<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934)
LIGAND PHARMACEUTICALS INCORPORATED
(NAME OF ISSUER)
LIGAND PHARMACEUTICALS INCORPORATED
(NAME OF PERSON(S) FILING STATEMENT)
WARRANTS TO PURCHASE COMMON STOCK, $0.001 PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
WARRANTS -- 53220K 11 6
(CUSIP NUMBERS OF CLASS OF SECURITIES)
DAVID E. ROBINSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
LIGAND PHARMACEUTICALS INCORPORATED
10275 SCIENCE CENTER DRIVE
SAN DIEGO, CALIFORNIA 92121
(858) 550-7500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
NOVEMBER 19, 1999
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
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TRANSACTION VALUATION(1) AMOUNT OF FILING FEE
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$12,267,517 $2,454
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</TABLE>
(1) Pursuant to Rule 0-11(b)(2), the filing fee has been determined based on the
average of high and low prices of the Warrants reported on The Nasdaq
National Market on November 17, 1999.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount previously paid: ________ Filing Party: ________
Form or registration no.: ________ Dated filed: ________
Instruction. Ten Copies of this statement, including all exhibits, shall be
filed with the Securities and Exchange Commission.
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<PAGE> 2
EXPLANATORY NOTE
Copies of the Offer to Exchange (as amended or supplemented from time to
time, the "Offer to Exchange"), pursuant to which Ligand Pharmaceuticals
Incorporated, a Delaware corporation (the "Company"), is offering to exchange
(the "Exchange Offer") certain of its outstanding warrants to purchase shares of
its common stock, par value $0.001 per share (the "Shares"), and the Letter of
Transmittal have been filed by the Company as Exhibits to this Issuer Tender
Offer Statement (this "Statement"). The Exchange Offer (as defined below)
relates to the warrants (the "Warrants" or "ALRT Warrants") originally issued in
the public offering with Allergan Ligand Retinoid Therapeutics, Inc. with an
exercise price of $7.12 per share. Unless otherwise indicated, all material
incorporated by reference in this Statement in response to items or sub-items of
this Statement is incorporated by reference to the information contained in the
Offer to Exchange under the indicated caption.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Ligand Pharmaceuticals Incorporated. Its
principal executive office is located at 10275 Science Center Drive, San Diego,
California 92121.
(b) As of November 12, 1999, Warrants to purchase 3,601,420 Shares were
issued and outstanding. The Company is offering to exchange for each outstanding
Warrant, together with payment of $7.12 in cash per Share for which such Warrant
is exercisable, the number of newly issued Shares issuable under such Warrant
plus a cash amount of $1.12, net, without interest, per Share. Directors and
officers of the Company may elect to exchange their Warrants pursuant to the
Exchange Offer.
The following directors and officers of the Company own Warrants. No other
"affiliates" of the Company own Warrants.
<TABLE>
<CAPTION>
NUMBER OF SHARES
ISSUABLE UPON
EXERCISE OF
NAME WARRANTS
---- ----------------
<S> <C>
Alexander Cross............................................. 1,492
Irving S. Johnson........................................... 20
David E. Robinson........................................... 20,134
George M. Gill(1)........................................... 550
Howard T. Holden............................................ 162
Paul V. Maier(2)............................................ 19,056
James R. Mirto.............................................. 104
Andres Negro-Vilar.......................................... 10,000
William L. Respess.......................................... 31,186
</TABLE>
- ---------------
(1) Includes 392 shares issuable upon the exercise of Warrants held as community
property with spouse and 32 shares issuable upon the exercise of Warrants
held by spouse.
(2) Includes 306 shares issuable upon the exercise of Warrants held as tenants
in common with spouse and 7,100 shares issuable upon the exercise of
Warrants held by spouse.
See the Cover Page of the Offer to Exchange, "Description of the Capital
Stock and the Warrants" and "The Exchange Offer -- Price Range of the Warrants
and the Shares; Dividends" for additional information concerning the Warrants.
(c) See "The Exchange Offer -- Price Range of the Warrants and the Shares;
Dividends."
(d) Not Applicable.
1
<PAGE> 3
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The consideration offered by the Company in exchange for the Warrants,
together with payment of $7.12 in cash per Share for which such Warrants are
exercisable, consists of cash and authorized Shares. Payments of cash, assuming
all holders of Warrants elect to exchange, will equal approximately $4,033,590.
The Company will pay such amount from cash payments received in connection with
the Exchange Offer. See "The Exchange Offer -- Background Relating to the
Warrants and the Exchange Offer."
(b) Not Applicable.
ITEM 3. PURPOSES OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
See "The Exchange Offer -- Background Relating to the Warrants and the
Exchange Offer" and "Information Concerning the Company."
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Neither the Company nor, to the knowledge of the Company, any of the
executive officers, directors or affiliates of the Company or any associate of
any of the foregoing, has engaged in any transactions involving the Warrants
during the 40 business days prior to the date hereof, with the exception that
holders of Warrants to purchase approximately 45 Shares have exercised such
Warrants during such period. See "The Exchange Offer -- Price Range of the
Warrants and the Shares; Dividends" and "The Exchange Offer -- Background
Relating to the Warrants and the Exchange Offer."
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
Neither the Company nor, to the best knowledge of the Company, any of its
executive officers, directors or affiliates is a party to any contract,
arrangement, understanding or relationship relating directly or indirectly to
the Exchange Offer with respect to securities of the Company which would require
disclosure under applicable rules and regulations of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
No person or class of persons has been employed, retained or is to be
compensated by the Company to make solicitations or recommendations in
connection with the Exchange Offer. The Company is in the process of retaining
ChaseMellon Consulting Services, L.L.C. to act as information agent (the
"Information Agent") and ChaseMellon Shareholder Services, L.L.C. to act as the
exchange agent (the "Exchange Agent") in connection with the Exchange Offer. The
Information Agent may contact holders of Warrants by mail, telephone, facsimile
transmission, electronic mail and personal interviews and may request brokers,
dealers and other nominee stockholders to forward materials relating to the
Exchange Offer to beneficial owners. The Information Agent and the Exchange
Agent will each receive reasonable and customary compensation for their
respective services, will be reimbursed for reasonable out-of-pocket expenses
and will be indemnified against certain liabilities in connection with their
services. Neither the Information Agent nor the Exchange Agent has been retained
to make solicitations or recommendations in their respective roles as
Information Agent and Exchange Agent.
ITEM 7. FINANCIAL INFORMATION.
See "The Information Concerning the Company -- Financial Information."
ITEM 8. ADDITIONAL INFORMATION.
(a) See "The Exchange Offer -- Background to Relating to the Warrants and
the Exchange Offer" and "Description of the Capital Stock and the Warrants."
(b) None.
(c) Not Applicable.
2
<PAGE> 4
(d) None.
(e) See the Offer to Exchange.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
(a)(1) Offer to Exchange
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter from Broker Dealer or other Nominee to Beneficial
Owner of Warrants and the related Letter of Instruction.
(a)(5) Letter to holders of Warrants from the President and Chief
Executive Officer of the Company with respect to the
Exchange Offer.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
3
<PAGE> 5
SIGNATURE
AFTER DUE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I CERTIFY
THAT THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND CORRECT.
Date: November 19, 1999 /s/ PAUL V. MAIER
--------------------------------------
Paul V. Maier
Senior Vice President,
Chief Financial Officer
4
<PAGE> 1
EXHIBIT (a)(1)
OFFER
BY
LIGAND PHARMACEUTICALS INCORPORATED
TO EXCHANGE
ANY AND ALL OUTSTANDING ALRT WARRANTS
TO PURCHASE ITS COMMON STOCK, TOGETHER WITH PAYMENT OF $7.12 PER SHARE
FOR WHICH THE WARRANTS ARE EXERCISABLE,
FOR THE NUMBER OF NEWLY ISSUED SHARES OF ITS COMMON STOCK
AND $1.12 IN CASH PER SHARE FOR WHICH THE WARRANTS ARE EXERCISABLE
------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:01 A.M., NEW YORK CITY TIME,
ON DECEMBER 18, 1999, UNLESS THE OFFER IS EXTENDED.
------------------------
Each outstanding warrant originally issued in the public offering with
Allergan Ligand Retinoid Therpeutics, Inc. (each a "Warrant" or "ALRT Warrant"
and collectively, the "Warrants" or "ALRT Warrants") represents a currently
exercisable right of the holder of such Warrant to purchase the number of shares
of common stock, $0.001 par value per share (the "Shares" or the "Common Stock")
set forth therein, of Ligand Pharmaceuticals Incorporated, a Delaware
corporation (the "Company"), at an exercise price of $7.12 in cash per Share on
or before the expiration date of the Warrants. See "Description of the Capital
Stock and the Warrants."
As described in this Offer to Exchange, the Company is offering to issue to
each holder of Warrants who tender such Warrants, together with a payment of
$7.12 per Share for which such Warrants are exercisable, the number of newly
issued Shares issuable under such Warrant plus a cash amount of $1.12, net,
without interest, per Share for which such Warrant is exercisable in accordance
with the terms and subject to the conditions set forth in this Offer to Exchange
(as amended or supplemented from time to time, the "Offer to Exchange") and the
related Letter of Transmittal (the "Exchange Offer").
The Exchange Offer is subject to the terms and conditions set forth herein.
AN INVESTMENT IN SHARES IS SUBJECT TO VARIOUS RISKS. SEE "INFORMATION
CONCERNING THE COMPANY -- RISK FACTORS," BEGINNING AT PAGE 13.
Neither the Company nor its Board of Directors nor any individual director
or officer of the Company makes any recommendation that any holder of Warrants
tender or refrain from tendering Warrants pursuant to the Exchange Offer.
THE ISSUANCE OF SHARES PURSUANT TO THE EXCHANGE OFFER HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
SEE "CERTAIN CONSEQUENCES OF ISSUANCE OF SHARES NOT BEING REGISTERED UNDER THE
SECURITIES ACT OF 1933."
------------------------
Any holder desiring to tender all or any portion of such holder's Warrants
should (1) deliver a certified or cashier's check, money order or wire transfer,
payable to ChaseMellon Shareholder Services, L.L.C., the exchange agent for the
Exchange Offer (the "Exchange Agent") (or to the account specified for wire
transfers), in the amount of $7.12 per share for which the Warrants are
exercisable and either (2) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and deliver it along with any other required documents to the
Exchange Agent, at one of the addresses set forth on the back cover of this
Offer to Exchange, and either (a) deliver the Warrants to the Exchange Agent
along with the Letter of Transmittal or (b) tender such Warrants pursuant to the
procedure for book-entry transfer set forth herein, or (3) request such holder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such holder. Any beneficial holder of Warrants whose Warrants
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee must contact such broker, dealer, commercial bank, trust
company or other nominee if such beneficial holder desires to tender such
Warrants.
Any holder of Warrants who desires to tender Warrants and whose Warrants
are not immediately available, or who cannot comply with the procedure for
book-entry transfer on a timely basis, may tender such Warrants by following the
procedures for guaranteed delivery set forth herein.
Questions and requests for assistance or additional copies of this Offer to
Exchange, the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the Exchange Agent and ChaseMellon Consulting Services, L.L.C., the
information agent (the "Information Agent"), at the telephone number set forth
on the back cover of this Offer to Exchange.
------------------------
The date of this Offer to Exchange is November 19, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
INTRODUCTION...................................................... 1
THE EXCHANGE OFFER................................................ 2
1. Terms of the Exchange Offer; Conditions; Extension of Tender
Period; Termination; Amendment.............................. 2
2. Acceptance for Exchange and Issuance of Shares.............. 4
3. Procedure for Tendering Warrants............................ 5
(a) Valid Tender of Warrants................................ 5
(b) Book-Entry Transfer..................................... 5
(c) Signature Guarantees.................................... 6
(d) Guaranteed Delivery..................................... 6
(e) Determination of Validity............................... 7
4. Withdrawal Rights........................................... 7
5. Certain Consequences of Issuance of Shares Not Being
Registered Under the Securities Act of 1933................. 7
6. Background Relating to the Warrants and the Exchange
Offer....................................................... 8
7. Certain Tax Consequences of the Exchange Offer.............. 9
8. Price Range of the Warrants and the Shares; Dividends....... 10
DESCRIPTION OF THE CAPITAL STOCK AND THE WARRANTS................. 11
1. Common Stock................................................ 11
2. Preferred Stock............................................. 12
3. Warrants.................................................... 12
INFORMATION CONCERNING THE COMPANY................................ 13
1. Information Incorporated By Reference; Availability of
Information................................................. 13
2. Risk Factors................................................ 13
3. General..................................................... 20
4. Financial Information....................................... 23
MISCELLANEOUS..................................................... 27
</TABLE>
i
<PAGE> 3
INTRODUCTION
Ligand Pharmaceuticals Incorporated, a Delaware corporation (the
"Company"), is offering to exchange certain of its outstanding warrants to
purchase shares of its common stock, $0.001 par value per share (the "Shares" or
the "Common Stock"). The Exchange Offer (as defined below) relates to warrants
(the "Warrants" or the "ALRT Warrants") originally issued in the public offering
with Allergan Ligand Retinoid Therapeutics, Inc. with an exercise price of $7.12
per share. The Company offers to exchange any outstanding Warrants, together
with payment to the Exchange Agent of $7.12 per Share for which the Warrants are
exercisable, for the number of newly issued Shares issuable under such Warrant
plus a cash amount of $1.12, net, without interest, per Share, in accordance
with the terms and subject to the conditions set forth in the Exchange Offer.
Each outstanding Warrant represents a currently exercisable right of the
holder of such Warrant to purchase the number of Shares set forth therein at an
exercise price of $7.12 in cash per Share on or before the expiration date of
the Warrants. The expiration date of the Warrants is 5:00 p.m., New York City
time, on June 3, 2000 (the "Warrant Expiration Date"). Warrants which are not
exercised prior to the Warrant Expiration Date will cease to be exercisable. See
"Description of the Capital Stock and the Warrants."
Tender of Warrants pursuant to the Exchange Offer may be made to the
Exchange Agent according to the procedures set forth herein. See "The Exchange
Offer -- Procedure for Tendering Warrants." Questions for assistance may be
directed to the Information Agent, at (888) 867-6003.
The Exchange Offer is subject to the condition that there shall not have
occurred prior to acceptance of the Warrants pursuant to the Exchange Offer: (i)
any event, circumstance or development or prospective event, circumstance or
development which has or may have an effect, whether positive or negative, on
the business, operations, financial position or results of operations of the
Company and its subsidiaries, taken as a whole, which, in the judgment of the
Company's Board of Directors (the "Board"), makes it inadvisable for the Company
to consummate the Exchange Offer; (ii) any suit or other proceeding or any
threatened suit or other proceeding relating to the Exchange Offer, the Warrants
or the issuance of Shares pursuant to the Exchange Offer; (iii) any order or
preliminary or permanent injunction entered in any action or proceeding before
any court or any statute, rule, regulation, order or official interpretation
being enacted, amended, enforced or interpreted or threatened to be enacted,
amended, enforced or interpreted by any federal, state, local or foreign
legislative body, court, government or governmental, administrative or
regulatory authority or agency which, in the judgment of the Board, has or may
have the effect of making illegal or restraining or prohibiting the making of
the Exchange Offer, the acceptance for exchange of the Warrants or the issuance
of Shares in exchange for the Warrants, or the consummation of the Exchange
Offer; (iv) any suspension or limitation of trading in securities generally on
the NYSE or The Nasdaq National Market or any setting of minimum prices for
trading on such exchange, or any suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market; (v) any banking
moratorium declared by Federal or New York authorities; or (vi) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of the Board, the effect
of any such outbreak, escalation, declaration, calamity or emergency makes it
inadvisable for the Company to consummate the Exchange Offer.
An investment in Shares is subject to various risks. See "Information
Concerning the Company -- Risk Factors."
The issuance of Shares pursuant to the Exchange Offer has not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
in reliance on an exemption thereunder. See "The Exchange Offer -- Certain
Consequences of Issuance of Shares Not Being Registered Under the Securities Act
of 1933."
Tendering holders of Warrants will not be obligated to pay any brokerage
fees or commissions or any transfer or stock issuance taxes with respect to the
issuance of Shares in exchange for Warrants pursuant to the Exchange Offer.
-1-
<PAGE> 4
As of September 30, 1999, there were outstanding 3,601,464 Warrants and
47,730,624 Shares. The Shares and the Warrants are listed for quotation on The
Nasdaq National Market. The Company will not reissue Warrants exchanged pursuant
to the Exchange Offer. Such tendered Warrants will be canceled.
Neither the Company nor the Board nor any individual officer or director of
the Company makes any recommendation that any holder of Warrants tender or
refrain from tendering Warrants pursuant to the Exchange Offer. Mr. David
Robinson, President and Chief Executive Officer of the Company, Mr. Paul Maier,
Senior Vice President, Chief Financial Officer of the Company, and Mr. William
Respess, Senior Vice President, General Counsel, Government Relations of the
Company, together with their spouses, beneficially own 70,376 Warrants, and each
has informed the Company that he intends to tender the Warrants he beneficially
owns pursuant to the Exchange Offer. See "The Exchange Offer -- Background
Relating to the Warrants and the Exchange Offer" for a more complete description
of the transaction in which the Warrants were issued.
