<PAGE>
                                                                  EXHIBIT 10.291


                       LIGAND PHARMACEUTICALS INCORPORATED

          AMENDED AND RESTATED NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
              STOCK OPTION UNDER DIRECTOR FEE OPTION GRANT PROGRAM

                AMENDED AND RESTATED EFFECTIVE DECEMBER 31, 2005

            Notice is hereby given of the following option grant (the "Option")
to purchase shares of the Common Stock of Ligand Pharmaceuticals Incorporated
(the "Corporation"):

            Optionee: __________________________________________________________

            Grant Date:  January 3, 2005

            Grant Number: ______________________________________________________

            Number of Option Shares: __________________ shares of Common Stock

            Exercise Price:  $3.7330 per share

            Expiration Date:  January 3, 2015

            Type of Option:  Non-Statutory Stock Option

            Exercise Schedule: The Option shall become vested with respect to
            the Option Shares in a series of twelve (12) successive equal
            monthly installments upon Optionee's completion of each calendar
            month of service as a member of the Corporation's Board of Directors
            (the "Board") during calendar year 2005, with the first such
            installment to become vested upon Optionee's continuation in Board
            service through January 31, 2005. In no event shall the Option
            become vested or exercisable for any additional Option Shares after
            Optionee's cessation of Board service.

            Optionee understands and agrees that the Option is granted subject
to and in accordance with the terms of the Director Fee Option Grant Program
under the Ligand Pharmaceuticals Incorporated 2002 Stock Incentive Plan (the
"Plan"). Optionee further agrees to be bound by the terms of the Plan and the
terms of the Option as set forth in the Director Fee Stock Option Agreement
attached hereto as Exhibit A. Optionee hereby acknowledges receipt of a copy of
the official prospectus for the Plan. A copy of the Plan is available upon
request made to the Corporate Secretary at the Corporation's principal offices.

            No Impairment of Rights. Nothing in this Notice or the attached
Director Fee Stock Option Agreement or in the Plan shall interfere with or
otherwise restrict in any way the rights of the Corporation and the
Corporation's stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.


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            Definitions. All capitalized terms in this Notice shall have the
meaning assigned to them in this Notice or in the attached Director Fee Stock
Option Agreement.

DATED:  _________________, _______


                                 LIGAND PHARMACEUTICALS INCORPORATED


                                 By:  __________________________________________

                                 Title: ________________________________________

                                        ________________________________________
                                        OPTIONEE

                                 Address:_______________________________________

                                         _______________________________________


ATTACHMENTS
EXHIBIT A - DIRECTOR FEE STOCK OPTION AGREEMENT


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                                    EXHIBIT A

                       LIGAND PHARMACEUTICALS INCORPORATED

            AMENDED AND RESTATED DIRECTOR FEE STOCK OPTION AGREEMENT



RECITALS

      A. The Corporation has implemented a special director fee stock option
grant program under the Plan pursuant to which non-employee members of the Board
may, by prior irrevocable election, apply all or any portion of the annual
fee(s) otherwise payable to them in cash to the acquisition of a special stock
grant.

      B. Optionee is a non-employee Board member who made the requisite election
to apply a portion of his or her annual fee(s) to the acquisition of the special
option, and this Agreement is executed pursuant to, and is intended to carry out
the purposes of, the Plan in connection with the grant of such special option to
Optionee.

      C. All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix.

            NOW, THEREFORE, it is hereby agreed as follows:

            1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as of
the Grant Date, a Non-Statutory Option to purchase up to the number of Option
Shares specified in the Grant Notice. The Option Shares shall be purchasable
from time to time during the option term specified in Paragraph 2 at the
Exercise Price.

            2. OPTION TERM. This option shall have a term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the last day of the Exercise Period.

            3. LIMITED TRANSFERABILITY.

                  (a) This option may be assigned in whole or in part during
Optionee's lifetime to one or more members of Optionee's family or to a trust
established for the exclusive benefit of one or more such family members or to
Optionee's former spouse, to the extent such assignment is in connection with
the Optionee's estate plan or pursuant to a domestic relations order. The
assigned portion shall be exercisable only by the person or persons who acquire
a proprietary interest in the option pursuant to such assignment. The terms
applicable to the assigned portion shall be the same as those in effect for this
option immediately prior to such assignment.

