NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

FOR IMMEDIATE RELEASE

6 September 2018

RECOMMENDED CASH OFFER

for

VERNALIS PLC

by

LIGAND HOLDINGS UK LTD.

(a wholly owned subsidiary of Ligand Pharmaceuticals Incorporated)

to be effected

by means of a scheme of arrangement of Vernalis plc

under Part 26 of the Companies Act 2006

Publication and Posting of Scheme Document

On 9 August 2018, the boards of Vernalis plc ("Vernalis") and Ligand Holdings UK Ltd ("Ligand UK") announced that they had agreed the terms of a recommended cash offer pursuant to which Ligand UK will acquire the entire issued and to be issued share capital of Vernalis (the "Acquisition"), which will be effected by means of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act 2006 ("Scheme").

The Board of Vernalis is pleased to announce that a scheme document relating to the Acquisition (the "Scheme Document"), together with associated Forms of Proxy, are today being published and posted to Vernalis Shareholders. The Scheme Document contains, inter alia, a letter from the Chairman of Vernalis, the full terms and conditions of the Scheme, an explanatory statement pursuant to section 897 of the Companies Act 2006, notices of the Court Meeting and General Meeting, the expected timetable of principal events and details of the actions to be taken by Vernalis Shareholders. Vernalis is also sending the Scheme Document to participants in the Vernalis Share Schemes for information only and those persons with information rights.

Capitalised terms in this announcement (the "Announcement"), unless otherwise defined, have the same meanings as set out in the Scheme Document. Copies of this Announcement and the Scheme Document will be available free of charge (subject to certain restrictions relating to persons in Restricted Jurisdictions) on Vernalis' website at www.vernalis.com and on the Ligand Group's website at www.investor.ligand.com/vernalisoffer up to and including the Effective Date. The contents of these websites are not incorporated into, and do not form part of, this Announcement.

Notices of the Court Meeting and General Meeting

As detailed further in the Scheme Document, the Scheme is subject to the Conditions. To become effective, the Scheme requires, among other things, that the requisite majorities of Scheme Shareholders vote in favour of the Scheme at the Court Meeting and that the requisite majorities of Vernalis Shareholders vote in favour of the special resolution to be proposed at the General Meeting.

Notices convening the Court Meeting and the General Meeting, each of which will be held at the offices of Covington & Burling LLP, 265 Strand, London WC2R 1BH on 2 October 2018, are set out in the Scheme Document. The Court Meeting will start at 11.00 a.m. and the General Meeting will start at 11.15 a.m. (or as soon thereafter as the Court Meeting has been concluded or adjourned). Forms of Proxy for use at such Meetings are enclosed with the Scheme Document.

It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair and reasonable representation of the opinion of Scheme Shareholders. Scheme Shareholders are therefore strongly encouraged to complete, sign and return their Forms of Proxy (once received) (or appoint a proxy through the CREST electronic proxy appointment service) as soon as possible and in any event in accordance with the instructions for doing so by the deadlines referred to in the timetable below.

Cancellation of admission of Vernalis Shares to trading on AIM

If the Scheme becomes effective in accordance with its terms, it is intended that dealings in Vernalis Shares will be suspended at 7.30 a.m. on 9 October 2018 and subsequently Vernalis Shares will be cancelled from admission to trading on AIM at 7.00 a.m. on 10 October 2018.

Timetable

The current expected timetable of principal events for the implementation of the Scheme is set out below and in the Scheme Document. If any of the key dates set out in the expected timetable changes, an announcement will be made through a Regulatory Information Service.

All times shown in this Announcement are references to London time unless otherwise stated.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

The following indicative timetable sets out expected dates for the implementation of the Scheme.

