What happens when the FDA rejects not one drug application, but two, in a short period of time? Your share price plunges by nearly 90%. And then you look for options. Such was the dilemma faced by UK-based drug maker Vernalis plc.
So, last March the Vernalis board started looking for offers to buy the company. One attraction was that it had close to $34 million of cash that would be at the disposal of a buyer. Publicly traded Ligand Pharmaceuticals emerged as the buyer, paying about $42 million, or a 45.7% premium to the closing price the day before the sales process was announced in March. It was just a 1.7% premium to the volume weighted average price for the three months before the March announcement, however.
Ligand is a $5.4 billion biotech firm based in San Diego. This acquisition, in addition to the cash, brings to Ligand a portfolio of more than eight fully-funded partners programs, including programs in the respiratory, oncology and CNS sectors. Partners include Corvus, Verona, Celgene, Servier, Menarini, Tris and CTI. It also brings a 70-person R&D team based in Cambridge, England focused on fragment- and structure-based drug discovery, an established compound library and additional early-stage, unpartnered programs in oncology, CNS and other areas.
