Ligand to take over Metabasis in cash and contingent value rights deal

US drugmakers Ligand Pharmaceuticals and Metabasis Therapeutics have entered into a definitive merger agreement under which Ligand will acquire all of the outstanding shares of the latter.

Under the terms of the agreement, Ligand will pay at the closing of the transaction approximately $3.2 million in cash, less Metabasis' net liabilities at closing (currently estimated to then be over $1.3 million) and less an amount deposited in the stockholders' representative's fund. At this time, Metabasis estimates the net cash that will be available for distribution to stockholders of Metabasis at closing will be approximately $1.8 million.

In addition to cash, Metabasis stockholders will receive tradable Contingent Value Rights (one of each series of CVRs (or 4 in total), for each former Metabasis share) that may result in additional cash payments to the CVR holders including the following:

* Approximately two-thirds of any milestone payments, royalties or saleback proceeds collected from Metabasis' partnership with Roche for the development of treatments for hepatitis; and

* 50% of any net proceeds received for licensing or selling Metabasis' thyroid receptor beta program for hyperlipidemia and/or glucagon program for diabetes for any transaction entered into in the six years following closing, 40% and 30%, respectively, of any proceeds from such a transaction entered into in the seventh and eighth years following closing, and 20% of any proceeds from such a transaction entered into in the ninth and tenth years following closing.

'This transaction utilizes a creative structure that we believe is potentially highly beneficial to the stockholders of both companies," said John Higgins, president and chief executive of Ligand. "Ligand obtains numerous high-quality partnered and development-stage programs that will increase our revenue potential and expand our pipeline of proprietary assets. In exchange, the non-partnered Metabasis programs will be advanced by a company with strong and proven research credentials, with the goal of generating cash proceeds payable directly to Metabasis stockholders. If any or all of the Metabasis programs are financially successful, stockholders at both companies will benefit meaningfully from their shared participation in the programs," he added.