Ligand Reports Record Financial Results for Full Year and Fourth Quarter 2001; Product Sales Double for Year, Driving Total Revenues Up 59%.

Business Editors & Health/Medical Writers

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SAN DIEGO--(BW HealthWire)--March 11, 2002

Fourth Quarter Operating Loss Down 73% Versus Prior Year; Ligand

Selects Avinza(TM) as Brand Name for Morphelan(TM)

Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) today reported total revenues for the year ended December 31, 2001, of $76.3 million, compared to $48.1 million for the year 2000, an increase of 59%. Not including one-time charges for debt conversion expense and license fees, net loss for 2001 was $35.5 million ($0.60 per share). Including one-time charges of $7.5 million incurred in the fourth quarter of 2001, net loss for the year was $43.0 million ($.72 per share), representing an improvement of 41% (45% per share).

For the fourth quarter ended December 31, 2001, total revenues were $22.6 million, compared to $13.8 million for the same period in 2000, an increase of 64%. Not including one-time charges, net loss for the fourth quarter of 2001 was $5.5 million ($0.09 per share), compared to a net loss of $12.7 million ($0.22 per share) for the same period in 2000, representing an improvement of 57% (59% per share). Including one-time charges of $7.5 million, net loss for the quarter was $13.1 million.

"Ligand had an excellent year in 2001," said Paul V. Maier, Senior Vice President and Chief Financial Officer. "We again showed robust overall revenue growth, driven by product sales that doubled to $45.6 million for the year. In particular, fourth quarter product sales were a record $15.6 million, a 134% increase over the fourth quarter of 2000 and a 37% increase over the third quarter of 2001, representing our tenth consecutive quarterly product sales increase.

"We continued to experience moderation in the growth of our overall operating expenses, enabling us to cut annual operating losses in half, to $23.1 million. Our fourth quarter operating loss of $2.5 million was our smallest since we began commercial operations in 1999. We look forward to continued strong revenue growth during 2002 and further declines in operating losses, consistent with our goal of operating profitability for the full year."

As of December 31, 2001, Ligand had cash, cash equivalents, short-term investments and restricted cash of $40.1 million, compared to $35.1 million at the end of 2000, an increase of 14%.

"Our capital structure improved substantially in 2001 and early 2002 through the early conversion of $50 million ($61.8 million including accrued interest) of zero-coupon convertible notes," Maier said. "The early conversion eliminates $5.0 million of annual accretion from these notes to non-operating expenses going forward, and enhances our ability to translate future operating profits into earnings per share."

Detailed Results

Net product sales for the full year and fourth quarter 2001 grew strongly across Ligand's product line:

                  2001 Sales   % Growth vs.   4Q Sales    % Growth vs.
                  (million)       2000        (million)      4Q 2000
                 ------------  ------------  ------------ ------------
ONTAK(R)            $24.3           84%         $8.0           130%
Targretin(R)
 capsules           $14.6          118%         $5.7           143%
Targretin gel and
 Panretin(R) gel     $6.6          156%         $1.9           140%
                 ------------  ------------  ------------ ------------
Total Net Product
 Sales              $45.6           99%        $15.6           134%

Sales growth of ONTAK (denileukin diftitox) was driven by increases in dose and number of treatment cycles, as well as by use in diseases other than cutaneous T-cell lymphoma (CTCL). At year-end, an estimated 35% of ONTAK sales were originating from diseases including chronic lymphocytic leukemia (CLL), B- and T-cell non-Hodgkin's lymphoma, and severe psoriasis. Sales growth of Targretin (bexarotene) capsules was driven by strong product acceptance among dermatologists and oncologists, and by increasing use in patients with earlier-stage CTCL. The strong growth of the gel products was due in part to the efforts of Ligand's specialty sales force focused on the unique needs of dermatologists. Fourth quarter sales of ONTAK and Targretin capsules were favorably affected by pre-price increase purchases and by initiation of wholesaler distribution stocking for ONTAK.

