Ligand Prices Upsized $625 Million Convertible Senior Notes Offering

(RTTNews) - Ligand Pharmaceuticals Incorporated (LGND) announced the pricing of an upsized $625 million offering of 0.0% convertible senior notes due 2031 in a private placement to qualified institutional buyers, strengthening the company's financial flexibility and supporting its long-term capital strategy.

The company also granted initial purchasers a 13-day option to buy up to an additional $75 million in notes, which could bring the total offering size to $700 million if fully exercised. The transaction is expected to close on June 25, 2026, subject to customary closing conditions.

Key Terms of the Notes

The notes will be senior unsecured obligations of Ligand, will not bear regular interest, and the principal amount will not accrete over time. They will mature on September 15, 2031, unless earlier converted, redeemed, or repurchased by the company.

Use of Proceeds

Ligand expects net proceeds of approximately $605.3 million, or up to $678.2 million if the additional notes option is fully exercised, after deducting fees and expenses. The company plans to use:

- Approximately $72.9 million to fund the cost of convertible note hedge transactions, partially offset by proceeds from related warrant sales.

- Approximately $60 million to repurchase 228,859 shares of its common stock from certain purchasers in privately negotiated transactions.

- Remaining proceeds, along with cash on, hand for general corporate purposes including potential acquisitions and investments. Ligand noted it has no current commitments beyond its previously announced agreement to acquire Xoma Royalty Corporation.

If the initial purchasers exercise their option to buy additional notes, Ligand expects to enter additional hedge and warrant transactions and use the remaining proceeds for general corporate purposes.

Strategic Rationale

Ligand described the offering as an opportunistic capital raise designed to enhance financial flexibility. The company highlighted that the combination of call spread transactions and share repurchases is intended to reduce potential dilution upon conversion of the notes, aligning the structure with shareholder interests.

LGND has traded between $111.72 and $276.20 over the past year. The stock closed Monday's trading at $262.17, down 4.62%.