Ligand stockholder Loeb demands special committee, 2 board seats, figures shares worth $17 each

By Ronda Fears

Nashville, Sept. 30 - In a follow-up letter Friday to San Diego-based Ligand Pharmaceuticals Inc. chief executive David Robinson, Third Point LLC CEO Daniel Loeb is demanding a special committee be formed to explore alternatives, such as the sale of the company, plus that two Third Point representatives be appointed to the company board of directors as well as the committee.

In addition, Loeb is requesting the company to rescind its "poison pill" or increase the trigger threshold from 10% to 20% so Third Point can increase its stake. Third Point's stake is right at the 10% threshold.

Ligand shares Friday gained $1.3365, or 15.19%, to $10.1365. For the week, the stock is up from around $8.

On Monday, Loeb in a letter to Robinson lambasted current managements and called for a sale of the company to the highest bidder.

Calls to Ligand executives were not answered Friday, or from Monday.

Loeb sees Ligand worth more

Loeb reiterated praise for Ligand's scientists, products and intellectual property but remained critical of executive management in his letter filed Friday at the Securities and Exchange Commission.

Too, in light of assets omitted in the previous letter, such as the more than $600 million net operating loss carry forward and unrecognized real estate value, Third Point increased its $14 worst-case valuation of Ligand shares to $17 per share.

Loeb also noted "significant interest subsequently expressed by potential acquirers of both existing and future product lines" after his first letter to Robinson.

Since Ligand executives and directors have not been willing to discuss matters with Loeb, he is demanding a special committee of three directors be established to maximize value for shareholders and at least two representatives of Third Point be named to the Ligand board and to serve on the special committee.

Loeb threatens to call meeting

He also is insisting that Ligand "devote all possible resources" to work with auditors at BDO Seidman to issue financial statements. The company is in the process of restating financial results for 2002, 2003 and first-quarter 2004 due to improper accounting for revenue, and delayed filing its 2004 10-K report as well as its first-quarter 2005 10-Q report. That sparked an SEC investigation in mid-September.

"We hope that you will not handle our request in the same dilatory manner as you have been handling the restatement of the company's financial statements," Loeb said in the letter.

"Therefore, should we not hear from you within one business day of this amended filing, you will leave us no choice but to exercise our rights as provided by the company's bylaws and the Delaware General Corporation Law, which require annual shareholder meetings. The company's annual meeting is substantially overdue - well past the 13 months contemplated by the DGCL."

Loeb said he is "prepared to take prompt action - including the commencement of litigation" but would prefer to work with the company in a cooperative manner.

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