") and
this Agreement shall expire
after a period of three (3) years from the
Commencement Date, unless terminated
earlier pursuant to Article 6.
1.2 Renewal. The term of this Agreement shall be
automatically renewed
for successive, additional three (3) year terms unless
either party delivers
written notice to the other at least six (6) months prior
to the expiration date
of this Agreement of an intention to terminate this
agreement or to renew it for
a term of less than three (3) years but not less than one
(1) year. If the term
of this Agreement is renewed for a term of less than three
(3) years, then
thereafter the term of this Agreement shall be
automatically renewed for
successive, additional identical terms unless either party
delivers a written
notice to the other at least six (6) months prior to a
termination date of this
agreement of an intention to terminate this Agreement or
to renew it for a
different term of not less than one (1) year.
If this Agreement is not renewed at the end of
any term hereof by the
Company for any reason except death, disability or
retirement of EXECUTIVE,
notwithstanding anything herein elsewhere contained,
EXECUTIVE shall be paid his
salary, as provided for in Section 3.1 hereof, and receive
the other benefits
applicable under
<PAGE> 2
Section 4 hereof, for an additional eighteen months after
the termination date
hereof.
ARTICLE 2
EMPLOYMENT DUTIES
2.1 Title/Responsibilities. EXECUTIVE shall hold
the position of
Chairman of the Board, President and Chief Executive
Officer of the Company, and
shall have the powers, duties and sufficient authority
consistent with such
position and shall report directly and be responsible
solely to the Company's
Board of Directors. EXECUTIVE shall also perform all
duties which from time to
time are assigned to him by the Company's Board of
Directors, and shall provide
the Board with periodic reports upon request. As Chief
Executive Officer of the
Company, EXECUTIVE shall use his best efforts in directing
the business of the
Company with the objective of providing maximum profit and
return on invested
capital, building stockholder value, establishing current
and long-range
objectives, plans and policies subject to the approval of
the Board, and
representing the Company with its major customers, the
financial community and
the public.
2.2 Full Time Attention. EXECUTIVE shall devote
substantially all of
his business time and attention, energy and skills to the
Company during the
time he is employed under this Agreement, but nothing in
the Agreement shall
preclude EXECUTIVE from engaging in charitable and
community affairs or from
managing his personal investments, provided that such
activities do not
interfere with the performance of his duties or
responsibilities under this
Agreement.
2.3 Directorships. Upon the commencement date,
EXECUTIVE will be
nominated for re-election to the Company's Board of
Directors if the By-Laws so
require it. At the pleasure of the Company's shareholders,
EXECUTIVE agrees to
serve as Chairman of the Board and a Director on the
Company's Board of
Directors at no additional compensation. In addition,
EXECUTIVE may serve as a
member of the board of directors of any other unaffiliated
company that is not
in competition with the Company subject in each case to
the approval of the
Compensation Committee of the Board of Directors of the
Company, provided that
such service does not interfere with the performance of
his duties or
responsibilities hereunder. EXECUTIVE may retain all
benefits he receives as a
director of any unaffiliated company, and the Company
shall not reduce his
compensation by the amount of such benefits.
<PAGE> 3
ARTICLE 3
COMPENSATION
3.1 Base Salary. EXECUTIVE shall receive a Base
Salary at an annual
rate of Four Hundred Ninety Thousand Dollars ($490,000),
payable every two weeks
in equal installments (less all required and authorized
withholdings and
deductions). The Company's Board of Directors shall
provide EXECUTIVE with
annual performance reviews, and, thereafter, EXECUTIVE
shall be entitled to such
higher rate of Base Salary as the Board of Directors may
from time to time
establish in its sole discretion.
3.2 Renewal Bonus. In lieu of any other stock
option grant for the year
1996, the Company on April 25, 1996, provided EXECUTIVE a
one-time contract
renewal stock option grant in the form of an option to
purchase one hundred
thousand (100,000) shares of the common stock of the
Company, the maximum number
of which shall be pursuant to Incentive Stock Options
under the Ligand
Pharmaceuticals Incorporated 1992 Stock Option/Stock
Issuance Plan. The entire
number of shares granted under such option, both
Incentive and Non-Statutory,
shall vest over four (4) years, with such vesting to be
in accordance with the
terms of the Ligand Pharmaceuticals Incorporated 1992
Stock Option/Stock
Issuance Plan. The Company will also pay EXECUTIVE's
reasonable legal fees
incurred in the negotiation and consummation of this
Agreement in an amount not
to exceed $3,000.00.
3.3 Incentive Bonus. In addition to any other
bonus EXECUTIVE shall be
awarded by the Company's Board of Directors, the Company
shall pay EXECUTIVE a
bonus payment of up to one hundred thousand dollars
($100,000) annually based
upon achievement by the Company against 8 to 10 reasonable
Impact Goals approved
by the Board of Directors annually.
ARTICLE 4
EXPENSE ALLOWANCES AND FRINGE
BENEFITS
4.1 Vacation. EXECUTIVE shall be entitled to
three (3) weeks of annual
paid vacation during the term of this Agreement.
4.2 Health Benefits. During the term of this
Agreement, the Company
shall also provide EXECUTIVE with the usual health
insurance benefits it
generally provides to its other senior management
employees.
4.3 Company Loan. The Company has loaned
EXECUTIVE Two Hundred Thousand
Dollars ($200,000) pursuant to a promissory note (the
<PAGE> 4
("Note") approved by the Company's Board of Directors. The
Note bears interest
at the applicable minimum federal rate required to avoid
imputation of interest
under IRC Section 1274(d), and has a four-year term,
payable in four equal
annual installments on August 23, subject to acceleration
upon EXECUTIVE's
cessation of employment with the Company under Sections
6.3 and 6.6. If
EXECUTIVE's employment with the Company is terminated
under Sections 6.4 or
6.5, the balance of the Note will be forgiven by the
Company. The Note is
secured by a deed of trust on the residential real
property owned by EXECUTIVE
in the greater San Diego area or such other security
approved by the Company's
Board of Directors. Twenty-five percent (25%) of the
original principal amount
of the Note plus all accrued but unpaid interest thereon
shall be forgiven by
the Company on each anniversary of the Note so long as
EXECUTIVE is
continuously employed by the Company during the prior
year. As of the date
hereof only fifty percent (50%) of the original principal
amount of such note
remains unpaid.
Such Note is non-negotiable.
4.4 Business Expense Reimbursement. During the
term of his employment
hereunder, EXECUTIVE shall be entitled to receive proper
reimbursement for all
reasonable out-of-pocket expenses incurred by him (in
accordance with the
policies and procedures established by the Company for its
senior executive
officers) in performing services hereunder, provided
EXECUTIVE properly
accounts therefor.
ARTICLE 5
CONFIDENTIALITY
5.1 Proprietary Information. EXECUTIVE shall
execute and deliver to
the Company the Company's standard Proprietary Information
and Inventions
Agreement in form acceptable to the Company's Vice
President and General
Counsel.
5.2 Return Of Property. All documents, records,
apparatus, equipment
and other physical property which is furnished to or
obtained by EXECUTIVE in
the course of his employment with the Company shall be and
remain the sole
property of the Company. EXECUTIVE agrees that, upon the
termination of his
employment, he shall return all such property (whether or
not it pertains to
Proprietary Information as defined in the Proprietary
Information and Inventions
Agreement), and agrees not to make or retain copies,
reproductions or summaries
of any such property.
<PAGE> 5
ARTICLE 6
TERMINATION
6.1 Death. In the event of the death of the
EXECUTIVE during the term
of this Agreement, his salary and any other unpaid amounts
shall be paid to the
EXECUTIVE's designated beneficiary, or in the absence of
such designation to the
estate or other legal representative of the EXECUTIVE for
the month in which
death occurs as well as for an additional twelve (12)
months thereafter. In the
event that the Company wishes to purchase life insurance
to fund this benefit,
the Executive shall comply with all reasonable requests of
the Company related
to such insurance, including, without limitation,
submitting to a physical
examination, a copy of which report will be furnished to
EXECUTIVE as soon as it
is available. Other death benefits, if any, will be
determined in accordance
with the terms of the Company's benefit programs and
plans.
6.2 Disability. In the event of the Executive's
disability, the
EXECUTIVE shall be entitled to his salary for a period of
one (1) year after
such disability commences and other benefits as determined
in accordance with
the terms of the Company's benefit programs and plans.
Notwithstanding anything in this Agreement to the
contrary, the Company
is hereby given the option to terminate the EXECUTIVE's
employment in the event
that the EXECUTIVE shall, during the term hereof, become
permanently disabled as
the term permanently disabled is hereinafter defined. Such
option shall be
exercised by the Company giving notice to EXECUTIVE by
certified mail of the
company's intention to terminate his employment due to
disability on the last
day of the month during which such notice is mailed
For purposes of this Agreement, EXECUTIVE shall
be deemed to have
become disabled if, during the term hereof, because of
physical or mental
disability he shall have been unable to perform his duties
hereunder. This
disability shall be deemed to be permanent if he shall
have been unable to
perform his duties hereunder (a) for 120 consecutive days,
or (b) for 180 days
(irrespective or whether such days are consecutive)
occurring during any period
of 365 consecutive days.
During a period in which salary continuation is
being made pursuant to
this Section, the EXECUTIVE will undergo reasonable
periodic medical
examinations to confirm the continuation of his
disability. Such medical
examinations will be conducted by a medical doctor chosen
by the parties. If the
parties cannot agree on such a doctor, they each shall
select a medical doctor
and the
<PAGE> 6
two doctors shall select a third medical doctor for this
purpose. In the event
that the Company has terminated EXECUTIVE because of
permanent disability
notwithstanding a determination by a medical doctor,
chosen as described in the
preceding sentence, that EXECUTIVE is no longer subject to
a disability as
defined in this Section, EXECUTIVE will continue to be
entitled to salary
continuation as herein set forth, provided that, following
such determination,
he makes a continuing reasonable effort to find employment
at such time
commensurate with his abilities, experience, and
background.
Anything herein to the contrary notwithstanding,
if, following a
termination of employment hereunder due to permanent
disability as provided,
EXECUTIVE becomes re-employed (except in connection with
management of his own
investments) whether as an employee or a consultant, any
salary, annual
incentive payments, or other benefits earned by him from
such employment shall
offset any comparable amounts due him hereunder.
