Ligand to Acquire Neurogen for Stock and Contingent Value Rights
24 8월 2009 - 9:30PM
Business Wire
Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) and
Neurogen Corporation (NASDAQ: NRGN) announced today they have
entered into a definitive merger agreement under which Ligand will
acquire Neurogen. Under the transaction, Neurogen stockholders will
receive an estimated $11 million in Ligand common stock and will be
granted Contingent Value Rights (“CVRs”) under four CVR agreements.
The CVRs would entitle Neurogen shareholders to cash payments for
the sale or licensing of certain assets and the achievement of a
specified clinical milestone. The Ligand and Neurogen Boards of
Directors have unanimously voted in favor of this transaction.
“We are very pleased to be combining Neurogen with Ligand and
believe this transaction benefits the stockholders of both
companies,” said John L. Higgins, President and Chief Executive
Officer of Ligand Pharmaceuticals. “Ligand stockholders will gain
access to an attractive partnership with Merck, additional pipeline
assets and drug discovery resources, approximately $7 million in
net cash and NOLs. Neurogen’s stockholders will receive equity in a
well-capitalized company with royalty streams from approved
pharmaceutical products, numerous fully funded partnerships with
the world’s leading pharmaceutical companies, an expanded internal
pipeline and financial liquidity.”
“We are committed to running Ligand as a company with a broad
array of royalty bearing assets and early stage pipeline programs,
backed by a strong balance sheet and staunch spending discipline,”
added Higgins. “The acquisition of Neurogen will complement our
long roster of partnerships, strengthen our research assets and
expand our discovery resources.”
Details of the Proposed
Transaction
- Under the terms of the
agreement, Ligand will issue to Neurogen stockholders shares of
Ligand common stock with an aggregate market value of approximately
$11 million, subject to certain conditions relating to the price of
Ligand’s shares and as adjusted to reflect Neurogen’s net cash
balance, in each case as measured shortly before closing. At the
last market price (August 21, 2009) this would result in Ligand
issuing approximately 4.0 million shares, or 0.06 shares for each
outstanding Neurogen share such that Neurogen stockholders would
own approximately 3% of the combined company. This implies a
purchase price of $0.16 per common share of Neurogen, in addition
to the potential for cash consideration to be paid under each of
four CVR agreements described below.
- In addition to Ligand stock, the
Neurogen stockholders will receive Contingent Value Rights payable
in cash as follows:
- Net proceeds from any sale of
Neurogen’s real estate within six months of closing.
- Net proceeds from any sale of
Neurogen’s Aplindore program within six months of closing.
Aplindore is a dopamine D2 partial agonist that Neurogen has
developed for the treatment of Parkinson’s disease and Restless
Legs Syndrome.
- $3 million upon Merck initiating
a Phase III clinical trial for Neurogen’s VR1 antagonist program or
50% of the net proceeds Ligand receives if it sells the program
prior to the initiation of Phase III studies.
- $4 million if Ligand partners
Neurogen’s H3 antagonist program or 50% of the net proceeds if it
sells the IP related to this program.
- The transaction is expected to
close by the fourth quarter of 2009 and is subject to approval by
Neurogen’s stockholders and other customary closing conditions as
well as a closing condition providing that Ligand is not required
to deliver more than 4,200,000 shares and that Neurogen can
terminate the agreement if that cap is reached and Ligand does not
waive the cap.
- Stockholders of Neurogen
representing approximately 33% of shares outstanding have signed
voting agreements in support of the transaction. Neurogen’s
financial advisor MTS Securities, LLC, an affiliate of MTS Health
Partners, has delivered to Neurogen’s Board of Directors their
opinion that the transaction is fair to Neurogen stockholders from
a financial point of view.
Neurogen Brings to Ligand the
Following:
- Fully Funded Partnership with
Merck for Vanilloid Receptor Subtype 1 (VR1) Antagonists - Neurogen
entered into an agreement with Merck in 2003 to develop VR1
antagonists for the treatment of acute and chronic pain. Merck is
pursuing the lead VR1 antagonist, MK 2295, and a backup compound in
preclinical testing to assess the suitability of these compounds
for possible future clinical development. Under the terms of the
license agreement, Merck will fund 100% of the program costs and
will make milestone and royalty payments upon the achievement of
certain development events and commercialization of any applicable
VR1 compounds covered under the agreement.
