Ligand Pharma (LGND) to spin-out, merge Pelican with Primrose Bio; raises EPS outlook
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Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) announced that it has entered into a merger agreement, pursuant to which its subsidiary, Pelican Technology Holdings, Inc., has become a wholly owned subsidiary of Primrose Bio, Inc.. Primrose Bio is a stand-alone private company focused on synthetic biology. As part of the transaction, Ligand retains the existing commercial royalties related to the Pelican Expression Technology® and will own 49.9% of Primrose Bio. Simultaneous with the merger, Ligand entered into a Purchase and Sale Agreement with Primrose Bio and contributed $15 million in exchange for a portion of the economic rights from two contracts previously entered into by Primordial Genetics and an economic interest in potential future revenues generated from PeliCRM197®.
Primrose Bio combines the Primordial Genetics’ Function Generator™ and Ligand’s Pelican Expression Technology® platform (formerly known as Pfenex Expression Technology®) to create a revolutionary way of enhancing biological productivity to enable the next generation of therapeutics. Function Generator is designed to systematically generate tens of millions of novel genes in an ultra-high-throughput fashion, to enable the discovery of enzymes and microbes with improved function. The Pelican Expression Technology is a robust and scalable production platform used in five approved medicines that is especially well-suited for large-scale protein production of complex proteins. These proprietary technologies have been leveraged to create Prima RNApols™ and PeliCRM197, two manufacturing and formulation solutions licensed to biopharma companies to develop mRNA therapeutics and conjugate vaccines, respectively.
“The acquisition of Pfenex in 2020 was a successful and accretive deal for Ligand that continues to pay dividends. After incubating Pfenex and its Pelican Expression Technology for three years, we now have five commercial royalties from the technology platform, and with today’s announcement, we retain a significant equity stake in an exciting new company pushing the frontiers of synthetic biology,” said Todd Davis, CEO of Ligand. “With the spinout of Pelican, retention of economic rights to commercial royalties, and subsequent purchase of economic rights, we are delivering on our strategy to streamline the Company’s operations and focus on accretive high-margin businesses and royalties. We believe this will accelerate profitability and growth for our investors and add multiple new royalty ‘shots-on-goal’ for Ligand while realizing lower infrastructure costs within our efficient high growth business model.”
About the Pelican - Primordial Genetics Transaction
- Pelican, which holds the Pelican Expression Technology®, related patents, employees and operating business, has merged into a subsidiary wholly owned by Primordial Genetics
- As part of the transaction, Primordial Genetics has changed its name to “Primrose Bio, Inc.”
- Ligand owns 49.9% of the equity of Primrose Bio, Inc.
- Ligand retains the existing royalty rights from the Pelican Expression Technology, including economic rights to Jazz’s RYLAZE®, Merck’s VAXNEUVANCE® and V116 vaccines, Alvogen’s Teriparatide, Serum Institute of India’s Pneumosil® and MenFive® vaccines, among others.
- Simultaneous with the merger, Ligand entered into a Purchase and Sale Agreement with Primrose Bio and contributed $15 million in exchange for economic rights in future programs
- As part of the Purchase and Sale Agreement, Ligand receives a portion of the economic rights from two contracts previously entered into by Primordial Genetics related to proprietary RNA polymerase enzymes (Prima RNApols) and an economic interest in future revenue generated from PeliCRM197®.
Ligand is increasing adjusted EPS guidance and modifying revenue guidance. As a result of the divestiture and given the profile of the Pelican business, Ligand will have lower contract revenue than previously expected but increased adjusted earnings. In addition, Ligand is updating royalty revenue guidance based upon the latest product sales estimates. Ligand’s updated guidance is now revenue of $124 million to $126 million (previously $124 to $128 million) and adjusted diluted EPS of $5.10 to $5.25 (previously $4.85 to $5.00). Guidance for royalties is now $82 million to $84 million (previously $78 to $82 million). Sales of Captisol are expected to be $25 million (previously $24 million) and contract revenue is now expected to be $17 million (previously $22 million).
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