6.3 Termination by the Company for Cause. Nothing
herein shall prevent
the Company from terminating EXECUTIVE's employment for
Cause. EXECUTIVE shall
continue to receive salary for the period ending with the
date of such
termination as provided in this Section 6.3. Any rights
and benefits he may have
in respect of any other compensation or employee benefit
plans or programs of
the Company shall be determined in accordance with the
terms of such other
compensation arrangements or such other plans or programs.
The term "Cause", as used herein, shall mean that
(a) the EXECUTIVE has
committed a willful, serious act, such as embezzlement,
against the Company
intending to enrich himself at the expense of the Company
or (b) the EXECUTIVE,
in carrying out his duties hereunder, has been guilty of
willful or gross
negligence, resulting in either case in material harm to
the Company (this
provision shall not apply to any particular instance which
is merely the result
of any good faith error in judgment), or (c) the willful
and continued failure
by EXECUTIVE to substantially perform his duties with the
Company (other than
any such failure resulting from EXECUTIVE's incapacity due
to physical or mental
illness), after a demand for substantial performance is
delivered to EXECUTIVE
by the Board which specifically identifies the manner in
which the Board
believes that EXECUTIVE has not substantially performed
his duties, or (d) the
willful engaging by EXECUTIVE in gross misconduct
materially and demonstrably
injurious to the Company. For purposes of this section, no
act, or failure to
act, on EXECUTIVE's part shall be considered "willful"
unless done, or omitted
to be done, by EXECUTIVE, not in good faith and without
reasonable doubt that
EXECUTIVE's action or omission was in the best interest of
the Company.
<PAGE> 7
Notwithstanding the foregoing, EXECUTIVE shall
not be deemed to have
been terminated for Cause unless and until there shall
have been delivered to
him a copy of a resolution duly adopted by the affirmative
vote of not less than
two-thirds (2/3) of the entire membership of the Board at
a meeting of the Board
called and held for the purpose (after reasonable notice
to EXECUTIVE and an
opportunity for EXECUTIVE, together with his counsel, to
be heard before the
Board), finding that in the good faith opinion of the
Board, EXECUTIVE was
guilty of conduct set forth above and specifying the
particulars thereof in
detail.
6.4 Termination by Company Other Than for Cause.
The foregoing
notwithstanding, the Company may terminate the EXECUTIVE's
employment for
whatever reason it deems appropriate, or for no reason. In
the event that
EXECUTIVE's employment is terminated pursuant to this
Section 6.4, the Company's
obligations under this Agreement shall immediately cease,
and EXECUTIVE shall be
entitled to no severance benefits or any other benefits
under this Agreement
other than as expressly provided in this Section 6.4.
6.4.1 If the Company terminates EXECUTIVE's
employment pursuant to this
Section 6.4, the Company will pay EXECUTIVE a severance
benefit equal to (i) his
Base Salary, and (ii) his health benefits described in
Section 4.2 of this
Agreement, each on a monthly basis for twenty-four (24)
months after the date of
such termination. Executive shall also receive credited
service for such
twenty-four (24) month period under any retirement plan or
policy provided by
the Company. This severance benefit shall be in addition
to EXECUTIVE's rights
under Section 6.4.2.
6.4.2 If EXECUTIVE is terminated other than for
Cause by the Company as
provided for in this Section 6.4 hereof or the EXECUTIVE
terminates for Good
Reason as provided for in Section 6.5 hereof during the
remainder of the three
(3) years of this employment agreement, then,
notwithstanding anything to the
contrary hereinbefore stated, the terms of the Restricted
Stock Purchase
Agreement will apply to the disposition of such stock of
EXECUTIVE.
6.5 Termination by the EXECUTIVE for Good Reason.
EXECUTIVE may
terminate his employment under this Agreement for Good
Reason, in which event
the Company shall still have the same obligations to
EXECUTIVE under this
Agreement as provided for in Section 6.4.
6.5.1 "Good Reason" shall mean:
(a) Without EXECUTIVE's express written
consent, the assignment to
EXECUTIVE of any duties inconsistent with his positions,
duties,
responsibilities and status with the Company set forth in
this Agreement, or a
change in his reporting responsibilities, title or offices
set forth in this
Agreement, or
<PAGE> 8
any removal of EXECUTIVE from or any failure to re-elect
him to any of such
positions except in connection with the termination of his
employment for Cause,
disability or retirement or as a result of his death or by
EXECUTIVE other than
for Good Reason;
(b) A reduction in EXECUTIVE's Base Salary
or benefits or a
material breach of the Company's obligations undertaken in
this Agreement (after
the Company has received written notice of such breach and
a reasonable
opportunity to cure);
(c) In the event of the occurrence of a
Change in Control, upon
the occurrence thereafter of one or more of the following
events:
(i) Any termination by the Company of
the employment of
EXECUTIVE within three (3) years after a Change
in Control and prior to
the date upon which EXECUTIVE shall have attained
age 65, which
termination shall be for any reason other than
for Cause or as a result
of the death of EXECUTIVE or by reason of
EXECUTIVE's disability: or
(ii) Termination by EXECUTIVE of his
employment with the
Company within three (3) years after a Change in
Control and upon the
occurrence of any of the following events:
(A) Failure to elect or re-elect
EXECUTIVE, or removal
of EXECUTIVE , as a director of the Company
(or any successor
thereto), if EXECUTIVE shall have been a
director of the Company
immediately prior to the Change in Control,
or the office of the
Company which EXECUTIVE held immediately
prior to a Change in
Control:
(B) A significant adverse change
in the nature or scope
of the authorities, powers, functions,
responsibilities or duties
attached to the position with the Company
which EXECUTIVE had
immediately prior to the Change in Control,
a reduction in the
aggregate of EXECUTIVE's Base Pay and
Incentive Pay received from
the Company, or the termination of
EXECUTIVE's rights to any
EXECUTIVE Benefits to which he was entitled
immediately prior to
the Change in Control or a reduction in
scope or value thereof
without the prior written consent of
EXECUTIVE, any of which is
not remedied within ten (10) calendar days
after receipt by the
Company of written notice from EXECUTIVE of
such change, reduction
or termination, as the case may be;
<PAGE> 9
(C) A determination by EXECUTIVE
made in good faith that
as a result of a Change in Control and a
change in circumstances
thereafter significantly affecting his
position, he has been
rendered substantially unable to carry out,
or has been
substantially hindered in the performance
of, any of the
authorities, powers, functions,
responsibilities or duties
attached to his position immediately prior
to the Change of
Control, which situation is not remedied
within ten (10) calendar
days after receipt by the Company of written
notice from EXECUTIVE
of such determination;
(D) The liquidation, dissolution,
merger, consolidation
or reorganization of the Company or transfer
of all or a
significant portion of its business and/or
assets unless the
successor or successors (by liquidation,
merger, consolidation,
reorganization or otherwise) to which all or
a significant portion
of its business and/or assets have been
transferred (directly or
by operation of law) shall have assumed all
duties and obligations
of the Company under this Agreement pursuant
to Section 7.2.2
hereof; or
(E) The Company shall relocate its
principal Executive
office or require EXECUTIVE to have as his
principal location of
work any location which is in excess of 50
miles from the location
thereof immediately prior to the Termination
Date or to travel
away from his office in the course of
discharging his
responsibilities or duties hereunder more
than thirty (30)
consecutive calendar days or an aggregate of
more than sixty (60)
calendar days in any consecutive 365
calendar day period without
in either case his prior consent.
(d) Subsequent to a Change in Control of the
Company, any purported
termination of EXECUTIVE's employment which is not
effected pursuant to a Notice
of Termination satisfying the requirements of Section 6.7
hereof; or
(e) EXECUTIVE is not elected a director, the
Chairman of the Board,
President and Chief Executive Officer of the Company on or
before June 1, 1996.
(f) A Chairman of the Board is appointed without
the consent and
approval of the Board of Directors and EXECUTIVE during
the term of this
contract, including any extensions and renewals hereof;
however, in the event
that it is considered in the best interests of the
Company, and the Board
of Directors and Executive concur to appoint a Chairman of
the Board other than
<PAGE> 10
Executive, such will not give the EXECUTIVE the right to
terminate his
employment under this agreement for good reason.
6.5.2 Change in Control. For purposes of this
Agreement, a "Change in
Control" shall have occurred if at any time during the
term of EXECUTIVE's
employment hereunder, any of the following events shall
occur:
(i) The Company is merged, or consolidated,
or reorganized into or
with another corporation or other legal person, and as a
result of such merger,
consolidation or reorganization less than 30% of the
combined voting power of
the then-outstanding securities of such corporation or
person immediately after
such transaction are held in the aggregate by the holders
of voting securities
of the Company immediately prior to such transaction;
(ii) Company sells all or substantially all
of its assets or any
other corporation or other legal person and thereafter,
less than 30% of the
combined voting power of the then-outstanding voting
securities of the acquiring
or consolidated entity are held in the aggregate by the
holders of voting
securities of the Company immediately prior to such sale;
(iii) There is a report filed after the date
of this Agreement on
Schedule 13 D or Schedule 14 D-1 (or any successor
schedule, form or report),
each as promulgated pursuant to the Securities Exchange
Act of 1934 (the
"Exchange Act") disclosing that any person (as the term
"person" is used in
Section 13(d)(3) or Section 14 (d) (2) of the Exchange
Act) has become the
beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or
any successor rule or regulation promulgated under the
Exchange Act)
representing 30% or more of the combined voting power of
the then-outstanding
voting securities of the Company;
(iv) The Company shall file a report or
proxy statement with the
Securities and Exchange Commission pursuant to the
Exchange Act disclosing in
response to item 1 of Form 8-X thereunder or Item 5(f) of
Schedule 14 A
thereunder (or any successor schedule, form or report or
item therein) that the
change in control of the Company has or may have occurred
or will or may occur
in the future pursuant to any then-existing contract or
transaction; or
(v) During any period of two consecutive
years, individuals who at
the beginning of any such period constitute the directors
of the Company cease
for any reason to constitute at least a majority thereof
unless the election to
the nomination for election by the Company's shareholders
of each director of
the company first elected during such period was approved
by a vote of at least
two-thirds of the directors of the Company then still in
<PAGE> 11
office who were directors of the Company at the beginning
of such period.