Loss from operations was $23.1 million for 2001, compared to $45.9 million in 2000, an improvement of 50%. In the fourth quarter, loss from operations was $2.5 million, compared to $9.4 million in the same period of 2000, an improvement of 73%.

Gross margin on product sales improved to 69% for 2001, compared to 63% in 2000. In the fourth quarter, gross margin was 72%, compared to 66% in the same period of 2000. As product sales continue to grow, gross margins could improve further (assuming constant product mix) as the technology amortization component of cost of sales declines as a percentage of sales.

Research and development expenses were $51.1 million for 2001, compared to $51.3 million in 2000. In the fourth quarter, R&D expenses were $12.6 million, compared to $12.8 million in the same period of 2000.

Selling, general and administrative expenses were $34.4 million for 2001, compared to $34.1 million in 2000. In the fourth quarter, SG&A expenses were $8.2 million, compared to $8.2 million in the same period of 2000.

Operating expenses are expected to accelerate during 2002 to support the launch of Avinza (morphine sulfate extended release, formerly Morphelan) and Phase III trials of Targretin capsules in non small-cell lung cancer.

Highlights of Fourth Quarter 2001 and Early 2002

      --  Ligand, Royalty Pharma Conclude Agreement for Rights/Options
        Tied to Future SERM Royalty Streams

              Royalty Pharma purchased from Ligand rights to a share of
            future payments from Ligand's collaborative partners'
            sales of three selective estrogen receptor modulator
            (SERM) products now in Phase III development. Royalty
            Pharma paid $6 million up front for a right to receive
            0.25% of net sales of lasofoxifene, TSE-424 and
            TSE-424/PREMARIN(R) for a period of 10 years. In total,
            Royalty Pharma has options to purchase at escalating
            prices rights to receive up to 1.25% of the products' net
            sales for a total of $56 million. The transaction enables
            Ligand, if options are exercised, to generate additional
            near-term resources to accelerate development of our own
            specialty pharmaceutical products.

      --  Ligand Selects Avinza as Brand Name for Oral, Once-Daily
        Sustained-Release Opioid Formerly Called Morphelan

              Subject to final FDA approval of the NDA, Ligand expects
            to commercialize its once-daily sustained release opioid
            product under the brand name Avinza.

      --  Two Avinza Clinical Studies Published in Peer-Reviewed
        Journals

              The first Avinza clinical study, published in Clinical
            Therapeutics (Vol. 24, No. 2, 2002), showed that
            sprinkling the entire contents of an Avinza capsule on
            applesauce and swallowing without chewing is bioequivalent
            to swallowing a capsule whole. The second study, published
            in the Journal of Oncology Pharmacy Practice (Vol. 7,
            2001), showed that Avinza once-daily provides more
            consistent and stable plasma opioid concentrations than
            OxyContin(R) (oxycodone hydrochloride controlled release)
            twice-daily, while achieving comparably rapid opioid
            release. Plasma levels do not necessarily translate to
            clinical efficacy. A third Avinza study is pending
            publication in The Journal of Applied Research.

      --  New, Low-Dose ONTAK Regimen Demonstrates Activity in Severe
        Psoriasis, Published Study Shows

              Almost half (7/15) of patients with severe psoriasis who
            were treated with a low-dose regimen of ONTAK had a
            clinically meaningful response and fewer, less severe side
            effects than patients in previous ONTAK studies, according
            to a Phase II trial published in the December issue of the
            Journal of the American Academy of Dermatology.

      --  Marketing Authorization Application (MAA) for ONZAR Submitted
        in Europe

              Ligand received a $1 million milestone payment from
            European marketing and distribution partner Elan for
            submitting an application to market ONZAR (ONTAK in the
            U.S.) for the treatment of cutaneous T-cell lymphoma
            (CTCL).

