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Ligand Pharmaceuticals Inc. (LGND, $2.54, -$0.22, -7.97%) announced plans to buy cash-strapped drug developer Neurogen Corp. (NRGN, $0.20, +$0.00, -0.15%) for $11 million in stock plus the potential for millions more in cash, giving Ligand access to a partnership with Merck & Co. (MRK, $32.50, -$0.06, -0.18%).
8:33AM Ligand Pharma to acquire Neurogen for stock and contingent value rights (LGND) 2.76 : Ligand Pharmaceuticals (LGND) and Neurogen (NRGN) announced they have entered into a definitive merger agreement under which Ligand will acquire Neurogen. Under the transaction, Neurogen stockholders will receive an estimated $11 mln in Ligand common stock and will be granted Contingent Value Rights ("C.V.Rs") under four C.V.R agreements. The C.V.Rs would entitle Neurogen shareholders to cash payments for the sale or licensing of certain assets and the achievement of a specified clinical milestone. -- 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 mln, 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 mln 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 C.V.R agreements described below. With the acquisition of Neurogen, Ligand projects its cash balance to increase by approximately $7 mln taking into account payment of transaction and wind-down costs and the repayment of Neurogen's debt.
Ligand to Acquire Neurogen for Stock and Contingent Value Rights
Aug 24, 2009 8:30:00 AM
Copyright Business Wire 2009
View Additional ProfilesAcquisition Provides Ligand a Fully Funded Partnership, Research Assets and Cash
SAN DIEGO & BRANFORD, Conn.--(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:
o Net proceeds from any sale of Neurogen's real estate within six months
of closing.
o 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.
o $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.
o $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 Erythropoietin (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(TM) (Accelerated Intelligent Drug Discovery) virtual library
modeling of large, dynamic compound sets to efficiently prioritize
chemicals for synthesis and biological assay tests. The AIDD(TM)
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(TM) 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.
Source: Ligand Pharmaceuticals Incorporated
----------------------------------------------
Ligand Pharmaceuticals Incorporated
John L. Higgins
858-550-7896
President and CEO
Erika Luib
858-550-7896
Investor Relations
or
Lippert/Heilshorn & Associates for Ligand
Don Markley
310-691-7100
dmarkley@lhai.com
or
Neurogen Corporation
Steve Davis
203-488-8201
President and CEO
Diane Hoffman
203-488-8201
Investor Relations
NRGN may have a run into their quarterly report on the 14th:
http://finance.yahoo.com/news/Neurogen-Corporation-bw-3853187602.html?x=0&.v=1
I'm taking a gamble we get close to .30 by end of July.
Loaded back up on NRGN, has held at current levels for the past week, looking for another bounce.
it sure is a good find
I hope this goes up slow because if this gets news the thing will get a moon lift more like Mars the way this thing trades.
Loaded back up on NRGN, ran without news last time, now may be time to test recent highs. The 20 DMA held yesterday & may be a nice adding point.
It must have been 2 minutes before I stopped staring at your
avatar....what I would give to have been there taking that photo, lol.
Just closed above...woot wooot!
Chart looks great, ideally you'd like to see it close above the previous high level that it just broke through today - very nice volume!
Hello Clay, nice chart here, imo it still has some power to more green (RSI 12 is nearing the power zone, that would be nice)
What do you think?
Still holding some, took some off the table when it went over .40 & selling other biotech stocks into this huge small cap surge.
surf
Discovered this one last week but didn't have any cash to get in(ARRRG). Decided to paper trade it. Oh what could have been.
Hi surf, I am still around. She's ready imo for a big move.
Cheers
Congrats....I'm following along closely --MONEYMADE
yeehaw. In at .17. This is the only stock that is making headway in portfolio. Good to see some green again.
NRGN ready for action, chart is still in good shape for a leg up.
Always tough buying into price spikes. You never know when the music stops--or the first round of profit taking starts.