6.5.3 Payments and Benefits Upon Executive's
Termination. Upon the
termination of this Agreement by EXECUTIVE pursuant to
Section 6.5, EXECUTIVE
shall be entitled to those benefits which are applicable
under the terms of
Section 6.4.1 and 6.4.2, and all Stock Options issued to
him by the Company
which are then unvested shall immediately vest so as to be
immediately
exercisable by him at his election. Notwithstanding
anything to the contrary in
the foregoing, in the event that the company has agreed to
a merger that is
intended to be treated as a pooling of interests for
accounting purposes and
EXECUTIVE terminates this Agreement pursuant to Section
6.5 prior to May 1,
1997, then the Stock Options issued to him by the company
shall not become
exercisable on an accelerated basis but only to the extent
that the Company's
independent auditors determine that accelerated vesting of
such Stock Options
would preclude the treatment of such merger as a pooling
of interest.
6.6 Termination by Executive by Voluntary
Resignation. EXECUTIVE may
terminate this Agreement prior to the expiration date
specified in Section 1
upon sixty (60) days notice to the Company, in which event
the Company shall be
obligated to pay him his total remuneration and other
applicable benefits
described in Sections 3.1 and 4 up to the date of
termination only. All earned
but unpaid bonuses pursuant to Section 3.3 shall be paid
to EXECUTIVE.
6.7 Notice of Termination. Any Notice of
termination by the Company
pursuant to Section 6.4 or by EXECUTIVE pursuant to
Section 6.5 shall be
communicated by written Notice of Termination to the other
party hereof. For
purposes of this Agreement, a "Notice of Termination"
shall mean a notice which
shall indicate the specific termination provision in this
Agreement relied upon
and shall set forth in reasonable detail the facts and
circumstances claimed to
provide a basis for termination of EXECUTIVE's employment
under the provision so
indicated. Such a notice must be given by the party
utilizing it within six (6)
months after the event giving rise to it occurs;
otherwise, the right to utilize
such event as a right to terminate hereunder is forever
lost.
6.8 Date of Termination. "Date of Termination"
shall mean:
(i) If EXECUTIVE's employment is terminated
pursuant to Section
6.5, the date specified in the Notice of Termination, and
(ii) If EXECUTIVE's employment is terminated
for any other reason,
the date on which a Notice of Termination is given;
provided that if within
thirty (30) days after any Notice of Termination is given,
one party notified
the other party that a
<PAGE> 12
dispute exists concerning the termination, the Date of
Termination shall be the
date on which the dispute is finally determined, either by
mutual written
agreement of the parties, by a binding and final
arbitration award or by a final
judgment, order or decree of a court of competent
jurisdiction (the time for
appeal thereof having expired and no appeal having been
perfected).
6.9 Resolution of a Dispute is Final. Once a
dispute between the
parties hereto under the contract might have been resolved
without either party
terminating this contract, the event giving rise to such
dispute may never be
utilized again by either party hereto for any reason
whatsoever including, but
not limited to terminating this contract.
ARTICLE 7
GENERAL PROVISIONS
7.1 Governing Law. The validity, interpretation,
construction and
performance of this Agreement and the rights of the
parties thereunder shall be
interpreted and enforced under California law without
reference to principles of
conflicts of laws. The parties expressly agree that
inasmuch as the Company's
headquarters and principal place of business are located
in California, it is
appropriate that California law govern this Agreement.
7.2 Assignment: Successors: Binding Agreement.
7.2.1 EXECUTIVE may not assign, pledge or
encumber his interest in this
Agreement or any part thereof.
7.2.2 The Company will require any successor
(whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or
substantially all of the business and/or assets of the
Company, by agreement in
form and substance reasonably satisfactory to EXECUTIVE,
to expressly assume and
agree to perform this Agreement in the same manner and to
the same extent that
the Company would be required to perform it if no such
succession had taken
place. Failure of the Company to obtain such agreement
prior to the
effectiveness of any such succession shall be a breach of
this Agreement and
shall entitle EXECUTIVE to compensation from the Company
in the same amount and
on the same terms as EXECUTIVE would be entitled hereunder
if EXECUTIVE
terminated his employment for Good Reason, except that for
purposes of
implementing the foregoing, the date on which any such
succession becomes
effective shall be deemed the Date of Termination. As used
in this Section
7.2.2, "Company" shall mean the Company as hereinbefore
described
<PAGE> 13
and any successor to its business and/or assets as
aforesaid which executes and
delivers the Agreement provided for in this Section 7.2.2
or which otherwise
becomes bound by all the terms and provisions of this
Agreement by operation of
law.
7.2.3 This Agreement shall inure to the benefit
of and be enforceable
by EXECUTIVE's personal or legal representatives,
executors, administrators,
successors, heirs, distributee, devisees and legatees. If
EXECUTIVE should die
while any amount is at such time payable to him hereunder,
all such amounts,
unless otherwise provided herein, shall be paid in
accordance with the terms of
this Agreement to EXECUTIVE's devisee, legatee or other
designee or, if there be
no such designee, to his estate.
7.3 No Waiver of Breach. The waiver by any party
of the breach of any
provision of this Agreement shall not be deemed to be a
waiver of any subsequent
breach.
7.4 Notice. For the purposes of this Agreement,
notices and all other
communications provided for in this Agreement shall be in
writing and shall be
deemed to have been duly given when delivered or mailed by
certified or
registered mail, return receipt requested, postage
prepaid,
addressed to the
respective addresses set forth below or to such other
address as either party
may have furnished to the other in writing in accordance
herewith, except that
notice of change of address shall be effective only upon
receipt.
TO THE COMPANY: William L. Respess, Esq.
General Counsel
Ligand Pharmaceuticals
Incorporated
9393 Towne Centre Drive
Suite 100
San Diego, California 92121
TO THE EXECUTIVE: Mr. David E. Robinson
P.O. Box 8993
Rancho Santa Fe, CA 92067-
8993
Copy to: John W. Hough, Esq.
Connelly & Schroeder
1 North Franklin Street,
Suite 1200
Chicago, Illinois 60606
7.5 Modification: Waiver: Entire Agreement. No
provisions of this
Agreement may be modified, waived or discharged unless
such waiver, modification
or discharge is agreed to in writing signed by EXECUTIVE
and such officer as may
be specifically designated by the
<PAGE> 14
Board of the Company. No waiver by either party hereto at
any time of any breach
by the other party of, or compliance with, any condition
or provision of this
Agreement to be performed by such other party shall be
deemed a waiver of
similar or dissimilar provisions or conditions at the same
or any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or
implied, with respect to the subject matter hereof have
been made by either
party which are not expressly set forth in this Agreement;
provided, however,
that this Agreement shall not supersede or in any way
limit the rights, duties
or obligations EXECUTIVE may have under any other written
agreement with the
Company (other than the Company's letter offering
employment to EXECUTIVE).
7.6 Validity. The invalidity or unenforceability
of any provision of
this Agreement shall not affect the validity or
enforceability of any other
provision of this Agreement, which shall remain in full
force and effect.
7.7 Controlling Document. In case of conflict
between any of the terms
and conditions of this present Employment Agreement with
any of the terms and
conditions hereof and of the Exhibits hereto and the
documents herein referred
to, including but not limited to the Ligand
Pharmaceuticals, Inc. Restricted
Stock Purchase Agreement and the Ligand Employees'
Handbook and Policies, the
terms and conditions of the terms and conditions of this
present Employment
Agreement shall control,
Upon this Successor Employment Agreement becoming
effective and binding
between the parties hereto the Employment Agreement of
October 4, 1991, and the
First Amendment thereto of October 5, 1991 shall be of no
further force or
effect.
Executed by the parties as of the day and year
first above written.
THE COMPANY:
Ligand Pharmaceuticals
Incorporated
By: /s/ P. Maier -------
---------------
- ------------------
Its: Vice President and
C.F.O.
-------------------
- -------------------
EXECUTIVE:
/s/ David E. Robinson --
------------------------
- ------------------
David E. Robinson
14
<PAGE> 1
EXHIBIT 10.150
[USL CAPITAL LOGO] MASTER LEASE AGREEMENT
[FORD LOGO]
FORD FINANCIAL
SERVICES GROUP
LESSOR: USL CAPITAL CORPORATION LESSEE: Ligand
Pharmaceuticals, Inc.
ADDRESS: 733 Front Street ADDRESS: 9393
Towne Centre Drive
San Francisco, California 94111 San
Diego, CA 92121
TERMS AND CONDITIONS OF LEASE
The undersigned Lessee hereby requests Lessor to purchase
the personal property
described in any Equipment Schedule hereunder (herein
called "Equipment") from
supplier listed in any Equipment Schedule hereunder
(herein called "Vendor"
and/or "Manufacturer", as applicable) and to lease the
Equipment to Lessee on
the terms and conditions of the lease set forth below.
Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the
Equipment upon the following terms and conditions:
1. NO WARRANTIES BY LESSOR. Lessee has selected the
Equipment and may have
entered into certain purchase, licensing, or maintenance
agreements with the
Vendor and/or Manufacturer (herein referred to as an
"Acquisition Agreement")
covering the Equipment as further described in Paragraph
26 hereof. If Lessee
has entered into any Acquisition Agreement, each agreement
shall provide for
certain rights and obligations of the parties thereto with
respect to the
Equipment, and Lessee shall perform all of the obligations
set forth in each
Acquisition Agreement as if this lease did not exist.
LESSOR MAKES NO WARRANTY,
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING
THE CONDITION OF THE
EQUIPMENT, ITS MERCHANTABILITY OR ITS FITNESS FOR ANY
PARTICULAR PURPOSE, AND,
AS TO LESSOR, LESSEE LEASES THE EQUIPMENT "AS IS." LESSOR
SHALL HAVE NO
LIABILITY FOR ANY LOSS, DAMAGE OR EXPENSE OF ANY KIND
WHATSOEVER RELATING
THERETO, INCLUDING WITHOUT LIMITATION ANY SPECIAL,
INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY CHARACTER.
