After selling off all four of its marketed products last fall, Ligand Pharmaceuticals Inc. announced plans to cut 76 percent of its work force, or 267 positions. The move is part of an investor-driven corporate restructuring plan intended to leave the company's troubled past behind and maximize value from early stage drug candidates and royalty streams.

According to analyst David Webber of First Albany Capital Inc., the board's goal may be to capture that anticipated value "sooner rather than later." The small size of the remaining staff and the departure of Paul Maier, Ligand's chief scientific officer, indicate the company wants to "quickly maximize value, not pursue a five- to 10-year plan," he told BioWorld Today.

Representatives from Ligand did not return calls seeking comment.

Eighty-five staffers will remain at the San Diego-based company after the restructuring. Several other officers will step down including the chief financial officer, general counsel and the heads of human resources, operations, regulatory affairs and project management. The company also will consolidate operations into a single facility and shut down a subsidiary in the United Kingdom.

Most of the restructuring will take place in the first quarter of 2007. Ligand expects to incur charges of about $10 million to $12 million associated with the process, but anticipates gaining annualized operating cash savings of $20 million to $22 million. Ligand's shares (Nasdaq:LGND) slipped 31 cents on the news to close at $12.68.

Ligand began moving away from the fully integrated pharmaceutical company business model last fall, when it sold all four of its marketed products. The pain drug Avinza (morphine sulfate extended-release capsules) went to King Pharmaceuticals Inc., of Bristol, Tenn., in exchange for $265 million cash up front, the assumption of $48 million in product-related liability and royalties. Cancer drugs Ontak (denileukin diftitox), Targretin (bexarotene) and Panretin (alitretinoin) were sold to Eisai Co. Ltd., of Tokyo, for $205 million in cash. (See BioWorld Today, Sept. 8, 2006, and Sept. 11, 2006.)

Following the close of the Avinza deal, 62 former Ligand employees will be offered positions with King.

Webber projects that King could grow sales of Avinza to $220 million by 2010. By then, Ligand also may be able to collect revenues on other partnered products that currently are in late-stage trials. Webber estimates that, if approved, Promacta (eltrombopag, GlaxoSmithKline plc) could pull in $625 million annually by 2010 in the platelet deficiency market. Similarly, Wyeth's Viviant (bazedoxifene) for osteoporosis and Aprela (bazedoxifene/CE) for menopausal symptoms could bring in a combined $600 million by 2010.

The payback to Ligand could be a royalty stream of $97 million of "pure profit" by 2010, Webber said.

While the partners focus on marketing, the remaining Ligand employees will turn their attention to the early stage pipeline. Chief among those products is LGD 4665, an oral small-molecule drug designed to mimic the activity of thrombopoietin, which entered Phase I trials last month. Other top candidates include LGD 5552, which is slated to begin Phase I trials this quarter and may have utility in inflammation and cancer, and LGD 3303, a selective androgen receptor modulator that the company has characterized as "on IND track."

The LGD compounds came out of Ligand's R&D engine, which has churned out an impressive stream of new molecules over the years, many of which advanced into clinical trials. Ligand currently holds all rights to those molecules, but how long the company will keep those rights is not known.

"It's not clear that the board wants to have a long-term vision for the company," Webber said. "If the board wants to maximize shareholder value quickly, they will monetize the products as soon as possible."

Ligand's current board structure emerged after a tumultuous 2004 and 2005. The series of events included a shareholder lawsuit, a re-statement of several years' worth of earnings and a subsequent SEC investigation. At the end of 2005, Ligand reached an agreement with hedge fund Third Point, a principal instigator among shareholders seeking change, and three new board members were added.

Things seemed to look up in 2006 as Ligand settled its shareholder lawsuit and regained its Nasdaq listing. Earlier this month, the company hired President and CEO John Higgins, who was previously chief financial officer of Connetics Corp., of Palo Alto, Calif., prior to its acquisition by Stiefel Laboratories Inc., of Coral Gables, Fla.