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With Vernalis Buy, Ligand Adds to Portfolio, Establishes U.K. Presence

Xconomy San Diego — 

Ligand Pharmaceuticals said Wednesday that its acquisition of U.K.-based biotech Vernalis has closed.

The $42.3 million deal netted the San Diego company eight partner programs and a 70-person R&D team in Cambridge, England, plus about $32 million in cash after deal costs.

Ligand (NASDAQ: LGND) CEO John Higgins, in a prepared statement, said the acquisition added more “shots on goal” to the company’s portfolio. Vernalis’s programs include drugs being developed for the respiratory and oncology sectors.

Ligand doesn’t have the business model of a traditional biotech. It licenses its drug development platforms and makes royalty deals with big pharma companies, avoiding the riskier late-stage development, regulatory management, and commercialization stages.

Vernalis began searching for potential acquirers in March after the U.S. Food and Drug Administration twice in 2017 rejected applications it submitted for prescription colds and cough treatments. The drugs were part of a portfolio of liquid cold and cough medicines Vernalis had partnered with Tris Pharma to develop based on New Jersey-based Tris’s extended-release technology.

At the time of the tie-up, announced in 2012, Vernalis CEO Ian Garland said the deal was “fundamental in transitioning Vernalis into a diversified and self-sustaining pharmaceutical company.” One such drug, a codeine-based treatment called Tuzistra XR, was already on the market when Vernalis submitted the applications in 2017. But its stock fell precipitously when the FDA denied approval of those candidates.

Ligand, which announced the Vernalis deal in August, said it doesn’t expect the acquisition to impact its finances in 2018. Beyond that, though, Ligand said the company expects longer-term milestones and royalties from the Vernalis programs to be accretive to earnings.

The San Diego biotech also said having U.K. operations would provide a platform from which it could more efficiently invest and acquire in Europe.