                  (b) Should the Optionee die while holding this option, then
this option shall be transferred in accordance with Optionee's will or the laws
of inheritance. However,


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Optionee may designate one or more persons as the beneficiary or beneficiaries
of this option, and this option shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Optionee's death while holding this option. Such beneficiary or beneficiaries
shall take the transferred option subject to all the terms and conditions of
this Agreement, including (without limitation) the limited time period during
which this option may, pursuant to Paragraph 5, be exercised.

            4. EXERCISABILITY/VESTING. This option shall become vested and
exercisable for the Option Shares in one or more installments as specified in
the Grant Notice. As the option becomes exercisable for such installments, those
installments shall accumulate, and the option shall remain exercisable for the
accumulated installments during the Exercise Period. The Option Shares shall,
however, be subject to accelerated vesting pursuant to the provisions of
Paragraph 5, 6 or 7, but in no event shall any additional Option Shares vest
following Optionee's cessation of service as a Board member.

            5. EXERCISE OF OPTION.

                  (a) This option shall only be exercisable by Optionee within
the two and one-half (2 1/2) month period following the first to occur of the
following events (the "Exercise Period"):

                        (i)   Optionee's "separation from service," within
the meaning of Section 409A(a)(2)(A)(i) of the Code and the Treasury
Regulations thereunder, with respect to the Corporation;

                        (ii)  Optionee's death or Permanent Disability;

                        (iii) a Change in Control, so long as such Change in
Control constitutes a change in the ownership or effective control of the
Corporation, or a change in the ownership of a substantial portion of the assets
of the Corporation, within the meaning of Code Section 409A(a)(2)(A)(iv) and the
Treasury Regulations thereunder; or

                        (iv)  October 1, 2014.

            During the Exercise Period, Optionee (or the person or persons to
whom this option is transferred pursuant to a permitted transfer under Paragraph
3) may not exercise this option in the aggregate for more than the number of
Option Shares (if any) in which Optionee is vested. Upon the expiration of the
Exercise Period, the option shall terminate and cease to be exercisable with
respect to any vested Option Shares for which the option has not been exercised.

                  (b) In the event this option is not exercised by Optionee (or
the person or persons to whom this option is transferred pursuant to a permitted
transfer under Paragraph 3) during the Exercise Period described in Paragraph
5(a), this option shall be automatically exercised on the last day of such
Exercise Period without any further action by Optionee (or the person or persons
to whom this option is transferred pursuant to a permitted transfer under
Paragraph 3). Upon such automatic exercise, the Corporation shall distribute to
Optionee (or the


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person or persons to whom this option is transferred pursuant to a permitted
transfer under Paragraph 3), in accordance with Paragraph 10(c), a number of
Option Shares, if any, with an aggregate Fair Market Value on the date of
exercise of this option equal to the amount determined by multiplying (i) the
amount (if any) by which the Fair Market Value of a share of Common Stock on the
date of exercise of this option exceeds the Exercise Price per share of this
option, by (ii) the number of Option Shares with respect to which this option is
vested on such exercise date. The automatic exercise of this option pursuant to
this Paragraph 5(b) has been pre-approved by the Board and the Optionee, and
neither the approval of the Plan Administrator nor the consent of the Board
shall be required at the time of the actual exercise of this option pursuant to
this Paragraph 5(b).

                  (c) Should Optionee cease service as a Board member by reason
of death or Permanent Disability, then this option shall automatically
accelerate and become immediately exercisable for all of the Option Shares at
the time subject to this option so that Optionee (or the personal representative
of Optionee's estate or the person or persons to whom the option is transferred
upon Optionee's death or to whom the option is transferred during Optionee's
lifetime pursuant to a permitted transfer under Paragraph 3 or the designated
beneficiary or beneficiaries of this option, as the case may be) shall have the
right to exercise this option for any or all of those Option Shares as
fully-vested shares of Common Stock during the Exercise Period.

