Ligand Pharmaceuticals has entered into a merger agreement to acquire Pharmacopeia, in an all-stock deal valued at $70 million. In addition to the share value, Pharmacopeia stockholders will be entitled to a Contingent Value Right (“CVR”) that entitles a cash payment of $15 million for all Pharmacopeia stockholders, under certain circumstances.

“We are very excited about combining Pharmacopeia with Ligand,” said John L. Higgins, president and chief executive officer of Ligand. “Ligand stockholders will gain access to numerous royalty partnerships, additional pipeline assets, drug discovery resources and cash and NOLs. Pharmacopeia’s shareholders will receive a substantial amount of equity in a well capitalized company with lucrative potential royalties, an expanded pipeline and financial liquidity.”

He added, “This is a unique opportunity for Ligand and Pharmacopeia shareholders. Both companies have similar growth strategies, and our respective drug discovery platforms are a great marriage of biology and chemistry resources. The acquisition of Pharmacopeia will complement and accelerate our product development programs, strengthen our research capability and increase our potential royalty streams.”

Joseph A. Mollica, Ph.D., chairman, interim president and chief executive officer of Pharmacopeia, stated, “Pharmacopeia’s portfolio of programs is an excellent complement to Ligand’s pipeline and over the next decade we believe the combined company will have important product introductions. On behalf of our Board, I would like to thank all of our employees for the dedication they have shown in pursuit of our scientific goals and the value they have created for our shareholders. We are excited about this transaction and look forward to sharing in the potential upside of the combined businesses by joining forces with a strong company like Ligand.”

Under the terms of the agreement, Ligand shareholders will own 84% of the combined company and Pharmacopeia stockholders would own approximately 16%. The transaction is expected to close by 1Q09.