Ligand to Spend $438M to Add Protein Maker Pfenex to Technology Lineup

Xconomy San Diego — 

Ligand Pharmaceuticals plans to acquire recombinant protein therapeutics maker Pfenex for $438 million, the companies announced Monday.

The larger company agreed to pay $12 per share for Pfenex (NYSE American: PFNX)—a 57 percent premium to its closing price Monday.

San Diego-based Ligand (NASDAQ: LGND) generates revenue from licensing deals and royalties paid by pharmaceutical companies that use technologies it develops or acquires for their own drug research. The company reported revenues of about $120.3 million in 2019. In a prepared statement, Ligand CEO John Higgins called the Pfenex deal an “ideal strategic, business and cultural fit.”

He likened the anticipated impact of adding its technology to his company’s offerings to that of Captisol, which produces an ingredient that increases the solubility of drug compounds, and OmniAb, an antibody discovery platform. Among the drugs in which Captisol is used is the Gilead Sciences (NASDAQ: GILD) COVID-19 treatment remdesivir, the only FDA-approved drug for patients hospitalized with the viral infection.

Under the terms of the agreement, Pfenex shareholders could later earn an additional $78 million in the form of a contingent value right of $2 more per share if Pfenex achieves a “predefined regulatory milestone”—what that is, the companies didn’t disclose—by the end of 2021. That would bump the deal value to $516 million.

Shares of Pfenex opened at $12.65 apiece Tuesday, up 65 percent from $7.66 apiece the day prior.

Pfenex, which is also based in San Diego and today has 88 employees, spun out from Dow Chemical in 2009. In 2019 the company reported $50.3 million in revenue, a 239 percent increase from the year prior.

Companies using its technology in their drug development efforts include Merck (NYSE: MRK), Jazz Pharmaceuticals (NASDAQ: JAZZ), Serum Institute of India, and Alvogen.

The companies anticipate the transaction to close in the fourth quarter.