Company Slides - dated 2/9/09

Safe Harbor Statement

During the course of this presentation, we may make projections or other forward-looking

statements regarding future events or the future financial performance of the company. We

wish to caution you that these statements are only predictions and that actual events or

results may differ materially. The forward-looking statements made in the presentation are

subject to several risk factors, including, but not limited to, the reliance on collaborative

partners for milestone and royalty payments, regulatory hurdles facing product candidates,

uncertain product development costs, disputes regarding ownership of intellectual property,

and the commercial success of approved products. Additional risks may apply to forward-

looking statements made in this presentation. We refer you to our press releases and to the

documents that the company files from time to time with the Securities and Exchange

Commission, specifically the company’s last Form 10-K and Forms 10-Q filed. These

documents

contain

and

identify

important

risk

factors

that

could

cause

actual

results

differ

materially from our projections or forward-looking statements. This presentation reflects

Ligand’s judgment as of February 9, 2009 and Ligand disclaims any intent or obligation to

update any forward-looking statements beyond this date. This caution is made under the safe

harbor provisions of the Private Securities Litigation Reform Act of 1995.

Ligand Company Overview

•

Company with strong fundamentals

Diverse royalty partnerships with promising potential revenue and profits

Robust product pipeline

Cost-efficient R&D business with spending discipline

•

Leverages highly successful drug discovery capabilities

Focus on early stage drug discovery and development

Partner pipeline assets at earliest value inflection point

•

Leadership focused on shareholders, market credibility and solid

foundation

•

Commitment to driving shareholder value and to transparency on the business

with goal to drive strong cash flow and earnings

Ligand –

Recent events

•

PROMACTA®

approved for chronic ITP

•

FABLYN®

received Complete Response letter in the US, Positive EU advisory

panel recommendation

•

Signed license agreement with GSK for Ligand's

TPO program for

$158 million in potential payments plus 16% royalty on any future sales

•

Closed acquisition of Pharmacopeia

•

Obtained positive Phase IIb

data for DARA; evaluating partnerability

for the

program

•

Entered drug screening collaboration with Trevena

with potential for $6 to $8

million in revenue

•

Earned $1 million milestone payment for Schering Plough for

Alzheimer's program in 1Q09

Why Own Ligand?

Great assets

Two royalty streams, with one being PROMACTA approved 4Q08

Nine pharma

deals, over 20 molecules in development with over a half billion

dollars of potential milestones

Powerful and proven drug discovery engine

Great track record

Clear communication and transparency with investors

Prolific drug discovery engine has produced multitudes of drug candidates

Objectives communicated and major goals achieved

Strong management

Staunch spending discipline

Clarity on how to drive a business forward in this market environment

Board’s decision-making focused on

value creating opportunities

Significant Value in Royalty Partnerships

•

Numerous deals with nine pharmaceutical companies

•

Over 15 programs in various stages of research and development

in partnership portfolio

•

More than 20 different therapeutic indications being pursued including the largest

untapped markets

Muscle wasting, COPD, thrombocytopenia, asthma, Alzheimer’s

•

More than $500 million in potential R&D and milestone payments from existing

deals

Ligand

has one of the strongest, most diverse royalty partnership rosters

in the small cap biotech universe

SERM Collaborations

•

Bazedoxifene (VIVIANT) Monotherapy:

Received third FDA approvable letter for osteoporosis

in May 2008

•

Expects to file complete response with FDA 1H09:

Submitted NDA for osteoporosis treatment in 3Q07

Submitted MAA for osteoporosis prevention &

treatment in 3Q07

•

Bazedoxifene in Combination with Premarin CE (APRELA):

FDA Meeting in February 2008 discussed product

formulation, bioequivalence and clinical study

efforts to support the planned NDA filing.

