Ligand Pharmaceuticals
| Company type | Public |
|---|---|
| Industry | Biopharmaceutical |
| Predecessor | Progenix Inc. |
| Founded | 1987 |
| Founder | Brook Byers |
| Headquarters | San Diego, California , United States |
Key people | John Higgins (CEO), Matthew Korenberg (CFO) |
| Products | Kyprolis, Promacta, Melphalan, Baxdela, Captisol |
Ligand Pharmaceuticals Incorporated is a biopharmaceutical firm based in San Diego, California. Established in 1987 under the name Progenix Inc., it became publicly traded in 1992. Originally dedicated to creating proprietary medications, the company altered its strategic direction in the early 2000s following changes in management, focusing instead on acquiring existing pharmaceutical products and collaborating with partners to further their development.
The company has encountered regulatory scrutiny, critical reports from short-sellers, and class action lawsuits accusing it of securities fraud. Nevertheless, in 2018, its chief executive officer was ranked among the five highest-paid executives in the San Diego area.
Business
Ligand Pharmaceuticals specializes in either developing or acquiring assets that generate royalty revenues across a broad spectrum of technologies and therapeutic areas. Its portfolio features medications such as Kyprolis, Promacta, Melphalan, and Baxdela, from which it earns royalty income.
By 2015, Ligand had established partnerships with approximately 120 pharmaceutical companies. Among these collaborations was the use of Captisol—a chemically modified cyclodextrin designed to improve the solubility, stability, bioavailability, and dosing of active pharmaceutical ingredients.
History
Founded as Progenix Inc. in 1987 by Brook Byers, Ligand Pharmaceuticals went public in late 1992. The company’s initial CEO was Howard Birndorf, followed by David Robinson; both concentrated on drug development targeting orphan nuclear receptors.
In September 2005, Ligand was removed from NASDAQ due to "accounting irregularities" and delays in filing required documents. The U.S. Securities and Exchange Commission conducted an investigation into the company's financial disclosures, which were characterized as "questionable," resulting in a major controversy. By October 2005, Ligand, its Board of Directors, and certain executives were subject to a shareholder derivative lawsuit alleging breaches of fiduciary duty and revenue inflation through practices described as “channel stuffing.” In June 2006, Ligand resolved securities class-action and shareholder derivative claims by agreeing to pay $12.2 million related to accounting misconduct.
Despite having some approved pharmaceuticals by 2006, Ligand had yet to achieve profitability. Activist shareholders, including Dan Loeb, exerted pressure leading to CEO Robinson’s departure. His successor, Henry F. Blissenbach, divested commercial operations and reduced workforce numbers. In January 2007, John Higgins, a former investment banker, was appointed CEO and redirected the company’s focus toward acquiring drug candidates and establishing partnerships for their development.
During the late 2000s, Ligand grew through acquisitions of Neurogen, Pharmacopeia biotechnology, Metabasis Therapeutics, and Cydex Pharmaceuticals. CEO Higgins emphasized that this approach resulted in a portfolio comprising roughly 60 drug candidates alongside numerous pharmaceutical alliances.
In November 2016, The Shareholder Foundation initiated a class-action suit accusing Ligand of securities fraud by overstating assets, misclassifying liabilities, and lacking adequate accounting controls. Another legal action named CEO John Higgins and CFO Matthew Korenberg for alleged "wrongful acts" that contributed to a significant drop in stock value and investor losses.
By December 2016, Ligand faced several securities class action lawsuits claiming misleading financial disclosures and deficient oversight of reporting processes.
In July 2018, investors including Citadel filed a $3.8 billion lawsuit against Ligand alleging unfair alterations to investor agreements that were not properly submitted to the SEC.
Short Seller
In June 2014, hedge fund manager Emmanuel Lemelson took a short position on Ligand's stock and released a detailed 56-page report accusing the company of fraudulent practices and financial instability. This report triggered a $500 million decline in Ligand's market value and resulted in Lemelson earning $1.4 million. Following this, Ligand’s leadership, together with former SEC attorney Brad Bondi and Congressman Duncan Hunter, petitioned the SEC to pursue charges against Lemelson. Internal documents later revealed that CEO John Higgins aimed to "permanently silence" Lemelson.
The SEC filed a lawsuit against Lemelson in September 2018, alleging a "manipulative scheme" intended to deceive investors. Nevertheless, on November 5, 2021, a federal jury issued a split verdict: Lemelson was acquitted of accusations related to Ligand but found liable for false statements involving another company, Viking Therapeutics. Subsequently, Lemelson was penalized with a $160,000 fine.