For a small company, Ligand Pharmaceuticals ( LGND) has been making a lot of news lately, much of which hasn't been encouraging.

Delisted by Nasdaq and investigated by the Securities and Exchange Commission, the San Diego-based company has experienced a number of financial and regulatory disappointments in recent months.

The company's travails have prompted its largest shareholder, investment management firm Third Point, to say it will line up eight candidates to challenge Ligand's nominees for the board. The showdown is scheduled for the annual meeting Jan. 31. Third Point owns just under 10% of Ligand's stock.

Ligand cleared up some longtime, nagging issues when it announced Nov. 18 the filing of its 10-K report with the SEC for the 2004 fiscal year. The report contains restated financial results for 2003 and 2002, as well as restatements of selected data for 2001 and 2000.

The formal SEC investigation of the restatements continues, and Ligand says it's cooperating. In addition, the company's independent auditor issued an adverse report on the effectiveness of its internal controls during 2004. Ligand says it's implementing corrective measures.

Ligand also recently issued preliminary revenue estimates for the third quarter that ended Sept. 30, as well as preliminary results for the first and second quarters of 2005. For the first half of 2005, it lost $25.6 million, or 35 cents a share, on revenue of $76.8 million. For the same period last year, it lost $44 million, or 60 cents a share, on revenue of $54.2 million.

Value Proposition

Ligand said it would submit in December formal statements to the SEC for the first three quarters of 2005. When that happens, Ligand will seek reinstatement by Nasdaq. The stock, delisted in September, now trades on the pink sheets.

These developments coincided with Ligand hiring UBS Securities as a financial adviser to explore options. Although "ongoing operational actions should translate into improved shareholder value," Ligand said its directors believe they need to look for other ways to improve the company.

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