Following the anticipated successful completion of the Exchange Offer, the
number of remaining outstanding Warrants may be so low that public trading of
the Warrants may be substantially reduced, which may make it harder to sell
Warrants not tendered in this Exchange Offer. In addition, if the number of
record holders of the Warrants drops too low, Nasdaq may institute proceedings
resulting in a delisting of the Warrants. In either event, the liquidity of the
Warrants may be significantly reduced following the Exchange Offer.
* * * * *
HOLDERS OF WARRANTS ARE URGED TO READ THIS OFFER TO EXCHANGE AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY IN THEIR ENTIRETY BEFORE DECIDING
WHETHER TO TENDER THEIR WARRANTS.
* * * * *
Certain statements in the documents incorporated herein by reference in
this Offer to Exchange under the captions "The Exchange Offer -- Background
Relating to the Warrants and the Exchange Offer" and "Information Concerning the
Company" and elsewhere in this Exchange Offer may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include the items referred to
under the caption "Information Concerning the Company -- Risk Factors" and other
factors referenced in this Offer to Exchange or in the Company's Annual Report
on Form 10-K for the year ended December 31, 1998 or in the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1999, which are
incorporated herein by reference. See "Information Concerning the
Company -- Risk Factors."
THE EXCHANGE OFFER
1. TERMS OF THE EXCHANGE OFFER; CONDITIONS; EXTENSION OF TENDER PERIOD;
TERMINATION; AMENDMENT
Upon the terms and subject to the conditions of the Exchange Offer
(including, if the Exchange Offer is extended or amended, the terms and
conditions of any such extension or amendment), the Company will accept any and
all Warrants validly tendered and not properly withdrawn on or prior to the
Offer Expiration Date (as defined) and will exchange each Warrant, together with
payment of $7.12 per Share for which such Warrant is exercisable, for the number
of newly issued Shares issuable upon exercise of such Warrant and $1.12 in cash,
net, without interest, per Share. Holders of Warrants will be paid such amounts
in U.S. dollars.
-2-
<PAGE> 5
Each outstanding Warrant represents a currently exercisable right of the
holder of such Warrant to purchase the number of Shares set forth therein at an
exercise price of $7.12 in cash per Share on or before the Warrant Expiration
Date.
The term "Offer Expiration Date" means 12:01 a.m., New York City time, on
December 18, 1999, unless the Company shall have extended the period during
which the Exchange Offer is open, in which event the term "Offer Expiration
Date" shall mean the latest time and date at which the Exchange Offer, as so
extended by the Company, shall expire.
The Exchange Offer is subject to the condition that there shall not have
occurred prior to acceptance of the Warrants pursuant to the Exchange Offer: (i)
any event, circumstance or development or prospective event, circumstance or
development which has or may have an effect, whether positive or negative, on
the business, operations, financial position or results of operations of the
Company and its subsidiaries, taken as a whole, which, in the judgment of the
Board, makes it inadvisable for the Company to consummate the Exchange Offer;
(ii) any suit or other proceeding or any threatened suit or other proceeding
relating to the Exchange Offer, the Warrants, or the issuance of Shares pursuant
to the Exchange Offer; (iii) any order or preliminary or permanent injunction
entered in any action or proceeding before any court or any statute, rule,
regulation, order or official interpretation being enacted, amended, enforced or
interpreted or threatened to be enacted, amended, enforced or interpreted by any
federal, state, local or foreign legislative body, court, government or
governmental, administrative or regulatory authority or agency which, in the
judgment of the Board, has or may have the effect of making illegal or
restraining or prohibiting the making of the Exchange Offer, the acceptance for
exchange of the Warrants or the issuance of Shares in exchange for Warrants, or
the consummation of the Exchange Offer; (iv) any suspension or limitation of
trading in securities generally on the NYSE or The Nasdaq National Market, or
any setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the
over-the-counter market; or (v) any banking moratorium declared by Federal or
New York authorities; or (vi) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if, in the
judgment of the Board, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it inadvisable for the Company to consummate the
Exchange Offer.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its reasonable discretion.
The Company expressly reserves the right, subject to applicable laws
(including applicable regulations of the Securities and Exchange Commission (the
"SEC")), at any time or from time to time to (i) extend the Exchange Offer, in
which event all Warrants and cash payments previously tendered and not properly
withdrawn or accepted will remain subject to the Exchange Offer, but subject to
the tendering holder's right to withdraw Warrants and cash payments tendered by
such holder; (ii) to delay acceptance for exchange of or, regardless of whether
such Warrants and cash payments were theretofore accepted for exchange, to delay
the issuance of Shares in exchange for such Warrants in order to comply, in
whole or in part, with any applicable law or government regulation; (iii) to
terminate the Exchange Offer (whether or not any Warrants and cash payments have
theretofore been accepted for exchange) if any of the conditions referred to
above have not been satisfied; (iv) to waive any condition, in whole or part; or
(v) to amend the Exchange Offer in any respect; provided that such amendment
does not decrease the number of Shares issued or the amount of cash paid in
exchange for Warrants or add additional conditions to the Exchange Offer. Such
delay, termination, waiver or amendment will be effected in each case by the
Company giving oral or written notice of such delay, termination, waiver or
amendment to the Exchange Agent. The Company acknowledges that (i) Rule 14e-1(c)
under the Exchange Act requires the Company to effect the exchange of Shares and
cash for Warrants in accordance with the Exchange Offer or to return the
Warrants and cash payments tendered promptly after the termination or withdrawal
of the Exchange Offer and (ii) the Company may not delay acceptance for exchange
of, or the issuance of Shares in exchange for such Warrants and cash payments
(except as provided by clause (ii) above) upon the occurrence of any of the
conditions specified above without extending the period of time during which the
Exchange Offer is open.
-3-
<PAGE> 6
The failure by the Company at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts or circumstances shall not be deemed a
waiver with respect to any other facts or circumstances, and each such right
shall be deemed an ongoing right that may be asserted at any time or from time
to time.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by the Company issuing a press release via
BusinessWire to major business publications and news services in the United
States. In the case of an extension, a press release will be issued no later
than 9:00 a.m. New York City time, on the next business day after the previously
scheduled Offer Expiration Date.
If the Company makes a material change in the terms of the Exchange Offer
or if the Company waives a material condition of the Exchange Offer, the Company
will extend the Exchange Offer for a period of time which will depend on the
facts and circumstances, including the materiality, of the changes. With respect
to a change in the consideration to be paid per Warrant, a minimum 10 business
day extension will be made to allow for adequate dissemination of information
regarding the change to holders of Warrants. Any extension of the Exchange Offer
will not constitute a waiver by the Company of any of the conditions to the
Exchange Offer.
The Exchange Offer is not being made to, nor will tenders be accepted from
or on behalf of, holders of Warrants residing in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in
compliance with the securities laws of such jurisdiction. However, the Company
may, in its discretion, take such action as it may deem necessary to make the
Exchange Offer in any jurisdiction and extend the Exchange Offer to holders of
Warrants in such jurisdiction.
2. ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF SHARES
Upon the terms and subject to the conditions of the Exchange Offer
(including, if the Exchange Offer is extended or amended, the terms and
conditions of any such extension or amendment), the Company will accept for
exchange all Warrants, together with $7.12 per Share for which the Warrants are
exercisable, validly tendered and not properly withdrawn on or prior to the
Offer Expiration Date as soon as practicable after the later to occur of: (i)
the Offer Expiration Date and (ii) the date of satisfaction or waiver of the
conditions set forth above. As soon as practicable following the acceptances for
exchange of properly tendered Warrants, cash payments and the required
documentation, the Company will issue Shares and pay cash to the holder of such
Warrants in accordance with the terms of the Exchange Offer. The Company intends
to deliver to the Exchange Agent stock certificates representing all Shares to
be issued and to deliver to the Exchange Agent (or to make available to the
Exchange Agent from the cash tendered by holders of Warrants) the aggregate
amount of cash payable pursuant to the Exchange Offer. The Exchange Agent will
cause certificates for the Shares and checks for cash due to each tendering
holder to be mailed to such holder following acceptance of the Warrants and cash
payments. Tendering holders whose Warrants and cash payments are accepted
pursuant to the Exchange Offer will become stockholders of record with respect
to the Shares issuable to them immediately before the close of business on the
earlier to occur of the day on which the Offer Expiration Date occurs or the
date the Exchange Agent receives certificates for such Warrants. The Company
reserves the right, in its sole discretion and subject to applicable law, to
delay acceptance of Warrants and related cash payments for exchange or the
issuance of Shares and payment of cash for Warrants in order to comply, in whole
or in part, with any applicable law or government regulation.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange all properly tendered Warrants and cash payments as and
when the Company gives oral or written notice to the Exchange Agent of its
acceptance of such Warrants and cash payments for exchange pursuant to the
Exchange Offer. The issuance of Shares and the cash in exchange for Warrants and
cash payments accepted for exchange pursuant to the Exchange Offer will occur as
promptly as practicable following acceptance of the Warrants and cash payments
and receipt of the required documentation. The Exchange Agent will act as agent
for the tendering holders for the purpose of receiving certificates for the
Shares and the cash issued pursuant to the Exchange Offer by the Company and
transmitting such certificates and cash to tendering holders. Under no
circumstances will interest be paid by the Company with respect to the Shares
issuable or
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<PAGE> 7
cash payable pursuant to the Exchange Offer, regardless of any delay in issuing
such Shares or paying such cash. The Company will pay all transfer and stock
issuance taxes, if any, payable on the issuance of Shares pursuant to the
Exchange Offer.
In all cases, the issuance of Shares and payment of cash in exchange for
Warrants will be made only after timely receipt by the Exchange Agent of (i) a
cash payment in the form of a certified or cashier's check, money order or wire
transfer in the amount of $7.12 per Share for which the Warrants are exercisable
payable to ChaseMellon Shareholder Services, L.L.C., as Exchange Agent (or to
the account specified for wire transfers), (ii) the Warrants or a timely
confirmation of a book-entry transfer of such Warrants into the Exchange Agent's
account at The Depository Trust Company ("DTC"), (iii) a Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees, or an Agent's Message (as defined), and (iv) any
other documents required by the Letter of Transmittal. For a description of the
procedure for tendering Warrants and cash payments pursuant to the Exchange
Offer, see Section 3 below.
If any tendered Warrants and cash payments are not accepted for exchange
for any reason or if the cash payments tendered are inadequate to cover all the
Warrants tendered, the unpurchased or untendered Warrants will be returned along
with the cash payment related thereto without expense to the tendering holder
(or, in the case of Warrants tendered by book-entry transfer into the Exchange
Agent's account at DTC pursuant to the procedures set forth in Section 3, such
Warrants will be credited to an account maintained at DTC) as promptly as
practicable following the expiration, termination or withdrawal of the Exchange
Offer.
If the Company amends the cash amount offered under the Exchange Offer so
that the cash amount is increased, such increased cash component will be issued
to all holders of Warrants whose Warrants are exchanged pursuant to the Exchange
Offer, whether or not such Warrants were tendered or accepted for exchange prior
to such increase in the cash.
3. PROCEDURE FOR TENDERING WARRANTS
(a) Valid Tender of Warrants. Except as set forth below, in order for
Warrants to be validly tendered pursuant to the Exchange Offer, (i) a cash
payment in the form of a certified or cashier's check, money order or wire
transfer in the amount of $7.12 per Share for which the Warrants are exercisable
payable to ChaseMellon Shareholder Services, L.L.C., as Exchange Agent, (or to
the account specified for wire transfers) must be received by the Exchange
Agent, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees, or
an Agent's Message in connection with a book-entry delivery of Warrants as
described below must be received by the Exchange Agent, and (iii) any other
documents required by the Letter of Transmittal, must be received by the
Exchange Agent at one of the addresses set forth on the back cover of this Offer
to Exchange. In addition, either tendered Warrants must be received by the
Exchange Agent at any such address or such Warrants must be tendered pursuant to
the procedure for book-entry transfer (and a confirmation of receipt of such
delivery must be received by the Exchange Agent), in each case on or prior to
the Offer Expiration Date or the guaranteed delivery procedures set forth below
must be complied with. The term "Agent's Message" means a message transmitted by
DTC to and received by the Exchange Agent and forming a part of a book-entry
transfer confirmation, which states that DTC has received an express
acknowledgment from the DTC participant tendering the Warrants which are the
subject of such Book-Entry Confirmation, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Company may enforce such agreement against such participant.
(b) Book-Entry Transfer. The Exchange Agent will establish an account with
respect to the Warrants at DTC for purposes of the Exchange Offer within two
business days after the date of this Offer to Exchange. Any financial
institution that is a participant in DTC may make book-entry delivery of
Warrants by causing DTC to transfer such Warrants into the Exchange Agent's
account in accordance with DTC's procedures for such transfer. Although delivery
of Warrants may be effected through book-entry transfer at DTC, (i) a cash
payment in the form of a certified or cashier's check, money order or wire
transfer in the amount of $7.12 per Share for which the Warrants are exercisable
payable to ChaseMellon Shareholder Services, L.L.C., as
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<PAGE> 8
Exchange Agent (or to the account specified for wire transfers), (ii) the Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and (iii) any other required documents,
must, in any case, be received by the Exchange Agent at one of the addresses set
forth on the back cover of this Offer to Exchange on or prior to the Offer
Expiration Date, or the guaranteed delivery procedures described below must be
complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
(c) Signature Guarantees. Signatures on Letters of Transmittal need not be
guaranteed if (i) the Letter of Transmittal is signed by the registered holder
of Warrants tendered or (ii) such Warrants are tendered for the account of an
Eligible Institution. See Instructions 1 and 6 of the Letter of Transmittal.
If the Warrants are registered in the name of a person other than the
signer of the Letter of Transmittal, then the tendered Warrants must be endorsed
or accompanied by appropriate warrant powers, signed exactly as the name(s) of
the registered holder(s) appear(s) on the Warrants, with the signatures on the
Warrants or warrant powers guaranteed as described below.
If signatures are required as set forth above, then signatures on Letters
of Transmittal must be guaranteed by a financial institution (including most
banks, savings and loan associations and brokerage houses) which is a
participant in the Securities Transfer Agents Medallion Program, the NYSE
Medallion Signature Program, or the Stock Exchange Medallion Program (each of
the foregoing constituting an "Eligible Institution"). See Instructions 1 and 6
of the Letter of Transmittal.
(d) Guaranteed Delivery. If a holder desires to tender Warrants pursuant to
the Exchange Offer and such holder's Warrants are not immediately available, or
time will not permit the Warrants and all other required documents to reach the
Exchange Agent on or prior to the Offer Expiration Date or such holder cannot
complete the procedure for book-entry transfer on a timely basis, such Warrants
may nevertheless be tendered if the following guaranteed delivery procedures are
satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company, is received by
the Exchange Agent as provided below on or prior to the Offer Expiration
Date;
(iii) all tendered Warrants (or a book-entry transfer confirmation
representing all tendered Warrants), in proper form for transfer, in each
case together with the Letter of Transmittal (or a facsimile thereof)
properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message)
and any other documents required by the Letter of Transmittal are received
by the Exchange Agent within three Nasdaq National Market trading days
after the date of execution of such Notice of Guaranteed Delivery; and
(iv) delivery of a cash payment in the form of a certified or
cashier's check, money order or wire transfer in the amount of $7.12 per
Share for which the Warrants are exercisable payable to ChaseMellon
Shareholder Services, L.L.C., as Exchange Agent (or to the account
specified for wire transfers), is made to the Exchange Agent at one of the
addresses set forth on the back cover of this Offer to Exchange prior to
the Offer Expiration Date.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Exchange Agent and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF WARRANTS, CASH PAYMENTS AND ALL OF THE REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT THE OPTION AND RISK OF THE
TENDERING HOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY
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<PAGE> 9
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPER INSURANCE IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
(e) Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for exchange of any
tender of Warrants and cash payments will be determined by the Company in its
sole discretion, which determination shall be final and binding. The Company
reserves the absolute right to reject any and all tenders of Warrants and cash
payments determined by it not to be in proper form or the acceptance for
exchange of which may, in the opinion of the Company, be unlawful. The Company
reserves the absolute right to waive any defect or irregularity in any tender of
Warrants and cash payments of any particular holder. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
Letter of Transmittal and the instructions thereto) will be final and binding.
