Ligand Pharmaceuticals is adding neurological disease and cystic fibrosis programs to its pipeline through a deal to acquire assets from drug discovery company Icagen.
San Diego-based Ligand (NASDAQ: LGND) is paying $15 million up front for the “core assets” of Icagen’s Durham, NC operations. The neuroscience program is being developed under a partnership with Roche while the cystic fibrosis research is a collaboration with the Cystic Fibrosis Foundation. The transaction also includes six unpartnered Icagen programs. Under the deal terms, Icagen stands to gain up to $25 million more depending on whether the programs hit revenue targets.
Ligand’s business model revolves around dealmaking. The company develops and acquires technologies that aid pharmaceutical companies in their own drug discovery work. Ligand also acquires programs, ideally ones that already have a large pharmaceutical partner to shoulder development and commercialization expenses. That’s the case for Icagen’s neuro partnership with Roche, which started in 2018. Icagen is responsible for preclinical work up to optimization of a lead compound. If the partners identify a candidate to advance, Roche will take over further development. Icagen could earn up to $274 million in milestone payments depending on the progress of the program.
The Cystic Fibrosis Foundation collaboration also began in 2018. The foundation awarded Icagen up to $11 million to support drug discovery work that includes screening more than 2 million compounds and using its technology to identify molecules that could suppress the genetic mutations that cause cystic fibrosis. Depending on the progress of the research, Icagen could earn additional unspecified milestone payments, plus royalties from sales if a drug reaches the market.
Icagen’s research focuses on ion channels, protein membranes that control the movement of charged particles—ions such as potassium and sodium—through cells. In an earlier incarnation as a publicly traded, clinical-stage biotech based in Durham, Icagen’s research led to partnerships with companies such as Bristol-Myers Squibb (NYSE: BMY), Astellas, and Pfizer (NYSE: PFE). In 2011, Pfizer acquired Icagen and its most advanced program at that time, a pain drug.
In 2015, Cambridge, MA-based drug discovery company Xpro Sciences acquired Icagen’s technology from Pfizer. That deal did not include the drug candidates that came to the pharmaceutical giant in the 2011 purchase. Xpro’s own assets included x-ray fluorescence technology, which has applications in ion channel research. Xpro relocated to Durham, rebranded under the Icagen name, and cast itself as a provider of drug discovery services to other companies.
In an investor presentation, Ligand notes that privately held Icagen is profitable. The company sees its latest acquisition fitting well with its other holdings, such as Vernalis, a UK-based company that it acquired for $42.3 million in 2018. Vernalis can use Icagen for services that it currently outsources, the company says.
Icagen’s assets also position Ligand for more dealmaking. In the presentation, Ligand describes Icagen as having a “proprietary technology and team that is well-known and respected in the field of ion channels, providing an opportunity for future partnering.” In addition to having an established technology and two partnered programs, the acquisition adds to its base of proprietary technologies and brings assets that could become the basis of future pharmaceutical alliances. Furthermore, the Icagen technology could be potentially useful to partners that currently use the drug discovery technologies that Ligand offers, the company says.
The acquisition still needs approval from Icagen shareholders. Ligand and Icagen expect to close the transaction in April.