Event                                                                                                                    Time and/or date

Latest time for lodging Forms of Proxy and registering proxy appointments through CREST for the:

Court Meeting (blue form)........................................................... 11.00 a.m. on 28 September 2018⁽¹⁾

General Meeting (yellow form).................................................... 11.15 a.m. on 28 September 2018⁽²⁾

Voting Record Time for the Court Meeting and the

General Meeting................................................................ close of business on 28 September 2018⁽³⁾

Court Meeting.................................................................................... 11.00 a.m. on 2 October 2018

General Meeting.............................................................................. 11.15 a.m. on 2 October 2018⁽⁴⁾

The following dates are indicative only and are subject to change⁽⁵⁾

Court Hearing............................................................................................................ 8 October 2018

Last day of dealings in, and for registration of transfers of, and for

disablement in CREST of, Vernalis Shares................................................ 6.00 p.m. on 8 October 2018

Scheme Record Time............................................................................... 6.00 p.m. on 8 October 2018

Dealings in Vernalis Shares suspended...................................................... 7.30 a.m. on 9 October 2018

Expected Effective Date of the Scheme....................................................................... 9 October 2018

Cancellation of admission to trading of Vernalis Shares on AIM................ 7.00 a.m. on 10 October 2018

Despatch of cheques and crediting of CREST for Cash Consideration due

under the Scheme................................................................................................ By 23 October 2018

Long Stop Date................................................................................................... 31 December 2018⁽⁶⁾

Notes:

1.     It is requested that blue Forms of Proxy for the Court Meeting be lodged not later than 48 hours before the time appointed for the Court Meeting, excluding any part of a day that is not a business day. Blue Forms of Proxy not so lodged may be handed to the Chairman of the Court Meeting or Link Asset Services on behalf of the Chairman of the Court Meeting before the start of the Court Meeting.

2.     Yellow Forms of Proxy for the General Meeting must be lodged not later than 48 hours before the time appointed for the General Meeting, excluding any part of a day that is not a business day. Yellow Forms of Proxy for the General Meeting not lodged by this time will be invalid.

3.     If either the Court Meeting or the General Meeting is adjourned, the Voting Record Time for the relevant adjourned meeting will be close of business on the day which is two days before the date of the adjourned meeting, excluding any part of a day that is not a business day.

4.     Or as soon as the Court Meeting shall have concluded or been adjourned.

5.     These dates are indicative only and will depend, among other things, on the date upon which:

(i)    the Conditions are satisfied or (if capable of waiver) waived;

(ii)   the Court sanctions the Scheme; and

(iii)  the Court Order is delivered to the Registrar of Companies.

6.     This is the latest date by which the Scheme may become effective unless Ligand UK and Vernalis agree (and the Panel and, if required, the Court permit) a later date.

All references in this document to times are to London time unless otherwise stated. The dates and times given are indicative only and are based on Vernalis' current expectations and may be subject to change (including as a result of changes to the regulatory timetable). If any of the expected times and/or dates above change, the revised times and/or dates will be notified to Vernalis Shareholders by announcement through a Regulatory Information Service with such announcement being made available on the Ligand Group's website at www.investor.ligand.com/vernalisoffer and on Vernalis' website at www.vernalis.com. Vernalis ADS Holders and overseas Vernalis Shareholders should refer to Part Six of the Scheme Document, which contains important information relevant to such holders.

Enquiries

Important notices relating to financial advisers

Evercore, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting solely for Vernalis as financial adviser in relation to the matters referred to in this announcement and for no one else. Evercore will not be responsible to anyone other than Vernalis for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement or any arrangement referred to herein. Neither Evercore, nor any of its affiliates, owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statue or otherwise) to any person other than Vernalis in connection with this announcement, any statement contained herein or otherwise. Evercore has given, and not withdrawn, its consent to the inclusion in this announcement of the references to its name and the advice it has given to Vernalis in the form and context in which they appear.