2. CLAIMS AGAINST VENDOR AND/OR MANUFACTURER. If the
Equipment is not properly
installed, does not operate as represented or warranted by
Vendor and/or
Manufacturer, or is unsatisfactory for any reason, Lessee
shall make any claim
on account thereof solely against Vendor and/or
Manufacturer pursuant to the
Acquisition Agreement, if any, and shall, nevertheless,
pay Lessor all rent
payable under this lease. All warranties from Vendor
and/or Manufacturer are, to
the extent they are assignable, hereby assigned to Lessee
for the term of the
lease or until an Event of Default occurs hereunder, for
Lessee's exercise at
Lessee's expense. Lessee may directly inquire with Vendor
and/or Manufacturer to
receive an accurate and complete statement of such
warranties, including any
disclaimers or limitations of such warranties or of any
remedies with respect
thereto.
3. VENDOR NOT AN AGENT. Lessee understands and agrees that
neither Vendor, nor
any sales representative or other agent of Vendor, is an
agent of Lessor. Sales
representatives or agents of Vendor, and persons that are
not employed by Lessor
(including brokers and agents) are not authorized to waive
or alter any term or
condition of this lease, and no representation as to the
Equipment or any other
matter by Vendor or any other person that is not employed
by Lessor (including
brokers and agents) shall in any way affect Lessee's duty
to pay the rent and
perform its other obligations as set forth in this lease.
4. NON-CANCELLABLE LEASE. This lease and any Equipment
Schedule hereto cannot be
cancelled or terminated except as expressly provided
herein. Lessee agrees that
its obligation to pay all rent and other sums payable
hereunder and the rights
of Lessor in and to such rent are absolute and
unconditional and are not subject
to any abatement, reduction, setoff, defense, counterclaim
or recoupment due
or alleged to be due to, or by reason of, any past,
present or future claims
which Lessee may have against Lessor, any assignee, any
Manufacturer or Vendor,
or against any person for any reason whatsoever.
5. ORDERING EQUIPMENT. Lessee shall arrange for delivery
of the Equipment so
that it can be accepted in accordance with Paragraph 6
hereof within 90 days
after the date on which Lessor accepts Lessee's offer to
enter into this lease
with respect to any Equipment Schedule or by such other
date as may be set forth
in an Equipment Schedule or Commitment Letter issued by
Lessor as the Commitment
Expiration Date. Unless otherwise specified on the
Equipment Schedule, Lessee
shall be responsible for all transportation, packing,
installation, testing and
other charges in connection with the delivery,
installation and use of the
Equipment. Lessee hereby authorizes Lessor to insert in
any Equipment Schedule
hereunder the serial numbers and other identification data
of Equipment when
determined by Lessor.
6. ACCEPTANCE. Lessee acknowledges that for purposes
of receiving or accepting
the Equipment from Vendor, Lessee is acting on
Lessor's
behalf. Upon delivery of
the Equipment to Lessee and Lessee's inspection thereof,
Lessee shall furnish
Lessor a written statement (a) acknowledging receipt of
the Equipment in good
condition and repair and (b) accepting it as satisfactory
in all respects for
the purposes of this lease (the "Certificate of
Acceptance"). The date of
receipt and acceptance of the Equipment covered by an
Equipment Schedule (or
any later date that Lessor chooses) shall be the Rent
Commencement Date
therefor. Lessor is authorized to fill in on any Equipment
Schedule hereunder
the Rent Commencement Date in accordance with the
foregoing.
7. TERMINATION BY LESSOR. If, by the Commitment Expiration
Date, the Equipment
described in any Equipment Schedule has not been delivered
to Lessee and
accepted by Lessee as provided in Paragraph 6 hereof, or
if other conditions of
Lessor's Commitment Letter, if any, have not been met,
then Lessor may, at its
option, terminate this lease and its obligations hereunder
with respect to such
Equipment Schedule at any time after the expiration of
such 90 days or any date
after the Commitment Expiration Date, as applicable.
Lessor shall give Lessee
written notice whether or not it elects to exercise such
option within 10 days
after Lessor's receipt of Lessee's written request for
such notice.
8. TERM. The term of this lease commences upon the Rent
Commencement Date, as
provided in Paragraph 9 below. The term shall continue
until all of Lessee's
obligations are fulfilled hereunder. The Initial Term with
respect to any
Equipment Schedule begins on the Rent Commencement Date
for such Equipment
Schedule (as defined in Paragraph 6) and expires after the
later of (i) the
number of periods for which the rent payments are due, or
(ii) the date Lessee
fulfills all Lessee's obligations hereunder.
9. RENTAL. Lessee shall pay the rent payments as stated on
each Equipment
Schedule, the first of which shall be due on the Rent
Commencement Date for said
Equipment Schedule, and subsequent payments shall be due
on the same day of each
calendar period as indicated on the Equipment Schedule for
the balance of the
Initial Term. Rent payments shall be due whether or not
Lessee has received any
notice that such payments are due. All rent payments shall
be paid to Lessor at
its address set forth on the Equipment Schedule or as
otherwise directed by
Lessor in writing.
10. RENEWAL. If no default shall have occurred and be
continuing, Lessee shall
be entitled to renew the lease with respect to all, but
not less than all, of
the Equipment covered by an Equipment Schedule for a
minimum 12 month period at
an amount equal to the fair market rental value thereof,
in use and operational,
in the condition required by the lease, payable on a
periodic basis, as mutually
agreed by Lessor and Lessee ("Renewal Rent"). Lessee must
give Lessor written
notice of its intention to exercise said option, which
notice must be received
by Lessor at least 90 days before expiration of the
Initial Term. The first
installment of the Renewal Rent shall be due at expiration
of the Initial Term
of the lease. Should Lessee fail to comply with the
provisions described above
covering Renewal, upon expiration of the Initial Term, the
term of the
<PAGE> 2
Schedule from Lessor at the end of the Initial Term or any
renewal term for
such Equipment Schedule at a purchase price equal to the
then fair market value
of the Equipment in use and operational, in the condition
required by the
lease, as mutually agreed by Lessor and Lessee. On a date
which is no later
than the expiration date of the Initial Term or any
renewal term, as
applicable, Lessee shall pay to Lessor the purchase price
for the Equipment
covered by such Equipment Schedule (plus any taxes levied
thereon) and Lessor
shall sell the Equipment "as-is where-is" without any
warranties expressed or
implied.
29. RELATED EQUIPMENT SCHEDULES. In the event that any
Equipment Schedule
hereunder shall include Equipment that may become attached
to, affixed to, or
used in connection with Equipment covered under another
Equipment Schedule
hereunder ("Related Equipment Schedule"), Lessee
acknowledges the following:
(a) if Lessee elects to exercise a purchase option or
renewal option under any
Equipment Schedule, if provided; or (b) if Lessee elects
to return the
Equipment under any Equipment Schedule as described in
Paragraph 14, then
Lessor, at its discretion, may require the similar
disposition of all Related
Equipment Schedules as provided for by this lease.
30. MISCELLANEOUS. This instrument and any Commitment
Letter issued by Lessor
and any Equipment Schedule hereunder constitutes the
entire agreement between
Lessor and Lessee, and shall not be amended, altered or
changed except by a
written agreement signed by the parties hereto, and in the
case of Lessor, such
agreement shall not be valid unless executed by Lessor at
Lessor's home office.
To the extent any provision of this lease may be
determined to be invalid or
unenforceable, it shall be ineffective without affecting
the other provisions
of this lease. To the extent permitted by applicable law,
Lessee hereby waives
any provisions of law which render any provision of this
lease unenforceable
in any respect. Unless specified otherwise, in the event
such written agreement
is attached to and made a part of an Equipment Schedule,
the terms and
conditions of said written agreement shall apply only to
said Equipment
Schedule and shall not apply to any other Equipment
Schedule attached to and
made a part of this lease. In the event Lessee issues a
purchase order to Lessor
covering Equipment to be leased hereunder, it is agreed
that such purchase
order is issued for purposes of authorization and Lessee's
internal use only,
and none of its terms and conditions shall modify the
terms and conditions of
this lease and/or related documentation, or affect
Lessor's responsibility to
Lessee as defined in this lease. An executed Equipment
Schedule that
incorporates by reference the terms of this Master Lease
Agreement, marked
"Original," shall be the original of the lease for the
Equipment described
therein for all purposes. All other executed counterparts
of the lease shall be
marked "Duplicate." To the extent the lease constitutes
chattel paper, as such
term is defined in the Uniform Commercial Code of the
applicable jurisdiction,
no security interest in the lease may be created through
the transfer of
possession of any counterpart other than the Original of
the lease. Lessor
reserves the right to charge Lessee fees for its provision
of additional
administrative services related to the lease requested by
Lessee. Lessee shall
provide Lessor with such corporate resolutions, opinions
of counsel, financial
statements, and other documents (including documents for
filing or recording)
as Lessor may request from time to time. LESSEE REPRESENTS
AND WARRANTS THAT
ALL CREDIT AND FINANCIAL INFORMATION SUBMITTED TO LESSOR
HEREWITH OR AT ANY
OTHER TIME IS TRUE AND CORRECT. LESSEE HEREBY APPOINTS
LESSOR OR ITS ASSIGNEE
ITS TRUE AND LAWFUL ATTORNEY IN FACT TO EXECUTE ON BEHALF
OF LESSEE ALL UNIFORM
COMMERCIAL CODE FINANCING STATEMENTS OR OTHER DOCUMENTS
WHICH, IN LESSOR'S
DETERMINATION, ARE NECESSARY TO SECURE LESSOR'S INTEREST
IN SAID EQUIPMENT. The
filing of UCC Financing Statements is precautionary and
shall not be evidence
that the lease is intended as security. If for any reason
this agreement is
determined not to be a lease, Lessee hereby grants Lessor
a security interest
in the lease, the Equipment or collateral pertaining
thereto and the proceeds
thereof, including re-lease, sale or disposition of the
Equipment or other
collateral. If more than one Lessee is named in this
lease, the liability of
each shall be joint and several. Time is of the essence
with respect to this
lease. Lessee represents and warrants that the Equipment
is being leased
hereunder for business purposes. The descriptive headings
which are used in
this lease are for convenience of the parties only and
shall not affect the
meaning of any provision of the lease. Any failure of the
Lessor to require
strict performance by the Lessee or any waiver by Lessor
of any provision
herein shall not be construed as a consent or waiver of
any other breach of the
same or of any other provision. This agreement shall be
governed by the laws of
the state of California (without giving effect to
principles of conflicts of
law thereof).
