Monday, August 24, 2009

Neurogen acquired by Ligand Pharmaceuticals

By Mass High Tech staff

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Neurogen Corp., the embattled drug developer in Branford, Conn., has entered a merger agreement in which the company will be sold to Ligand Pharmaceuticals Inc., a San Diego biotechnology firm, for an estimated $11 million in an upfront Ligand common stock offering to Neurogen shareholders. Additionally, Neurogen (Nasdaq: NRGN) stockholders will be eligible to receive up to $7 million more, based on certain milestone achievements, as well as access to Ligand’s partnerships with established pharmaceutical firms.

As part of the acquisition, Neurogen facilities will be sold and its business operations will shut down. Neurogen first announced the possibility of a company or assets sale in May, at the same time it cut about half of its work force and stopped enrollment of its Phase 2 studies.

Ligand (Nasdaq: LGND) will benefit from the deal by gaining access to Neurogen’s existing partnership with Merck for Vanilloid Receptor Subtype 1 (VR1) Antagonists, a treatment for acute and chronic pain; its H3 Antagonist Program; and its Oral Erythropoietin (EPO) Research Program.

Neurogen stockholders are eligible for further cash payments resulting from net proceeds from the sale of Neurogen’s facilities within six months as well as from the sale of Neurogen’s Aplindore program, a treatment program for Parkinson’s disease and Restless Legs Syndrome. In addition, Neurogen stockholders could receive either $3 million (subject to Merck starting a Phase 3 clinical trial for Neurogen’s VR1 antagonist program) or half of the net proceeds if Ligand sells the program before a Phase 3 study. Lastly, stockholders are eligible for $4 million if Ligand partners Neurogen’s H3 antagonist program or half of the net proceeds if it sells the related intellectual property.