NDA planned by 2H09

SERM Collaborations

•

Lasofoxifene (FABLYN) for osteoporosis

treatment

•

NDA pending approval; FDA issued Complete

Response Letter in January 2009

•

FDA Panel had positive vote (9-3) on

September 8, 2008 that there is a population of

postmenopausal women with osteoporosis in

which the benefit of treatment with lasofoxifene

is likely to outweigh the risks.

•

EU Drug Panel granted positive opinion for the

treatment of osteoporosis in postmenopausal

women at increased risk of fracture.

•

Submitted for Fibromyalgia, Osteoporosis

Treatment in Europe in June 2008

Collaboration Highlights

•

Collaboration began in November 1997

•

Partnership resulted in lead and back-up

p38 kinase inhibitor compounds

•

Anti-inflammatory therapeutics

Ongoing Clinical Trials:

•

Phase II in rheumatoid arthritis

•

Phase II in psoriasis

•

Phase II in atherosclerosis

The Opportunity:

•

Large, established target markets

•

Data from up to three Phase II trials in 2009

•

If successfully developed, Ligand estimates

product could be on market in 2013

p38 Kinase Inhibitors

•

Collaboration began in October 1998

•

Collaboration produced multiple drug

candidates

Clinical Trials:

•

Phase II in COPD

•

Phase II in asthma

•

Phase II in psoriasis completed

The Opportunity:

•

Large, established target markets

•

Ongoing Phase II studies, expected completion

in 2009 (clinicaltrials.gov)

•

If successfully developed, Ligand estimates

product could be on market in 2013

Chemokine

Receptor CXCR2 Program

Collaboration Highlights

Collaboration Highlights

Other Research Program

Ongoing Clinical Trials:

•

Enzyme inhibitor in Phase II for oncology

•

Candidate for inflammatory diseases in Phase I

•

Candidate for respiratory diseases in Phase I

Recent Event:

•

BACE inhibitor for Alzheimer’s in development,

resulting in a milestone payment of $1 million

Collaboration Highlights

Organon

Collaboration

•

Collaboration began in February 2007 with

a five-year term

•

$4 million per year in research funding

•

Generation of lead compounds at targets

in multiple therapeutic areas selected by

Schering-Plough

•

Success-based milestone payments and

up to double-digit royalties upon

commercialization

Collaboration Highlights

•

Collaboration began March 2006

•

Identify and advance molecules in chosen

therapeutic programs to development

stage

Milestone and Royalty:

•

6 compounds

identified

date

•

Success-based milestone payments and

up to double-digit royalties upon

commercialization

Broad Discovery Program

Collaboration Highlights

•

Collaboration began in December 2006

$3 million per year in research funding

•

Alliance based on development of JAK3

kinase

inhibitors for systemic administration

for immunological and inflammatory

diseases

•

Success-based milestone payments and

up to double-digit royalties upon

commercialization

Jak-3 Kinase

Collaboration Highlights

•

Collaboration began in January 2003

•

Research activities of the agreement completed

Ongoing Clinical Trial:

•

Phase I in inflammation

c-Jun N-terminal

Kinase

Program

Broad Discovery

•

Collaboration began in May 2006

•

Drug discovery, development and commercial

alliance

•

PROMACTA approved for treatment of

thrombocytopenia in patients with chronic immune ITP

in November 2008.

•

LGD-4665 and other Ligand TPO molecules licensed to

GSK in December 2008

•

Hepatitis C: Two Phase III trials were initiated in 4Q07,

Phase III in CLD, Phase II Hep C data published in the

NEJM

•

CIT: Chemotherapy-induced thrombocytopenia Phase

II ongoing

•

Sarcoma: Phase I trial ongoing

•

Submitted MAA for the long-term treatment of ITP in

December 2008.

Collaboration Highlights

Thrombocytopenia -

Causes of Disease

•

Decreased production of platelets

Myelodysplastic syndrome

Hepatitis C

Cancer in the bone marrow (leukemia)

Aplastic anemia

•

Increased destruction of platelets

Autoimmune, such as ITP

Sequestration in the spleen

•

Drug-induced

Myelosuppression by chemotherapy regimens

Anti-virals in Hep C therapies

Thrombocytopenia is a condition in which there is an abnormally low level of

platelets in the blood.