31. LESSEE'S REPRESENTATIONS; WAIVER OF JURY TRIAL. Lessee
represents and
warrants, as of the date of this lease: (a) Lessee is duly
organized, validly
existing and in good standing under the laws of the state
of its incorporation
or organization, and is duly qualified to do business
wherever necessary to
carry on its present business and operations and to own
its property; (b) this
lease (and any Equipment Schedule entered into pursuant to
this lease) has been
duly authorized by all necessary action on the part of the
Lessee, duly
executed and delivered by authorized officers or agents of
Lessee, does not
require any further shareholder or partner approval, does
not require the
approval of, or the giving notice to, any federal, state,
local or foreign
governmental authority, does not contravene any law
binding on Lessee or
contravene any certificate or articles of incorporation or
by-laws or
partnership certificate or agreement, or any agreement,
indenture or other
instruments to which Lessee is a party or by which it or
any of its assets or
property may be bound; (c) this lease (and any Equipment
Schedule entered into
pursuant to this lease) constitutes the legal, valid and
binding obligation of
Lessee and is enforceable in accordance with its terms;
(d) all credit and
financial information, and all other information submitted
to Lessor at any
time is true and correct, and there does not exist any
pending or threatened
action or proceeding before any court or administrative
agency which might
materially adversely affect Lessee's financial condition
or operations; (e)
Lessee agrees to furnish to Lessor (i) as soon as
available, and in any event
within 120 days after the last day of each fiscal year of
Lessee, a copy of the
financial statements of Lessee as of the end of such
fiscal year, certified by
an independent certified public accounting firm; (ii) at
any time if requested
by Lessor, a copy of quarterly financial statements
certified by the principal
financial officer of Lessee; and (iii) such additional
information concerning
Lessee as Lessor may reasonably request. LESSEE AND LESSOR
HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS
LEASE OR ANY OTHER
AGREEMENT EXECUTED IN CONNECTION HEREWITH.
32. COMMITMENT FEE REQUIREMENT. Lessee agrees, with
respect to each
transaction, to pay the commitment fee specified in
Lessor's proposal for such
transaction or in the Equipment Schedule related thereto.
This commitment fee
is given in consideration for Lessor's costs and expenses
in investigating and
appraising and/or establishing credit for Lessee. This
commitment fee shall not
be refunded unless Lessor declines to accept Lessee's
offer to enter into the
lease. Upon Lessor's acceptance of Lessee's offer to enter
into the lease,
unless otherwise specified in the proposal or Equipment
Schedule, the amount
shall be applied to the first period's rent payment.
Lessee acknowledges that
Lessor's act of depositing any commitment fee into
Lessor's bank account shall
not in itself constitute Lessor's acceptance of Lessee's
offer to enter into
the lease.
IN WITNESS WHEREOF, the parties have executed this Master
Lease Agreement
effective as of the first date it is signed by Lessee
below.
<TABLE>
<S>
<C> <C>
<C> USL CAPITAL CORPORATION (LESSOR)
LIGAND PHARMACEUTICALS, INC. (LESSEE) TITLE
DATE
BY
BY
Name
X P Maier VP & CFO
5/30/96
-----------------------------------------------------
- ------------------------------------------------------
BY
Title
X
----------------------------------------------------
- ------------------------------------------------------
Business Unit
(CO-LESSEE) TITLE DATE
-----------------------------------
- -----------------------------
BY
HOME OFFICE: 733 FRONT STREET, SAN FRANCISCO, CA 94111
X
(415) 627-9000 ------------------------------
- ----------------------------------
Not valid unless executed by Lessor at Lessor's
home office.
</TABLE>
<PAGE> 1
EXHIBIT 10.151
SETTLEMENT AGREEMENT
AND
MUTUAL RELEASE OF ALL CLAIMS
This Settlement Agreement and Mutual Release of
All Claims
("Settlement Agreement") is entered into by and between
Ligand
Pharmaceuticals Incorporated ("Ligand") and Pfizer Inc
("Pfizer").
RECITALS:
A. On May 1, 1991, Pfizer and Ligand entered into
an agreement ("the
1991 Agreement"), pursuant to which they agreed to
collaborate in the discovery
and development of new pharmaceuticals for the treatment
of osteoporosis. On
October 1, 1993, Pfizer and Ligand entered into a
Supplementary Agreement (the
"Supplementary Agreement") pursuant to which they agreed
to terminate research
activities at Ligand in furtherance of the objectives of
the collaboration.
B. On or about May 2, 1991, Ligand and Pfizer
entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement")
pursuant to which Pfizer
paid Ligand $7,500,000 and Ligand issued to Pfizer
3,000,000 shares of Ligand's
Series D preferred Stock, which shares were subsequently
converted into
1,353,125 shares of Ligand common stock ("the subject
stock") .
<TABLE>
<S>
<C>
Certain confidential portions of this Exhibit were omitted
by means of blackout of the text (the "Mark").
This Exhibit has been filed separately with the Secretary
of the Commission without the Mark pursuant to
the Company's Application Requesting Confidential
Treatment under Rule 406 under the Securities Act.
</TABLE>
<PAGE> 2
C. Pfizer has been engaged in the development of
a compound known as
droloxifene as a potential drug for the treatment of
osteoporosis and breast
cancer. The chemical structure of droloxifene is set forth
in Exhibit A attached
to this Settlement Agreement. Pfizer has been engaged in
the development of the
compound CP-336,156 as a potential drug for the treatment
of osteoporosis. The
chemical structure of CP-336,156 is set forth in Exhibit B
attached to this
Settlement Agreement.
D. A dispute has arisen between Ligand and Pfizer
concerning their
respective rights and obligations under the terms of the
1991 Agreement and the
Supplementary Agreement with respect to past and future
milestone payments and
future royalty payments from Pfizer to Ligand in
connection with Pfizer's
development of droloxifene. On December 21, 1994, Ligand
filed an action against
Pfizer in the San Diego Superior Court entitled Ligand
Pharmaceuticals
Incorporated, etc. v. Pfizer Inc., etc., et al., Case No.
683965 ("said legal
action"). Ligand's complaint in said legal action alleges,
inter alia, that
Pfizer breached the 1991 Agreement and the Supplementary
Agreement by failing to
make milestone payments to Ligand. It also seeks
declaratory relief with respect
to a dispute between Pfizer and Ligand over Pfizer's
future obligations to make
milestone and royalty payments to Ligand under the terms
of the 1991 Agreement
and the Supplementary Agreement. Pfizer filed an answer in
said
- 2 -
<PAGE> 3
legal action denying the material allegations of Ligand's
complaint.
E. In accordance with the provisions of this
Settlement Agreement,
Ligand and Pfizer have reached a settlement and resolution
of all disputes that
have arisen between them, including all disputes
concerning the 1991 Agreement,
the Supplementary Agreement, all disputes arising from any
of the facts set
forth in Recitals A-D above, and all disputes and issues
raised during the
course of said legal action that could have been properly
plead and tried in
state court. Ligand and Pfizer wish to restore their
relationship to one of
respect and collegiality and to fix and establish in this
Settlement Agreement
their respective rights and future obligations.
AGREEMENT:
1. Materiality
Pfizer and Ligand acknowledge and agree
that each provision of
this Settlement Agreement is material to their respective
decisions to settle
said legal action and all disputes that have arisen
between them concerning the
1991 Agreement and the Supplementary Agreement. Pfizer and
Ligand further
acknowledge and agree that neither of them would have
entered into this
Settlement Agreement in the absence of any of its
provisions.
- 3 -
<PAGE> 4
2. Milestone Payments
2.1 The schedule of milestone payments
set forth in Section
4.1 of the 1991 Agreement is, except as expressly modified
by the provisions of
this Settlement Agreement, hereby incorporated into this
Settlement Agreement.
2.2 Pfizer shall be obligated to pay to
Ligand and Ligand
shall have the right to receive from Pfizer, at most, one
set of milestone
payments for CP-336,156 or droloxifene whichever, if any,
reaches each milestone
first, for any and all indications for the treatment of
disease in human beings
("indication"). Pfizer and Ligand acknowledge and agree
that Ligand has already
received the first milestone payment (i.e., Satisfaction
of Development
Criteria) of $100,000.
2.3 Within fifteen days of receipt of
notice of the execution
of this Settlement Agreement by Ligand and its attorneys
of
record in said legal
action, which notice may be given by facsimile to Pfizer's
attorneys of record
in said legal action at (714) 851-2351, Pfizer will pay to
Ligand the second
milestone payment (i.e., Submission of IND) for
droloxifene in the amount of
$350,000.
2.4 On September 1, 1996, Pfizer will
make payment to Ligand
in the sum of $900,000 as a credit against the third
milestone payment (i.e.,
Initiation of Phase III Clinicals) for droloxifene,
provided that on September
1, 1996, Pfizer is
- 4 -
<PAGE> 5
continuing with clinical studies with droloxifene for
treatment of osteoporosis
and has not previously given Ligand written notice of
Pfizer's abandonment of
its development of droloxifene as a drug for the treatment
of osteoporosis.
Subject to the provisions of Section 2.6 below, this
payment
will be credited
against future royalty payments for droloxifene or CP
336,156 for any indication
if Pfizer gives written notice to Ligand after September
1, 1996, of its
abandonment of development of droloxifene as a drug for
treatment of
osteoporosis before the United States Food and Drug
Administration and all other
equivalent foreign regulatory bodies prior to the approval
of a New Drug
Application ("NDA") (or its foreign equivalent) for
droloxifene for the
treatment of osteoporosis. For the purposes of this
Agreement, the phrase
"equivalent foreign regulatory bodies" shall mean those
drug approval regulatory
bodies located in the following countries: Japan, Canada,
Switzerland or any
member of the European Union.
2.5 If Ligand has not already received
the third milestone
payment (i.e., Initiation of Phase III Clinicals or its
foreign equivalent)
pursuant to Section 2.6 below, Pfizer shall pay to Ligand
$900,000 against the
third milestone payment (i.e., Initiation of Phase III
Clinicals or its foreign
equivalent) if and when droloxifene enters Phase III
(i.e., pivotal efficacy)
clinical trials for treatment of osteoporosis. This
payment shall not be
refundable.
