LIGAND PHARMACEUTICALS INCORPORATED (LGND) Files An 8-K Results of Operations and Financial Condition

On November 3, 2016, Ligand Pharmaceuticals Incorporated (the
Company) issued a press release announcing its financial results
for the three and nine months ended September 30, 2016 (the
Earnings Release). A copy of the Earnings Release was furnished
as Exhibit 99.1 to the Companys Form 8-K filed on November 3,
2016. The Earnings Release included a reconciliation of U.S.
generally accepted accounting principles (GAAP) net income and
earnings per share to adjusted net income and adjusted earnings
per share. Due to the corrections to GAAP net income described
below, the Company is furnishing a revised reconciliation as
Exhibit 99.1 to this report.

In accordance with General Instruction B.2. of Form 8-K, the
information in and exhibits furnished to Item 2.02 of this
Current Report on Form 8-K, including Exhibit 99.1, shall not be
deemed filed for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the Exchange Act), or otherwise
subject to the liability of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act
of 1933, as amended, or the Exchange Act, except as expressly set
forth by specific reference in such a filing.

As previously disclosed on November 3, 2016, in the Earnings
Release, as identified above in Item 2.02, the Company conducted
a review of the amount of net operating loss carryforwards
recorded as a result of certain acquisitions accounted for prior
to February of 2010. These net operating loss carryforwards
resulted in a portion of our deferred tax assets (DTA) of
approximately $209 million and a tax benefit of $220 million as
of and for the third quarter of 2015. As a result of this review,
management has determined that the Company overstated the value
of the DTA by approximately $27.5 million, or 13% of the DTA
initially recorded in the third quarter of 2015. The adjustment
reduces the discrete DTA gain and reduces GAAP net income for
that period by the same amount. As restated, the Companys balance
sheet for the third quarter of 2015 and every subsequent period
should reflect the reduction in DTA.

Further, management determined that the Companys outstanding
convertible senior unsecured notes due 2019 (the Convertible
Notes) should have been classified as short-term debt rather than
long-term debt as of December 31, 2015 because the Convertible
Notes were convertible according to their terms as of such date.
In addition, the related unamortized discount of $39.6
million>previously included within stockholders’ equity was
reclassified as temporary equity component of currently
redeemable convertible notes on our Consolidated Balance Sheet.
The change to the classification of the Convertible Notes has no
effect on GAAP net income.

Section 404 of Sarbanes Oxley Act

Management has evaluated the effect of the restatement on the
Companys prior conclusions on the effectiveness of its internal
control over financial reporting and disclosure controls and
procedures as of December 31, 2015. In connection with
managements re-evaluation of the effectiveness of the Companys
internal control over financial reporting as of December 31,
2015, management determined that the Company did not maintain
effective controls over the accuracy and presentation of the
accounting for income taxes relate to complex transactions,
including the income tax provision and related tax assets and
liabilities and controls over the financial reporting
classification of convertible debt and temporary equity. The
Company will amend its disclosures pertaining to its evaluation
of such controls and procedures in the Form 10-K/A to report a
material weakness in those controls and procedures and will
report that its internal control over financial reporting and its
disclosure controls and procedures were not effective as of
December 31, 2015.

Consequently, on November 14, 2016, the Audit Committee of the
Companys board of directors, in consultation with management,
determined that the consolidated financial statements as of and
for each of the following financial periods contain a material
error, should not be relied upon and need to be restated:
September 30, 2015, December 31, 2015, March 31, 2016 and June
30, 2016 (collectively, the Previously Issued Financial
Statements).

The Audit Committee and management have discussed the matters
disclosed in this filing