Good afternoon. My name is Heather and I will be your conference operator today. At this time, I would like to welcome everyone to the Ligand fourth quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-session. (Operator Instructions). Thank you. Ms. Luib, you may begin your conference.

Great. Thanks, and welcome to the Ligand fourth quarter financial results and business update call. Presenting for Ligand today are John Higgins, President and CEO; John Sharp, Vice President of Finance and CFO; and Martin Meglasson, Vice President of Discovery Research. I want to remind everyone that today's call will contain forward-looking statements within the meaning of federal securities laws. These may include, but are not limited to, statements regarding intent, beliefs or current expectations of the Company, its internal partner programs and its management. These statements involve risks and uncertainties, and actual events or results may differ materially from the projections described in the press release and this conference call. Additional information concerning risk factors and other matters concerning Ligand can be found in Ligand's public periodic filings with the Securities and Exchange Commission, which are available at www.sec.gov. The information in this conference call related to projections or other forward-looking statements represents the Company's best judgment as of today February 20, 2008. Ligand undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. At this time, I will turn the conference call over to John Higgins. John?

Erika, thank you and thank you to everybody who's joining us, welcome to the conference call. Ligand continues to make great progress in the fourth quarter and today we're reporting on a strong year of execution and successful transition to the new Ligand. It is a theme we've talked about in our past call, but now with the full year 2007 behind us, we enter 2008 with solid financial footing and a promising outlook both with our partnered programs as well as our own research progress. Over the last few quarters, our strategy has been focused around three things. One; cleaning up the balance sheet; two, aligning the business towards our most promising opportunities; and three, leveraging our R&D programs and pharmaceutical alliances to create value for shareholders. Today, I'm pleased to report that Ligand is running the leanest, most efficient business that it has run in years. At the same time, we're funding important and exciting research programs and we've made meaningful progress over the last several months. In addition to our internal programs, our partnered programs are at the most advanced stages than ever before with three of our partners mainly GSK, Pfizer and Wyeth, all with pending NDAs for drugs that were generated from Ligand drug discovery partnerships. Our operating costs have been reduced significantly recently and we're currently enjoying a healthy royalty from King Pharmaceuticals on their sales of AVINZA. Our balance sheet is strong with nearly $100 million in cash. We have a large NOL tax benefit, essentially no debt and substantially reduced liabilities from our discontinued operation. In addition, a couple of months ago, we announced the positive data from our Phase I trial with our lease program and we have advanced drug discovery in a couple of other key areas of research including…

Thanks, John. During the fourth quarter Ligand continued to take steps towards reducing expenses. While we are very happy with the progress we have made to date. In 2008, we will continue to focus on becoming even more efficient in further reducing costs. Now, turning to the fourth quarter financial results and as a reminder the results of operations related to the sale of our oncology products and AVINZA are reflected as discontinued operations for all reporting periods I will be discussing today. Total revenues for the fourth quarter of 2007 were $5.8 million compared with no revenue in the fourth quarter of 2006. Fourth quarter 2007 revenues consist of $4.8 million of royalty income from King sales of AVINZA and $1 million of milestone revenue earned from GlaxoSmithKline. So, operating expenses for the fourth quarter of 2007 were $14.3 million, down from $26.7 million for the fourth quarter of 2006. The reduction in expense largely reflects savings realized from our first quarter restructuring plan. We recorded a tax benefit from continuing operations of $2.9 million for the fourth quarter of 2007 compared to a tax benefit of $18.8 million for the 2006. As a result, for the fourth quarter of 2007, we reported a $5.3 million loss from continuing operations compared with a $3.5 million loss for the fourth quarter of 2006. The net loss for the fourth quarter of 2007 also includes a $1.3 million write down of a $5 million commercial paper investment, we currently hold that was highly rated at the time of purchase but was subsequently downgraded. Our current investments now consist primarily of money market accounts and government obligations with a small amount and high-grade corporate notes. For the fourth quarter of 2007, we realize $11.3 million of income from discontinued operations net of…

Thanks, John. Today I will highlight three of our programs; our TPO Mimetic program, our SARM or Selective Androgen Receptor Modulator Program and a new program to develop orally active EPO Mimetics. In our TPO Mimetic program, we reported promising results on our lead compound LGD-4665 at the ASH Annual Meeting in December. The results presented at ASH showed that LGD-4665 caused rises in the platelet counts of normal volunteers. This is great news for our drug and it shows that our preclinical findings translate well into humans. In January, a US patent was issued to Ligand covering LGD-4665 composition of matter. Our research activities continue on TPO Mimetics and this effort has been fruitful. We have discussed previously that LGD-4665 is more potent than eltrombopag and one manifestation of this is its ability to stimulate rising platelets after administration of a single oral dose. We have discovered compounds that are even more potent than 4665. One example is LGD-3532, which is active on human bone marrow in vitro at nanomolar concentrations. This compound is chemically different from LGD-4665 and will be covered by a separate patent family. In our SARM program, we have two compounds at the preclinical stage. We presented data on one of these; LGD-3303 in a plenary session of the 2007 American Society of Bone and Mineral Research Annual Meeting. We showed in an animal model a postmenopausal osteoporosis that LGD-3303 increased bone mineral density and strength. Its action was through a combination of anabolic and anti-resorptive effects on bone. Importantly, its effect was addictive with a bisphosphonates, suggesting that it could be a complimentary treatment to bisphosphonates. The current standard of care for osteoporosis or other anti- resorptive agents as these are approved. LGD-4033 is a SARM from a different chemical class than LGD-3303. This…