                  (d) Upon exercise of this option, this option shall be
cancelled and Optionee shall cease to have any further right to acquire those
Option Shares under this Agreement.

                  (e) Notwithstanding the foregoing, this option shall be
exercisable, and Option Shares shall be issuable with respect to this option, at
such times and upon such events as are specified in this Agreement only to the
extent issuance under such terms will not cause this option or the Option Shares
issuable with respect to this option to be includible in the gross income of
Optionee under Section 409A of the Code prior to such times or the occurrence of
such events, as permitted by the Code and the Treasury regulations and other
guidance thereunder.

            6.    CHANGE IN CONTROL.

                  (a) In the event of a Change in Control effected during
Optionee's period of Board service, any Option Shares at the time subject to
this option but not otherwise vested shall automatically vest so that this
option shall, immediately prior to the specified effective date for that Change
in Control, become exercisable for all of the Option Shares as fully vested
shares of Common Stock and may be exercised for any or all of those vested
shares.

                  (b) If this option is assumed in connection with a Change in
Control or otherwise continued in effect, then this option shall be
appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities which would have been issuable to Optionee in
consummation of such Change in Control had the option been exercised immediately
prior to such Change in Control, and appropriate adjustments shall also be made
to


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the Exercise Price, provided the aggregate Exercise Price shall remain the same.
To the extent the actual holders of the Corporation's outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the Change
in Control transaction, the successor corporation may, in connection with the
assumption of this option, substitute one or more shares of its own common stock
with a fair market value equivalent to the cash consideration paid per share of
Common Stock in such Change in Control transaction.

            7. HOSTILE TAKE-OVER/HOSTILE TENDER-OFFER. In the event of a Hostile
Take-Over effected during Optionee's period of Board service, any Option Shares
at the time subject to this option but not otherwise vested shall automatically
vest so that this option shall, immediately prior to the effective date of that
Hostile Take-Over, become exercisable for all of the Option Shares as fully
vested shares of Common Stock and may be exercised for any or all of those
vested shares.

            8. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, proportionate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.

            9. STOCKHOLDER RIGHTS. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.

            10.   MANNER OF EXERCISING OPTION.

                  (a) Subject to Paragraph 5(b), in order to exercise this
option with respect to all or any part of the Option Shares for which this
option is at the time exercisable, Optionee (or any other person or persons
exercising the option) must take the following actions:

                        (i) Execute and deliver to the Corporation a Notice of
      Exercise (see attached form) for the Option Shares for which the option is
      exercised.

                        (ii) Pay the aggregate Exercise Price for the purchased
      shares in one or more of the following forms:

                              (A) cash or check made payable to the Corporation
            (includes cash paid from Optionee's brokerage pursuant to a presale
            of shares in a so-called "cashless" exercise),

                              (B) shares of Common Stock held by Optionee (or
            any other person or persons exercising the option) for the requisite
            period necessary to avoid a charge to the Corporation's earnings for


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            financial reporting purposes and valued at Fair Market Value on the
            Exercise Date, or

                              (C) to the extent the option is exercised for
            vested Option Shares, through a special sale and remittance
            procedure pursuant to which Optionee (or any other person or persons
            exercising the option) shall concurrently provide irrevocable
            instructions (I) to a brokerage firm to effect the immediate sale of
            the purchased shares and remit to the Corporation, out of the sale
            proceeds available on the settlement date, sufficient funds to cover
            the aggregate Exercise Price payable for the purchased shares plus
            all applicable income and employment taxes required to be withheld
            by the Corporation by reason of such exercise and (II) to the
            Corporation to deliver the certificates for the purchased shares
            directly to such brokerage firm in order to complete the sale.

                        (iii) Furnish to the Corporation appropriate
      documentation that the person or persons exercising the option (if other
      than Optionee) have the right to exercise this option.