None of the Company, any of its affiliates or assigns, the Exchange Agent, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
4. WITHDRAWAL RIGHTS
Tenders of Warrants and cash payments pursuant to the Exchange Offer may be
withdrawn at any time on or prior to the Offer Expiration Date. Thereafter, such
tenders are irrevocable. If the Company extends the Exchange Offer, is delayed
in accepting Warrants and cash payments for exchange or issuing Shares and cash
in exchange for Warrants and cash payments or is unable to accept Warrants for
exchange or issue Shares and cash pursuant to the Exchange Offer for any reason,
then, without prejudice to the Company's rights under the Exchange Offer, the
Exchange Agent may, on behalf of the Company, retain all Warrants and cash
payments tendered, and such Warrants and cash payments may not be withdrawn
except to the extent that tendering holders are entitled to withdrawal rights as
set forth in this Section 4.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Exchange Agent at one of the addresses set forth on the back cover of this Offer
to Exchange. Any notice of withdrawal must specify the name of the person who
tendered the Warrants to be withdrawn, the number of Warrants to be withdrawn
and the name of the registered holder, if different from that of the person who
tendered such Warrants. If Warrants to be withdrawn have been delivered or
otherwise identified to the Exchange Agent, then prior to the physical exchange,
the signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution unless such Warrants have been tendered for the account of an
Eligible Institution. If Warrants have been tendered pursuant to the procedure
for book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawn Warrants.
Withdrawals may not be rescinded, and Warrants and cash payments withdrawn
will thereafter be deemed not validly tendered for purposes of the Exchange
Offer. However, withdrawn Warrants and cash payments may be retendered at any
time prior to the Offer Expiration Date by again following one of the procedures
described in Section 3.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Company, in its sole
discretion, whose determination shall be final and binding. None of the Company,
any of its affiliates or assigns or the Exchange Agent or the Information Agent
or any other person will be under any duty to give notification of any defects
or irregularities in any notice of withdrawal or incur any liability for failure
to give such notification.
5. CERTAIN CONSEQUENCES OF ISSUANCE OF SHARES NOT BEING REGISTERED UNDER THE
SECURITIES ACT OF 1933
The offer and issuance of Shares by the Company pursuant to the Exchange
Offer has not been registered under the Securities Act. The Company believes
that the offer and issuance of shares pursuant to this Exchange Offer is exempt
from registration under Section 3(a)(9) of the Securities Act. Section 3(a)(9)
provides an exemption from registration for "any security exchanged by the
issuer with its existing security holders exclusively where no commission or
other remuneration is paid or given directly or indirectly for
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<PAGE> 10
soliciting such exchange." The Company has not obtained and does not intend to
seek a legal opinion from outside legal counsel or a no-action letter from the
Staff of the SEC with respect to the applicability of the exemption.
The Company has further been advised that the Shares issued pursuant to the
Exchange Offer are not restricted securities and may be resold by the recipients
thereof without regard to the limitation of Rule 144 and without such recipients
being deemed underwriters for purposes of the Securities Act; except that shares
issued in exchange for Warrants that are held by affiliates of the Company will
be entitled to tack the period during which such Warrants were held by the
recipient prior to the exchange. Accordingly, such affiliates who have held
their Warrants for more than one year will be able to sell or transfer the
Shares received in exchange for their Warrants in accordance with the volume
limitations and manner of sale limitations and other provisions set forth in
Rule 144.
An additional consequence of the issuance of Shares pursuant to the
Exchange Offer not being registered under the Securities Act is that certain
protections set forth in Section 11 and other provisions of the Securities Act
will not be available to holders who exchange Warrants and cash payments for
Shares and cash in the Exchange Offer.
6. BACKGROUND RELATING TO THE WARRANTS AND THE EXCHANGE OFFER
In December 1994, the Company, together with Allergan, Inc., formed
Allergan Ligand Retinoid Therapeutics, Inc. ("ALRT") to continue the research
and development activities previously conducted by a joint venture with
Allergan. In June 1995, the joint venture was dissolved and the Company and ALRT
completed a public offering of 3,250,000 units. Each unit consisted of one share
of ALRT's callable common stock and two Warrants, each Warrant entitling the
holder to purchase the number of Shares set forth therein. The $32.5 million
aggregate proceeds from the offering and cash contributions by Allergan and the
Company of $50.0 million and $17.5 million, respectively, provided net proceeds
of $94.3 million for retinoid product research and development.
The Company's $17.5 million in cash, as well as the Warrants, were in
exchange for:
- a right to acquire all of the ALRT callable common stock at specified
future dates and amounts and
- a right to acquire all rights to the Panretin(R) product, jointly with
Allergan.
Allergan's $50.0 million cash contribution to ALRT was in exchange for:
- the right to acquire one-half of the technologies and other assets in the
event the Company exercised its right to acquire all of the ALRT callable
common stock
- a similar right to acquire all of the callable common stock if the
Company did not exercise its right and
- a right to acquire all rights to the Panretin(R) product, jointly with
the Company.
In September 1997, the Company exercised the option to purchase all of the
ALRT callable common stock. At the same time, Allergan exercised its option to
purchase certain assets of ALRT. In November 1997, the Company issued 3,166,567
Shares along with cash payments totaling $25.0 million, to holders of the ALRT
callable common stock. In November 1997, Allergan made a cash payment of $8.9
million to ALRT, which the Company used to pay a portion of the cash payment
under its option exercise. Following the exercise of these options, ALRT became
one of the Company's wholly owned subsidiaries and the Warrants remained
outstanding.
In connection with the ALRT initial public offering, the Shares issuable
upon exercise of all outstanding Warrants were registered under the Securities
Act. At the same time, the Warrants were listed for quotation on The Nasdaq
National Market. The Warrants initially traded as a unit of two Warrants along
with a share of callable common stock of ALRT. They separated and began trading
separately in June 1997. See "Price Range of the Warrants and the Shares;
Dividends." As of November 12, 1999, Warrants for an aggregate number of
2,898,580 Shares had been exercised. As of November 12, 1999, the Company's
officers and directors beneficially owned approximately 83,000 Warrants.
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<PAGE> 11
In view of the Company's history of operating losses as it attempts to
progress from a research-based company to one that becomes profitable from sales
of its products and royalties on sales of products by its corporate
collaborators, the Company's management and Board regularly consider the
Company's financial needs and strategies for raising cash to meet them. Among
the strategies used by the Company has been sales of equity to corporate
collaborators. The Company has also raised significant cash from the sale of
convertible notes to Elan Corporation, plc and Elan International Services, Ltd.
Public offerings of stock have been considered, but not adopted, by the Company
in view of the generally poor market for secondary offerings of biotechnology
stocks in recent years.
Another source of capital to meet the Company's cash needs are proceeds
from the Warrants when they are exercised. From time to time over the past
approximately 18 months, the Company's management and Board have considered
strategies to encourage holders to exercise their Warrants to provide a
substantial infusion of cash. This consideration has included informal advice
from investment banks.
In December 1998 and May 1999, the Company received net proceeds of
approximately $12.5 million and $3.5 million, respectively, from investors who
elected to exercise their Warrants to purchase an aggregate of 2,892,836 Shares.
The Company agreed to pay a cost of money incentive to the investors for the
early exercise of those Warrants.
During the first two weeks of November 1999, David Robinson, the Company's
President and Chief Executive Officer, Paul Maier, the Company's Senior Vice
President, Chief Financial Officer, William Respess, the Company's Senior Vice
President, General Counsel, Government Relations, and Christiane Sheid, the
Company's Vice President, Finance and Communications, discussed the proposed
exchange offer and reviewed the recent and historical movements in the market
prices of the Shares and Warrants, the Company's results for the third quarter
and projected results for the fourth quarter of 1999, and the Company's
financing alternatives and capital requirements. They discussed possible
variations in the $1.12 cash component and other aspects of the Exchange Offer
and determined to recommend the terms of the Exchange Offer to the Board. As
part of its decision making process, the Company informally consulted with an
investment bank with regard to aspects of the Exchange Offer. However, the
Company has not received any formal report or appraisal of any kind from any
outside party which materially relates to the Exchange Offer in any way.
At a special telephonic meeting of the Board on November 15, 1999, Mr.
Robinson, as chairman of the Board, recommended the terms of the exchange offer
to the Board and discussed a range for the cash payments to be made to tendering
holders of Warrants. The Board discussed the Company's financial outlook for
1999 and 2000, the Company's capital requirements, net equity and financing
alternatives and other factors. After discussion, the Board concluded that the
proposal was in the best interests of the Company and approved and authorized an
exchange offer, subject to management's determination based on trading prices of
the Warrants and the Common Stock immediately prior to announcement of the
Exchange Offer of the precise amount of cash payments, within a range approved
by the Board, to be made in connection with the Exchange Offer.
The Company will pay all cash pursuant to the Exchange Offer from cash
payments received in connection with the Exchange Offer.
7. CERTAIN TAX CONSEQUENCES OF THE EXCHANGE OFFER
The following discussion summarizes the material federal income tax
consequences of the transactions to be accomplished pursuant to the Exchange
Offer to a person who tenders Warrants and cash pursuant to the Exchange Offer.
This summary is based upon existing statutes, as well as judicial and
administrative interpretations thereof, all of which are subject to change,
including changes which may be retroactive. No opinion of counsel or ruling from
the Internal Revenue Service ("IRS") will be requested by the Company on any tax
issue connected with the Exchange Offer. Accordingly, no assurance can be given
that the IRS will not challenge certain of the tax positions described herein or
that such a challenge would not be successful.
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<PAGE> 12
The discussion below does not address the foreign, state or local tax
consequences of the transactions to be accomplished pursuant to the Exchange
Offer, nor does it specifically address the tax consequences to taxpayers
subject to special treatment under the federal income tax laws (including
dealers in securities, foreign persons, life insurance companies, tax-exempt
organizations, financial institutions and taxpayers subject to the alternative
minimum tax). The discussion below assumes that the Warrants are or will be held
as a capital asset within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code"), by holders of Warrants at the Offer
Expiration Date. In the following discussion, the term "should" is used to
denote the more likely of possible characterizations in situations where more
than one characterization is possible.
THE FOLLOWING SUMMARY OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE
TRANSACTIONS TO BE ACCOMPLISHED PURSUANT TO THE EXCHANGE OFFER IS NOT A
SUBSTITUTE FOR OBTAINING INDIVIDUAL TAX ADVICE AND WARRANT HOLDERS ARE NOT TO
CONSTRUE ANY OF THE CONTENTS OF THIS OFFER TO EXCHANGE AS TAX ADVICE.
ACCORDINGLY, EACH HOLDER OF OUTSTANDING WARRANTS IS URGED TO CONSULT SUCH
HOLDER'S OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE EXCHANGE
OFFER.
Federal Income Tax Consequences to Holders of Warrants. It is possible that
holders of the Warrants will be treated as merely having exercised the Warrants
for a net cash payment equal to the exercise price less $1.12 per Warrant. In
such case no gain or loss should be recognized by the such holders.
Alternatively, holders of the Warrants participating in the Exchange Offer may
be treated for federal income tax purposes as having exchanged their Warrants
plus the net cash payment in exchange for shares of Common Stock. In such event,
(i) the receipt of Common Stock in exchange for the net cash payment would be
treated as merely a purchase of a portion of the Common Stock, and (ii) the
exchange of the Warrants for the balance of the Common Stock should be treated
as a "recapitalization" of the Company within the meaning of Code Section
368(a)(1)(E) in which no gain or loss is recognized. As a result of the
foregoing, the holders of the Warrants should not recognize any gain or loss in
connection with the Exchange Offer. The Company intends to treat the Exchange
Offer as merely an exercise of the Warrants.
Regardless of which of the foregoing characterizations applies, the
aggregate tax basis of the Common Stock received by a holder pursuant to the
Exchange Offer should be equal to such holder's adjusted tax basis in the
Warrants transferred in exchange therefor and increased by the amount of the net
cash payment.
The holding period for the Common Stock will depend upon the
characterization of the Exchange Offer. If the Exchange Offer is treated as
merely an exercise of the Warrants, the holding period for the Common Stock will
begin on the date of the date of the Exchange. If the Exchange Offer is treated
in part as a purchase and in part as a recapitalization, the holding period of
each share of Common Stock will be divided, with part of each share having a
holding period which includes the period of time the holder held the Warrants
and the remaining part of each share having a holding period which commences as
of the date of the exchange to the extent the share was received in exchange for
the net cash payment.
Holders of Warrants who do not participate in the Exchange Offer should not
recognize any gain or loss as a result of other holders of Warrants
participating in the Exchange Offer.
Federal Income Tax Consequences to Company. The exchange by holders of
Warrants pursuant to the Exchange Offer should not result in the recognition of
gain or loss by the Company.
8. PRICE RANGE OF THE WARRANTS AND THE SHARES; DIVIDENDS
The Common Stock and the Warrants trade on the Nasdaq National Market tier
of The Nasdaq Stock Market. The Common Stock trades under the symbol "LGND." The
Warrants trade under the symbol "LGNDW." The following table sets forth the high
and low sales prices for the Common Stock and the Warrants on The Nasdaq
National Market for the periods indicated. The Warrants initially traded as a
unit of
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<PAGE> 13
two Warrants along with a share of callable common stock of ALRT. They separated
and began trading separately in June 1997.
<TABLE>
<CAPTION>
WARRANTS SHARES
----------- -----------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
1st Quarter................................................. $-- $-- $17 $10 1/4
2nd Quarter (from June 3, 1997 for the Warrants)............ 9 6 14 1/2 9 1/8
3rd Quarter................................................. 11 1/2 6 17 3/4 11 5/8
4th Quarter................................................. 13 1/4 6 3/4 18 3/8 11 1/4
YEAR ENDED DECEMBER 31, 1998
1st Quarter................................................. 10 1/2 5 16 5/8 10 7/8
2nd Quarter................................................. 10 1/4 6 3/8 16 3/8 12 1/8
3rd Quarter................................................. 7 1 5/8 13 1/4 5 1/2
4th Quarter................................................. 6 1/2 2 9/16 12 3/8 6 15/16
YEAR ENDING DECEMBER 31, 1999
1st Quarter................................................. 8 1/4 3 5/32 14 3/4 8 3/16
2nd Quarter................................................. 5 1/2 2 3/4 11 7/16 8 3/16
3rd Quarter................................................. 5 1/4 1 11/16 11 3/16 6 7/16
4th Quarter (through November 12, 1999)..................... 4 1/4 1 11/16 10 5/16 7 1/2
</TABLE>
On November 12, 1999, the closing sale price of the Warrants was $3 5/8 per
Warrant and the closing sale price of the Common Stock was $9 31/32 per share.
HOLDERS OF WARRANTS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
WARRANTS AND THE SHARES.
As of September 30, 1999, there were approximately 2,031 holders of record
of the Common Stock. The Company has never declared or paid any cash dividends
on its capital stock and does not intend to pay any cash dividends in the
foreseeable future. The Company currently intends to retain its earnings, if
any, to finance future growth. The Company has no contractual restrictions on
paying dividends.
DESCRIPTION OF THE CAPITAL STOCK AND THE WARRANTS
The authorized capital stock of the Company consists of 80,000,000 shares
of Common Stock, and 5,000,000 shares of Preferred Stock, $0.001 par value per
share ("Preferred Stock"). The following description of the capital stock of the
Company is a summary of certain provisions of the Company's Amended and Restated
Certificate of Incorporation and is qualified in its entirety by the provisions
of such document which has been filed with the SEC.
1. COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Subject to
preferences that may be applicable to any outstanding Preferred Stock, holders
of Common Stock are entitled to receive ratably such dividends as may be
declared by the Board out of funds legally available. In the event of
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share ratably in all assets remaining after payment of
liabilities and the liquidation preference of any outstanding Preferred Stock.
Holders of Common Stock have no preemptive rights and no right to cumulate votes
in the election of directors. There are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common Stock are fully
paid and nonassessable. At September 30, 1999, there were 47,730,624 shares of
Common Stock outstanding and held of record by approximately 2,031 stockholders.
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<PAGE> 14
2. PREFERRED STOCK
The Board has the authority to issue the Preferred Stock in one or more
series and to fix the designation, powers, preferences, rights, qualifications,
limitations and restrictions of the shares of each such series, including the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), liquidation preferences
and the number of shares constituting any such series, without any further vote
or action by the stockholders. The rights and preferences of Preferred Stock may
in all respects be superior and prior to the rights of the Common Stock. The
issuance of the Preferred Stock could decrease the amount of earnings and assets
available for distribution to holders of Common Stock or adversely affect the
rights and powers, including voting rights, of the holders of the Common Stock
and could have the effect of delaying, deferring or preventing a change in
control of the Company. In connection with the adoption of the Company's
stockholder rights plan, the Company's Board designated 1,600,000 shares of
Series A Participating Preferred Stock, none of which are outstanding as of
September 30, 1999.
3. WARRANTS
The Warrants were issued pursuant to a Warrant Agreement, dated June 3,
1995 (the "Warrant Agreement"), entered into between the Company and First
Interstate Bank of California, as warrant agent (the "Warrant Agent"), a copy of
which has been filed with the SEC and is incorporated herein by reference.
ChaseMellon Shareholder Services, L.L.C. is the successor Warrant Agent under
the Warrant Agreement.
