Loeb Cuts Ligand Stake

His ThirdPoint enters an equity swap with UBS.
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ThirdPoint has trimmed its stake in drug company

Ligand Pharmaceuticals

(LGND) - Get Report

.

The New York investment firm, run by activist investor Daniel Loeb, disclosed in a filing this week that it sold 5.7 million Ligand shares in a deal that involved a so-called equity swap with UBS.

Equity swaps are often used by investors to reduce their costs or to hedge risks associated with an investment. In this case, the swap allows ThirdPoint to have "acquired the economic benefits, and assumed the economic risks, of owning the shares of common stock sold" by the firm.

ThirdPoint now holds about 2 million shares in the San Diego-based biotech, which amounts to a 2% stake, according to a public filing.

Loeb originally spent about $54.3 million to buy some 7 million Ligand shares in 2005 at prices between $7.40 and $8.02 a share. His firm sold the shares at $10.54.

The investment manager resigned a Ligand board seat at the beginning of the month. He had been seeking to unlock value through a breakup of its pharmaceutical operations and a sale of some of its drug assets.

Loeb's agitating prompted Ligand to sell drug assets such as its Avinza drug to Bristol, Tenn.-based

King Pharmaceuticals

(KG)

. King paid $480 million for the prescription drug, which is a morphine sulfate pill that treats chronic pain.

Ligand has also collaborated with pharmaceutical companies including

GlaxoSmithKline

(GSK) - Get Report

,

Wyeth

(WYE)

and

Pfizer

(PFE) - Get Report

in developing new drugs.

Calls to Loeb were directed to spokesman at public relations outfit Abernathy MacGregor Group, who declined to comment. A call to a Ligand spokeswoman wasn't immediately returned.

An official at UBS declined to comment.