Thanks, John. Today I will highlight three of our programs; our TPO Mimetic program, our SARM or Selective Androgen Receptor Modulator Program and a new program to develop orally active EPO Mimetics. In our TPO Mimetic program, we reported promising results on our lead compound LGD-4665 at the ASH Annual Meeting in December. The results presented at ASH showed that LGD-4665 caused rises in the platelet counts of normal volunteers. This is great news for our drug and it shows that our preclinical findings translate well into humans. In January, a US patent was issued to Ligand covering LGD-4665 composition of matter. Our research activities continue on TPO Mimetics and this effort has been fruitful. We have discussed previously that LGD-4665 is more potent than eltrombopag and one manifestation of this is its ability to stimulate rising platelets after administration of a single oral dose. We have discovered compounds that are even more potent than 4665. One example is LGD-3532, which is active on human bone marrow in vitro at nanomolar concentrations. This compound is chemically different from LGD-4665 and will be covered by a separate patent family. In our SARM program, we have two compounds at the preclinical stage. We presented data on one of these; LGD-3303 in a plenary session of the 2007 American Society of Bone and Mineral Research Annual Meeting. We showed in an animal model a postmenopausal osteoporosis that LGD-3303 increased bone mineral density and strength. Its action was through a combination of anabolic and anti-resorptive effects on bone. Importantly, its effect was addictive with a bisphosphonates, suggesting that it could be a complimentary treatment to bisphosphonates. The current standard of care for osteoporosis or other anti- resorptive agents as these are approved. LGD-4033 is a SARM from a different chemical class than LGD-3303. This…

Yeah. Thanks Martin. I am pleased with how well Ligand is executing our business plans and very important we set several important corporate goals for 2008. Just a quick recap of those before we turn to the Q&A section. By the end of this year, we're looking for FDA action on three filed NDAs for our corporate partners. One is for PROMACTA, which is filed by GSK, the other for VIVIANT filed by Wyeth and the third is FABLYN filed by Pfizer. In our internal programs, we expect to initiate multiple clinical studies for LGD-4665. We anticipate filing an IND for our lead SARM candidates by the end of this year. And also, of course, we look forward to advancing our other pipeline programs. Thank you for joining us for the call, and operator, with that we will turn it over for questions.

(Operator Instructions). Your first question comes from the line of David Webber with Broadpoint Capital.

Hi. Just a couple of questions, John. First, I don't know if you have this information or not, but can you tell us whether the PROMACTA NDA has been accepted for review, and if so, what the review status is?

We do not know. And I don't believe that we would necessarily get that information unless it would pass on to us by investor enquiry from GSK. But they did file in December, about two months ago. And certainly, we'll be looking for any other news or headlines from GSK in terms of their expectations for us PADUFA to date.

Okay. And then on LGD-4665, I think you alluded to this, but more specifically could we get a sense of where we are with testing to establish the feasibility of once weekly dosing?

Yes. We do plan to conduct a weekly oncology study. We have not started it. We expected about a six-week course in healthy volunteers. So all in all, with enrollments and trial, data collections, it's probably about a three-month study. We expect to start that probably in the next couple of months, and to have the data, I would expect, in the third quarter of this year. That trial is very important. We are intrigued by the long half-life and obviously the pharmacologic effects of that with dosing, and our objective is to get that data in hand before we start our Hepatitis trial.

Okay. So then Phase II studies in ITP and myelodysplasia would be of daily dosing schedule?

That's correct. Right.

Okay. And then, in terms of the revenue guidance, I guess, are you making any assumptions in the guidance for royalties from AVINZA, about any major changes in the direction of that drug from our market share point of view?

No. I appreciate the question. It is pretty simple math. The last two quarters of royalty to Ligand have been very similar, very comparable. In fact, fourth quarter was up only slightly and so, we are not making any judgment about the potential for price increases or the prescription trend. Looking at a 15% royalty that we will enjoy out of the product in '08, that's our estimate, for where the run rate is currently about a $20 million or so.