Regardless of the underlying cause, thrombocytopenia leads to decreased platelet counts,

which puts patients at greater risk for bleeding and serious adverse events.

Medical Significance of Thrombocytopenia (US)

(Estimated markets)

Potential Treatable Patients

ITP

~60,000

Hepatitis C

~120,000

Chronic Liver Disease

~400,000

Myelodysplastic

syndrome

~20,000

Leukemia / lymphoma

~50,000

Chemotherapy induced thrombocytopenia

~140,000

Intensive

care

unit

–

acquired

~500,000

Bone marrow transplants

~50,000

Lupus

~100,000

Cirrhosis

~113,000

HIV/other

~600,000

~ 2 million platelet transfusions per year

•

A potent,

selective

blocker

the

angiotensin

type

receptor

(AT

)

and

the

endothelin

receptor

(ET

)

•

Combines the properties of two marketed product classes

–

and ET

mechanisms synergize to produce a greater effect

–

Potential for better blood pressure control and kidney protection

•

receptor selectivity provides the desirable effects of endothelin

blockade without ET

receptor side effects

•

Many

hypertensive

patients

are

treated

with

drugs

–

drug

with a dual mechanism reduces the risks of polypharmacy

PS-433540 Dual Acting Receptor Antagonist

First-in-class Dual Acting Angiotensin and

Endothelin Receptor Antagonist (DARA)

PS-433540 Dual Acting Receptor Antagonist Program

•

A comprehensive dataset has been compiled

Clinical studies

–

7 Phase I studies in normal volunteers have been completed

–

2 Positive Phase II studies in hypertensive patients have shown

statistically significant reductions in blood pressure

–

Clinical studies include a head-to-head comparison with Avapro®

(irbesartan) and an angiotensin-challenge test

Chronic animal toxicity studies have been completed

•

Next steps

–

Ligand

will seek a partner for full clinical development of PS-433540

–

Given the profile of DARA, diabetic nephropathy is a promising

potential market opportunity

Preliminary Results of Phase IIb

Hypertension Study

P<0.01 vs

placebo

P<0.05

irbesartan

PS433540

Placebo

N=59

200 mg

N=58

800 mg

N=28

400 mg

N=58

Irbesartan

N=58

9.3

31.5

36.2

51.9

61.5

0.0

25.0

50.0

75.0

Most Hypertensive Patients Achieve Blood Pressure Goal (< 140/90)

with Once-Daily PS-433540 for 12-weeks

Chemokine

Receptor CXCR2 Antagonists for

Inflammatory Lung Disease

Market Need:

COPD is the fourth leading cause of death in the U.S

12 million U.S. adults are reported to have COPD

•

CXCR2 is the receptor for the inflammatory cytokine IL-8

•

Neutrophilic

inflammation and increased IL-8 production are

present in chronic lung diseases, e.g., COPD and allergic asthma

•

CXCR2 receptor antagonists blocks neutrophil recruitment to the

lung

•

CXCR2 antagonist has been shown to inhibit a neutrophil

chemotaxis

marker in COPD patients

•

Existing drugs provide limited long-term benefit in COPD –

CXCR2 antagonists may address weaknesses in current

therapeutics

References: National Center for Health Statistics

•

SCH-527123 / PS-291822 Program Status

Jointly discovered by Schering-Plough and Ligand

Clinical trials have been conducted in multiple inflammatory diseases

2 Phase II clinical trials in asthma are currently underway

Phase II study in smokers with moderate-to-severe COPD completed

in 4Q08

•

Currently only clinical-stage competitor is GSK in Phase I

Chemokine

Receptor CXCR2 Blockers for Lung Disease

Reference:

clinicaltrials.gov

accessed

Feb.