The statements herein relating to the Warrants and the Warrant Agreement
are summaries and are subject to the detailed provisions of the Warrant
Agreement, to which reference is hereby made for a complete statement of those
provisions. Whenever particular provisions of the Warrant Agreement or terms
defined therein are referred to herein, those provisions or definitions are
incorporated by reference as part of the statements made, and the statements are
qualified in their entirety by that reference.
Exercise of Warrants. Each Warrant represents a currently exercisable right
of the holder thereof to purchase the number of Shares set forth therein at an
exercise price of $7.12 in cash per Share. The Warrants are exercisable, at the
holder's option, as a whole or from time to time in part at any time until the
Warrant Expiration Date, in accordance with the terms of the Warrants and the
Warrant Agreement.
Certain Adjustments. The Warrant Agreement provides that the Exercise Price
and the number of shares of Common Stock issuable upon exercise of each Warrant
will be adjusted in the event of any stock split, stock combination, rights
offering, stock dividend or certain other special dividends with respect to
Common Stock. The Warrant Agreement further provides that in case of any capital
reorganization of the Company, any reclassification of Common Stock, any
consolidation or merger of the Company with or into another corporation or any
sale, lease or transfer to any person of all or substantially all of the assets
of the Company, the holder of each outstanding Warrant will have the right, upon
subsequent exercise of the Warrant, to receive the kind and amount of shares of
stock, other securities or property receivable upon the capital reorganization,
reclassification, consolidation, merger, sale lease or other transfer that would
have been received by such holder upon the exercise of the Warrant had such
Warrant been exercised immediately prior to that event, and the Exercise Price
will be appropriately adjusted.
Transferability. Any Warrant may be transferred, split up, combined or
exchanged for another Warrant or Warrants entitling the registered holder
thereof to purchase a like number of Shares as the Warrant surrendered. Warrants
may be exchanged for other Warrants in different denominations representing
Warrants to purchase the same aggregate number of Shares at any time.
No Rights as Holder of Shares. The Warrants do not confer upon the holder
thereof any voting, preemptive or other rights as a stockholder of the Company.
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INFORMATION CONCERNING THE COMPANY
1. INFORMATION INCORPORATED BY REFERENCE; AVAILABILITY OF INFORMATION
The SEC allows the Company to "incorporate by reference" the information it
files with the SEC, which means that the Company can disclose important
information to a holder of Warrants by referring such holder to those documents.
The information incorporated by reference is considered to be part of this
prospectus, and later information filed with the SEC will update and supersede
this information. The Company incorporates by reference the documents listed
below and any future filings it makes with the SEC under Section 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934 until the Exchange Offer is
consummated or terminated.
- the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (File No. 000-20720);
- the Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1999, June 30, 1999, and September 30, 1999 (File No. 000-20720);
- the Company's Registration Statement on Form 8-A, filed on November 21,
1994, as amended (File No. 000-20720); and
- the Company's Registration Statement on Form 8-A, filed on May 1, 1995,
as amended (File No. 000-20720).
The Company has also filed with the SEC an Issuer Tender Offer Statement on
Schedule 13E-4 (File No. 000-20720) (the "Schedule 13E-4") which includes
certain additional information relating to the Exchange Offer.
The Company files annual, quarterly and special reports, proxy statements
and other information with the SEC. A stockholder may read and copy any document
the Company files at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. The Company's SEC filings are
also available to the public on the SEC's website at http://www.sec.gov.
2. RISK FACTORS
The following is a summary description of some of the many risks we face in
our business. You should carefully review these risks in evaluating our business
and the businesses of our subsidiaries and when determining whether to
participate in the Exchange Offer. You should also consider the other
information described in this report
For the purposes of this section, the terms "we," "our," and "us" refer to
the Company.
RISKS RELATED TO THE EXCHANGE OFFER
The liquidity of the Warrants may be significantly reduced following the
Exchange Offer.
Following the anticipated successful completion of the Exchange Offer, the
number of remaining outstanding Warrants may be so low that public trading of
the Warrants may be substantially reduced, which may make it harder to sell
Warrants not tendered in this Exchange Offer. In addition, if the number of
record holders of the Warrants drops too low, Nasdaq may institute proceedings
resulting in a delisting of the Warrants. In either event, the liquidity of the
Warrants may be significantly reduced following the Exchange Offer.
We have not established any minimum number of Warrants that must be tendered in
the Exchange Offer and the tender of Warrants and related cash payments may not
provide as many funds as we expect.
We are relying upon the receipt of cash in connection with the tender of
the Warrants to provide near-term cash requirements of our business. In the
event that not as many Warrants are tendered as we expect, we
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<PAGE> 16
may be required to complete equity or debt financings to fund our operations.
These financings may not be available on acceptable terms. In addition, these
financings, if completed, still may not meet our capital needs and could result
in substantial dilution to our stockholders.
RISKS RELATED TO OUR BUSINESS
Our product development and commercialization involves a number of
uncertainties and we may never generate sufficient revenues from the sale of
products to become profitable.
We were founded in 1987. We have incurred significant losses since our
inception. At September 30, 1999, our accumulated deficit was $447.5 million. To
date, we have received the majority of our revenues from our collaborative
arrangements. We expect to incur additional losses as we continue our research
and development, testing and regulatory activities and as we continue to build
manufacturing and sales and marketing capabilities. To become profitable, we
must successfully develop, clinically test, market and sell our products. Even
if we achieve profitability, we cannot predict the level of that profitability
or whether we will be able to sustain profitability. We expect that our
operating results will fluctuate from period to period as a result of
differences in when we incur expenses and receive revenues from product sales,
collaborative arrangements and other sources. Some of these fluctuations may be
significant.
Most of our products will require extensive additional development,
including preclinical testing and human studies, as well as regulatory
approvals, before we can market them. We do not expect that any products
resulting from our product development efforts or the efforts of our
collaborative partners, other than those for which marketing approval has been
received, will be available for sale until the first half of the 2000 calendar
year at the earliest, if at all. There are many reasons that we may fail in our
efforts to develop our other potential products, including the possibility that:
- we may discover during preclinical testing or human studies that they are
ineffective or cause harmful side effects,
- the products may fail to receive necessary regulatory approvals from the
FDA or other foreign authorities in a timely manner or at all,
- we may fail to produce the products, if approved, in commercial
quantities or at reasonable costs, or
- the proprietary rights of other parties may prevent us from marketing the
products.
We need to build marketing and sales forces in the United States and Europe
which will be an expensive and time-consuming process.
Developing the sales force to market and sell products is a difficult,
expensive and time-consuming process. We recently developed a sales force for
the U.S. market and, at least initially, rely on another company to distribute
our products. The distributor will be responsible for providing many marketing
support services, including customer service, order entry, shipping and billing,
and customer reimbursement assistance. In addition, in Canada we are the sole
marketer of two cancer products other companies have developed. We may not be
able to continue to establish and maintain the sales and marketing capabilities
necessary to successfully commercialize our products. To the extent we enter
into co-promotion or other licensing arrangements, any revenues we receive will
depend on the marketing efforts of others, which may or may not be successful.
Some of our key technologies have not been used to produce marketed products
and may not be capable of producing such products.
To date, we have dedicated most of our resources to the research and
development of potential drugs based upon our expertise in our non-peptide
hormone activated Intracellular Receptors, or IRs, and cytokine and growth
factor activated Signal Transducers and Activators of Transcription, or STATs,
technologies. Even though there are marketed drugs that act through IRs, some
aspects of our IR technologies have not been used to produce marketed products.
In addition, we are not aware of any drugs that have been developed and
successfully commercialized that interact directly with STATs. Much remains to
be learned about the
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<PAGE> 17
location and function of IRs and STATs. If we are unable to apply our IR and
STAT technologies to the development of our potential products, we will not be
successful in developing new products.
Our drug development programs will require substantial additional future
capital.
Our drug development programs require substantial additional capital,
arising from costs to:
- conduct research, preclinical testing and human studies,
- establish pilot scale and commercial scale manufacturing processes and
facilities, and
- establish and develop quality control, regulatory, marketing, sales and
administrative capabilities.
Our future operating and capital needs will depend on many factors,
including:
- the pace of scientific progress in our research and development programs
and the magnitude of these programs,
- the scope and results of preclinical testing and human studies,
- the time and costs involved in obtaining regulatory approvals,
- the time and costs involved in preparing, filing, prosecuting,
maintaining and enforcing patent claims,
- competing technological and market developments,
- our ability to establish additional collaborations,
- changes in our existing collaborations,
- the cost of manufacturing scale-up, and
- the effectiveness of our commercialization activities.
Our products must clear significant regulatory hurdles prior to marketing.
Before we obtain the approvals necessary to sell any of our potential
products, we must show through preclinical studies and clinical trials that each
product is safe and effective. Our failure to show any product's safety and
effectiveness would delay or prevent regulatory approval of the product and
could adversely affect our business. The clinical trials process is complex and
uncertain. The results of preclinical studies and initial clinical trials may
not necessarily predict the results from later large-scale clinical trials. In
addition, clinical trials may not demonstrate a product's safety and
effectiveness to the satisfaction of the regulatory authorities. A number of
companies have suffered significant setbacks in advanced clinical trials or in
seeking regulatory approvals, despite promising results in earlier trials. The
FDA may also require additional clinical trials after regulatory approvals are
received, which could be expensive and time-consuming, and failure to
successfully conduct those trials could jeopardize continued commercialization.
The rate at which we complete our clinical trials depends on many factors,
including our ability to obtain adequate clinical supplies and patient
enrollment. Patient enrollment is a function of many factors, including the size
of the patient population, the proximity of patients to clinical sites and the
eligibility criteria for the trial. Delays in patient enrollment may result in
increased costs and longer development times. In addition, some of our
collaborative partners have rights to control product development and clinical
programs for products developed under the collaborations. As a result, these
collaborators may conduct these programs more slowly or in a different manner
than we had expected. Even if clinical trials are completed, we or our
collaborative partners still may not apply for FDA approval in a timely manner
or the FDA still may not grant approval.
We may not be able to pay amounts due on our outstanding indebtedness.
We and our subsidiaries may not have sufficient cash to make required
payments due under existing debt. We, or our subsidiaries, may not have the
funds necessary to pay the interest on and the principal of existing debt when
due. If we, or our subsidiaries, do not have adequate funds, we will be forced
to refinance the existing debt and may not be successful in doing so. Our
subsidiary, Glycomed Incorporated, is obligated to make payments under certain
debentures in the total principal amount of $50 million. The debentures bear
interest at a rate of 7 1/2% per annum and are due in 2003. In addition, in
October 1997, we issued a $2.5 million convertible note to SmithKline Beecham
Corporation and in November 1998, July 1999, and August 1999 we
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<PAGE> 18
issued zero coupon convertible notes with a total issue price of $100 million to
Elan Corporation, plc and/or Elan International Services, Ltd. ("Elan").
Glycomed's failure to make payments when due under its debentures would cause us
to default under these notes or other notes we may issue to Elan.
We may require additional stock or debt financings to fund our operations which
may not be available on acceptable terms.
We have incurred losses since our inception and will not generate positive
cash flow to fund our operations for the 1999 calendar year and perhaps for one
or more subsequent years. As a result, we may need to complete additional equity
or debt financings to fund our operations. Our inability to obtain additional
financing could adversely affect our business. These financings may not be
available on acceptable terms. In addition, these financings, if completed,
still may not meet our capital needs and could result in substantial dilution to
our stockholders. For instance, the $100 million in notes we issued to Elan are
convertible into common stock at the option of Elan, subject to some
limitations. In addition, we may issue additional notes to Elan with up to a
total issue price of $10 million, which also would be convertible into common
stock. If adequate funds are not available, we may be required to delay, reduce
the scope of or eliminate one or more of our drug development programs.
Alternatively, we may be forced to attempt to continue development by entering
into arrangements with collaborative partners or others that require us to
relinquish some or all of our rights to certain technologies or drug candidates
that we would not otherwise relinquish.
We face substantial competition.
Some of the drugs that we are developing and marketing will compete with
existing treatments. In addition, several companies are developing new drugs
that target the same diseases that we are targeting and are taking IR-related
and STAT-related approaches to drug development. Many of our existing or
potential competitors, particularly large drug companies, have greater
financial, technical and human resources than us and may be better equipped to
develop, manufacture and market products. Many of these companies also have
extensive experience in preclinical testing and human clinical trials, obtaining
FDA and other regulatory approvals and manufacturing and marketing
pharmaceutical products. In addition, academic institutions, governmental
agencies and other public and private research organizations are developing
products that may compete with the products we are developing. These
institutions are becoming more aware of the commercial value of their findings
and are seeking patent protection and licensing arrangements to collect payments
for the use of their technologies. These institutions also may market
competitive products on their own or through joint ventures and will compete
with us in recruiting highly qualified scientific personnel. Any of these
companies, academic institutions, government agencies or research organizations
may develop and introduce products and processes that compete with or are better
than ours. As a result, our products may become noncompetitive or obsolete.
Our success will depend on third-party reimbursement and may be impacted by
health care reform.
Sales of prescription drugs depend significantly on the availability of
reimbursement to the consumer from third party payors, such as government and
private insurance plans. These third party payors frequently require drug
companies to provide predetermined discounts from list prices, and they are
increasingly challenging the prices charged for medical products and services.
Our current and potential products may not be considered cost-effective and
reimbursement to the consumer may not be available or sufficient to allow us to
sell our products on a competitive basis.
In addition, the efforts of governments and third party payors to contain
or reduce the cost of health care will continue to affect the business and
financial condition of drug companies. A number of legislative and regulatory
proposals to change the health care system have been discussed in recent years.
In addition, an increasing emphasis on managed care in the United States has and
will continue to increase pressure on drug pricing. We cannot predict whether
legislative or regulatory proposals will be adopted or what effect those
proposals or managed care efforts may have on our business. The announcement
and/or adoption of such proposals or efforts could adversely affect our profit
margins and business.
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We rely heavily on collaborative relationships and termination of any of these
programs could reduce the financial resources available to us.
Our strategy for developing and commercializing many of our potential
products includes entering into collaborations with corporate partners,
licensors, licensees and others. To date, we have entered into collaborations
with Warner-Lambert Company, Eli Lilly and Company, SmithKline Beecham
Corporation, American Home Products, Abbott Laboratories, Sankyo Company Ltd.,
Glaxo-Wellcome plc, Allergan, Inc., and Pfizer Inc. These collaborations provide
us with funding and research and development resources for potential products
for the treatment or control of metabolic diseases, hematopoiesis, women's
health disorders, inflammation, cardiovascular disease, cancer and skin disease,
and osteoporosis. These agreements also give our collaborative partners
significant discretion when deciding whether or not to pursue any development
program. We cannot be certain that our collaborations will continue or be
successful.
In addition, our collaborators may develop drugs, either alone or with
others, that compete with the types of drugs they currently are developing with
us. This would result in less support and increased competition for our
programs. If products are approved for marketing under our collaborative
programs, any revenues we receive will depend on the manufacturing, marketing
and sales efforts of our collaborators, who generally retain commercialization
rights under the collaborative agreements. Our current collaborators also
generally have the right to terminate their collaborations under certain
circumstances. If any of our collaborative partners breach or terminate their
agreements with us or otherwise fail to conduct their collaborative activities
successfully, our product development under these agreements will be delayed or
terminated.
We may have disputes in the future with our collaborators, including
disputes concerning which of us owns the rights to any technology developed. For
instance, we were involved in litigation with Pfizer, which we settled in April
1996, concerning our right to milestones and royalties based on the development
and commercialization of droloxifene. These and other possible disagreements
between us and our collaborators could delay our ability and the ability of our
collaborators to achieve milestones or our receipt of other payments. In
addition, any disagreements could delay, interrupt or terminate the
collaborative research, development and commercialization of certain potential
products, or could result in litigation or arbitration. The occurrence of any of
these problems could be time-consuming and expensive and could adversely affect
our business.
Our success depends on our ability to obtain and maintain our patents and
other proprietary rights.
Our success will depend on our ability and the ability of our licensors to
obtain and maintain patents and proprietary rights for our potential products
and to avoid infringing the proprietary rights of others, both in the United
States and in foreign countries. Patents may not be issued from any of these
applications currently on file or, if issued, may not provide sufficient
protection. In addition, if we breach our licenses, we may lose rights to
important technology and potential products.
Our patent position, like that of many pharmaceutical companies, is
uncertain and involves complex legal and technical questions for which important
legal principles are unresolved. We may not develop or obtain rights to products
or processes that are patentable. Even if we do obtain patents, they may not
adequately protect the technology we own or have licensed. In addition, others
may challenge, seek to invalidate, infringe or circumvent any patents we own or
license, and rights we receive under those patents may not provide competitive
advantages to us. Further, the manufacture, use or sale of our products may
infringe the patent rights of others.