- 5 -
<PAGE> 6
2.6 If droloxifene enters Phase III
clinical trials for any
indication other than osteoporosis or breast cancer or if
CP-
336,156 enters
Phase III clinical trials for any indication, Ligand will
be paid the balance
($900,000) of the third milestone payment of $1.8 million
pursuant to Section
4.1 of the 1991 Agreement (i.e., Initiation of Phase III
Clinicals or its
foreign equivalent) and Ligand shall no longer be
obligated to credit the
$900,000 payment set forth in Section 2.4 above or, if
such $900,000 payment or
any portion thereof has been credited as set forth in
Section 2.4, Pfizer shall
reimburse Ligand for the amount of such credit. Consistent
with the provisions
of Section 2.2 above, Pfizer and Ligand agree that if
Ligand has previously
received either or both of the payments set forth in
Sections 2.4 and 2.5 above,
such payments shall be credited against any obligation of
Pfizer to make the
third milestone payment under the provisions of this
Section 2.6 such that in no
event shall Ligand be entitled to receive more than
$1,800,000 for the third
milestone.
2.7 Ligand shall be eligible to receive
and Pfizer shall be
obligated to pay the fourth (i.e., Submission of NDA or
its foreign equivalent)
and fifth (i.e., Approval of NDA or its foreign equivalent
) milestone payments
in the event either CP-336,156 or droloxifene qualifies
for these milestones
for any indication.
- 6 -
<PAGE> 7
2.8 $2,500,000 of the milestone payments
made by Pfizer to
Ligand, including the $100,000 milestone payment noted in
Section 2.2 above,
shall be creditable by Pfizer against future royalties
under Sections 3.1-3.4
below, provided that no credit under this Settlement
Agreement may be used to
reduce the royalties owed in any quarter by more than
fifty percent (50%).
2.9 Pfizer's obligation to pay
milestones to Ligand pursuant
to Sections 2.1 through 2.8 above may, consistent with the
provisions of Section
5.2 below, be discharged, by the transfer of the subject
stock or a portion of
it to Ligand.
3. Royalty Payments
3.1 Pfizer shall be obligated to pay
Ligand a royalty of one
percent (1%) of Net Sales of droloxifene for treatment of
breast cancer, which
obligation shall increase to three percent (3%) of Net
Sales of droloxifene for
any and all indications if and when Pfizer makes sales of
droloxifene for any
indication other than breast cancer.
3.2 Pfizer shall be obligated to pay
Ligand a royalty of six
percent (6%) of Net Sales of CP-336,156 for any and all
indications. In
addition, Pfizer shall be obligated to pay Ligand a
royalty of six percent (6%)
of Net Sales (and any unearned milestones, if any) on any
compound which exerts
its primary mechanism of action through the estrogen
receptor and which was
screened or characterized by Ligand during the
- 7 -
<PAGE> 8
collaboration under the 1991 Agreement, or was screened or
characterized by
Pfizer using constructs, reagents or assays, provided to
Pfizer by Ligand or
constructs, reagents or assays which are embraced by
claims in issued patents,
or pending patent applications owned or licensed by
Ligand, for any and all
indications. Pfizer's obligations to Ligand for compounds,
other than CP-336,156
and droloxifene, will terminate if development of such
compounds (i.e., issuance
of a Candidate Alert Notice or its equivalent) is not
initiated within three
years of the effective date of this Settlement Agreement.
3.3 For the purposes of calculating and
reporting on royalty
payments under Sections 3.1 and 3.2 above, Sections 1.3,
6.1, and 6.2 of the
1991 Agreement are hereby incorporated into this
Settlement Agreement. Pfizer
will pay Ligand the royalty set forth in Section 3.1 above
on Net Sales of
droloxifene on a country-by-country basis for a period of
fifteen years from the
first sale of droloxifene in each country, or until the
Occurrence of Generic
Competition with droloxifene in each country, whichever
occurs first, provided,
however, in no instance will Pfizer pay royalties to
Ligand on Net Sales of
droloxifene on a country-by-country basis under this
Section 3.3 for a period of
less than twelve years from the first sale of droloxifene
in each country. As
used herein, the phrase "Occurrence of Generic
Competition" shall mean the first
business day of the calendar quarter following the
provision of written notice
by Pfizer to Ligand of the grant of an ANDA (or its
- 8 -
<PAGE> 9
equivalent) for droloxifene to a third party in a country
by the appropriate
regulatory body or bodies of that country (e.g., the
United States Food and Drug
Administration, the Canadian Pricing Board) empowered to
grant such approval(s)
to the third party within that country, provided that the
third party granted
such approval cannot be (i) Pfizer, including its
subsidiaries, affiliates,
collaborators, licensees, licensors, and licensees of its
licensors, or any
party receiving rights relating to droloxifene from Pfizer
or (ii) a party that
obtains a compulsory license to droloxifene. Pfizer will
pay Ligand the royalty
set forth in Section 3.2 above on Net Sales of CP-336,156
on a
country-by-country basis for a period of fifteen years
from the date of first
sale in each country or until expiration of the last
Pfizer patent on CP-336,156
in each country, whichever occurs first.
3.4 Pfizer's obligation to pay royalties
to Ligand pursuant to
Sections 3.1 and 3.2 above may, consistent with the
provisions of Section 5.2
below, be discharged by the transfer of the subject stock
or a portion of it to
Ligand.
4. Warranties and Representations by Pfizer
Pfizer hereby warrants and represents as
follows:
4.1 Pfizer presently has in development
no successor
compounds to droloxifene or CP-336,156. As set forth in
this
warranty and representation, "successor compound" means
any
- 9 -
<PAGE> 10
compound that is derived from or whose synthesis was based
upon the chemical
structures of either droloxifene or CP-336,156.
4.2 With the exception of CP-336,156 and
droloxifene, Pfizer
has no compound in development for any indication that was
screened or
characterized by Ligand during the collaboration under the
1991 Agreement or was
screened or characterized by Pfizer at any time using
constructs, reagents, or
assays provided to Pfizer by Ligand or constructs,
reagents or assays which are
embraced by claims in issued patents or pending patent
applications owned or
licensed by Ligand. Pfizer has, with the exception of CP
336,156 and
droloxifene, no compounds in development that qualify for
milestone or royalty
payments under the 1991 Agreement.
4.3 Pfizer has ceased using, has no
intention of ever again
using, and will not in the future use any constructs,
reagents, or assays that
were provided to Pfizer by Ligand at any time during the
collaboration under the
1991 Agreement or that were otherwise obtained by Pfizer
pursuant to the 1991
Agreement or the Supplementary Agreement or constructs,
reagents or assays which
are embraced by claims in issued patents or pending
patent applications owned or
licensed by Ligand.
4.4 As of the effective date of this
Agreement, Pfizer has
made no decision to terminate development of droloxifene
for osteoporosis or any
other indication, and droloxifene currently
- 10 -
<PAGE> 11
is in, or Pfizer plans to initiate, Phase II or Phase
II/III clinical trials for
droloxifene in osteoporosis. Nothing in this provision
shall abrogate or
otherwise alter Pfizer's rights under paragraph 6 of this
Settlement Agreement.
5. Subject Stock
5.1 Except as set forth in this
Settlement Agreement, Pfizer
shall not sell, transfer or otherwise dispose of the
subject stock for a period
of seven years from the effective date of this Settlement
Agreement.
5.2 At the option of either Pfizer or
Ligand, the subject
stock may be used to satisfy any obligations of Pfizer to
make payment of
milestones or royalties to Ligand pursuant to Sections 2.1
2.9 and 3.1-3.4
above. For purposes of calculating the amount of credit to
be given to transfers
of the subject stock from Pfizer to Ligand under this
provision, the subject
stock shall be valued at its closing selling price per
share as of the effective
date of this Settlement Agreement as reported by the
National Association of
Securities Dealers, Inc. through its Nasdaq system.
5.3 If Pfizer abandons development of
droloxifene and
CP-336,156 for all indications for all countries, the
provisions of Section 5.1
above shall, upon written notice of such abandonment from
Pfizer to Ligand,
cease.
- 11 -
<PAGE> 12
6. Pfizer's Control of Development of
Droloxifene and CP-
336,156
Pfizer and Ligand agree that Pfizer will
retain
absolute discretion and control regarding the development,
regulatory filings,
promotion, marketing, selection of indications to pursue,
protection of
intellectual property rights, and pursuit or abandonment
of droloxifene and
CP-336,156.
7. Ligand's Right to Pursue CP-336,156 if
Abandoned: Not
Droloxifene
7.1 Pfizer and Ligand agree that in the
event Pfizer
abandons CP-336,156 for all indications for all countries,
Ligand shall have the
right to develop and market CP-336,156 free of any control
or restrictions by
Pfizer. Pfizer shall promptly give written notice to
Ligand of its abandonment
of CP-336,156 in the event Pfizer determines not to pursue
further development
of CP-336,156. Upon abandonment, Pfizer shall also grant
Ligand a worldwide
exclusive royalty-free license to all patents and all
patent applications
relating to CP-336,156, including the right to make, have
made, use, offer for
sale, sell, and import CP-336,156, as well as the right to
grant sublicenses,
and the right to prosecute pending patent applications and
to enforce the
patents and prosecute infringers. Pfizer shall also
provide to Ligand, free of
any confidentiality obligation and at Ligand's expense for
copying charges and
postage, those technical materials (including regulatory
approvals, if any and
if
- 12 -
<PAGE> 13
remaining in force) which are reasonably necessary for
continuation of development of CP-336,156 by Ligand.
7.2 Pfizer and Ligand agree that, if
Pfizer abandons
droloxifene, Ligand shall not acquire any rights in
droloxifene.
8. Publicity Regarding Settlement and
Development of
Droloxifene: News Release
8.1 Ligand and Pfizer agree that in
characterizing or
describing the settlement and resolution of said legal
action or the terms and
conditions of this Settlement Agreement, neither party
will make any statements
that such party has been successful, attained a victory,
or prevailed in said
legal action. Pfizer and Ligand acknowledge that this
Settlement Agreement is
the product of a compromise and a desire by both parties
to restore their
relationship to one of respect and collegiality and that
neither of them has
attained a victory, prevailed, or succeeded in said legal
action. Pfizer and
Ligand agree that Ligand may state that it performed work
on droloxifene at
Pfizer's request, but may not state that it engaged in the
joint drug
development of droloxifene with Pfizer or any other party.
