Allergan and Ligand Dissolving Joint Venture

IRVINE — Allergan Inc. is breaking off a 5-year-old joint venture with San Diego-based Ligand Pharmaceuticals Inc. that has been developing drugs based on vitamin A for treating cancer, skin disorders and other diseases.

Officials for both companies said the venture, Allergan Ligand Retinoid Therapeutics Inc., enabled them to pool their compounds and know-how and speed drug development. Now, the companies will divvy up the compounds and develop them separately.

Ligand, which develops drugs for cancer and other diseases, said it will exercise its option to pay $71.4 million, or $21.97 a share, to buy out all shares of the joint venture firm.

Irvine-based Allergan, which makes treatments for eye and skin disorders, will exercise its option to pay $8.9 million for a one-half interest in the venture’s assets and technologies.

In 1994, the venture raised $32.5 million in an initial public offering of investment units. Each unit, priced at $10, gave the investor a share in the venture and warrants to purchase two shares of Ligand stock for $7.12 each.

In Nasdaq trading Wednesday, Ligand closed at $16.38 a share, the joint venture closed at $19.44, and both were unchanged. Allergan, which holds a 10% stake in Ligand itself, rose 63 cents a share to close at a 52-week high of $34.88.

Though the venture itself is scheduled to end on Nov. 3, links between the companies will continue.

They have divided seven compounds, with Ligand getting exclusive worldwide marketing rights to some in advanced stages of development and Allergan getting rights to some in earlier stages.

Each company will get royalties on sales by the other.

Officials of both parties pointed to the venture’s progress on the drug Panretin, a treatment for Kaposi’s sarcoma. The compound, which was on the drawing board in 1992 when the joint venture was formed, is now in late-stage human tests and is expected to be considered by federal regulators for marketing approval by next year.

“The productivity of the research has far surpassed anybody’s fondest hope,” said Susan Atkins, a Ligand spokeswoman.