      --  New Clinical Data for ONTAK, Targretin Presented at American
        Society of Hematology (ASH) Meeting

              Treating CTCL patients with Targretin boosted the activity
            of ONTAK and increased patient response rates in a pilot
            phase I study presented by Tufts researchers at the annual
            ASH meeting. In a second, related study, Tufts scientists
            reported that in vitro, chronic lymphocytic leukemia (CLL)
            cells that were exposed to bexarotene were more
            susceptible to treatment with denileukin diftitox than
            were cells treated with denileukin diftitox alone. And in
            a third study, Wake Forest researchers reported for the
            first time that ONTAK showed anti-cancer activity in
            patients with fludaribine-refractory CLL.

      --  Elan Converts $50 Million of Notes Into Ligand Stock

              Elan converted three zero-coupon convertible notes with a
            total original issue price of $50 million ($61.8 million
            total value including accrued interest) into 4.4 million
            shares of Ligand common stock. Ligand recognized a
            one-time charge, arising from the agreement, of $5.0
            million in the fourth quarter. From 2002 on, the
            transaction eliminates $5.0 million of annual accretion
            from these notes to Ligand's non-operating expenses.

      --  Ligand Recognized for Contributions to Lymphoma Education,
        Research and Treatment

              Ligand received the third annual "Trailblazer Award" from
            the Cure for Lymphoma Foundation for the company's three
            new innovative lymphoma products and for its contributions
            to lymphoma education, research and treatment.

Web Cast Conference Call

Ligand will host a live web cast, open to all interested parties, of a conference call during which David E. Robinson, Ligand Chairman, President and CEO, and Paul V. Maier, Senior Vice President and CFO, will discuss financial results for the fourth quarter and full year 2001. The web cast will be available at http://www.streetevents.com and at http://www.ligand.com (investor relations page) on March 12 at 8:30 a.m. Eastern Standard Time.

Ligand Pharmaceuticals Incorporated

Ligand discovers, develops and markets new drugs that address critical unmet medical needs of patients in the areas of cancer, skin diseases, men's and women's hormone-related diseases, osteoporosis, metabolic disorders, and cardiovascular and inflammatory diseases. Ligand's proprietary drug discovery and development programs are based on its leadership position in gene transcription technology, primarily related to Intracellular Receptors (IRs) and Signal Transducers and Activators of Transcription (STATs).

Caution Regarding Forward-Looking Statements

This news release contains certain forward-looking statements by Ligand that involve risks and uncertainties and reflect Ligand's judgment as of the date of this release. These statements include those related to product sales and margins, operating expenses, the launch and commercialization of Avinza, studies of ONTAK (ONZAR), and the exercise of options by Royalty Pharma. Actual events or results may differ from Ligand's expectations. There can be no assurance that Ligand will increase revenues or margins from currently marketed products or reduce operating losses; that Ligand will be able to achieve its goal of operating profitability; that the results from the periods discussed in this release will be indicative of results for future periods; that results of any clinical study will be confirmed by later studies; that Avinza or any other products under development by Ligand or any of its collaborative partners will receive marketing approval; that there will be a market for the drugs if successfully developed and thereafter approved; that collaborative arrangements will be successful or continued; that Royalty Pharma will exercise any options; or that Ligand will receive any milestone payments for the discovery and/or development of any compounds. Additional information concerning these and other risk factors affecting Ligand's business can be found in prior press releases as well as in Ligand's public periodic filings with the Securities and Exchange Commission, available via Ligand's web site at http://www.ligand.com. Ligand disclaims any intent or obligation to update these forward-looking statements beyond the date of this release. This caution is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Note: Ligand(R), Targretin(R), Panretin(R), Avinza(TM), ONTAK(R) and ONZAR(TM) are trademarks of Ligand Pharmaceuticals Incorporated. Morphelan(TM) is a trademark of Elan. Other trademarks are the property of their owners. Full prescribing information for Ligand's products may be obtained in the U.S. from Ligand Professional Services by calling toll free 800-964-5836 or on Ligand's web site at http://www.ligand.com.

