Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 11, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-27163 | |
Entity Registrant Name | SWK Holdings Corp | |
Entity Central Index Key | 0001089907 | |
Entity Tax Identification Number | 77-0435679 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 14755 Preston Road | |
Entity Address, Address Line Two | Suite 105 | |
Entity Address, City or Town | Dallas | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75254 | |
City Area Code | 972 | |
Local Phone Number | 687-7250 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 12,911,453 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 24,318 | $ 11,158 |
Accounts receivable | 2,011 | 2,554 |
Marketable investments | 912 | 1,802 |
Other current assets | 1,548 | 1,087 |
Total current assets | 28,789 | 16,601 |
Finance receivables, net | 177,981 | 172,825 |
Marketable investments | 285 | 466 |
Deferred tax asset, net | 24,527 | 25,780 |
Warrant assets | 1,748 | 3,555 |
Intangible assets, net | 21,796 | 25,113 |
Goodwill | 8,404 | 8,404 |
Property, plant and equipment, net | 1,299 | 1,292 |
Other assets | 290 | 336 |
Total assets | 265,119 | 254,372 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 4,068 | 3,061 |
Revolving credit facility | 14,288 | |
Total current liabilities | 18,356 | 3,061 |
Contingent consideration payable | 14,500 | 14,500 |
Warrant liability | 129 | 76 |
Other non-current liabilities | 137 | 203 |
Total liabilities | 33,122 | 17,840 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively | ||
Common stock, $0.001 par value; 250,000,000 shares authorized; 12,918,006 and 12,917,348 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively | 13 | 13 |
Additional paid-in capital | 4,432,271 | 4,432,146 |
Accumulated deficit | (4,200,287) | (4,195,627) |
Total stockholders' equity | 231,997 | 236,532 |
Total liabilities and stockholders' equity | $ 265,119 | $ 254,372 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 250,000,000 | 250,000,000 |
Common stock, issued | 12,918,006 | 12,917,348 |
Common stock, outstanding | 12,918,006 | 12,917,348 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | ||
Finance receivable interest income, including fees | $ 7,136 | $ 9,391 |
Pharmaceutical development | 148 | |
Other | 18 | 1 |
Revenues | 7,302 | 9,392 |
Costs and expenses: | ||
Provision for loan credit losses | 609 | |
Impairment expense | 163 | |
Interest expense | 101 | 102 |
Pharmaceutical manufacturing, research and development expense | 1,150 | |
Depreciation and amortization expense | 3,505 | 5 |
General and administrative | 3,040 | 1,264 |
Total costs and expenses | 7,959 | 1,980 |
Other income (expense), net | ||
Unrealized net (loss) gain on warrants | (1,860) | 258 |
Unrealized net loss on equity securities | (890) | |
Income (loss) before provision (benifit) for income taxes | (3,407) | 7,670 |
Provision (benefit) for income taxes | 1,253 | 1,111 |
Consolidated net income | $ (4,660) | $ 6,559 |
Net income (loss) per share attributable to SWK Holdings Corporation Stockholders | ||
Basic (in dollars per share) | $ (0.36) | $ 0.51 |
Diluted (in dollars per share) | $ (0.36) | $ 0.51 |
Weighted Average Shares | ||
Basic (in shares) | 12,913,000 | 12,906,000 |
Diluted (in shares) | 12,913,000 | 12,909,000 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Consolidated net income | $ (4,660) | $ 6,559 |
Other comprehensive income (loss), net of tax | ||
Other comprehensive income, net of tax | ||
Comprehensive income | $ (4,660) | $ 6,559 |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance at Dec. 31, 2018 | $ 13 | $ 4,432,499 | $ (4,219,455) | $ 213,057 |
Beginning Balance, in Shares at Dec. 31, 2018 | 12,933,674 | |||
Stock-based compensation | 102 | 102 | ||
Issuance of common stock | ||||
Issuance of common stock, in Shares | 42,225 | |||
Repurchases of common stock in open market | (745) | (745) | ||
Repurchases of common stock in open market (in shares) | (77,300) | |||
Net income | 6,559 | 6,559 | ||
Ending Balance at Mar. 31, 2019 | $ 13 | 4,431,856 | (4,212,896) | 218,973 |
Ending Balance, in Shares at Mar. 31, 2019 | 12,898,599 | |||
Beginning Balance at Dec. 31, 2019 | $ 13 | 4,432,146 | (4,195,627) | 236,532 |
Beginning Balance, in Shares at Dec. 31, 2019 | 12,917,348 | |||
Stock-based compensation | 187 | 187 | ||
Issuance of common stock | ||||
Issuance of common stock, in Shares | 5,937 | |||
Repurchases of common stock in open market | (62) | (62) | ||
Repurchases of common stock in open market (in shares) | (5,279) | |||
Net income | (4,660) | (4,660) | ||
Ending Balance at Mar. 31, 2020 | $ 13 | $ 4,432,271 | $ (4,200,287) | $ 231,997 |
Ending Balance, in Shares at Mar. 31, 2020 | 12,918,006 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Consolidated net (loss) income | $ (4,660) | $ 6,559 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Provision for loan credit losses | 609 | |
Security impairment expense | 163 | |
Amortization of debt issuance costs | 47 | |
Deferred income taxes | 1,253 | 1,111 |
Change in fair value of warrants | 1,860 | (258) |
Change in fair value of equity securities | 890 | |
Loan discount amortization and fee accretion | (536) | (600) |
Interest paid-in-kind | (467) | (406) |
Stock-based compensation | 187 | 102 |
Interest income in excess of cash collected | (82) | |
