Ligand Pharmaceuticals acquires Neurogen

Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) announced today that it has completed the acquisition of Neurogen Corporation (NASDAQ: NRGN), following approval of the transaction by Neurogen stockholders earlier today. As a result, Ligand gains a fully funded partnership with Merck & Co., additional pipeline assets, drug discovery resources and additional cash balances.

“This acquisition, our second in the last 12 months, demonstrates our ability to consolidate companies in a way that provides significant potential upside value for shareholders of both firms”

“This acquisition, our second in the last 12 months, demonstrates our ability to consolidate companies in a way that provides significant potential upside value for shareholders of both firms,” said John L. Higgins, President and Chief Executive Officer of Ligand. “Ligand is executing a unique strategy that utilizes acquisitions and internal research capabilities to build an extensive portfolio of royalty-bearing assets and early stage pipeline programs, backed by a strong balance sheet and spending discipline. The acquisition of Neurogen meets all of these criteria by adding to our long roster of partnerships, expanding our drug candidate pipeline and strengthening our cash reserves."

In connection with the acquisition, Ligand issued 4.2 million shares of Ligand common stock and approximately $600,000 in cash to Neurogen stockholders. In addition, Neurogen stockholders will receive four Contingent Value Rights, as previously disclosed.

Primary Acquired Assets

• Fully Funded Partnership with Merck for Vanilloid Receptor Subtype 1 (VR1) Antagonists: Merck will fund 100% of program costs and make milestone and royalty payments upon the achievement of certain development events and commercialization of any applicable VR1 compounds.
• H3 Antagonist Program: Neurogen has developed a significant intellectual property estate and identified multiple clinical candidates for blockade of the histamine H3 receptor. The H3 receptor is a target for the potential treatment of sleep disorders, attention deficit hyperactivity disorder (ADHD), and cognitive deficits (e.g., schizophrenia and Alzheimer's disease).
• Oral Erythropoietin (EPO) Research Program: 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.
• Cash and net operating loss carryforwards (NOLs): Ligand will gain approximately $7.4 million net in cash from this transaction, after taking into account the $600,000 paid to Neurogen shareholders at closing. Neurogen also has more than $180 million of NOLs. 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

Reflecting the acquisition of Neurogen, Ligand projects having more than $50 million in cash at the close of 2009.