                  (b) Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise or this option is automatically
exercised pursuant to Paragraph 5(b), payment of the Exercise Price must
accompany the Notice of Exercise (or the Purchase Agreement) delivered to the
Corporation in connection with the option exercise.

                  (c) As soon after the Exercise Date as practical, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto. To the extent any such Option
Shares are unvested, the certificates for those Option Shares shall be endorsed
with an appropriate legend evidencing the Corporation's repurchase rights and
may be held in escrow with the Corporation until such shares vest.

                  (d) In no event may this option be exercised for any
fractional shares.

            11. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in any way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. In addition, this Agreement shall not in any way be
construed or interpreted so as to affect adversely or otherwise impair the right
of the Corporation or the stockholders to remove Optionee from the Board at any
time in accordance with the provisions of applicable law.

            12. COMPLIANCE WITH LAWS AND REGULATIONS.

                  (a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all


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applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the Nasdaq National Market, if applicable)
on which the Common Stock may be listed for trading at the time of such exercise
and issuance.

                  (b) The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be necessary
to the lawful issuance and sale of any Common Stock pursuant to this option
shall relieve the Corporation of any liability with respect to the non-issuance
or sale of the Common Stock as to which such approval shall not have been
obtained. The Corporation, however, shall use its best efforts to obtain all
such approvals.

            13. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
in Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns, the legal representatives, heirs and legatees of
Optionee's estate and any beneficiaries of this option designated by Optionee.

            14. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.

            15.   CONSTRUCTION.  This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all respects
limited by and subject to the terms of the Plan.

            16.   GOVERNING LAW.  The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.

            17. INFORMATION REQUIREMENTS. In the event the Corporation's annual
financial statements cease to be publicly available through the Corporation's
periodic filings under the Securities Exchange Act of 1934, as amended, the
Corporation will provide Optionee with copies of its annual financial statements
at least once per year in accordance with Section 260.140.46 of the Regulations
promulgated under the California Corporate Securities Law.

            18. SECTION 409A OF THE CODE. In the event any provision of the Plan
or this Agreement, or the application thereof, is or becomes inconsistent with
Section 409A of the Code and the Treasury Regulations promulgated thereunder,
such provision shall be void or unenforceable, or in the sole discretion of the
Board shall be deemed amended to the extent necessary to comply with Section
409A of the Code and the Treasury Regulations promulgated thereunder. The other
provisions of the Plan and this Agreement shall remain in full force and effect.


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                                    EXHIBIT I

                               NOTICE OF EXERCISE

            I hereby notify Ligand Pharmaceuticals Incorporated (the
"Corporation") that I elect to purchase _____________ shares of the
Corporation's Common Stock (the "Purchased Shares") at the option exercise price
of $ per share (the "Exercise Price") pursuant to that certain option (the
"Option") granted to me under the Corporation's 2002 Stock Incentive Plan on
_________________, ________.

            Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price for any Purchased Shares in which I am vested at the time of exercise of
the Option.


_________________________, ________
Date
                                      __________________________________________
                                      Optionee

                                      __________________________________________

                                      Address: _________________________________

                                      __________________________________________

Print name in exact manner
it is to appear on the
stock certificate:                    __________________________________________

Address to which certificate
is to be sent, if different
from address above:                   __________________________________________

                                      __________________________________________

Social Security Number:               __________________________________________
<PAGE>
                                    APPENDIX


            The following definitions shall be in effect under the Agreement:

            A. AGREEMENT shall mean this Director Fee Stock Option Agreement.

            B. BOARD shall mean the Corporation's Board of Directors.

            C. CHANGE IN CONTROL shall mean a change in ownership or control of
the Corporation effected through any of the following transactions:

                  (i) a merger, consolidation or other reorganization approved
      by the Corporation's stockholders, unless securities representing more
      than fifty percent (50%) of the total combined voting power of the voting
      securities of the successor corporation are immediately thereafter
      beneficially owned, directly or indirectly and in substantially the same
      proportion, by the persons who beneficially owned the Corporation's
      outstanding voting securities immediately prior to such transaction, or

                  (ii)  the sale, transfer or other disposition of all
      or substantially all of the Corporation's assets in complete
      liquidation or dissolution of the Corporation, or

                  (iii) .the acquisition, directly or indirectly, by any person
      or related group of persons (other than the Corporation or a person that
      directly or indirectly controls, is controlled by, or is under common
      control with, the Corporation) of beneficial ownership (within the meaning
      of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
      percent (50%) of the total combined voting power of the Corporation's
      outstanding securities pursuant to a tender or exchange offer made
      directly to the Corporation's stockholders.