Several drug companies and research and academic institutions have
developed technologies, filed patent applications or received patents for
technologies that may be related to our business. Others have filed patent
applications and received patents that conflict with patents or patent
applications we have licensed for our use, either by claiming the same methods
or compounds or by claiming methods or compounds that could dominate those
licensed to us. In addition, we may not be aware of all patents or patent
applications that may impact our ability to make, use or sell any of our
potential products. For example, United States patent applications are
confidential while pending in the Patent and Trademark Office, and patent
applications filed in foreign countries are often first published six months or
more after filing. Any conflicts resulting from the
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patent rights of others could significantly reduce the coverage of our patents
and limit our ability to obtain meaningful patent protection. If other companies
obtain patents with conflicting claims, we may be required to obtain licenses to
those patents or to develop or obtain alternative technology. We may not be able
to obtain any such license on acceptable terms or at all. Any failure to obtain
such licenses could delay or prevent us from pursuing the development or
commercialization of our potential products.
We have had and will continue to have discussions with our current and
potential collaborators regarding the scope and validity of our patent and other
proprietary rights. If a collaborator or other party successfully establishes
that our patent rights are invalid, we may not be able to continue our existing
collaborations beyond their expiration. Any determination that our patent rights
are invalid also could encourage our collaborators to terminate their agreements
where contractually permitted. Such a determination could also adversely affect
our ability to enter into new collaborations.
We may also need to initiate litigation, which could be time-consuming and
expensive, to enforce our proprietary rights or to determine the scope and
validity of others' rights. If litigation results, a court may find our patents
or those of our licensors invalid or may find that we have infringed on a
competitor's rights. If any of our competitors have filed patent applications in
the United States which claim technology we also have invented, the Patent and
Trademark Office may require us to participate in expensive interference
proceedings to determine who has the right to a patent for the technology.
We have learned that Hoffmann-La Roche Inc. has received a United States
patent and has made patent filings in foreign countries that relate to our
Panretin capsules and gel products. We filed a patent application with an
earlier filing date than Hoffmann-La Roche's patent, which we believe is broader
than, but overlaps in part with, Hoffmann-La Roche's patent. We currently are
investigating the scope and validity of Hoffmann-La Roche's patent to determine
its impact upon our products. The Patent and Trademark Office has informed us
that the overlapping claims are patentable to us and has initiated a proceeding
to determine whether we or Hoffmann-La Roche are entitled to a patent. We may
not receive a favorable outcome in the proceeding. In addition, the proceeding
may delay the Patent and Trademark Office's decision regarding our earlier
application. If we do not prevail, the Hoffmann-La Roche patent might block our
use of Panretin(R) capsules and gel in certain cancers.
We also rely on unpatented trade secrets and know-how to protect and
maintain our competitive position. We require our employees, consultants,
collaborators and others to sign confidentiality agreements when they begin
their relationship with us. These agreements may be breached and we may not have
adequate remedies for any breach. In addition, our competitors may independently
discover our trade secrets. Any of these actions might adversely affect our
business.
We currently have limited manufacturing capability and will rely on
third-party manufacturers.
We currently have no manufacturing facilities outside of Marathon's
facility and we rely primarily on others for clinical or commercial production
of our potential products. To be successful, we will need to manufacture our
products, either directly or through others, in commercial quantities, in
compliance with regulatory requirements and at acceptable cost. Any extended and
unplanned manufacturing shutdowns could be expensive and could result in
inventory and product shortages. If we are unable to develop our own facilities
or contract with others for manufacturing services, our ability to conduct
preclinical testing and human clinical trials will be adversely affected. This
in turn could delay our submission of products for regulatory approval and our
initiation of new development programs. In addition, although other companies
have manufactured drugs acting through IRs and STATs on a commercial scale, we
may not be able to do so at costs or in quantities to make marketable products.
Any of these events would adversely affect our business.
Our manufacturing process also may be susceptible to contamination, which
could cause the affected manufacturing facility to close until the contamination
is identified and fixed. In addition, problems with equipment failure or
operator error also could cause delays.
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<PAGE> 21
Our business exposes us to product liability risks and we may not have
sufficient insurance to cover any claims.
Our business exposes us to potential product liability risks. A successful
product liability claim or series of claims brought against us could result in
payment of significant amounts of money and divert management's attention from
running the business. Some of the compounds we are investigating may be harmful
to humans. For example, retinoids as a class are known to contain compounds,
which can cause birth defects. We may not be able to maintain our insurance on
acceptable terms, or our insurance may not provide adequate protection in the
case of a product liability claim. To the extent that product liability
insurance, if available, does not cover potential claims, we will be required to
self-insure the risks associated with such claims.
We are dependent on our key employees, the loss of whose services could
adversely affect us.
We depend on our key scientific and management staff, the loss of whose
services could adversely affect our business. Furthermore, we are currently
experiencing a period of rapid growth, which requires us to hire many new
scientific, management and operational personnel. Accordingly, recruiting and
retaining qualified management, operations and scientific personnel to perform
research and development work also is critical to our success. Although we
believe we will successfully attract and retain the necessary personnel, we may
not be able to attract and retain such personnel on acceptable terms given the
competition among numerous drug companies, universities and other research
institutions for such personnel.
We use hazardous materials which requires us to incur substantial costs to
comply with environmental regulations.
In connection with our research and development activities, we handle
hazardous materials, chemicals and various radioactive compounds. We cannot
completely eliminate the risk of accidental contamination or injury from the
handling and disposing of hazardous materials. In the event of any accident, we
could be held liable for any damages that result, which could be significant. In
addition, we may incur substantial costs to comply with environmental
regulations. Any of these events could adversely affect our business.
Our stock price may be adversely affected by volatility in the markets.
The market prices and trading volumes for our securities, and the
securities of emerging companies like us, have historically been highly volatile
and have experienced significant fluctuations unrelated to operating
performance. Future announcements concerning us or our competitors may impact
the market price of our common stock. These announcements might include:
- the results of research or development testing,
- technological innovations,
- new commercial products,
- government regulation,
- receipt of regulatory approvals by competitors,
- our failure to receive regulatory approvals,
- developments concerning proprietary rights, or
- litigation or public concern about the safety of the products.
You may not receive a return on your shares other than through the sale of
your shares of common stock.
We have not paid any cash dividends on our common stock to date, and we do
not anticipate paying cash dividends in the foreseeable future. Accordingly,
other than through a sale of your shares, you may not receive a return.
Our shareholder rights plan and charter documents may prevent transactions
that could be beneficial to you.
Our shareholder rights plan and provisions contained in our certificate of
incorporation and bylaws may discourage transactions involving an actual or
potential change in our ownership, including transactions in
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which you might otherwise receive a premium for your shares over then-current
market prices. These provisions also may limit your ability to approve
transactions that you deem to be in your best interests. In addition, our board
of directors may issue shares of preferred stock without any further action by
you. Such issuances may have the effect of delaying or preventing a change in
our ownership.
We are subject to year 2000 risks for which we may not be prepared.
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, many companies' software and computer systems
may need to be upgraded or replaced in order to comply with year 2000
requirements. The impact of the year 2000 issue may affect other systems that
utilize imbedded computer chip technology, including building controls, security
systems or laboratory equipment. It may also impact the ability to obtain
products or services if the provider encounters and fails to resolve year 2000
related problems.
We have established an active program to identify and resolve year 2000
related issues. This program includes the review and assessment of our
information technology and non-information technology systems, as well as third
parties with whom we have a material relationship. This program consists of four
phases: inventory, risk assessment, problem validation and problem resolution.
The inventory phase identified potential risks we face. They include among
others: computer software, computer hardware, telecommunications systems,
laboratory equipment, and facilities systems, such as security, environment
control and alarm; service providers, such as contract research organizations,
consultants and product distributors; and other third parties. The risk
assessment phase categorizes and prioritizes each risk by its potential impact.
The problem validation phase tests each potential risk, according to priority,
to determine if an action risk exists. In the case of critical third parties,
this step will include a review of their year 2000 plans and activities. The
problem resolution phase will, for each validated risk, determine the
method/strategy for alleviating the risk. It may include anything from
replacement of hardware or software to process modification to selection of
alternative vendors. This step also includes the development of contingency
plans.
We initiated this program in 1998. The inventory and risk assessment phases
were completed in 1998 while the problem validation phase was completed in the
second calendar quarter of 1999. Follow-up reviews of the progress being made by
critical third parties will continue. Contingency plans were developed and
continue to be revised based upon additional information from the follow-up
vendor reviews. As of the end of the third calendar quarter of 1999, the problem
resolution phase has been completed with only minor exceptions. These exceptions
do not involve major systems and generally consist of operational actions that
must occur on or before January 1, 2000.
To date, we had determined that some of our internal information technology
and non-information technology systems were not year 2000 compliant. We actively
corrected the identified problems. These corrections included the replacement of
hardware and software systems, the identification of alternative service
providers and the creation of contingency plans. We estimate that the cost of
correcting the identified problems was approximately $100,000 for hardware and
software upgrades or modifications. In addition, we estimate that we will incur
approximately $400,000 of internal personnel costs by the time the project is
completed. We do not believe that the cost of these actions will have a material
adverse affect on our business. We expect that costs for completion of the
project will be part of normal operating expenses.
Any failure of our internal computer systems or of third-party equipment or
software we use, or of systems maintained by our suppliers, to be year 2000
compliant may adversely affect our business. In addition, adverse changes in the
purchasing patterns of our potential customers as a result of year 2000 issues
affecting them may adversely affect our business. These expenditures by
potential customers may result in reduced funds available to purchase our
products, which could adversely affect our business.
3. GENERAL
The Company's goal is to build a profitable pharmaceutical company which
discovers, develops and markets new drugs that address critical unmet medical
needs of patients in the areas of cancer, men's and
-20-
<PAGE> 23
women's health and skin diseases, as well as osteoporosis, metabolic,
cardiovascular and inflammatory diseases. The Company strives to develop drugs
that are more effective and/or safer than existing therapies and that are more
convenient (taken orally or topically administered) and cost effective. The
Company pursues the discovery, development, approval and marketing of new drugs
through internal and collaborative research and development programs, and
through the licensing or acquisition of late-stage development products.
Internal and collaborative programs utilize the Company's proprietary science
technology. In-licensing and acquisition programs focus on products which have
near-term prospects of FDA approval, and which can be marketed by a small
specialty cancer and HIV-center sales force. See "-- Risk Factors."
In February 1999, the Company was granted FDA marketing approval for its
first two products -- Panretin(R) gel for the topical treatment of cutaneous
AIDS-related Kaposi's sarcoma, also known as KS, and ONTAK(R) for the treatment
of patients with persistent or recurrent cutaneous T-cell lymphoma ("CTCL")
whose malignant cells express the CD25 component of the Interleukin-2 receptor.
In late 1998 and early 1999, the Company assembled a 26-member specialty
oncology and HIV-center sales force in the U.S. to launch Panretin(R) gel and
ONTAK(R) in the U.S. In addition, the Company established a subsidiary, Ligand
Pharmaceuticals International, Inc., with a branch in London, England to manage
its European operations. A Canadian sales force, which has been in place since
1995, currently markets two in-licensed cancer products in Canada.
The Company's drug discovery and development programs are based on its
leadership position in gene transcription technology. The Company's proprietary
technologies involve two natural mechanisms that regulate gene activity:
- non-peptide hormone activated Intracellular Receptors, or IRs, and
- cytokine and growth factor activated Signal Transducers and Activators of
Transcription, or STATs.
The Company applies its IR technology to the discovery and development of small
molecule drugs to enhance therapeutic and safety profiles and to address unmet
patient needs in certain cancers, men's and women's health, skin diseases,
osteoporosis, cardiovascular and metabolic diseases, and inflammatory disorders.
Similarly, STATs influence many biological processes, including those associated
with cancer, other metabolic diseases, and inflammation and blood cell
formation. Through the Company's acquisition of Seragen Incorporated in August
1998 and Glycomed Incorporated in May 1995, the Company also has proprietary
technology in fusion proteins and complex carbohydrates. Fusion protein
technology was used in the development of ONTAK(R). See "-- Risk Factors."
The Company uses an innovative combination of internal and collaborative
programs to develop and market potential drugs.
The Company has a number of compounds in various stages of internal
development.
- In June 1999, the Company filed a new drug application with the FDA for
Targretin(R) capsules for the treatment of patients with CTCL. As noted
in the Company's third quarter earnings announcement, the Company expects
to meet with the FDA's Oncologic Drugs Advisory Committee on December 13
to review the submission of Targretin(R) capsules; the FDA is expected to
issue an action letter on the filing soon thereafter.
- The Company has additional U.S. and European regulatory filings planned
for the fourth quarter of 1999, including a new drug application with the
FDA for Targretin(R) gel for the treatment of patients with CTCL.
Targretin(R) gel is also in earlier-stage human testing for the treatment
of actinic keratoses and skin cancer.
- Targretin(R) capsules are in early-stage human testing for the treatment
of patients with breast cancer and psoriasis.
- Other internal programs include the post-marketing trials for ONTAK(R),
which the FDA required in connection with its accelerated approval. The
Company's compound LGD1550 is in early-stage human testing for the
treatment of patients with advanced cancer.
-21-
<PAGE> 24
The Company has established several corporate collaborations, with multiple
compounds in development, which may generate future royalty-based revenue. The
table below highlights the Company's collaborations to date:
<TABLE>
<CAPTION>
CORPORATE COLLABORATOR INITIATION OF COLLABORATION DISEASE/INDICATION
---------------------- --------------------------- ------------------
<S> <C> <C>
Warner-Lambert Company.......... September 1999 Treatment and prevention of diseases
mediated through the estrogen receptor
Eli Lilly and Company........... November 1997 Metabolic and cardiovascular diseases
SmithKline Beecham
Corporation..................... February 1995 Oncological uses, anemia
Wyeth-Ayerst, the pharmaceutical
division of American Home
Products...................... September 1994 Osteoporosis, breast cancer, oral
contraception, endometriosis, uterine
fibroids, hormone replacement therapy
Abbott Laboratories............. July 1994 Rheumatoid arthritis, inflammatory bowel
disease, asthma, dermatitis
Glaxo-Wellcome plc.............. September 1992 Atherosclerosis and other cardiovascular
diseases
Allergan, Inc................... June 1992 Type II diabetes, cancer and skin
disorders
Pfizer Inc...................... May 1991 Osteoporosis
</TABLE>
The Company also seeks to in-license and/or acquire cancer and other
medical specialty drugs, which are in late-stage clinical development or have
been approved by regulatory authorities. During 1998, the Company acquired
ONTAK(R), a treatment for CTCL, in its acquisition of Seragen and in-licensed
rights in the U.S. and Canada to Morphelan(TM) from Elan Corporation, plc.
Morphelan(TM), a once-daily, oral, sustained-release product for the management
of pain in oncology and HIV patients, is in Phase III clinical trials in the
U.S. See "-- Risk Factors."
-22-
<PAGE> 25
4. FINANCIAL INFORMATION
The following table represents consolidated financial data for the Company
for the years ended December 31, 1997 and 1998 and for the nine-months ended
September 30, 1998 and 1999. Financial data for the years 1997 and 1998 has been
derived from the Company's audited consolidated financial statements in the
Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
Unaudited financial data for the nine months ended September 30, 1998 and 1999
has been derived from the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999.
LIGAND PHARMACEUTICALS INCORPORATED AND SUBSIDIARIES
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
-------------------------- --------------------------
1997 1998 1998 1999
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Revenues:
Product sales....................... $ 418 $ 406 $ 282 $ 9,127
Contract manufacturing sales........ -- -- -- 1,884
Collaborative research and
development and other milestone
revenues:
Related parties................ 18,997 -- -- --
Unrelated parties.............. 32,284 17,267 13,117 17,456
----------- ----------- ----------- -----------
Total revenues.............. 51,699 17,673 13,399 28,467
----------- ----------- ----------- -----------
Costs and expenses:
Costs of products and services
sold............................. 520 436 305 8,177
Research and development............ 71,906 70,303 48,917 44,799
Selling, general and
administrative................... 10,108 16,568 9,924 20,056
Write-off of acquired in-process
technology....................... 64,970 45,000 30,000 --
----------- ----------- ----------- -----------
Total costs and expenses.... 147,504 132,307 89,146 73,032
----------- ----------- ----------- -----------
Loss from operations.................. (95,805) (114,634) (75,747) (44,565)
----------- ----------- ----------- -----------
Other income (expense):
Interest income..................... 3,743 3,070 2,406 1,894
Interest expense.................... (8,088) (8,322) (5,886) (8,942)
Other............................... -- 2,000 2,000 (245)
----------- ----------- ----------- -----------
Total other income
(expense)................. (4,345) (3,252) (1,480) (7,293)
----------- ----------- ----------- -----------
Net loss.............................. $ (100,150) $ (117,886) $ (77,227) $ (51,858)
=========== =========== =========== ===========
Basic and diluted net loss per
share............................... $ (3.02) $ (2.92) $ (1.97) $ (1.11)
Shares used in computing net loss per
share............................... 33,128,372 40,392,421 39,255,981 46,580,319
</TABLE>
-23-
<PAGE> 26
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
(UNAUDITED)
<S> <C> <C>
CONSOLIDATED BALANCE SHEETS DATA:
Cash, cash equivalents, and short term investments(1)....... $ 72,521 $ 47,889
Working capital............................................. 51,098 35,513
Total assets................................................ 156,020 131,713
Long-term debt(2)........................................... 51,185 113,320
Convertible subordinated debentures......................... 39,302 41,308
Accumulated deficit......................................... (395,630) (447,488)
Total stockholders' deficit................................. (11,362) (44,989)
</TABLE>
- ---------------
(1) Includes restricted short-term investments.
