SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 29, 2006
LIGAND PHARMACEUTICALS INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
000-20720
(Commission File Number)
10275 SCIENCE CENTER DRIVE,
SAN DIEGO, CALIFORNIA
(Address of principal executive offices)
(858) 550-7500
(Registrant's telephone number, including area code)
77-0160744
(I.R.S. Employer Identification No.)
92121-1117
(Zip Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|X| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On September 6, 2006, Ligand Pharmaceuticals Incorporated, a Delaware
corporation (the "Company"), King Pharmaceuticals,Inc., a Tennessee corporation,
and King Pharmaceuticals Research and Development, Inc., a Delaware corporation
and wholly owned subsidiary of King Pharmaceuticals (collectively "King")
entered into a Purchase Agreement (the "Purchase Agreement"), pursuant to which
King has agreed to acquire all of the Company's rights in and to Avinza(R)
(morphine sulfate extended-release capsules) in the United States, its
territories and Canada, including, among other things, all Avinza(R) inventory,
equipment, records and related intellectual property, and assume certain
liabilities as set forth in the Purchase Agreement (collectively, the
"Transaction"). In addition, King agreed, subject to the terms and conditions of
the Purchase Agreement, to offer employment following the closing of the
Transaction (the "Closing") to certain of the Company's existing sales
representatives that support the sale of Avinza(R) or otherwise reimburse the
Company for certain agreed upon severance arrangements offered to any such
non-hired representatives. Each party had the right to terminate the Purchase
Agreement if the Closing had not occurred by December 31, 2006
(the "Outside Date").
In connection with the Transaction, King committed to loan the Company,
at the Company's option, $37.75 million (the "Loan"). The Loan was drawn on
October 12, 2006 and is subject to certain market terms, including a 9.5%
interest rate and a security interest in the assets that comprise Avinza(R) and
certain of the proceeds of the Company's sale of certain other assets. Under the
original terms of the Loan, if the Closing occurred by January 8, 2007, accrued
interest on the Loan would be forgiven and the outstanding principal amount due
thereunder would be credited against the Closing Payment. If the Loan were drawn
by the Company and the Closing did not occur by such date, accrued interest and
the outstanding principal amount due thereunder would become due on January 1,
2007.
On January 3, 2007, the Company and King executed an amendment to the
Purchase Agreement (the "Amendment") effective as of November 30, 2006 and a
letter agreement effective as of December 29, 2006 (the "Side Letter"). Under
the Amendment, the parties agreed that King could make offers to the Ligand
sales representatives, plus its regional business managers starting on November
30,2006, such offers to be contingent on the Closing. The Parties agreed on
certain related termination, bonus and severance terms with respect to those
sales representatives and regional business managers that did not receive offers
from King.
The parties further amended the Purchase Agreement to move the Outside
Date from December 31, 2006 to February 28, 2007.
Also on September 6, 2006, the Company entered into a Contract Sales
Force Agreement (the "Sales Agreement") with King, pursuant to which King has
agreed to conduct a detailing program to promote the sale of Avinza(R) for an
agreed upon fee, subject to the terms and conditions of the Sales Agreement. As
part of the Amendment, the parties agreed that termination of the Sales
Agreement would be subject to 60 days advance notice, instead of the original 30
days.
In connection with the Loan, King and Ligand executed the Side Letter
on January 3, 2007 which provides that Ligand will repay the Loan, with interest
then due on January 8, 2007 and, if the Closing occurs on or before February 28,
2007 the interest will be refunded to Ligand at the Closing. The interest refund
would be in addition to any credits due under the Purchase Agreement at Closing,
including Ligand's $37.75 million termination payment to Organon Pharmaceuticals
USA in October 2006, for which the Loan proceeds were used.
The foregoing descriptions of the various agreements entered into in
connection with the Transaction do not purport to be complete and are qualified
in their entirety by reference to such agreements. The Amendment and Side Letter
are attached hereto as exhibits and incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
EXHIBIT NO. DESCRIPTION
2.1 Amendment Number 1 to Purchase Agreement, Contract Sales Force
Agreement and Confidentiality Agreement by and between Ligand
and King effective as of November 30, 2006.
10.1 Letter Agreement by and between Ligand and King effective as
of December 29, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned.
LIGAND PHARMACEUTICALS INCORPORATED
Date : January 5, 2007 By: /s/ Warner Broaddus
Name: Warner Broaddus
Title: Vice President, General Counsel & Secretary