Ligand Pharmaceuticals is set to acquire Vernalis for the knockdown price of £33 million ($42 million). The takeover agreement comes one year after Vernalis was left reeling by a second FDA rejection in quick succession.

Vernalis’ stock price has fallen by almost 90% over the past two years amid the unraveling of its plans to bring cough-cold products to market. The British drug developer built the planned portfolio on Tris Pharma’s extended-release technology and scored an early success in 2015 when Tuzistra XR came to market. However, the wheels came off last year when the FDA rejected CCP-07 and CCP-08.

The company had originally planned to refile for approval of the drugs within months but ended up shuttering its U.S. commercial operation and paying Tris $10 million to terminate their agreement. In March, Vernalis began seeking offers from companies interested in buying the business.

Ligand, a Nasdaq-traded biotech, answered the call. Vernalis’ board and shareholders, who hold 67% of the company, have signed off on a £0.062-a-share bid. The company’s stock traded around 5.5 pence for most of the past few weeks but has been lower in the recent past. Ligand’s bid is 46% higher than Vernalis’ share price before the British company said it was seeking offers.

If the deal goes through, Ligand will get quite a lot for a small outlay. While Vernalis’ cough-cold unit imploded, the company still has eight programs partnered with companies including Celgene and a 70-person R&D team in Cambridge, England. Vernalis also has £27 million in cash.

Ligand thinks Vernalis’ existing agreements and its as-yet-unpartnered early-stage programs could be a source of income in the years to come. Equally, Ligand wants to use the U.K. base it will gain in the takeover to support further investment and acquisition activities in the country and the rest of Europe. 

That said, Ligand plans to make some cuts. With Ligand planning to cancel Vernalis’ stock listing, the British company’s headquarters is slated to close, potentially putting all its managerial and administrative staff out of work. Ligand also plans to make some cuts at the Cambridge R&D site.

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