(2) Includes long-term portion of equipment financing obligations, convertible
note and zero coupon convertible notes.
The Company's book value per share was $(0.25) and $(0.94) as of December
31, 1998 and September 30, 1999, respectively.
PRO FORMA SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma summary consolidated balance sheet
information as of December 31, 1998 and September 30, 1999 and the unaudited pro
forma summary statements of operations information for the year ended December
31, 1998 and the nine months ended September 30, 1999 give effect to the
Exchange Offer.
The unaudited pro forma summary consolidated financial information is based
on the historical consolidated financial statements of the Company, giving
effect to the Exchange Offer and the assumptions and adjustments as discussed in
the accompanying note to the unaudited pro forma summary consolidated financial
information. This unaudited pro forma summary consolidated financial information
has been prepared by the management of the Company based upon the consolidated
financial statements of the Company as of September 30, 1999 (unaudited) and for
the year ended December 31, 1998 and the nine months ended September 30, 1999
(unaudited). The unaudited pro forma summary consolidated financial information
should be read in conjunction with the historical consolidated financial
statements and notes thereto incorporated by reference herein. The unaudited pro
forma summary consolidated financial information is not necessarily indicative
of what actual results of operations would have been for the periods presented
had the Exchange Offer occurred on the dates indicated and do not purport to
indicate the results of future operations.
NOTE TO PRO FORMA SUMMARY CONSOLIDATED FINANCIAL INFORMATION
ASSUMPTIONS AND ADJUSTMENTS
The pro forma summary consolidated financial information has been prepared
with the following assumptions:
- 3,601,420 Warrants outstanding and subject to the Exchange Offer
- Cash payments of $7.12 per Warrant tendered by holders of Warrants
- Warrants exchanged for 3,601,420 shares of Common Stock
- Consideration offered to Warrant holder of $1.12 per Warrant
- Estimated transaction costs of $100,000
- Net proceeds invested in interest bearing instruments
-24-
<PAGE> 27
LIGAND PHARMACEUTICALS INCORPORATED AND SUBSIDIARIES
PRO FORMA SUMMARY CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
-----------------------------------------
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
Total revenues....................................... $ 17,673 -- $ 17,673
Total costs and expenses............................. 132,307 -- 132,307
Loss from operations................................. (114,634) -- (114,634)
Total other income (expense)......................... (3,252) $1,172 (2,080)
Net loss............................................. $ (117,886) 1,172 $ (116,714)
Basic and diluted net loss per share................. $ (2.92) $ (2.65)
Shares used in computing net loss per share.......... 40,392,421 43,993,841
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999
-----------------------------------------
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
Total revenues....................................... $ 28,467 -- $ 28,467
Total costs and expenses............................. 73,032 -- 73,032
Loss from operations................................. (44,565) -- (44,565)
Total other income (expense)......................... (7,293) $813 (6,480)
Net loss............................................. $ (51,858) 813 $ (51,045)
Basic and diluted net loss per share................. $ (1.11) $ (1.02)
Shares used in computing net loss per share.......... 46,580,319 50,181,739
</TABLE>
See accompanying note to Pro Forma Summary Consolidated Financial Information.
-25-
<PAGE> 28
LIGAND PHARMACEUTICALS INCORPORATED AND SUBSIDIARIES
PRO FORMA SUMMARY CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS DATA
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
-------------------------------------
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
--------- ----------- ---------
<S> <C> <C> <C>
Cash, cash equivalents and short term investments....... $ 72,521 $22,681 $ 95,202
Working capital......................................... 51,098 22,681 73,779
Total assets............................................ 156,020 22,681 178,701
Long-term debt.......................................... 51,185 -- 51,185
Convertible subordinated debentures..................... 39,302 -- 39,302
Accumulated deficit..................................... (395,630) 1,172 (394,458)
Total stockholders' equity (deficit).................... (11,362) 22,681 11,319
Book value per share.................................... (0.25) 0.48 0.23
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
-------------------------------------
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
--------- ----------- ---------
<S> <C> <C> <C>
Cash, cash equivalents and short term investments....... $ 47,889 $22,322 $ 70,211
Working capital......................................... 35,513 22,322 57,835
Total assets............................................ 131,713 22,322 154,035
Long-term debt.......................................... 113,320 -- 113,320
Convertible subordinated debentures..................... 41,308 -- 41,308
Accumulated deficit..................................... (447,488) 813 (446,675)
Total stockholders' equity (deficit).................... (44,989) 22,322 (22,667)
Book value per share.................................... (0.94) 0.50 (0.44)
</TABLE>
See accompanying note to Pro Forma Summary Consolidated Financial Information.
-26-
<PAGE> 29
MISCELLANEOUS
The Company is not aware of any jurisdiction where the making of the
Exchange Offer is prohibited by administrative or judicial action pursuant to
any valid statute of such jurisdiction. If the Company becomes aware of any such
valid statute prohibiting the making of the Exchange Offer or the acceptance of
Warrants pursuant thereto, the Company will make a good faith effort to comply
with such statute. If, after such good faith effort, the Company cannot comply
with such statute, the Exchange Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Warrants in such jurisdiction.
The Company has filed with the SEC the Schedule 13E-4 pursuant to Rule
13e-4 under the Exchange Act containing certain additional information with
respect to the Exchange Offer. Such Schedule and any amendments thereto,
including exhibits, may be examined and copies may be obtained from the
principal office of the SEC in the manner set forth under the heading
"Information Concerning the Company -- Information Incorporated by Reference;
Availability of Information" (except that they will not be available at the
regional offices of the SEC).
No person has been authorized to give any information or make any
representation on behalf of the Company not contained in this Offer to Exchange
or in the Letter of Transmittal and, if given or made, such information or
representations must not be relied upon as having been authorized.
Ligand Pharmaceuticals Incorporated
November 19, 1999
-27-
<PAGE> 30
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Hand Delivery: By Overnight Delivery: By Mail:
120 Broadway, 13th Floor 85 Challenger Road P.O. Box 3301
New York, New York 10271 Mail Drop-Reorg. South Hackensack, New Jersey
Attn: Reorganization Dept. Ridgefield Park, New Jersey 07606
07660 Attn: Reorganization Dept.
Attn: Reorganization Dept.
</TABLE>
<TABLE>
<S> <C>
Wire Transfer Instructions: Facsimile Transmission:
The Chase Manhattan Bank (201) 296-4293
New York, NY 10001 Confirm Receipt of Facsimile By Telephone:
ABA #021 000 021 (201) 296-4860
Attn: ChaseMellon Shareholder Services,
L.L.C.
Reorg. Acct. #323-213057
Re: Ligand Pharmaceuticals Warrants
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent at its telephone number listed below. Additional copies of this Offer to
Exchange, the Letter of Transmittal and other exchange offer materials may be
obtained by contacting the Information Agent and will be furnished promptly at
the Company's expense:
THE INFORMATION AGENT FOR THE EXCHANGE OFFER IS:
CHASEMELLON CONSULTING SERVICES, L.L.C.
450 WEST 33RD STREET, 14TH FLOOR
NEW YORK, NEW YORK 10001
Banks and Brokers Call: (212) 273-8035
All Others Call Toll Free: (888) 867-6003
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO EXCHANGE ALRT WARRANTS
OF
LIGAND PHARMACEUTICALS INCORPORATED
PURSUANT TO THE COMPANY'S OFFER TO EXCHANGE
DATED NOVEMBER 19, 1999
THE EXCHANGE OFFER WILL EXPIRE AT 12:01 A.M., NEW YORK CITY TIME, ON
DECEMBER 18, 1999, UNLESS THE OFFER IS EXTENDED (THE "OFFER EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE OFFER EXPIRATION DATE.
If you desire to accept the Exchange Offer, this Letter of Transmittal
should be completed, signed, and submitted to the Exchange Agent:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Hand Delivery: By Overnight Delivery: By Mail:
120 Broadway, 13th Floor 85 Challenger Road P.O. Box 3301
New York, New York 10271 Mail Drop-Reorg South Hackensack
Attn: Reorganization Dept. Ridgefield Park, New Jersey 07660 New Jersey 07606
Attn: Reorganization Dept. Attn: Reorganization Dept.
</TABLE>
<TABLE>
<S> <C>
Wire Transfer Instructions: Facsimile Transmission:
The Chase Manhattan Bank (201) 296-4293
New York, New York 10001
ABA# 021 000 021 Confirm Receipt of Facsimile
Attn: ChaseMellon Shareholder Services, L.L.C. By Telephone:
Reorg Acct. #323-213057 (201) 296-4860
Re: Ligand Pharmaceuticals Warrants
</TABLE>
FOR TELEPHONE ASSISTANCE CALL THE INFORMATION AGENT:
CHASEMELLON CONSULTING SERVICES, L.L.C.
450 WEST 33RD STREET, 14TH FLOOR
NEW YORK, NEW YORK 10001
BANKS AND BROKERS CALL: (212) 273-8035
ALL OTHERS CALL TOLL FREE: (888) 867-6003
DESCRIPTION OF WARRANTS TENDERED
(ATTACH SEPARATE SIGNED LIST IF NECESSARY)
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
WARRANTS TENDERED
- -------------------------------------------------------
(1) (2) (3) (4) (5)
TOTAL NO. OF NAMES AND ADDRESS(ES) OF HOLDERS
CERTIFICATE WARRANTS NO. OF WARRANTS CASH (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEARS ON
NO. DELIVERED TENDERED TENDERED WARRANTS
- ------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Unless otherwise specified, it will be assumed that the entire number of
shares represented by the Warrants described above is being tendered. See
Instruction 5.
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
<PAGE> 2
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
EXCEPT AS OTHERWISE PROVIDED HEREIN, ALL SIGNATURES ON THIS LETTER OF
TRANSMITTAL MUST BE GUARANTEED IN ACCORDANCE WITH THE PROCEDURES SET FORTH
HEREIN. SEE INSTRUCTION 1.
HOLDERS WHO WISH TO TENDER THEIR WARRANTS MUST COMPLETE COLUMNS (1), (2),
(4) AND (5) IN THE BOX HEREIN ENTITLED "DESCRIPTION OF WARRANTS TENDERED" ON THE
FIRST PAGE HEREOF AND SIGN IN THE APPROPRIATE BOX BELOW. IF ONLY THOSE COLUMNS
ARE COMPLETED, THE HOLDER WILL BE DEEMED TO HAVE TENDERED ALL THE WARRANTS
LISTED IN THE TABLE. IF A HOLDER WISHES TO TENDER FEWER THAN ALL OF SUCH
WARRANTS, COLUMN (3) MUST BE COMPLETED IN FULL, AND SUCH HOLDER SHOULD REFER TO
INSTRUCTION 5.
HOLDERS MUST SUBMIT A CASHIER'S OR CERTIFIED CHECK, MONEY ORDER OR WIRE
TRANSFER IN THE AMOUNT OF $7.12 PER SHARE OF COMMON STOCK FOR WHICH THE
WARRANT(S) BEING TENDERED IS (ARE) EXERCISABLE PAYABLE TO CHASEMELLON
SHAREHOLDER SERVICES, L.L.C., AS EXCHANGE AGENT, (OR TO THE ACCOUNT SPECIFIED
FOR WIRE TRANSFERS) IN ORDER TO VALIDLY TENDER WARRANTS. PAYMENT MUST BE
RECEIVED BY THE EXCHANGE AGENT BEFORE THE OFFER EXPIRATION DATE.
This Letter of Transmittal relates to warrants (the "Warrants" or the "ALRT
Warrants") for the purchase of the common stock, par value $0.001 per share (the
"Common Stock") of Ligand Pharmaceuticals Incorporated, a Delaware corporation
(the "Company"), at an exercise price of $7.12 per share which warrants were
originally issued in connection with a public offering with Allergan Ligand
Retinoid Therapeutics, Inc. This Letter of Transmittal is to be used only if the
Warrants are to be physically delivered to the Exchange Agent or if delivery of
the Warrants is to be made by book-entry transfer to the Exchange Agent's
account at The Depository Trust Company ("DTC") pursuant to the procedures set
forth in the Offer to Exchange dated November 19, 1999 (as the same may be
amended or supplemented from time to time, the "Offer to Exchange") under the
heading "The Exchange Offer -- Procedures for Tendering Warrants."
In order to validly tender warrants a payment of $7.12 per share of Common
Stock into which the Warrant(s) being tendered is exercisable must be made. Such
payment must be made via a certified or cashier's check, money order or wire
transfer payable to ChaseMellon Shareholder Services, L.L.C., as exchange agent
(or to the account specified for wire transfers). Such payment must be received,
by the Exchange Agent, prior to the Offer Expiration Date.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
(BOX BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED WARRANTS ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE EXCHANGE AGENT'S ACCOUNT AT THE DEPOSITORY TRUST COMPANY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution:
Account No.:
Transaction Code No.:
[ ] CHECK HERE IF TENDERED WARRANTS ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution that Guaranteed Delivery:
If delivery is by book-entry transfer: Name of Tendering Institution:
Account No.: ________________________ at DTC
Transaction Code No.:
2
<PAGE> 3
Ladies and Gentlemen:
By execution hereof, the undersigned hereby acknowledges he, she or it has
received and reviewed the accompanying Offer to Exchange and this Letter of
Transmittal relating to the offer to exchange by Ligand Pharmaceuticals
Incorporated, a Delaware corporation (the "Company"), upon the terms and subject
to the conditions set forth herein and therein, certain of its outstanding
warrants to purchase shares of its common stock, $0.001 par value per share
("Common Stock"). The Exchange Offer (as defined below) relates to warrants (the
"Warrants" or "ALRT Warrants") originally issued in the public offering with
Allergan Ligand Retinoid Therapeutics, Inc., at an exercise price of $7.12 per
share. As set forth in the Offer to Exchange, the Company has offered to
exchange any outstanding Warrants, together with payment to the Exchange Agent
of $7.12 per share for which the Warrants are exercisable, the number of newly
issued shares of Common Stock issuable under such Warrants plus a cash amount of
$1.12, net, without interest, per share of Common Stock (the "Exchange Offer").
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the Warrants and the cash payment
indicated above and elects to have such Warrants converted, upon consummation of
the Exchange Offer, into the right to receive shares of Common Stock and cash,
as applicable. The undersigned understands that the obligation of the Company to
consummate the Exchange Offer is subject to several conditions as set forth in
the Offer to Exchange under "The Exchange Offer -- Terms of the Offer;
Conditions; Extension of Tender Period; Termination; Amendment."
The undersigned acknowledges that all the conditions referred to above are
for the sole benefit of the Company and may be asserted by the Company
regardless of the circumstances giving rise to such conditions and may be waived
by the Company, in whole or in part, at any time and from time to time, in the
sole discretion of the Company. The failure by the Company at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. If any of the conditions set forth
in this section shall not be satisfied, the Company may, subject to applicable
law, (i) terminate the Exchange Offer and return all Warrants and cash payments
tendered pursuant to the Exchange Offer to tendering holders; (ii) extend the
Exchange Offer and retain all tendered Warrants and cash payments until the
Offer Expiration Date for the extended Exchange Offer; (iii) amend the terms of
the Exchange Offer or modify the consideration to be provided by the Company
pursuant to the Exchange Offer; or (iv) waive the unsatisfied conditions with
respect to the Exchange Offer and accept all Warrants and cash payments tendered
pursuant to the Exchange Offer. Notwithstanding anything to the contrary, the
Company may extend the period of the Exchange Offer in its sole discretion. In
any such event, the tendered Warrants not accepted for exchange (and the related
cash payments) will be returned to the undersigned without cost to the
undersigned as soon as practicable following the date on which the Exchange
Offer is terminated or expires without any Warrants being exchanged thereunder,
at the address shown below the undersigned's signature(s).