            D. COMMON STOCK shall mean shares of the Corporation's common stock.

            E. CODE shall mean the Internal Revenue Code of 1986, as amended.

            F. CORPORATION shall mean Ligand Pharmaceuticals Incorporated, a
Delaware corporation, and any successor corporation to all or substantially all
of the assets or voting stock of Ligand Pharmaceuticals Incorporated which shall
by appropriate action adopt the Plan.

            G. EXERCISE DATE shall mean the date on which the option shall have
been exercised in accordance with Paragraph 10 of the Agreement.

            H. EXERCISE PRICE shall mean the exercise price per share as
specified in the Grant Notice.


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            I. EXPIRATION DATE shall mean the date on which the option expires
as specified in the Grant Notice.

            J. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

                  (i) If the Common Stock is at the time traded on the Nasdaq
      National Market, then the Fair Market Value shall be the closing selling
      price per share of Common Stock on the date in question, as the price is
      reported by the National Association of Securities Dealers on the Nasdaq
      National Market and published in The Wall Street Journal. If there is no
      closing selling price for the Common Stock on the date in question, then
      the Fair Market Value shall be the closing selling price on the last
      preceding date for which such quotation exists.

                  (ii) If the Common Stock is at the time listed on any Stock
      Exchange, then the Fair Market Value shall be the closing selling price
      per share of Common Stock on the date in question on the Stock Exchange
      which serves as the primary market for the Common Stock, as such price is
      officially quoted in the composite tape of transactions on such exchange
      and published in The Wall Street Journal. If there is no closing selling
      price for the Common Stock on the date in question, then the Fair Market
      Value shall be the closing selling price on the last preceding date for
      which such quotation exists.

            K. GRANT DATE shall mean the date of grant of the option as
specified in the Grant Notice.

            L. GRANT NOTICE shall mean the Notice of Grant of Non-Employee
Director Stock Option Under Director Fee Option Grant Program accompanying the
Agreement, pursuant to which Optionee has been informed of the basic terms of
the option evidenced hereby.

            M. HOSTILE TAKE-OVER shall mean a change in ownership or control of
the Corporation effected through either of the following transactions:

                  (i) a change in the composition of the Board over a period of
      thirty-six (36) consecutive months or less such that a majority of the
      Board members ceases, by reason of one or more contested elections for
      Board membership, to be comprised of individuals who either (A) have been
      Board members continuously since the beginning of such period or (B) have
      been elected or nominated for election as Board members during such period
      by at least a majority of the Board members described in clause (A) who
      were still in office at the time the Board approved such election or
      nomination; or

                  (ii)  a Hostile Tender-Offer.

            N. HOSTILE TENDER-OFFER shall mean the acquisition, directly or
indirectly, by any person or related group of persons (other than the
Corporation or a person that directly or


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indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders which
the Board does not recommend such stockholders to accept.

            O. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.

            P. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.

            Q. NOTICE OF EXERCISE shall mean the notice of exercise in the form
of Exhibit I.

            R. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option.

            S. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.

            T. PERMANENT DISABILITY shall mean that the Optionee is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months.

            U. PLAN shall mean the Corporation's 2002 Stock Incentive Plan.

            V. STOCK EXCHANGE shall mean the American Stock Exchange or the New
York Stock Exchange.

            W. VESTING SCHEDULE shall mean the vesting schedule specified in the
Grant Notice, pursuant to which the Option Shares will vest in one or more
installments over the Optionee's period of Board service, subject to
acceleration in accordance with the provisions of the Agreement.


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