8.2 Pfizer and Ligand shall, within five
business days after
the effective date of this settlement agreement, issue a
mutually agreed upon
joint press release in the form attached to this
Settlement Agreement as Exhibit
C.
- 13 -
<PAGE> 14
9. Periodic Reports by Pfizer
Pfizer shall make reports to Ligand two
times per year, each
June 1 and December 1 setting forth the information
specified in Exhibit D
attached to this Settlement Agreement. During the duration
of this reporting
requirement, Pfizer shall be afforded a 15-day grace
period for no more than two
reports.
10. Mutual Release of Claims
In consideration of the obligations,
warranties and
representations of each of the parties to this Settlement
Agreement, and
contingent upon each party's timely performance of them,
Pfizer and Ligand each
hereby releases and forever discharges the other, and each
of their
stockholders, predecessors, successors, affiliated
corporations, subsidiary
corporations, parent corporations, agents, directors,
officers, employees,
representatives, lawyers, and all persons acting by,
through, under, or in
concert with them, or any of them, from any and all
liability whatever,
including all claims, demands and causes of action, of
every nature, including,
without limitation, any claims for breach of contract,
declaratory relief,
misrepresentation, or any other form. of damage or theory
of recovery whatever
arising from any of the facts and circumstances set forth
in Recitals A-D above,
and further including, without limiting the generality of
the foregoing, any
claims arising out of, based upon or relating to the 1991
Agreement, the
Supplementary Agreement, or said legal action, as well as
any claims which could
have been properly plead and tried in state
- 14 -
<PAGE> 15
court in said legal action. Pfizer and Ligand shall each
bear their own
attorneys' fees and costs incurred in this action.
Ligand and Pfizer each acknowledge that they have
been advised by legal
counsel and are familiar with the provisions of California
Civil Code Section
1542, which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR."
Pfizer and Ligand, and each of them, being aware
of said Code section,
hereby expressly waive any rights they may have
thereunder.
11. Dismissal with Prejudice
Ligand hereby authorizes and directs its
attorneys of record
in said legal action, William F. Sullivan and Brobeck,
Phleger & Harrison,
L.L.P., to execute a dismissal with prejudice of said
legal action in the form
attached hereto as Exhibit E and direct their attorneys to
file said dismissal
with the San Diego Superior Court within seven days after
the effective date of
this settlement.
12. Confidentiality
Pfizer and Ligand hereby incorporate
Section 8.1 of the
1991 Agreement for purposes of limiting the disclosure of
- 15 -
<PAGE> 16
confidential information provided by either party to the
other under the
provisions of this Settlement Agreement.
13. Governing Law
This Settlement Agreement shall be
governed by and construed
in accordance with the laws of the State of New York.
14. Written Notices
All written notices, payments, and
reports, except as
otherwise set forth in this Settlement Agreement, shall be
deemed to be
effective when mailed, postage prepaid, by first class,
registered or certified
mail to:
(if to Pfizer)
Pfizer Inc.
Attn: President, Central Research 235
East 42nd Street
New York, NY 10017
Copy to: General Counsel
and
(if to Ligand)
Ligand Pharmaceuticals Incorporated
Attn: General Counsel
9393 Town Center Drive, Suite 100
San Diego, CA 92121
or to such other person or by such other means to which
the parties may from
time to time have agreed.
- 16 -
<PAGE> 17
15. Successors and Assigns
The terms of this Settlement Agreement
shall enure to the
benefit of and be binding upon the respective successors
and assigns of each
party.
16. Entire Agreement: Integration
The terms and conditions of this
Settlement Agreement
constitute the entire agreement between Pfizer and Ligand
and supersede all
previous negotiations or agreements, either oral or
written, between the parties
with respect to the subject matter of this Settlement
Agreement. The Stock
Purchase Agreement and Amended Registration Rights
Agreement executed between
Ligand and Pfizer dated June 24, 1994 survive and are not
affected by this
Settlement Agreement except as specifically provided
herein. This Settlement
Agreement shall not be amended, supplemented or abrogated
other than by a
written instrument signed by the authorized representative
of each party.
17. No Waiver
The failure of either party to enforce
at any time any of the
provisions of this Settlement Agreement, or any rights in
respect of it, or to
exercise any election provided in it, shall in no way be
considered to be a
waiver of such provisions, rights or elections, and shall
in no way affect the
validity of this Settlement Agreement.
- 17 -
<PAGE> 18
18. Compromise And Settlement
This Settlement Agreement is entered
into
solely by way of
compromise and settlement of said legal action and the
dispute between Ligand
and Pfizer and is not and shall not be construed as an
admission of liability,
responsibility or fault by either party.
19. Counterparts
This Settlement Agreement may be
executed in one or more
counterparts by each party and their attorneys, each of
which shall be deemed to
be an original and all of which taken together shall
constitute one and the same
agreement.
20. Effective Date
The effective date of this Settlement
Agreement shall be April
19, 1996.
21. Rights Through Affiliates
Pfizer and Ligand may execute their
rights and fulfill their
obligations through their affiliates.
22. Headings
The headings used in this Settlement
Agreement are inserted
for reference only and shall not be deemed to be a part of
the text.
- 18 -
<PAGE> 19
23. Assurances and Warranties
Ligand and Pfizer agree to execute,
acknowledge and deliver
such further instruments, and to do such other acts, as
may be reasonably
necessary in order to carry out the intent and purposes of
this Settlement
Agreement. Each party warrants that it has the authority
to enter into this
Settlement Agreement on the basis of the terms and
conditions herein and that it
has not made any other agreement inconsistent with its
obligations under this
Settlement Agreement.
24. Severability of Provisions
The invalidity or unenforceability of
any provision of this
Settlement Agreement shall in no way affect the validity
or
- 19 -
<PAGE> 20
enforceability of any other provision of this Settlement
Agreement.
Dated: April 20, 1996 LIGAND
PHARMACEUTICALS
INCORPORATED
By: David
E. Robinson
Its:
President and CEO
APPROVED AS TO FORM AND CONTENT
THIS 20 DAY OF APRIL, 1996
BROBECK, PHLEGER & HARRISON, L.L.P.
By: WILLIAM F. SULLIVAN
____________________________
William F. Sullivan
Attorneys for Ligand
Pharmaceuticals Incorporated
Dated: April 23, 1996 PFIZER
INC
By:
Steven Kany
Its: Sr.
Asst. General Counsel
APPROVED AS TO FORM AND CONTENT
THIS 22 DAY OF APRIL, 1996
PALMIERI, TYLER, WIENER,
WILHELM & WALDRON
By: FRANK C. ROTHROCK
___________________________
Frank C. Rothrock
Attorneys for Pfizer Inc
- 20 -
<PAGE> 21
This Exhibit contains a diagram of the
chemical structure of
droloxifene.
EXHIBIT A
<PAGE> 22
*CONFIDENTIAL
TREATMENT REQUESTED
EXHIBIT B
*
*
*
<PAGE> 23
EXHIBIT C
[INSERT DATE]
FOR IMMEDIATE RELEASE
CONTACT: Brian McGlynn Susan Atkins
Pfizer Inc Ligand
Pharmaceuticals Inc.
(203) 441-5448 (619) 550-
7687
PFIZER AND LIGAND END LITIGATION
OVER DROLOXIFENE
SAN DIEGO - April [X], 1996 - Pfizer Inc
(NYSE:PFE) and Ligand
Pharmaceuticals Inc. (NASDAQ/NMS:LGND) today announced
that the two companies
settled a lawsuit for breach of contract filed by Ligand
against Pfizer in
December 1994.
In order to end the costs and avoid the risks
inherent in litigation,
Ligand and Pfizer settled the lawsuit and reached
agreement that Ligand will be
eligible to receive certain milestones and royalties in
connection with
droloxifene. Droloxifene, licensed by Pfizer from Klinge
Pharma Gmbh, is
currently in Phase III clinical trials for breast cancer
and Phase II clinical
trials for osteoporosis. These payments are contingent
upon the compound's
advancement toward regulatory approval and sales as a drug
in breast cancer,
osteoporosis or other indications.
"We are pleased to bring an end to this
litigation and
restore a normal business relationship with Pfizer,
Ligand's first collaborative partner," stated David E.
Robinson, Ligand
President and Chief Executive Officer. "We value our
relationship with Pfizer in the development and
commercialization
-1-
<PAGE> 24
of compounds for osteoporosis, one of the truly exciting
growth
markets, as well as for other indications."
Ligand and Pfizer entered into a collaboration in
1991 to
apply Ligand's intracellular receptor (IR) technology to
the pursuit of drugs for the treatment of osteoporosis.
The collaboration research phase ended in 1993.
Pfizer Inc is a diversified, research-based
health care company with
global operations. The company reported sales of more than
$10.02 billion for
1995.
Ligand Pharmaceuticals Incorporated, founded in
1987, is a leader in
gene transcription technology, particularly IR technology
and Signal Transducers
and Activators of Transcription (STATs). Ligand applies IR
and STATs technology
to the discovery and development of small molecule drugs
to enhance therapeutic
and safety profiles and to address major unmet patient
needs in cancer, women's
health and skin diseases, as well as osteoporosis,
cardiovascular and
inflammatory disease.
This statement contains certain forward looking
statements by Ligand
and Pfizer and actual results could differ materially from
those described as a
result of factors, including, but not limited to, the
following. There can be no
assurance that droloxifene, or any development candidate
identified as a result
of the Pfizer-Ligand collaboration, will be successfully
developed, that
regulatory approvals will be granted, or patient and
physician acceptance of
these products will be achieved.
-2-
<PAGE> 25
EXHIBIT D
REPORTING REQUIREMENTS
24.1 Reporting Requirement Objectives: The
objectives of these
reporting requirements are to provide definitive
guidelines by which Pfizer will
furnish Ligand with objective information regarding the
development of
droloxifene, CP-336,156 and any compound for which
development is initiated
under the terms of Section 3.2 of the Settlement Agreement
(collectively
"subject compounds"). It is the intention of the parties
to define these
guidelines with sufficient specificity such that the
satisfaction of each
requirement can be objectively determined.