Subject to, and effective upon, the acceptance by the Company of the
Warrants and cash payment tendered hereby for exchange pursuant to the terms of
the Exchange Offer, the undersigned hereby irrevocably sells, assigns and
transfers to, or upon the order of, the Company, all right, title and interest
in and to, and any and all claims in respect of or arising or having arisen as a
result of the undersigned's status as a holder of, all Warrants and cash
payments tendered hereby, waives any and all rights with respect to the Warrants
and cash payments tendered hereby and releases and discharges any obligor of the
Warrants from any and all claims the undersigned may have now, or may have in
the future, arising out of or related to the Warrants. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent (with full knowledge
that the Exchange Agent also acts as agent of the Company) as the true and
lawful agent and attorney-in-fact of the undersigned with respect to such
Warrants and cash payments, with full power of substitution (such power-of-
attorney being deemed to be an irrevocable power coupled with an interest) to
(a) deliver such Warrants and cash payments and to receive on behalf of the
undersigned in exchange for the Warrants and cash payments, any certificates of
the shares of Common Stock and cash issuable pursuant to the Exchange Offer to
be forwarded to the undersigned, (b) present such Warrants for transfer on the
books of the Company, and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Warrants, all in accordance with the
terms of the Exchange Offer.
The undersigned hereby represents and warrants that (i) the undersigned has
full power and authority to tender, sell, assign and transfer the Warrants and
cash payments tendered hereby, and that when such Warrants and cash payments are
accepted for exchange by the Company, the Company will acquire good, marketable
and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and that none of such Warrants and cash payments will
be subject to any adverse claim or right; (ii) the undersigned owns the Warrants
and cash payments being tendered hereby and is entitled to tender such Warrants
and cash payments as contemplated by the Exchange Offer, all within the meaning
of Rule 13e-4 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and (iii) the tender of such Warrants and cash payments
complies with Rule 13e-4 under the Exchange Act. The undersigned, upon request,
will execute and deliver all additional documents deemed by the Exchange Agent
or the Company to be
3
<PAGE> 4
necessary or desirable to complete the sale, assignment and transfer of the
Warrants and cash payments tendered hereby. The undersigned understands that
tenders of Warrants and cash payments pursuant to any of the procedures
described in the Offer to Exchange under the caption "The Exchange
Offer -- Procedures for Tendering Warrants" and in the instructions hereto will
constitute the undersigned's acceptance of the terms and conditions of the
Exchange Offer. The Company's acceptance of such Warrants and cash payments for
exchange pursuant to the terms of the Exchange Offer will constitute a binding
agreement between the undersigned and the Company upon the terms and subject to
the conditions of the Exchange Offer. The undersigned has read and agrees to all
terms and conditions of the Exchange Offer. Delivery of the enclosed Warrants
and cash payments shall be effected, and risk of loss and title of such Warrants
and cash payments shall pass, only upon proper delivery thereof, to the Exchange
Agent.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death or incapacity of the undersigned and every
obligation of the undersigned under this Letter of Transmittal shall be binding
upon the undersigned's heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives. WARRANTS AND CASH PAYMENTS TENDERED PURSUANT TO THE EXCHANGE
OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 12:01 A.M., NEW YORK CITY TIME, ON
DECEMBER 18, 1999, UNLESS THE OFFER IS EXTENDED (THE "OFFER EXPIRATION DATE").
See the information set forth under the heading "The Exchange
Offer -- Withdrawal Rights" in the Offer to Exchange.
The undersigned requests that you issue the applicable consideration with
respect to Warrants and cash payments accepted for exchange, and return any
Warrants and cash payments not tendered or not accepted for exchange, in the
name(s) of the registered holder(s) appearing in the box entitled "Description
of Warrants Tendered." Similarly, please deliver the applicable consideration
with respect to Warrants and cash payments accepted for exchange, together with
any Warrants not tendered or any Warrants and cash payments not accepted for
exchange (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing in the box entitled "Description of Warrants
Tendered."
If your Certificate(s) have been lost, stolen, misplaced or mutilated
contact ChaseMellon at 1-888-867-6003. See Instruction 10.
SPECIAL ISSUANCE/PAYMENT INSTRUCTIONS
Complete ONLY if the new certificate and/or check is to be issued in
a name which differs from the name on the surrendered Warrant(s). Issue
to:
Name:
---------------------------------------------------
Address:
-------------------------------------------------
(Please also complete Substitute Form W-9 below AND see instructions
regarding signature guarantee. See Instructions 1 & 6)
SPECIAL DELIVERY INSTRUCTIONS
Complete ONLY if the new certificate and check are to be mailed to
some address other than the address reflected above. Mail to:
Name:
---------------------------------------------------
Address:
-------------------------------------------------
(Please also complete Substitute Form W-9 below AND see instructions
regarding signature guarantee. See Instructions 1 & 6)
4
<PAGE> 5
PLEASE COMPLETE THE SUBSTITUTE FORM W-9 BELOW.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF WARRANTS REGARDLESS OF
WHETHER WARRANTS OR CASH PAYMENTS ARE BEING PHYSICALLY DELIVERED HEREWITH)
____________________________________ DATED: ____________________ , 1999
____________________________________ DATED: ____________________ , 1999
SIGNATURE(S) OF HOLDER(S)
OR AUTHORIZED SIGNATORY
Must be signed by the registered holder(s) of the Warrants tendered hereby
exactly as their name(s) appear(s) on such Warrants, or by person(s) authorized
to become registered holder(s) by endorsements and documents transmitted with
this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, agent or
other person acting in a fiduciary or representative capacity, please provide
the following information and see Instruction 6.
Name(s):
______________________________________________________________
(Please Print)
Capacity (full title):
______________________________________________________
Address:
________________________________________________________________
(Including Zip Code)
Area Code and Telephone Number:
-------------------------------------------------
Tax Identification or Social Security No.:
--------------------------------------
SIGNATURE GUARANTEE
(SEE INSTRUCTIONS 1 AND 6 BELOW)
- --------------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
- --------------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
ELIGIBLE INSTITUTION)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(PRINTED NAME)
- --------------------------------------------------------------------------------
(TITLE)
5
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a financial institution (including most banks, savings and
loan associations, and brokerage houses) which is a participant in the
Securities Transfer Agents Medallion Program, the NYSE Medallion Signature
Program or the Stock Exchange Medallion Program (an "Eligible Institution")
unless (a) this Letter of Transmittal is signed by the holder of the Warrants
tendered herewith and such holders have not completed either the box entitled
"special payment instructions" or the box entitled "special delivery
instructions on the Letter of Transmittal or (b) such Warrants are tendered for
the account of an Eligible Institution. See Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL, WARRANTS AND CASH PAYMENTS. This
Letter of Transmittal is to be used only if Warrants and cash payments tendered
hereby are to be physically delivered to the Exchange Agent (or cash payments
made by wire transfer to the account specified for wire transfers) or if
delivery of the Warrants is to be made by book-entry transfer to the Exchange
Agent's account at DTC pursuant to the proceeds set forth in the Offer to
Exchange. All physically tendered Warrants and cash payments, together with a
properly completed and validly executed Letter of Transmittal (or facsimile or
electronic copy thereof or an electronic agreement to comply with the terms
thereof) and any other documents required by this Letter of Transmittal, must be
received by the Exchange Agent at one of its addresses set forth in this Letter
of Transmittal prior to the Offer Expiration Date. If Warrants and cash payments
are forwarded to the Exchange Agent in multiple deliveries, a properly completed
and validly executed Letter of Transmittal must accompany each such delivery.
All cash payments must be made either by cashier's or certified check, money
order or wire transfer. Personal checks will not be accepted.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, WARRANTS, CASH
PAYMENTS, AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND RISK OF THE TENDERING HOLDER, AND THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, THE MAILING SHOULD BE MADE SUFFICIENTLY IN ADVANCE OF THE OFFER
EXPIRATION DATE, TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH DATE. NO
ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF WARRANTS AND CASH PAYMENTS
WILL BE ACCEPTED. BY EXECUTION OF THIS LETTER OF TRANSMITTAL (OR A FACSIMILE
HEREOF), ALL TENDERING HOLDERS WAIVE ANY RIGHT TO RECEIVE ANY NOTICE OF THE
ACCEPTANCE OF THEIR WARRANTS FOR EXCHANGE.
3. INADEQUATE SPACE. If the space provided on the first page hereof under
"Description of Warrants Tendered" is inadequate, the Warrant number(s) and the
number of shares for which of Common Stock for which such Warrants are
exercisable should be listed on a separate schedule and attached hereto.
4. WITHDRAWAL OF TENDERS. Tenders of Warrants and cash payments may be
withdrawn at any time until the Offer Expiration Date. Thereafter, such tenders
are irrevocable. Holders who wish to exercise their right of withdrawal with
respect to the Exchange Offer must give written notice of withdrawal, delivered
by mail or hand or facsimile transmission, to the Exchange Agent at one of its
addresses set forth in this Letter of Transmittal prior to the Offer Expiration
Date or at such other time as otherwise provided for herein. In order to be
effective, prior to the physical release of the Warrants and cash payments to be
withdrawn, a notice of withdrawal must specify (i) the name of the person who
deposited the Warrants and cash payments to be withdrawn (the "Depositor"), (ii)
the name in which the Warrants are registered, if different from that of the
Depositor, and (iii) the number of shares issuable upon exchange of the Warrants
to be withdrawn. The notice of withdrawal must be signed by the registered
holder of such Warrants in the same manner as the applicable Letter of
Transmittal (including any required signature guarantees), or be accompanied by
evidence satisfactory to the Company that the person withdrawing the tender has
succeeded to the beneficial ownership of such Warrants. Withdrawals of tenders
of Warrants and cash payments may not be rescinded, and any Warrants and cash
payments withdrawn will be deemed not validly tendered thereafter for purposes
of the Exchange Offer. However, properly withdrawn Warrants and cash payments
may be tendered again at any time prior to the Offer Expiration Date by
following the procedures for tendering not previously tendered Warrants
described elsewhere herein. If the Company is delayed in its acceptance for
exchange and payment for any Warrants or is unable to accept Warrants or cash
payments for exchange or issue shares of Common Stock or cash, pursuant to the
Exchange Offer, for any reason, then, without prejudice to the Company's rights
hereunder, tendered Warrants and cash payments may be retained by the Exchange
Agent on behalf of the Company and may not be withdrawn (subject to Rule
13e-4(f)(5) under the Securities Exchange Act of 1934, as amended, which
requires that the issuer making the tender offer pay the consideration offered,
or return
6
<PAGE> 7
the tendered securities, promptly after the termination or withdrawal of a
tender offer), except as otherwise permitted hereby.
5. PARTIAL TENDERS. Warrants delivered to the Exchange Agent will be deemed
to have been tendered for the aggregate number of shares evidenced by the
Warrants, unless otherwise indicated. If tenders of Warrants are made with
respect to less than the entire number of shares for which the Warrants
delivered herewith are exercisable. A new warrant will be issued and sent to the
registered holder exercisable for the untendered balance of such Warrants.
6. SIGNATURES ON LETTER OF TRANSMITTAL; WARRANT POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Warrants
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of such Warrants without alteration, enlargement or any other change
whatsoever. If any Warrants and cash payments tendered hereby are owned of
record by two or more persons, all such persons must sign this Letter of
Transmittal. If any Warrants and cash payments tendered hereby are in the names
of different holders or if a single holder's name appears differently on
different Warrants, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal, and any necessary accompanying documents, as
there are different registrations of such Warrants.
If this Letter of Transmittal is signed by a person other than the
holder(s) of the Warrants tendered hereby, the Warrants must be endorsed or
accompanied by appropriate warrant powers, in either case signed exactly as the
name(s) of the holder(s) appear(s) on the Warrants. Signatures on such Warrants
and warrant powers must be guaranteed by an Eligible Institution. See
Instruction 1.
If this Letter of Transmittal or any Warrants or warrant powers or checks
for cash payments are signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Company of such person's authority to so act
must be submitted with this Letter of Transmittal.
7. TRANSFER TAXES. The Company will pay all transfer taxes with respect to
the delivery and exchange of Warrants and cash payments pursuant to the Exchange
Offer.
8. TAXPAYER IDENTIFICATION NUMBER. Each tendering holder is required to
provide the Exchange Agent with the holder's correct taxpayer identification
number ("TIN"), generally, the holders' social security or federal employer
identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below, and to certify whether such person is subject
to backup withholding of federal income tax.
A holder must cross out Item (2) of Part 2 in the Certification box of
Substitute Form W-9 if such holder is subject to backup withholding. Failure to
provide the information on the Substitute Form W-9 may subject the tendering
holder to 31% federal income tax backup withholding on the reportable payments
made to the holder or other payee with respect to Warrants exchanged pursuant to
the Exchange Offer. The box in Part 3 of the form should be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 3 is checked and the
Exchange Agent is not provided with a TIN within 60 days, thereafter the
Exchange Agent will hold 31% of all reportable payments until a TIN is provided
to the Exchange Agent.
9. CONFLICTS. In the event of any conflict between the terms of the Offer
to Exchange and the terms of this Letter of Transmittal, the terms of the Offer
to Exchange will control.
10. MUTILATED, LOST, STOLEN OR DESTROYED WARRANTS. Any holder whose
Warrants have been mutilated, lost, stolen or destroyed, should contact
ChaseMellon Consulting Services, L.L.C., the Information Agent, at the address
and telephone number indicated on the back cover page of the Offer to Exchange
for further instructions.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
or additional copies of the Offer to Exchange, this Letter of Transmittal and
the Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 may be obtained from ChaseMellon Consulting Services, L.L.C., the
Information Agent, at the number on the cover of this document.
12. DETERMINATION OF VALIDITY. All questions as to the form of all
documents, the validity (including time of receipt) and acceptance of tenders of
the Warrants and cash payments will be determined by the Company, in its sole
discretion, the determination of which shall be final and binding. Alternative,
conditional or contingent tenders of Warrants and cash payments will not be
considered valid. The Company reserves the absolute right to reject any or all
tenders of Warrants and cash payments that are not in proper form or the
acceptance of which, in the Company's opinion, would be unlawful. The Company
also reserves the right to waive any defects, irregularities or conditions of
tender as to particular Warrants and cash payments. If the Company waives its
right to reject a defective tender of Warrants and cash payments, the holder
will be entitled to the applicable consideration. The Company's interpretation
of the terms and
7
<PAGE> 8
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding. Any defect or irregularity in connection
with tenders of Warrants and cash payments must be cured within such time as the
Company determines, unless waived by the Company. Tenders of Warrants and cash
payments shall not be deemed to have been made unless and until all defects and
irregularities have been waived by the Company or cured. None of the Company,
the Exchange Agent, the Information Agent, or any other person will be under any
duty to give notice of any defects or irregularities in tenders of Warrants and
cash payments, or will incur any liability to holders for failure to give any
such notice.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a holder whose tendered Warrants are
accepted for exchange is required by law to provide the Exchange Agent (as
payer) with such holder's correct TIN on Substitute Form W-9 below. If such
holder is an individual, the TIN is his or her social security number. If the
Exchange Agent is not provided with the correct TIN, a $50 penalty may be
imposed by the Internal Revenue Service, and payments of applicable
consideration may be subject to backup withholding.
Certain holders (including, among others, corporations) are not subject to
these backup withholdings and reporting requirements. Exempt holders should
indicate their exempt status on Substitute Form W-9. In order for a foreign
individual to qualify as an exempt recipient, such individual must submit a
statement, signed under penalties of perjury, attesting to such individual's
exempt status. Forms of such statements can be obtained from the Exchange Agent.
See the enclosed Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 for additional instruction.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any reportable payments made to the holder or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on reportable payments made with respect to
Warrants and cash payments accepted for exchange pursuant to the Exchange Offer,
the holder is required to notify the Exchange Agent of such holder's correct TIN
by completing the form below, certifying that the TIN provided on the Substitute
Form W-9 is correct (or that such holder is awaiting a TIN) and that (a) such
holder is exempt from backup withholding, (b) such holder has not been notified
by the Internal Revenue Service that he, she or it is subject to backup
withholding as a result of a failure to report all interest or dividends or (c)
the Internal Revenue Service has notified such holder that such holder is no
longer subject to backup withholding.
8
<PAGE> 9
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the holder of the Warrants
and cash payments tendered hereby. If the Warrants are held in more than one
name or are not held in the name of the actual owner, consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional guidance on which number to report.
- --------------------------------------------------------------------------------
Payor's Name: ChaseMellon Shareholder Services, L.L.C.
- --------------------------------------------------------------------------------
SUBSTITUTE
FORM W-9
----------------------------------------------------------------
Department of the
Treasury Internal
Revenue Service
Payer's Request
for Taxpayer
Identification
Number (TIN)
- --------------------------------------------------------------------------------
PART 1 -- Please provide your tin in
the box at right and certify by
Social Security Number
signing and dating below.
OR Employer Identification
Number
PART 2 -- Certification -- Under
penalties of perjury, I certify that:
(1) The number shown on this form is
my correct Taxpayer Identification
Number (or I am waiting for a number
to be issued to me); and
(2) I am not subject to backup
withholding either because (a) I am
exempt from backup withholding, (b) I
have not been notified by the Internal
Revenue Service (the "IRS") that I am
subject to backup withholding as a
result of a failure to report all
interest or dividends or (c) the IRS
has notified me that I am no longer
subject to backup withholding.
