Ligand plans $550M convertible note offering for buybacks, Xoma

Ligand Pharmaceuticals plans to raise $550 million through an offering of convertible senior notes due 2031, the company said Monday.

The proceeds will fund share buybacks and the Xoma Royalty deal. The company also will use some of the money for general corporate purposes. Convertible notes can be exchanged for shares at a premium above Ligand's current stock price. If shares rally past that conversion level, noteholders could convert positions, diluting existing equity.

Ligand did not disclose the conversion premium or the coupon rate in the initial filing. The notes are expected to be sold to institutional buyers under Rule 144A. The offering is subject to market conditions.

Ligand holds royalties on several approved drugs and runs its own drug-development pipeline. The Xoma Royalty deal expands that portfolio. Buybacks are part of the company's capital allocation strategy, Ligand said.

The board authorized the offering. Pricing and final terms will be set at the time of sale.