Okay. And then, I assume there are potential milestone payments for approvals of PROMACTA and VIVIANT, FABLYN. Can you give us any sense how large those payments could be?

Sure. We are on top of the payments from all of the partners for various regulatory events. In total, in aggregate I'll say the most that we will get probably is in the low-to-mid single million digit range. And it's a combination, obviously whether we're receiving payments is going to be based on time. But candidly, there are -- well, the revenue will be valuable there, very nominal payments in context to the import of the drug getting approved, but we'll add more information on that obviously. As John said, regulatory events come in provision.

Okay. Then just one more question and I'll get back in the queue. The income tax benefits that you've been recording each quarter, but how much longer we do expect those to go on?

That will be over in '07. So those are recorded because we do have taxable gain from the sale of AVINZA. In 2008, we expect to be in a loss position again, and so there will not be any tax benefits that will be recorded.

Okay. Alright. That's my figure. And then -- I am sorry, one last financial, the $7.5 million coming out of escrow in the first quarter, will that appear as revenue on the discontinued operation lines as well?

It will.

Okay. Thanks very much.

David, thank you.

Your next question comes from Derek Jellinek with Susquehanna Financial.

Afternoon, guys. First, could you give us your thoughts about the upcoming Nplate panel and then the potential ramifications for PROMACTA?

Sure. Derek, your voice is a low, but the question is: any comment on the upcoming panel meeting for Amgen's drug Nplate? Yeah, there is a not a whole lot that we can really add in terms of our expectation, except to say that we think that it will provide some useful information, some clarity from the FDA advisors on how they view this category of medicine. And also, obviously, it's going to help put some more definition around the specific product profile for Nplate. So we look forward towards when the panel takes place, which is less than a month away. It's hard to predict in fact what the implication will be for GSK's drug, but we certainly look forward to that event.

Okay. And what about on, what's your PROMACTA outline – John, your partnering strategy for 4665?

Yeah. We talked about this with investors and I think on past calls. With our new Ligand, the new business structure, we don't plan to fully commercialize product or sales. We may retain some commercial or co-promotion rights, but our objective with our pipeline assets is interesting partnerships. We've got some very exciting drug research programs going on right now. Specific to 4665, we are at, we think, a very exciting stage where we can now advance on to multiple clinical indications, get data from a whole series of different disease categories as well as run some fairly short and inexpensive pharmacology studies to prove and differentiate our drug from some of the other drugs in development right now. So again, it's an investment period, whether it's 6, 12, 18 months, we can't predict how long it's going to take to answer some of these key questions. But we think we'll continue to add value to our program. And in the meantime, I think there is more awareness around our program. The ASH presentation created a lot of enquiries about the program and as we build our data set we'll surely be engaging more and more in partnering discussion with a co-partner in that program sometime in the future.

I appreciate that. You said advancing multiple clinical indications. Can you maybe comment why you are really not going for CIT?

A great question and it will be crystal clear. It's not that we are not going for CIT. I think we're trying to be very realistic as a small development company right now. The first three indications we've laid out, we believe that a TPO mimetic could be approved for many indications, 5670 indications potentially. And of course, there are mainly some diminishing returns but in terms of clinical addition, we would like to pursue a clinical campaign in CIT. We know that GSK is conducting a study from CIT, Amgen, is referring the initiated study. But for us, again, it's a matter of being very pragmatic with our resources and clinical timelines. This is something that whether it is like being solo or in partnership, it isn't an indication that we're excited about, principally because of the potency we've see with 4665. It appears to be not only safe but a highly potent compound that we think in CIT could be a very compelling indication. So, it is not that we aren't interested or won't pursue it. It is just a matter of talking about our nearest term priorities.

Great. Thanks for the clarity on that. Maybe a follow onto that, this 4665 is so potent, it seems like 3532 is more potent. So now, where does that compound status as far as getting it into the clinic, are you pushing that one forward?

We are advancing in. Obviously, in its earlier stage there is a battery of animal pharmacology studies that have to be conducted before you could file an IND, but we feel that we've got some very exciting recent research activities that's speaking not just one drug but really a library of compounds and as much as 4665 appears to be a very attractive clinical candidate, we're also pleased to know that we have a compound that now is chemically distinct from an ID perspective, but longer a (inaudible) but also may have given a pharmacology property. So, having said that, we have advanced 4665. That will get the headlines here in '08, but we certainly look forward to again expanding our library of other TPO mimetic compounds too.

Well, that's great. Thanks for taking my questions.

Thank you, Derek.

(Operator instructions) Your next question comes from the line of Neil Weiner with Foxhill Capital Partners.

Hi, gentlemen. A couple questions here. Glaxo's indicated that they would know whether PROMACTA will get expedited review in mid-February. Have they indicated that to you? They would know whether or not that will get expedited review by mid-February?