2009

P38 MAP Kinase

Inhibitors for Inflammatory Diseases

•

P38

MAP kinase

is highly expressed in leukocytes

•

P38 is activated in monocytes

by bacterial products causing the

secretion of TNF

and IL-1

•

Proof-of-concept for P38 inhibitors has been established in rheumatoid

arthritis and psoriasis by exploratory medicine studies

•

Other inflammatory diseases may also be treated using P38 inhibitor,

e.g., inflammatory bowel disease, COPD, and asthma

•

Early P38 inhibitors floundered in clinical trials due to liver

transaminase

elevations

•

BMS / Ligand, GSK, Pfizer, and Vertex have a new generation of

compounds in Phase II clinical trials

BMS-582949 / PS-540466

P38 Inhibitor

•

Jointly discovered by BMS and Ligand

•

Multiple Phase II studies ongoing in inflammatory diseases

Plaque psoriasis

Rheumatoid arthritis

Atherosclerosis

•

Phase I clinical results presented at 2008 ACR Annual Meeting

showed BMS-582949 was well tolerated by normal volunteers

without liver function test abnormalities for up

to 28 days

•

Positive Phase IIa

clinical results in RA patients concomitantly

receiving methotrexate

also presented at 2008 ACR meeting

References: American College of Rheumatology Annual Meeting 2008, posters #354-356

Chemokine

Receptor CCR1 Antagonist Program Status

•

CCR1 is the receptor on neutrophils

and monocytes

for the cytokines MIP-1

and

RANTES

•

Multiple potential indications for CCR1 antagonists –

rheumatoid arthritis,

psoriasis, asthma

•

Ligand’s

CCR1 antagonist PS-031291

Superior drug distribution properties

Insurmountable mechanism of receptor blockade

•

Model studies in human whole blood indicate that long-term blockade of CCR1

can be achieved at low doses

•

PS-031291 in preclinical development studies

•

Available for out-licensing

Selective Androgen Receptor Modulator Program

•

Androgens (e.g. testosterone) are steroids that play key roles in bone, skeletal

muscle and libido

•

Current androgenic drugs have disadvantages that significantly limit their use

Non-selective stimulation of all androgen receptors

Inconvenient formulations –

injectable or topical

Available oral drugs have potential for hepatotoxicity

•

Ligand’s lead SARMs

Tissue-selective for bone and muscle while sparing the prostate

Orally active

PS-178990 –

Phase I

LGD-4033 and LGD-3303 –

at advanced preclinical stage

•

Target Indications:

osteoporosis, frailty, hypogonadism,

sexual dysfunction, cachexia

Market Need:

Convenient, prostate-sparing androgen receptor modulator with

activity in bone, muscle and CNS

Ligand’s

Expanded SARM Portfolio

•

PS-178990 added to Ligand’s

SARM portfolio in Pharmacopeia transaction

•

LGD-4033, LGD-3303, and PS-178990 are chemically differentiated

Broadens our I.P. estate with 3 distinct patent families

Reduces chemical risks to successful development

•

PS-178990

Highly potent in animal models suggesting that only low doses will be needed

to treat patients –

provides great flexibility for drug delivery

Shows a robust safety margin between doses that stimulate bone and muscle

and undesirable tissues, e.g., prostate

Phase I

•

LGD-4033

Generation SARM with much improved tissue selectivity

Has a novel SARM mechanism –

full agonist activity on muscle and bone vs.

partial agonist activity on prostate and sebaceous glands

IND submitted

Why Own Ligand?

Great assets

Two royalty streams, with one being PROMACTA approved Q4 2008

Nine pharma

deals, over 20 molecules in development with over a half billion

dollars of potential milestones

Powerful and proven drug discovery engine

Great track record

Clear communication and transparency with investors

Prolific drug discovery engine has produced multitudes of drug candidates

Objectives communicated and major goals achieved

Strong management

Staunch spending discipline

Clarity on how to drive a business forward in this market environment

Board’s decision-making focused on

value creating opportunities