By Mary Welch

Ligand Pharmaceuticals Inc. formed an alliance with Bristol-Myers Squibb Co. (BMS) to discover, design and develop orally active compounds that selectively modulate the mineralocorticoid receptor.

Under the terms of the deal, Ligand, based in San Diego, will receive an undisclosed up-front payment and may receive up to $8.6 million in research funding should the research continue through April 2004. In addition, Ligand will receive future product milestone payments and royalties as compounds are developed and commercialized.

For its part, New York-based BMS will receive exclusive worldwide rights to all indications for the compounds discovered in the collaboration.

"We are not disclosing the financial information but this collaboration could be a very, very significant one," said Paul Maier, Ligand's chief financial officer. "The cardiovascular field is very large. If you look at our other two collaborations in the cardiovascular disease area, you'll see that we have a track record, an extraordinary track record, of getting from drug development to the point where the compounds enter the clinic."

The mineralocorticoid receptor (MR) plays a critical role in several illnesses, particularly cardiovascular diseases such as congestive heart failure and hypertension. MR modulators are becoming an important treatment for those diseases.

"We had been working in this field for quite a period of time," Maier said. "So we're not starting from scratch. That was one of the reasons why Bristol-Myers is so excited and was willing to provide an up-front payment."

Ligand will use its proprietary nuclear receptor technology to discover receptor-specific, tissue-selective non-steroidal molecules that target the mineralocorticoid receptor.

In addition to the financial incentives, the collaboration fits into Ligand's plan to find partners to develop some of its technology. "An important part of our plan is to find somebody who can actively exploit our technology," Maier said. "We just don't have all the resources to pursue all of our potential development areas. We want to find the large drug companies to partner with who can move the compounds forward quickly and efficiently."

Ligand's stock (NASDAQ:LGND) closed Tuesday at $11.625, down 12.5 cents.