The transaction is structured as a stock-for-stock exchange and in addition, Pharmacopeia stockholders will be entitled to a contingent value right (CVR). The CVR’s will entitle holders under certain circumstances to a cash payment of an aggregate of $15 million for all Pharmacopeia stockholders.
Under the terms of the agreement, Ligand will issue approximately 17.5 million shares, subject to adjustment for Pharmacopeia options at closing, or 0.58 shares for each outstanding Pharmacopeia share such that current Ligand stockholders would own approximately 84% of the combined company and Pharmacopeia stockholders would own approximately 16%.
In addition, the Pharmacopeia stockholders will receive CVR’s under which they could receive an aggregate $15 million cash payment if Ligand enters into a license, sale, development, marketing or option agreement with respect to its Dara program by December 31, 2011. The CVR’s will not be transferable.
The transaction is expected to close by the first quarter of 2009 and is subject to the approval of Pharmacopeia stockholders and antitrust regulatory clearance, as well as other customary closing conditions.