- H3 Antagonist Program - Neurogen
has developed a significant intellectual property estate and
identified multiple clinical candidates for blockade of the
histamine H3 receptor. The histamine H3 receptor is a target of
significant interest for the potential treatment of sleep disorders
(e.g. narcolepsy), attention deficit hyperactivity disorder (ADHD),
and cognitive deficits (e.g. schizophrenia and Alzheimer's).
Neurogen’s lead and backup compounds are potent, inverse agonists
of the H3 receptor that demonstrate efficacy in animal models after
oral dosing.
- Oral Erythropoetin (EPO)
Research Program – Ligand has been conducting internal research on
orally active erythropoietin agonists and has made significant
progress toward declaring a clinical candidate. Neurogen has
conducted its own drug discovery efforts in the area and provides
novel chemical scaffolds and additional know-how that could further
enhance Ligand’s oral EPO program. Neurogen’s program also includes
technology for the pursuit of granulocyte cell stimulating factor
(G-CSF) mimetics for neutropenia.
- Discovery Technology – Neurogen
has a drug discovery technology based on AIDD™ (Accelerated
Intelligent Drug Discovery) virtual library modeling of large,
dynamic compound sets to efficiently prioritize chemicals for
synthesis and biological assay tests. The AIDD™ technology has
resulted in the discovery of numerous clinical candidates. The
technology fits with Ligand’s ultra-high throughput biological
assays and 5 million-plus ECLiPS™ compound collection acquired in
the Pharmacopeia transaction.
- Cash – After taking into account
transaction fees and repayment of debt, Ligand will gain an
estimated $7 million in cash from this transaction. In addition,
Ligand projects that its cost to operate Neurogen will be
negligible going forward as Neurogen’s facilities are to be sold
and Neurogen’s operations will be shut down. Any investment in
Neurogen’s research programs are currently projected to be assumed
within Ligand’s operating forecast.
- Net Operating Loss Carryforwards
– Neurogen has more than $180 million in net operating loss
carryforwards. While there will be significant limitation to the
utilization of the NOLs over time given the tax laws governing use
of acquired NOLs, the NOLs may be usable to some extent by Ligand,
should the combined Company become profitable.
Financial Outlook of Combined
Companies
With the acquisition of Neurogen, Ligand projects its cash
balance to increase by approximately $7 million taking into account
payment of transaction and wind-down costs and the repayment of
Neurogen’s debt. Accordingly, Ligand believes that if the
transaction closes by the end of 2009, Ligand could have nearly $50
million in cash at year-end. Ligand does not forecast this
acquisition to impact the operating expense guidance for 2010 and
therefore, consistent with previous guidance, Ligand currently
expects expenses for 2010 to be in the range of $30 million to $35
million. Given Ligand's revenue outlook for 2010, Ligand currently
projects that the business will be cash flow neutral on an
operating basis in 2010.
About Neurogen
Based in Branford, CT., Neurogen Corporation is a drug
development company historically focusing on small-molecule drugs
to improve the lives of patients suffering from psychiatric and
neurological disorders with significant unmet medical need.
Neurogen has conducted its drug development independently and, when
advantageous, collaborated with world-class pharmaceutical
companies to access additional resources and expertise.
About Ligand Pharmaceuticals
Ligand discovers and develops new drugs that address critical
unmet medical needs of patients with muscle wasting, frailty,
hormone-related diseases, osteoporosis, inflammatory diseases,
anemia, asthma, rheumatoid arthritis and psoriasis. Ligand's
proprietary drug discovery and development programs are based on
advanced cell-based assays, gene-expression tools, ultra-high
throughput screening and one of the world’s largest combinatorial
chemical libraries. Ligand has strategic alliances with major
pharmaceutical and biotechnology companies, including Bristol-Myers
Squibb, Celgene, Cephalon, GlaxoSmithKline, Schering-Plough, Pfizer
and Wyeth Pharmaceuticals. With nine pharmaceutical agreements and
more than 20 molecules in various stages of development, Ligand
utilizes proprietary technologies for identifying drugs with novel
receptor and enzyme drug targets.