Cheer up--- more news to come
http://www.biohealthinvestor.com/2009/05/record-number-of-biotechs-under-strategic-review-bpax-cege-epix-idmi-nrgn-tptx-ljpc-nfld.html#more-1634
Used to be above 10$, imo, way undervalued and needs some attention.
** NRGN Annotated Chart **
*Check it Out* - ClayTrader Trading Group - http://investorshub.advfn.com/boards/read_msg.aspx?message_id=38173990
Does Using Charts 'Actually' Work?? - http://investorshub.advfn.com/boards/read_msg.aspx?message_id=37681794
Need an annotated chart? - stop by my board - http://investorshub.advfn.com/boards/board.aspx?board_id=8765
IMO...
I should have sold pre-market :(
Sweet NRGN action today. I got in finally yesterday
Looks like the MM's were trying to shake some people out of their shares. I held on and I believe we could see the .30's today very easily.
AH woot woot! ....here too.
Yessir. A blind man could have seen the upwards movement from the .23's. GLTY!
YoungS-------HOLD FOR SURE! It will get back into the mid 30s in a week or so! HOLD!
hold or fold? got it @ 0.235 x 3350
here we go again... back up to HOD... nice...
holy cow... money is flowing in... big time...
Hopefully NRGN will retest that old high of .36 within a week or so.
surf
Company's assets are for sale (buyout); pending buyer could be announced any day according to rumors. Stock is undervalued as well IMO.
Any idea why the good size pop?
Churning here in the .23's...should see a nice rise north from here IMO
trading nice today... on good volume...
Agreed. Buildin steam again.
looks like another accumulation day
From another message board:
Re: The smart money is now moving in... 22-May-09 04:45 pm
I agree completely...I keep doing the math to make sure I'm not crazy.
Even if their cash dwindles down to $6 million (taking into account debt) and they get $0 for their pipeline and their buildings/land are only worth $6 million instead of the estimated $7M, that is almost $0.18/share. A lot of biotechs trade under cash because they are spending money like crazy. However, NRGN is not spending hardly anything.
I fully expect a deal by the end of the summer. $10M cash + $7M buildings/land + $30 million for pipeline = $0.70/share easily.
From another message board:
Re: The smart money is now moving in... 22-May-09 04:45 pm
I agree completely...I keep doing the math to make sure I'm not crazy.
Even if their cash dwindles down to $6 million (taking into account debt) and they get $0 for their pipeline and their buildings/land are only worth $6 million instead of the estimated $7M, that is almost $0.18/share. A lot of biotechs trade under cash because they are spending money like crazy. However, NRGN is not spending hardly anything.
I fully expect a deal by the end of the summer. $10M cash + $7M buildings/land + $30 million for pipeline = $0.70/share easily.
Cheers! Should be a good week. GLTA! em
what it says is coming soon news? I have no shares of this company, but consider buying on Monday.
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http://www.neurogen.com/
http://finance.yahoo.com/q/ks?s=NRGN
http://www.form4oracle.com/company?cik=0000849043&ticker=nrgn
http://www.mffais.com/nrgn.html
Neurogen Corporation engages in the drug discovery and development with a focus on small molecule drugs for various disorders, including neurological diseases, pain, metabolic diseases, and inflammation. The company, through its Accelerated Intelligent Drug Discovery system, focuses on the development of drugs primarily relating to insomnia, pain, depression/anxiety, and obesity/diabetics. Its primary product candidate, insomnia compound, NG2-73, a phase II clinical trial product, is being developed to treat sleep disorders. The company is also developing vanilloid receptor-1, NGD-8243, a phase I clinical trial product, for the treatment of pain in collaboration with Merck Sharp & Dohme Limited. Neurogen’s preclinical trial products include receptors for corticotrophin releasing factor-1 to treat depression, anxiety, and/or stress related disorders; and melanin concentrating hormone receptor-1, a mediator of food intake. The company was incorporated in 1987 and is based in Branford, Connecticut.
http://www.neurogen.com/pipeline.htm
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