Ligand Pharmaceuticals

(LGND) - Get Report

has engineered a major overhaul of its operations, sharpened its strategy and raised more than $500 million.

The San Diego-based company signed two deals that will take it away from selling drugs and enable it to concentrate on developing drugs that will be licensed to partners. Ligand had been conducting the two-pronged approach of selling and licensing since 1999.

"The sale of our commercial businesses will create a refocused Ligand," said Henry F. Blissenbach, chairman and interim CEO, in a prepared statement issued Thursday night. "Ligand will become a dynamic and highly specialized R&D and royalty company."

Ligand already has royalty deals with several Big Pharma companies, including

Wyeth

(WYE)

and

GlaxoSmithKline

(GSK) - Get Report

.

Blissenbach's remarks accompanied Ligand's signing of a deal to sell its four cancer drugs to Japan's

Eisai

. Directors of both companies have approved the transaction, which still must secure clearance from the Federal Trade Commission. Eisai will pay Ligand $205 million and assume all obligations related to the four drugs.

The producs treat certain cancers called skin lymphomas and Kaposi's sarcoma, a cancer of connective tissue associated with AIDS.

Ligand also agreed to sell the rights for the painkiller Avinza, an extended-release form of morphine, to

King Pharmaceuticals

(KG)

. King will pay $265 million to acquire the rights in the U.S. and Canada and assume a $48 million liability related to the drug.

King also will pay Ligand a 15% royalty during the first 20 months after the deal closes and subsequent royalties based on yearly sales. The later royalties will range from 5% to 15% and will be paid until Avinza's patent expires in November 2017.

The agreement must be approved by the FTC and Ligand's shareholders. Ligand and King expect the deal to close by year-end.

Blissenbach added that his company's makeover isn't complete. "By the end of 2006, Ligand expects to have new corporate leadership, to have restructured and narrowly focused its research and development endeavors ... and to minimize its expense structure," he said. Blissenbach replaced David E. Robinson, who resigned as president, CEO and chairman on Aug. 1.

The strategic changes at Ligand come after a revolt by some shareholders that almost caused a proxy fight. The most vocal critic was Daniel S. Loeb, who runs the Third Point hedge fund and who bitterly criticized Robinson's stewardship.

Another unhappy investor was hedge fund manager David M. Knott. Loeb called off his proxy fight in December after Ligand's board agreed to add three Loeb-designated directors. One month before the truce between Ligand and Loeb, the company hired an investment-banking firm to explore strategic alternatives.