Depreciation and amortization expense | 3,505 | |
Changes in operating assets and liabilities: | ||
Interest and accounts receivable, net | 543 | 265 |
Other assets | (462) | (9) |
Accounts payable, accrued liabilities, and other liabilities | 994 | (291) |
Net cash provided by operating activities | 3,317 | 7,000 |
Cash flows from investing activities: | ||
Investment in finance receivables | (5,500) | (11,186) |
Repayment of finance receivables | 1,348 | 23,866 |
Corporate debt security principal payment | 18 | 21 |
Other | (249) | |
Net cash provided by (used in) investing activities | (4,383) | 12,701 |
Cash flows from financing activities: | ||
Net proceeds from credit facility | 14,288 | |
Repurchases of common stock, including fees and expenses | (62) | (745) |
Net cash used in financing activities | 14,226 | (745) |
Net decrease in cash and cash equivalents | 13,160 | 18,956 |
Cash and cash equivalents at beginning of period | 11,158 | 20,227 |
Cash and cash equivalents at end of period | $ 24,318 | $ 39,183 |
SWK Holdings Corporation and Su
SWK Holdings Corporation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
SWK Holdings Corporation and Summary of Significant Accounting Policies | Note 1. SWK Holdings Corporation and Summary of Significant Accounting Policies Nature of Operations SWK Holdings Corporation (the “Company”) was incorporated in July 1996 in California and reincorporated in Delaware in September 1999. In July 2012, the Company commenced its strategy of building a specialty finance and asset management business. In August 2019, the Company commenced a complementary strategy of building a pharmaceutical development, manufacturing and intellectual property licensing business. The Company’s operations comprise two reportable segments: “Finance Receivables” and “Pharmaceutical Development.” The Company allocates capital to each segment in order to generate income through the sales of life science products by third parties. The Company is headquartered in Dallas, Texas, and as of March 31, 2020, the Company had 32 employees. The Company has net operating loss carryforwards (“NOLs”) and believes that the ability to utilize these NOLs is an important and substantial asset. However, at this time, under current law, the Company does not anticipate that the Finance Receivables or Pharmaceutical Development segments will generate sufficient income to permit the Company to utilize all of its NOLs prior to their respective expiration dates. As such, it is possible that the Company might pursue additional strategies that it believes might result in the ability to utilize more of the NOLs. As of May 11, 2020, and since inception of the strategy, the Company and its partners have executed transactions with 36 different parties under its specialty finance strategy, funding an aggregate $540.1 million in various financial products across the life science sector. The Company’s portfolio includes senior and subordinated debt backed by royalties and synthetic royalties paid by companies in the life science sector, and purchased royalties generated by sales of life science products and related intellectual property. On August 26, 2019, the Company commenced its Pharmaceutical Development segment with the acquisition of Enteris BioPharma, Inc. (“Enteris”). SWK Products Holdings LLC (“SWK Products”), a wholly-owned subsidiary of the Company, entered into a merger agreement pursuant to which Enteris became a wholly-owned subsidiary of SWK Products. Enteris is a clinical stage biopharmaceutical company offering innovative formulation solutions built around its proprietary oral drug delivery technologies, the Peptelligence® platform. Since its founding in 2013, Enteris has advanced multiple internal and external programs leveraging Peptelligence®, which enables the oral delivery of molecules that are typically injected, including peptides and BCS Class II, III, and IV small molecules, in an enteric-coated tablet formulation. Peptelligence® utilizes a unique multifaceted approach to increase the solubility and absorption of peptides and small molecules, addressing the complex challenges regarding solubility and permeability of therapeutics with low oral bioavailability. Peptelligence® is protected by an extensive patent estate that extends until 2036. Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The consolidated financial statements include the accounts of all subsidiaries and affiliates in which the Company holds a controlling financial interest as of the financial statement date. Normally a controlling financial interest reflects ownership of a majority of the voting interests. The Company consolidates a variable interest entity (“VIE”) when it possesses both the power to direct the activities of the VIE that most significantly impact its economic performance and the Company is either obligated to absorb the losses that could potentially be significant to the VIE or the Company holds the right to receive benefits from the VIE that could potentially be significant to the VIE, after elimination of intercompany accounts and transactions. The Company owns interests in various partnerships and limited liability companies, or LLCs. The Company consolidates its investments in these partnerships or LLCs, where the Company, as the