On May 31, 2017, Ligand Pharmaceuticals Incorporated (Ligand)
entered into a royalty agreement (the Royalty Agreement) with a
subsidiary of Aziyo Biologics, Inc. (Aziyo) to which Ligand will
receive a portion of revenues (royalties) from certain marketed
products that Aziyo acquired from Cormatrix Cardiovascular, Inc.
(Cormatrix). to the Royalty Agreement, Ligand will receive $10
million from Aziyo to buydown the royalty rate on the products
Cormatrix is selling to Aziyo. In May 2016, Ligand acquired
rights to royalties on these products and several pipeline
extracellular matrix (ECM) programs from CorMatrix for $17.5
million. The Royalty Agreement closed on May 31, 2017, in
connection with the closing of the asset sale from Cormatrix to
Aziyo (the Cormatrix Asset Sale).

to the Royalty Agreement, Ligand will receive a 5% royalty on the
products Aziyo acquired in the Cormatrix Asset Sale, reduced from
the original 20% royalty paid from CorMatrix to the previously
announced Interest Purchase Agreement, dated May 3, 2016 (the
Original Interest Purchase Agreement) between Cormatrix and
Ligand. In addition, to the Royalty Agreement, Aziyo has agreed
to pay Ligand up to $10 million of additional sales-based
milestones tied to the commercial success of the products Aziyo
acquired in the Cormatrix Asset Sale and to extend the term on
these royalties by one year. The Royalty Agreement will terminate
on May 31, 2027.

In addition, on May 31, 2017, Ligand entered into an amended and
restated interest purchase agreement (the Amended Interest
Purchase Agreement) with Cormatrix, which supersedes in its
entirety the Original Interest Purchase Agreement. Other than
removing the commercial products sold to Aziyo in the Cormatrix
Sale, the terms of the Amended Interest Purchase Agreement remain
unchanged with respect to the Cormatrix pipeline products,
including the royalty rate of 5% on such pipeline products. The
Amended Interest Purchase Agreement will terminate 10 years from
the date of the first commercial sale of such products.

As previously disclosed, Jason Aryeh, a member of Ligands board
of directors, was previously a member of CorMatrixs board of
directors. Mr. Aryeh resigned from CorMatrixs board of directors
on March 7, 2017, prior to Ligands consideration of the Amended
Interest Purchase Agreement.

The foregoing descriptions of certain terms contained in the
Royalty Agreement and the Amended Interest Purchase Agreement do
not purport to be complete and are qualified in their entirety by
reference to the copy of the Royalty Agreement and Amended
Interest Purchase Agreement to be filed with the Companys
Quarterly Report on Form 10-Q for the period ending June 30, 2017
and are incorporated herein by reference.

Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking
statements by Ligand that involve risks and uncertainties and
reflect Ligand’s judgment as of the date of this release. Words
such as plans, believes, expects, anticipates, and will, and
similar expressions, are intended to identify forward-looking
statements. These forward-looking statements include, without
limitation, statements regarding: the timing of the $10 million
payment related to the buy-down by Aziyo of the royalty rate,
which is expected to be paid in full by the end of 2017; the
timing of the sales-based milestones; the launch of CorMatrixs
development stage products, if ever. Actual events or results may
differ from Ligand’s expectations. For example, Aziyo may not
make the $10 million milestone payment as expected and may not be
successful in commercializing the ECM products it has acquired
from CorMatrix. Further, CorMatrix may not be successful in
developing its ECM products and may abandon its development.
Additional information concerning these and other risk factors
affecting Ligand can be found in Ligand’s public periodic
filings with the Securities and Exchange Commission available at
www.sec.gov. 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.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

To be filed with Ligands Quarterly Report on Form 10-Q for the
period ending June 30, 2017