Canaccord Genuity, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting solely for Vernalis as Nominated Adviser and broker in relation to the matters referred to in this announcement and for no one else.  Canaccord Genuity will not be responsible to anyone other than Vernalis for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement or any arrangement referred to herein. Neither Canaccord Genuity, nor any of its affiliates, owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statue or otherwise) to any person other than Vernalis in connection with this announcement, any statement contained herein or otherwise. Canaccord Genuity has given, and not withdrawn, its consent to the inclusion in this announcement of the references to its name in the form and context in which they appear.

finnCap, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively as financial adviser to Ligand UK and for no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Ligand UK for providing the protections afforded to its clients or for providing advice in relation to the matters referred to in this announcement. Neither finnCap, nor any of its affiliates, owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of finnCap in connection with this announcement, any statement contained herein or otherwise. finnCap has given, and not withdrawn, its consent to the inclusion in this announcement of the references to its name in the form and context in which they appear.

MTS is acting exclusively as financial adviser to Ligand UK and for no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Ligand UK for providing the protections afforded to its clients or for providing advice in relation to the matters referred to in this announcement. MTS is a US registered broker dealer and is not advising Ligand UK for the purposes of the Code. Neither MTS, nor any of its affiliates, owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of MTS in connection with this announcement, any statement contained herein or otherwise.

Further information

This announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction in contravention of applicable law.  The Acquisition is being made solely pursuant to the terms of the Scheme Document which contains the full terms and conditions of the Acquisition, including details of how to vote at the Meetings in respect of the Acquisition. Any vote in relation to the Acquisition should be made only on the basis of the information contained in the Scheme Document. Vernalis Shareholders are strongly advised to read the Scheme Document carefully.

The statements contained in this Announcement are made as at the date of this Announcement, unless some other time is specified in relation to them.

This Announcement does not constitute a prospectus or prospectus equivalent document.

Overseas jurisdictions

The release, publication or distribution of this announcement in or into jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of another jurisdiction to vote their Vernalis Shares with respect to the Scheme at the Court Meeting or the General Meeting, or to execute and deliver Forms of Proxy appointing another person to vote at the Court Meeting or the General Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. Any failure to comply with the applicable legal or regulatory restrictions of any jurisdiction may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person. This announcement has been prepared for the purpose of complying with English law, the rules of the London Stock Exchange, the AIM Rules and the Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside of the United Kingdom.

Unless otherwise determined by Ligand UK or required by the Code, and permitted by applicable law and regulation, the Acquisition will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction or any jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Acquisition by any such use, means, instrumentality or from within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction or any other jurisdiction where to do so would constitute a violation of the laws of that jurisdiction, and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send such documents in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the Acquisition. If the Acquisition is implemented by way of a Takeover Offer (unless otherwise permitted by applicable law and regulation), the Takeover Offer may not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Takeover Offer may not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.

Further details in relation to Vernalis Shareholders in overseas jurisdictions is contained in the Scheme Document.

Notice to US holders of Vernalis Shares and Vernalis ADSs

The Acquisition relates to the shares of an English company and is being made by means of a scheme of arrangement provided for under English company law. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act. Accordingly, the Acquisition is subject to the disclosure requirements and practices applicable in the United Kingdom to schemes of arrangement which differ from the disclosure requirements of United States tender offer and proxy solicitation rules. If, in the future, Ligand UK exercises the right to implement the Acquisition by way of a Takeover Offer and determines to extend such Takeover Offer into the United States, the Acquisition will be made pursuant to applicable UK tender offer rules and securities laws and otherwise in accordance with the requirements of the Code. Accordingly, any such Takeover Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments, that are different from those applicable to tender offers made in accordance with US procedures and law. Financial information included in this announcement and the Scheme Document has been or will be prepared in accordance with accounting standards applicable in the United Kingdom that may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.

It may be difficult for US holders of Vernalis Shares (and Vernalis ADS Holders) to enforce their rights and any claim arising out of the US federal securities laws, since Vernalis is located in a non-US jurisdiction, and some or all of their officers and directors may be residents of a non-US jurisdiction. US holders of Vernalis Shares and Vernalis ADS Holders may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgement.