- --------------------------------------------------------------------------------
Certification Instructions -- You must cross out item (2) above if you
have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you are subject
to backup withholding, you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out such
item (2).
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY
PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID
BACKUP WITHHOLDING.
PART 3 -- Awaiting TIN [ ]
- --------------------------------------------------------------------------------
Signature
Name: (Please Print)
Date:
Address:
9
<PAGE> 10
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN THE
SUBSTITUTE FORM W-9 INDICATING YOU HAVE APPLIED FOR, AND ARE AWAITING RECEIPT
OF, YOUR TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and that I mailed or delivered an application to
receive a taxpayer identification number to the appropriate Internal Revenue
Service center or Social Security Administration office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a taxpayer identification number to the payor, 31% of all payments made
to me pursuant to this offer shall be retained until I provide a tax
identification number to the payor and that, if I do not provide my taxpayer
identification number within sixty days, such retained amounts shall be remitted
to the IRS as backup withholding and 31% of all reportable payments made to me
thereafter will be withheld and remitted to the IRS until I provide a taxpayer
identification number.
Signature:
- ------------------------------------ Date:
- ------------------------------------, 1999
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS. PLEASE REVIEW THE ENCLOSED GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.
THE EXCHANGE AGENT FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Hand Delivery By Overnight Delivery: By Mail:
120 Broadway, 13th Floor 85 Challenger Road P.O. Box 3301
New York, New York 10271 Mail Drop-Reorg South Hackensack
Attn: Reorganization Dept. Ridgefield Park, New Jersey 07660 New Jersey 07606
Attn: Reorganization Dept. Attn: Reorganization Dept.
</TABLE>
<TABLE>
<S> <C>
Wire Transfer Instructions: Facsimile Transmission:
The Chase Manhattan Bank (201) 296-4293
New York, New York 10001
ABA# 021 000 021 Confirm Receipt of Facsimile
Attn: ChaseMellon Shareholder Services, L.L.C. By Telephone:
Reorg Acct. #323-213057 (201) 296-4860
Re: Ligand Pharmaceuticals Warrants
</TABLE>
THE INFORMATION AGENT FOR THE OFFER IS:
CHASEMELLON CONSULTING SERVICES, L.L.C.
450 WEST 33RD STREET
14TH FLOOR
NEW YORK NEW YORK, 10001
BANKS AND BROKERS CALL: (212) 273-8035
ALL OTHERS CALL TOLL FREE: (888) 867-6003
10
<PAGE> 1
EXHIBIT (a)(3)
LIGAND PHARMACEUTICALS INCORPORATED NOTICE OF
GUARANTEED DELIVERY OF ALRT WARRANTS
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the offer by Ligand Pharmaceuticals Incorporated,
a Delaware corporation (the "Company") to exchange, upon the terms and
conditions set forth in the Offer to Exchange and the Letter of Transmittal,
certain of its outstanding warrants to purchase shares of its common stock,
$0.001 par value per share ("Common Stock"). The Exchange Offer (as defined
below) relates to warrants (the "Warrants" or "ALRT Warrants") originally issued
in the public offering with Allergan Ligand Retiwoid Therapeutics, Inc., at an
exercise price of $7.12 per share. As set forth in the Offer to Exchange (as
defined below) the Company has offered to exchange any outstanding Warrants,
together with payment to the Exchange Agent of $7.12 per share for which the
Warrants are exercisable, the number of newly issued shares of Common Stock
issuable under such Warrants plus a cash amount of $1.12, net, without interest,
per share of Common Stock (the "Exchange Offer"). If (a) certificates
representing the Warrants are not immediately available, (b) the procedures for
book-entry transfer cannot be completed prior to the Offer Expiration Date (as
defined), or (c) time will not permit the Warrants and all other required
documents to reach the Exchange Agent prior to the Offer Expiration Date then
this form may be delivered by an Eligible Institution by mail or hand delivery
or transmitted, via facsimile, telegram or telex to the Exchange Agent as set
forth below. However, if the cash payment required to participate in the
Exchange Offer is not received by the Exchange Agent before the Offer Expiration
date, then neither the tender of the Warrants nor the use of this form will
allow the holder of any such Warrants to participate in the Exchange Offer. All
capitalized terms used herein but not otherwise defined herein shall have the
meanings ascribed to them in the Offer to Exchange dated November 19, 1999 of
the Company (as the same may be amended or supplemented from time to time, the
"Offer to Exchange").
THE EXCHANGE OFFER WILL EXPIRE AT 12:01 A.M., NEW YORK CITY TIME, ON
DECEMBER 18, 1999, UNLESS EXTENDED, (THE "OFFER EXPIRATION DATE"). TENDERS OF
WARRANTS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE OFFER EXPIRATION DATE.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Hand Delivery By Overnight Delivery: By Mail:
120 Broadway, 13th Floor 85 Challenger Road P.O. Box 3301
New York, New York 10271 Mail Drop-Reorg South Hackensack
Attn: Reorganization Dept. Ridgefield Park, New Jersey 07660 New Jersey 07606
Attn: Reorganization Dept. Attn: Reorganization Dept.
</TABLE>
<TABLE>
<S> <C>
Wire Transfer Instructions: Facsimile Transmission:
The Chase Manhattan Bank (201) 296-4293
New York, NY 10001
ABA# 021 000 021 Confirm Receipt of Facsimile
Attn: ChaseMellon Shareholder Services, L.L.C. By Telephone:
Reorg Acct. #323-213057 (201) 296-4860
Re: Ligand Pharmaceuticals Warrants
</TABLE>
THE INFORMATION AGENT FOR THE EXCHANGE OFFER IS:
CHASEMELLON CONSULTING SERVICES, L.L.C.
450 West 33rd Street
14th floor
New York, New York 10001
Banks and Brokers call: (212) 273-8035
all others call toll free: (888) 867-6003
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OR TELEX, OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON THE
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen: The undersigned hereby tender(s) to Ligand
Pharmaceuticals Incorporated (the "Company"), upon the terms and subject to the
conditions set forth in the Offer to Exchange and the Letter of Transmittal,
receipt of which is hereby acknowledged, the Warrants set forth below, pursuant
to the guaranteed delivery procedures set forth in the Offer to Exchange under
the heading "The Exchange Offer -- Procedures for Tendering Warrants --
Guaranteed Delivery Procedures."
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
PLEASE SIGN AND COMPLETE
Please tender __________ Warrants held by you for my account.
- ------------------------------------------------------
- ------------------------------------------------------
(NAME OF RECORD HOLDER(S)) (AUTHORIZED
SIGNATURE(S))
- --------------------------------------------------------------------------------
(ADDRESS)
- --------------------------------------------------------------------------------
(CITY, STATE, ZIP CODE)
- --------------------------------------------------------------------------------
(AREA CODE AND TELEPHONE NUMBER)
Dated: ________________, 1999
Certificate No(s). of Warrants (if available):
---------------------------------
If Warrants will be delivered by book-entry transfer, check box below:
[ ] The Depository Trust Company Trust Company Account No.:
--------------------
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office, branch or agency in the
United States, guarantees (a) that the above named person(s) "own(s)" the
Warrants tendered hereby within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended, (b) that such tender of Warrants complies with
Rule 14e-4 and (c) to deliver to the Exchange Agent the Shares tendered hereby,
together with a properly completed and duly executed Letter(s) of Transmittal
(or facsimile(s) thereof), unless an Agent's Message is utilized, and any other
required documents, all within three Nasdaq Stock Market trading days of the
date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Exchange Agent and must deliver the Letter of Transmittal and
Warrants to the Exchange Agent within the same time period herein. Failure to do
so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
- ---------------------------------------------------------- ----------------------------------------------------------
(NAME OF FIRM) (AUTHORIZED SIGNATURE)
- ---------------------------------------------------------- ----------------------------------------------------------
(ADDRESS) (NAME) PLEASE TYPE OR PRINT
- ---------------------------------------------------------- ----------------------------------------------------------
(CITY, STATE, ZIP CODE) (TITLE)
- ---------------------------------------------------------- ----------------------------------------------------------
(AREA CODE AND TELEPHONE NUMBER)
Dated: , 1999
</TABLE>
DO NOT SEND WARRANTS WITH THIS FORM. WARRANTS SHOULD BE SENT TO THE EXCHANGE
AGENT TOGETHER WITH A PROPERLY COMPLETED AND VALIDLY EXECUTED LETTER OF
TRANSMITTAL.
3
<PAGE> 1
EXHIBIT (a)(4)
LIGAND PHARMACEUTICALS INCORPORATED
OFFER TO EXCHANGE EACH OUTSTANDING ALRT WARRANT FOR THE PURCHASE OF COMMON
STOCK OF LIGAND PHARMACEUTICALS INCORPORATED TOGETHER WITH $7.12 IN CASH FOR
EACH SHARE FOR WHICH SUCH WARRANTS ARE EXERCISABLE, FOR ONE SHARE OF COMMON
STOCK OF LIGAND PHARMACEUTICALS INCORPORATED AND $1.12 IN CASH.
THE OFFER WILL EXPIRE AT 12:01 A.M., NEW YORK CITY TIME, ON DECEMBER 18,
1999, UNLESS EXTENDED (THE "OFFER EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE OFFER EXPIRATION DATE.
November 19, 1999
To Our Clients:
Enclosed for your consideration is the Offer to Exchange and form of Letter
of Transmittal relating to the offer of Ligand Pharmaceuticals Incorporated, a
Delaware corporation (the "Company"), to exchange certain of the Company's
outstanding warrants for the purchase of its common stock, par value $0.001 per
share (the "Common Stock"). The Exchange Offer relates to warrants (the
"Warrants" or "ALRT Warrants") originally issued in a public offering with
Allergan Ligand Retinoid Therapeutics, Inc. for the purchase of the Company's
Common Stock at an exercise price of $7.12 per share. The Company offers to
exchange any outstanding Warrants together with the payment to the Company of
$7.12 per share for which the Warrants are exercisable into, for the number of
newly issued shares of Common Stock issuable thereunder and $1.12 cash per
share, net, without interest all upon the terms and subject to the conditions
set forth in the Offer to Exchange and in the accompanying Letter of Transmittal
(the terms of which constitute the "Exchange Offer").
This material is being forwarded to you as the beneficial owner of Warrants
carried by us in your account but not registered in your name.
WE ARE THE HOLDER OF RECORD OF THE WARRANTS HELD FOR YOUR ACCOUNT. AS THE
HOLDER OF RECORD OF YOUR WARRANTS ONLY WE, PURSUANT TO YOUR INSTRUCTIONS, CAN
TENDER YOUR WARRANTS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER WARRANTS HELD BY US FOR
YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish us to tender
any or all Warrants held by us for your account pursuant to the terms and
conditions set forth in the enclosed Offer to Exchange and the Letter of
Transmittal.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to tender Warrants in accordance with the terms of the
Exchange Offer. The Exchange Offer will expire at 12:01 a.m., New York City
time, on December 18, 1999, unless extended by the Company.
If you wish to have us tender any or all of your Warrants held by us for
your account, please so instruct us by completing, executing and returning to us
the instruction form which appears below in this letter. An envelope to return
your instructions to us is enclosed. Please forward your instructions to us as
soon as possible to allow us ample time to tender your Warrants on your behalf
prior to the Offer Expiration Date.
The Exchange Offer is not being made to, nor will tenders be accepted from
or on behalf of, holders of Warrants residing in any jurisdiction in which the
making of the Exchange Offer or acceptance thereof would not be in compliance
with the securities laws of such jurisdiction. However, the Company may, in its
discretion, take such action as it may deem necessary to make the Exchange Offer
in any jurisdiction and extend the Offer to holders of Warrants in such
jurisdiction.
<PAGE> 2
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
DTC PARTICIPANT
FROM BENEFICIAL OWNER
OF
LIGAND PHARMACEUTICALS INCORPORATED
OUTSTANDING WARRANTS TO PURCHASE COMMON STOCK
To Registered Holder and/or DTC Participant:
The undersigned hereby acknowledges receipt of the Offer to Exchange, dated
November 19, 1999 (the "Offer to Exchange"), of Ligand Pharmaceuticals
Incorporated, a Delaware corporation (the "Company"), and the accompanying
Letter of Transmittal (the "Letter of Transmittal"), the terms of which, as
amended or supplemented from time to time collectively constitute, the Company's
offer (the "Exchange Offer"). Capitalized terms used but not defined herein have
the meanings ascribed to them in the Offer to Exchange.
This will instruct you, the registered holder and/or DTC participant, as to
action to be taken by you relating to the Exchange Offer with respect to the
Warrants held by you for the account of the undersigned.
The aggregate number of Warrants held by you for the account of the
undersigned is (FILL IN AMOUNT):
- --------- Warrants.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK ONE OF THE THREE BOXES BELOW):
[ ] TO TENDER the following Warrants held by you for the account of the
undersigned (INSERT AGGREGATE NUMBER OF WARRANTS):
--------------- and TENDER from the undersigned's account the required
cash payment of $7.12 per share of Common Stock for which the
Warrant(s), which the undersigned is instructing you to tender, are
exercisable.
[ ] TO TENDER the following Warrants held by you for the account of the
undersigned (INSERT AGGREGATE NUMBER OF WARRANTS):
--------------- but do NOT tender any funds on behalf of the undersigned.
The undersigned will send the Exchange Agent a certified or cashier's
check, money order or wire transfer (to the account specified for wire
transfers) of the required cash payment of $7.12 per share of Common
Stock for which the Warrant(s), which the undersigned is instructing
you to tender, are exercisable.
[ ] NOT TO TENDER any Warrants held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Warrants held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the under signed as a
beneficial owner; (b) to agree, on behalf of the undersigned, as set forth in
the Letter of Transmittal; and (c) to take such other action as necessary under
the Offer to Exchange or the Letter of Transmittal to effect the valid tender of
such Warrants.
SIGN HERE
Signature(s):
Name of beneficial owners (please print):
Address:
Telephone number:
Account number:
Taxpayer Identification or Social Security Number:
Date: __________, 1999
UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN IN THE SPACE PROVIDED, YOUR
SIGNATURE(S) HEREON SHALL CONSTITUTE AN INSTRUCTION TO US TO TENDER ALL OF YOUR
OUTSTANDING WARRANTS.
2
<PAGE> 1
EXHIBIT (a)(5)
LOGO
November 19th, 1999
Dear Warrant Holder:
After careful consideration and evaluation, the management and Board of
Directors of Ligand Pharmaceuticals Incorporated have determined that it is in
the best interests of the Company to make a tender offer for the outstanding
Warrants which were issued in connection with a public offering with Allergan
Ligand Retinoid Therapeutics, Inc. The Board has unanimously approved an
exchange offer whereby, for a limited period, each Warrant together with $7.12
per share for which the Warrant is exercisable paid in cash can be exchanged for
the number of shares of Ligand common stock set forth in the Warrant plus $1.12
in cash per share.
The Exchange Offer, which will expire at 12:01 a.m. New York City time on
Saturday, December 18, 1999 unless extended, is not conditioned upon the
exchange of a minimum number of Warrants.
The purpose of the Exchange Offer is to strengthen Ligand's cash, balance
sheet and net equity while providing additional working capital to fund
expanding commercialization of Ligand's products. The Exchange Offer is
consistent with Ligand's long-term financing strategy of the past several years,
and Ligand believes that it is the least dilutive and lowest cost alternative
available to Ligand to raise capital to achieve these objectives.
Following the anticipated successful completion of the Exchange Offer, the
number of remaining outstanding Warrants may be so low that public trading of
the Warrants may be substantially reduced, possibly resulting in a delisting of
the securities by Nasdaq. In that event, the liquidity of the Warrants may be
significantly reduced. Any unexercised Warrants will expire at 5:00 p.m. New
York City time on June 3, 2000.
The accompanying Offer to Exchange and Letter of Transmittal provides
important information about Ligand and the detailed terms of the Exchange Offer.
Please read and consider them carefully. Any Warrant holder electing to tender
Warrants pursuant to the Exchange Offer must complete and sign the Letter of
Transmittal, in accordance with the instructions therein and forward or hand
deliver it, together with the tendered Warrants and the cash payment in a
cashier's or certified check, money order or wire transfer, to the Exchange
Agent at its address set forth on the back cover page of the Offer to Exchange.
Any beneficial owner of Warrants whose securities are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee should not use
the Letter of Transmittal, but should contact the registered holder(s) of such
securities promptly to instruct the registered holder(s) whether to tender your
securities.
Questions and requests for assistance or for additional copies of the Offer
to Exchange should be directed to ChaseMellon Consulting Services, L.L.C., the
Company's information agent, at (888) 867-6003. Again, I urge you to give your
careful consideration to the offer described in the accompanying Offer to
Exchange.
Sincerely yours,
/s/ DAVID E. ROBINSON
David E. Robinson
President and Chief Executive Officer
LIGAND PHARMACEUTICALS INCORPORATED 10275 Science Center Drive, San Diego, CA
92121 (619) 550-7500 fax (619) 550-7506