Right, yes. Neil, a fair question. We simply do not know anything in regard to that. That sounds like a very reasonable timeline, if GSK have said that. We know they filed two months ago in December. That sounds like about the right timeline, but when they would get some clarity from the FDA. Frankly, I think we've got a very good relationship with GSK. We are not prohibiting any of their regulatory discussions with the FDA on those topics.

Okay. And I guess the second question is a follow-up to LGD-4665. So is it my understanding that you really are not going to get into an advance stage of discussions for strategic partnerships until you have a more advanced portfolio of clinical investigations and that would be a year from now or 18 months from now?

I think the simple answer is that Ligand has, I think, a great deal of opportunity in terms of when we do a corporate deal. And our objective is obviously to drive for the best partnership. And the best partnership not only in economic terms, but also to get a partner that is committed and really has the capability to aggressively advance the programs. I think the unique thing is that Ligand, we aren't short on cash and we aren't looking at some very significant build, no build decision point that would really define when the deal has to happen. If a partner came along with -- then with attractive, from a development perspective with good terms, we could do a deal sooner. But also, we believe that we're running some pretty important studies right now. They are going to continue to add value to the program. So I think we have got a lot of flexibility. We just as a general practice don't give a specific guidance as to when we expect to do a corporate deal. But we've got -- we think an exciting molecule and in short-term we're going to be adding more value. So having said that, there is certainly, perhaps more awareness around this program than ever before noted by Amgen, and GSK's pending drug applications. There is a lot of public information out there at the medical conferences and we think the interest around this program for Ligand is actually increasing. So we are encouraged by that and again we don't talk about the specific product discussion. But we think that we have got significant opportunity to keep advancing our program and the potential partner discussion.

Thanks.

(Operator Instructions). Your next question comes from the line of David Webber with Broadpoint Capital.

Thanks for taking the follow-up. I had a question I guess for Martin on regarding LGD-3532, just from a medical point of view, since with a TPO Mimetic, the one thing you have to worry about is overshoot. How much more potent do you want to get? What's the utility of that in the end?

Yeah, potency will only buy you so much in the clinic. I think that with 3532, we may have a compound that, with it the doses will be smaller and presumably because of the smaller dose one might have some increase in overall safety of the compound, but basically what 3532 and several other compounds from that cohorts bring us, are noble chemistry, a renewed patented estate and then, pharmacology that is an awful lot like 4665. But I think over the long haul, it provides a future partner with the ability to create a TPO Mimetic franchise based on multiple generation of compounds, with 4665 being the first generation of those compounds and compounds like 3532 being in a later generation.

Okay. That helps. And then, John, I guess, I don't know how evolved the thinking is on this subject yet, but just trying to get a handle on what pricing of PROMACTA, and then eventually 4665 might be, for indication like ITT. Can you put it in a ballpark?

David, and I certainly understand and respect your question, it is impossible to answer. Actually, we have no role inside of GSK to price their products. We'll talk a little bit on our Investor's presentations about the landscape. When we look at other drugs for anemia, pricing is anywhere in the $10,000 to $20,000 range for an annual chronic treatment, which we do think are relative or relevant ranges for potential pricing. Some other comparisons are cost of care. When we look at platelet transfusion, the transfusion can cost as much as $4000 and platelets only survive in the body for four to five days. So it's a very expensive treatment, particularly if you get multiple courses of platelet. When you look at splenectomies and clearly, when you're removing an organ, there is not only the cost of procedure but also there can be significant therapeutic cost as well as management cost. So across the board, we think the environment may support that it is a fairly high chronic treatment cost, but it still provides a very significant pharmacological and economic advantage to the existing treatment regimen. That's background, that's some perspective. But having said that, we're a few years away certainly from pricing our drug and we don't have insight as to how Amgen or GSK will go about pricing their product.

Okay. That's fair enough. Then a question on the stock repurchase program, I think certainly we're over nine months into a plan that was envisioned to repurchase up to $100 million of stock if I recall correctly and we're a little over $40 million. Can you just layout the goals here and the timeframe?

Sure. I am not sure what do you mean about the goals. The timeframe, this was set up. It was fairly common that you authorized a dollar amount and then a period of time. We set this up about year ago actually, last March. So the $100 million authorization was open for one-year. That year technically expires next month.

Okay. Do you expect to reauthorize it?

At this time, we have no plans to reauthorize it.

Okay. Thanks very much.

There are no further questions at this time. Are there any closing remarks?

No, not by the management, unless there are other questions. We do appreciate people's attention. As we've outlined there are numerous very exciting events that we're going to get answers from over the next nine months or so. And certainly as soon as we get information, we'll be updating investors and you can count on us to keep our heads down and be working hard to drive our programs here at the company as well. Thank you for your time and attention.

Thank you for your participation in today's Ligand fourth quarter earnings conference call. You may now disconnect.