Ligand Pharmaceuticals' releases are available on the World Wide Web at www.businesswire.com/cnn/lgnd.htm

                  LIGAND PHARMACEUTICALS INCORPORATED
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except per share data)

                          Three Months Ended          Year Ended
                              December 31,            December 31,
                              (Unaudited)
                          ------------------       ----------------
                           2001         2000       2001        2000
                           ----         ----       ----        ----
Revenues:
 Product sales           $ 15,608    $  6,676    $ 45,623    $ 22,910
 Collaborative research
  and development and
  other revenues            7,035       7,157      30,718      25,200
                         --------    --------    --------    --------
    Total revenues         22,643      13,833      76,341      48,110
                         --------    --------    --------    --------

Operating costs and
 expenses:
 Cost of products sold      4,386       2,263      13,947       8,591
 Research and development  12,626      12,794      51,104      51,287
 Selling, general and
  administrative            8,178       8,190      34,427      34,114
                         --------    --------    --------    --------
    Total operating costs
     and expenses          25,190      23,247      99,478      93,992
                         --------    --------    --------    --------

Loss from operations       (2,547)     (9,414)    (23,137)    (45,882)
                         --------    --------    --------    --------

Other expense:
 Interest expense, net     (2,894)     (2,732)    (11,495)    (10,545)
 Debt conversion expense   (5,043)       --        (5,043)     (2,025)
 Other, net                (2,571)       (558)     (3,320)       (825)
                         --------    --------    --------    --------
     Total other expense,
      net                 (10,508)     (3,290)    (19,858)    (13,395)
                         --------    --------    --------    --------

Loss before cumulative
 effect of a change in
 accounting principle     (13,055)    (12,704)    (42,995)    (59,277)
Cumulative effect on prior
 years (to December 31,
 1999) of changing method
 of revenue recognition      --          --          --       (13,099)
                         --------    --------    --------    --------
Net loss                 $(13,055)   $(12,704)   $(42,995)   $(72,376)
                         ========    ========    ========    ========

Basic and diluted per
 share amounts:
Loss before cumulative
 effect of a change in
 accounting principle    $  (0.22)   $  (0.22)   $  (0.72)   $  (1.06)
Cumulative effect on
 prior years (to December
 31, 1999) of changing
 method of revenue
 recognition                 --          --          --         (0.24)
                         --------    --------    --------    --------
Net loss                 $  (0.22)   $  (0.22)   $  (0.72)   $  (1.30)
                         ========    ========    ========    ========
Weighted average number
 of common shares
 outstanding               59,747      56,642      59,413      55,665
                         ========    ========    ========    ========


                  LIGAND PHARMACEUTICALS INCORPORATED
                      CONSOLIDATED BALANCE SHEETS
                            (in thousands)


                                            December 31,  December 31,
                                                 2001          2000
                                            ------------  ------------
Assets
Current assets:
 Cash, cash equivalents and short-term
  investments                                 $  37,688     $  33,663
 Other current assets                            15,886        10,986
                                              ---------     ---------
   Total current assets                          53,574        44,649
Restricted investments                            2,370         1,434
Property and equipment, net                       9,690        10,972
Acquired technology, net                         37,879        40,924
Other assets                                     13,960        15,443
                                              ---------     ---------
                                              $ 117,473     $ 113,422
                                              =========     =========
Liabilities and Stockholders' Deficit
Current liabilities                           $  31,726     $  28,415
Zero-coupon convertible senior notes             86,078        79,766
Convertible subordinated debentures              47,326        44,651
Other long-term liabilities                      10,218        15,715
Stockholders' deficit                           (57,875)      (55,125)
                                              ---------     ---------
                                              $ 117,473     $ 113,422
                                              =========     =========