Neither the SEC nor any securities commission of any state of the United States has approved or disapproved the Acquisition, passed upon the fairness of the Acquisition or passed upon the adequacy or accuracy of this announcement. Any representation to the contrary is a criminal offence in the United States.

In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US Exchange Act, Ligand UK or its nominees or brokers (acting as agents) may from time to time make certain purchases of, or arrangements to purchase, Vernalis Shares outside the United States, other than pursuant to the Acquisition, until the date on which the Scheme and/or Takeover Offer becomes effective, lapses or is otherwise withdrawn. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the UK, will be reported to the Regulatory News Service of the London Stock Exchange and will be available on the London Stock Exchange website.

Forward-looking statements

This announcement may contain statements about the Ligand Group and the Vernalis Group which are, or may be deemed to be, "forward-looking statements" and which are prospective in nature. All statements other than statements of historical fact included in this announcement may be forward-looking statements. They are based on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects", "is expected", "is subject to", "budget", "scheduled", "estimates", "forecasts", "predicts", "intends", "anticipates", "believes", "targets", "aims", "projects", "future-proofing" or words or terms of similar substance or the negative of such words or terms, as well as variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements may include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of the Ligand Group's or the Vernalis Group's operations and potential synergies resulting from the Acquisition; and (iii) the effects of global economic conditions and governmental regulation on the Ligand Group's or the Vernalis Group's business.

Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors may cause the actual results, performance or achievements of the Ligand Group or the Vernalis Group to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These factors include changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or disposals. For a discussion of important factors which could cause actual results to differ from forward-looking statements in relation to the Ligand Group or the Vernalis Group, refer to the results of the Ligand Group for the financial year ended 31 December 2017 and of the Vernalis Group for the financial year ended 30 June 2017, respectively. Each of the Ligand Group and the Vernalis Group, and each of their respective members, directors, officers, employees, advisers and persons acting on their behalf, expressly disclaims any intention or obligation to update or revise any forward-looking or other statements contained in this announcement, whether as a result of new information, future events or otherwise, except as required by applicable law.

No member of the Ligand Group, nor the Vernalis Group, nor any of their respective associates, directors, officers, employees or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur.

Except as expressly provided in this announcement, no forward-looking or other statements have been reviewed by the auditors of the Ligand Group or the Vernalis Group. All subsequent oral or written forward-looking statements attributable to any member of the Ligand Group or Vernalis Group, or any of their respective associates, directors, officers, employees or advisers, are expressly qualified in their entirety by the cautionary statement above.

No profit forecast and profit estimate

No statement in this announcement is intended as a profit forecast or estimate for any period and no statement in this announcement should be interpreted to mean that earnings or earnings per share for Vernalis for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Vernalis.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Code applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3 of the Code.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the Code).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Information relating to Vernalis Shareholders

Please be aware that addresses, electronic addresses and certain other information provided by Vernalis Shareholders and Vernalis ADS Holders, persons with information rights and other relevant persons for the receipt of communications from Vernalis may be provided to Ligand UK during the Offer Period as required under Section 4 of Appendix 4 to the Code to comply with Rule 2.11(c) of the Code.

Publication on website

Pursuant to rule 26 of the Code, a copy of this announcement will be available, subject to certain restrictions relating to persons resident in, or subject to the laws and/or regulations, of Restricted Jurisdictions, for inspection on the Ligand Group's website at www.investor.ligand.com/vernalisoffer and on Vernalis' website at www.vernalis.com promptly and in any event by no later than 12 noon (London time) on the business day following the date of this announcement. For the avoidance of doubt the contents of those websites are not incorporated into, and do not form part of, this announcement.

Vernalis Shareholders may request a hard copy of this announcement, free of charge, by contacting Vernalis on +44 (0) 118 938 0015. Vernalis Shareholders may also request that all future documents, announcements and information to be sent to them in relation to the Acquisition should be provided in hard copy form.