24.2 Contents of Reports: Each report will
include the
following:
(1) Copies of the preclinical
pharmacology and toxicology
summaries prepared for the IND and NDA for each of the
subject compounds, when
complete and approved within Pfizer, if not previously
provided.
(2) Copy of the Investigator's
Brochure for the
subject compounds, including any amendments, when
available and
if not previously provided.
(3) Copies of the Integrated
Summary
of Efficacy and
Integrated Summary of Safety prepared for the NDA for each
of the subject
compounds, when complete and approved within Pfizer, if
not previously provided.
(4) Any projected and actual
initiation dates for
clinical trials for each subject compound for all
indications.
(5) Any projected and actual dates
of
completion of
clinical phases.
(6) The projected and actual
completion dates of each
trial.
(7) Any projected and actual dates
of
NDA submissions for
each subject compound and any FDA response thereto.
(8) Notification of, and a summary
of
the basic terms,
when Pfizer enters into any sub-licensing, co-marketing or
co-promotion plans
with respect to the subject compounds.
(9) Copies of any galley proofs
within Pfizer's
possession of publications (preclinical and clinical) by
Pfizer
-1-
<PAGE> 26
or its investigators or Pfizer's third party
collaborators/investigators concerning the subject
compounds.
(10) Copies of materials presented
to
financial
analysts concerning the subject compounds.
C. Changes in Expected Dates: Pfizer will
notify Ligand
of any delays in the development of either subject
compound as
outlined above and will summarize the cause(s) of such
delay.
D. Responsibility for Preparation: Michael
R. Ostrander,
Ph.D., Associate Director of Regulatory Affairs at Pfizer
Central
Research, or his successor, will have responsibility for
providing Ligand with these reports.
E. Reporting Deadlines: The above reports
will be
furnished to Ligand twice a year, on June 1 and December 1
of
each calendar year, subject to a maximum of two 15-day
grace periods during the duration of the reporting
requirement.
F. Confidentiality: Ligand will agree to
maintain as
confidential any and all documents and information
provided in
these reports that Pfizer designates in writing as
confidential
and will not disclose such confidential information or
documents
to any third parties. The foregoing obligations shall not
apply
when and to the extent such documents and information
(hereinafter collectively, "Information") (1) was already
in Ligand's possession at the time of disclosure thereof,
(2) was
lawfully available to the public prior to receipt of such
Information by Ligand, (3) through no act on the part of
Ligand,
thereafter becomes lawfully available to the public, (4)
is required to be disclosed by Ligand to a third party by
law or
legal process, provided that, should Ligand be required to
make
such disclosure, they will take all reasonable steps to
inform
Pfizer of such disclosure in sufficient time for Pfizer to
oppose
such disclosure before it takes place, (5) is received
from a
third party having no obligations of confidentiality to
Pfizer,
(6) on written advice of reasonably acceptable independent
outside counsel (a copy of which is furnished to Pfizer)
is reasonably required to be disclosed by Ligand to the
securities
markets pursuant to section 10(b)(5) of the Securities and
Exchange Act of 1934 or the NASD Schedule "D", P.
1806(A), provided, however, that the law firm of Brobeck,
Phleger & Harrison LLP is deemed by the parties to be
acceptable outside
counsel, (7) is required to be disclosed to a third party
evaluator of Ligand (e.g., investment banker, analyst)
provided,
however, prior to making such a disclosure, Ligand will
first
secure a confidentiality agreement with the third party
evaluator
substantially incorporating the provisions of this
paragraph, but
only including exceptions (1)-(5) herein, or (8) is
approved by a
disclosing Party for disclosure by the receiving Party.
The
-2-
<PAGE> 27
obligations imposed in this paragraph will run during the
time that royalty
payments are made to Ligand by Pfizer.
G. Expiration: Pfizer's obligations under
these reporting
requirements with respect to each of the subject
compounds will
expire for a given indication upon NDA approval for that
indication for each compound or, if and when, each such
compound
is abandoned.
-3-
<PAGE> 28
Name, Address and Telephone space
below
for use of
No. of attorney(s) Court
Clerk only
BROBECK, PHLEGER & HARRISON LLP
William E. Trautman, Bar No. 37731
William F. Sullivan, Bar No. 78353
Christopher H. McGrath, Bar No. 149129
550 West "C" Street, Suite 1300
San Diego, CA 92101 619-234-1966
Attorney(s) for: Plaintiff LIGAND
PHARMACEUTICALS INCORPORATED
- ----------------------------------------------------------
- --------------------
SUPERIOR COURT OF CALIFORNIA, COUNTY OF SAN
DIEGO ----------------------------------------------------
- --------------------------
(SUPERIOR, MUNICIPAL or JUSTICE)
- ----------------------------------------------------------
- --------------------
(Name of Municipal or Justice Court District or of
branch court, if any)
Plaintiff(s): LIGAND PHARMACEUTICALS CASE NUMBER
683965
INCORPORATED, a Delaware
corporation, REQUEST
FOR
DISMISSAL
TYPE
OF ACTION
Defendant(s): PFIZER INC, a Delaware [ ] Personal
injury, Property Damage
corporation, and DOES 1 through and
Wrongful
Death;
50, inclusive, [ ] Motor
Vehicle
[ ] Other
[ ] Domestic
Relations
[ ] Eminent
Domain
[x] Other:
(Specify) Breach of
(abbreviated title) Contract;
Declatory Relief
- ----------------------------------------
TO THE CLERK: Please dismiss this action as follows:
(Check applicable boxes.)
1. [x] With prejudice [ ] Without prejudice
2. [x] Entire action [ ] Complaint only [ ]
Position only
[ ] Cross-complaint only [ ] Other (Specify)*
BROBECK,
PHLEGER & HARRISON
Dated: April , 1996 ---------------
- --
- ------------------
* It dismisses requested as of Attorney(s) for
Plaintiff Ligand
specified parties only, or specified Pharmaceuticals
Incorporated
causes of action only or of specified
cross-complaints only, to state and
identify the parties, causes of actions ---------------
- --
- -------------------
or cross-complaints to be dismissed. (Type or print
attorney(s) name(s))
William F.
Sullivan, Esq.
- ----------------------------------------------------------
- --------------------
TO THE CLERK: Consent to the above dismissal is hereby
given.
Dated: ----------------------------- ---------------
- --
- -------------------
When a cross-complaint (or recourse Attorney(s) for
(marriage) among affirmative ??) is
on ??, the attorney(s) for the cross-
complaint (respondent) must sign the ---------------
- --
- -------------------
consent qhen required by CCP (Type or print
attorney(s) name(s))
Sec1(1), (2) or (5)
- ----------------------------------------------------------
- --------------------
(To be completed by clerk)
[ ] Dismissal entered as requested on
_________________________________________
[ ] Dismissal entered on ______________ as to only
____________________________
[ ] Dismissal not entered as requested for the following
reason(s), and
attorney(s) notified on
______________________________Clerk
Dated_________________________________
By__________________________, Deputy
- ----------------------------------------------------------
- -------------------
Form Adopted by Rule 982 of REQUEST FOR DISMISSAL
CCP 581, etc.
The Judicial Council of EXHIBIT E
Cal. Rules of Court,
California
Rule 1233
Revised Effective July 1, 1972
<PAGE> 1
Exhibit 10.152
[ABBOTT LETTERHEAD]
March 14, 1996
Mr. William L. Respess
*
CONFIDENTIAL *
Senior V.P., General Counsel
TREATMENT REQUESTED
Ligand Pharmaceuticals Inc.
9393 Towne Center Drive
San Diego, CA 92121
Dear Mr. Respess:
Abbott Laboratories hereby confirms the extension of our
Research, Development
and License Agreement dated July 6, 1994, for a third year
(July 6, 1996
through July 5, 1997), with an amendment to Section 3.1
and Exhibit A, to set
the Ligand staffing for this third year to
*________*________* Ligand full-time
equivalents and an Aggregate Annual Research Fee for
Contract Year 3,
therefore, as *__________________*__________________*.
This revision reflects
the discussions of our respective representatives to the
Joint Research Policy
Committee over the past months. This modification is
intended to provide the
optimum distribution of resources for achieving Research
Program success.
For the convenience of future renewal discussions, Abbott
also proposes to
amend Section 14.3.1 to provide for "notice to be given
not later than four (4)
months...", with all other provisions remaining as
originally provided.
If you agree with the amendments outlined above, please
sign
both copies of
this letter amendment and return one copy to me.
Thanks very much for your assistance.
Sincerely,
Alan S. Rosenthal, M.D. ACCEPTED AND
AGREED:
Vice President, Discovery R&D LIGAND
PHARMACEUTICALS INC.
By: WILLIAM
L. RESPESS
____________________________
William
L. Respess
Senior
Vice President,
General
Counsel and Secretary
Date 3-
2996
<TABLE>
<S>
<C>
Certain confidential portions of this Exhibit were omitted
by means of blackout of the text (the "Mark").
This Exhibit has been filed separately with the Secretary
of the Commission without the Mark pursuant to
the Company's Application Requesting Confidential Treatment
under Rule 406 under the Securities Act.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Statement of Financial Condition at June 30,
1996(Unaudited) and the Condensed Consolidated Statement of Income for the
Six Months Ended June 30, 1996 unauditied and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1.
<CASH> 11228
<SECURITIES> 45473
<RECEIVABLES> 1978
<ALLOWANCES> 0
<INVENTORY> 101
<CURRENT-ASSETS> 59463
<PP&E> 20952
<DEPRECIATION> 9030
<TOTAL-ASSETS> 76673
<CURRENT-LIABILITIES> 12626
<BONDS> 51330
0
0
<COMMON> 28
<OTHER-SE> 17701
<TOTAL-LIABILITY-AND-EQUITY> 76673
<SALES> 118
<TOTAL-REVENUES> 17140
<CGS> 91
<TOTAL-COSTS> 17118
<OTHER-EXPENSES> 9963
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2787)
<INCOME-PRETAX> (17120)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17120)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17120)
<EPS-PRIMARY> (.61)
<EPS-DILUTED> (.61)
</TABLE>