Forward-Looking Statements
This release contains forward-looking statements that involve
risks and uncertainties. Ligand and Neurogen caution readers that
any forward-looking information is not a guarantee of future
performance and actual results could differ materially from those
contained in the forward-looking information. Words such as
"expect," "estimate," "project," "potential," and similar
expressions are intended to identify such forward-looking
statements. Such forward-looking statements include, but are not
limited to, the expected timing of closing the merger, statements
about the benefits of the transaction between Ligand and Neurogen,
including future financial and operating results, expected cash
balance of the combined entity as of the closing, the 2010 pro
forma operating cash burn rate, the possibility of payments being
made under the CVR agreements, the combined entity’s plans,
objectives, expectations and intentions and other statements that
are not historical facts. Among the important factors that could
cause actual results to differ materially from those in any
forward-looking statements are the risks that Merck may not advance
the VR1 program successfully; the risk that Neurogen’s real estate
or the Aplindore program may not be sold and that the conditions of
the H3 and Merck CVR’s may not be met in order to produce proceeds
for the CVR holders; the anticipated synergies and benefits from
the transaction may not be fully realized or may take longer to
realize than expected; failure of Neurogen’s stockholders to
approve the merger; Ligand or Neurogen inability to satisfy the
conditions of the merger, or that the merger is otherwise delayed
or ultimately not consummated; Neurogen product candidates may have
unexpected adverse side effects or inadequate therapeutic efficacy;
and positive results in clinical trials may not be sufficient to
obtain FDA approval. There can be no assurance that any product in
Ligand’s, Neurogen’s or the projected combined company’s product
pipeline will be successfully developed or manufactured, that final
results of clinical studies will be supportive of regulatory
approvals required to market licensed products, or that any of the
forward-looking information provided herein will be proven
accurate. Additional important factors that may affect future
results are detailed in Ligand’s and Neurogen’s filings with the
Securities and Exchange Commission (the "SEC"), including each
company’s recent filings on Forms 10-K and 10-Q, or in information
disclosed in public conference calls, the date and time of which
are released beforehand. Each of Ligand and Neurogen disclaims any
intent or obligation to update these forward-looking statements
beyond the date of this release.
Additional Information and Where to Find It
Ligand intends to file with the SEC a Registration Statement on
Form S-4, which will include a proxy statement of Neurogen and
other relevant materials in connection with the proposed
transaction. The proxy statement which will also constitute a
Ligand prospectus, will be mailed to the stockholders of Neurogen.
Investors and security holders of Neurogen are urged to read the
proxy statement and the other relevant materials when they become
available because they will contain important information about
Ligand, Neurogen and the proposed transaction. The proxy statement
and other relevant materials (when they become available), and any
other documents filed by Ligand or Neurogen with the SEC, may be
obtained free of charge at the SEC's web site at www.sec.gov. In
addition, investors and security holders may obtain free copies of
the documents filed with the SEC by Ligand by going to the Investor
Relations page on Ligand’s corporate website at www.ligand.com.
Investors and security holders may obtain free copies of the
documents filed with the SEC by Neurogen by going to the Investor
Relations page on Neurogen’s corporate website at www.neurogen.com. Investors and security
holders of Neurogen are urged to read the proxy statement and the
other relevant materials when they become available before making
any voting or investment decision with respect to the proposed
transaction.
Ligand and its respective directors and executive officers may
be deemed to be participants in the solicitation of proxies from
the stockholders of Neurogen in favor of the proposed transaction.
Information concerning Ligand’s directors and executive officers is
set forth in Ligand’s proxy statement for its 2009 annual meeting
of shareholders, which was filed with the SEC on April 29, 2009,
and annual report on Form 10-K filed with the SEC on March 16,
2009.
Neurogen and its respective directors and executive officers may
be deemed to be participants in the solicitation of proxies from
the stockholders of Neurogen in favor of the proposed transaction.
Information about Neurogen’s executive officers and directors and
their ownership of Neurogen common stock is set forth in Neurogen’s
amended annual report on Form 10-K filed with the SEC on April 30,
2009. Investors and security holders may obtain more detailed
information regarding the direct and indirect interests of Neurogen
and its executive officers and directors in the acquisition by
reading the proxy statement regarding the merger, which will be
filed with the SEC.
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Neurogen (NASDAQ:NRGN)
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