general partner or managing member, exercises effective control, even though the Company’s ownership may be less than 50 percent, the related governing agreements provide the Company with broad powers, and the other parties do not participate in the management of the entities and do not effectively have the ability to remove the Company. The Company has reviewed each of the underlying agreements to determine if it has effective control. If circumstances change and it is determined this control does not exist, any such investment would be recorded using the equity method of accounting. Although this would change individual line items within the Company’s consolidated financial statements, it would have no effect on its operations and/or total stockholders’ equity attributable to the Company. Unaudited Interim Financial Information The unaudited condensed consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, 2020. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 30, 2020. Reclassification Certain prior year amounts have been reclassified to conform to current year presentation. The amounts for prior periods have been reclassified to be consistent with current year presentation and have no impact on previously reported total assets, total stockholders’ equity or net (loss) income. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in the determination of revenue recognition; stock-based compensation; valuation of accounts receivable; impairment of financing receivables; long-lived assets; property, plant and equipment; intangible assets; goodwill; valuation of warrants; contingent consideration; income taxes; and contingencies and litigation, among others. Some of these judgments can be subjective and complex, and consequently, actual results may differ from these estimates. The Company’s estimates often are based on complex judgments, probabilities and assumptions that it believes to be reasonable but that are inherently uncertain and unpredictable. For any given individual estimate or assumption made by the Company, there may also be other estimates or assumptions that are reasonable. The Company regularly evaluates its estimates and assumptions using historical experience and other factors, including the economic environment. As future events and their effects cannot be determined with precision, the Company’s estimates and assumptions may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause changes to those estimates and assumptions. Market conditions, such as illiquid credit markets, health crises such as the COVID-19 global pandemic, volatile equity markets, and economic downturns, can increase the uncertainty already inherent in the Company’s estimates and assumptions. The Company adjusts its estimates and assumptions when facts and circumstances indicate the need for change. Those changes generally will be reflected in our consolidated financial statements on a prospective basis unless they are required to be treated retrospectively under the relevant accounting standard. It is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. Business Combinations We account for business combinations under the acquisition method of accounting. This method requires the recording of acquired assets and assumed liabilities at their acquisition date fair values. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Results of operations related to business combinations are included prospectively beginning with the date of acquisition and transaction costs related to business combinations are recorded within selling, general and administrative expenses. Refer to Note 3, Business Combinations Segment Information The Company earns revenues from its two U.S.-based business segments: its specialty finance and asset management business offering customized financing solutions to a broad range of life-sciences companies, and as of August 26, 2019, the Company’s business offering oral therapeutic formulation solutions built around Enteris’ pharmaceutical Peptelligence® platform, which enables the oral delivery of molecules that are typically injected, including peptides and BCS Class II, III, and IV small molecules in an enteric-coated tablet formulation. The financial results of Enteris are included in the Pharmaceutical Development segment as of the acquisition date. Revenue Recognition The Company’s Pharmaceutical Development segment enters into collaboration and licensing agreements with strategic partners, under which it may exclusively license rights to research, develop, manufacture and commercialize its product candidates to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, upfront license fees; reimbursement of certain costs; customer option exercise fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products. Deferred revenue includes amounts that have been billed per the contractual terms but have not been recognized as revenue. The Company classifies as current the portion of deferred revenue that is expected to be recognized within one year from the balance sheet date. Deferred revenue was $0.7 million and $0.1 million as of March 31, 2020 and December 31, 2019, respectively, and is included in accounts payable and accrued liabilities in the unaudited condensed consolidated balance sheets. Research and Development Research and development expenses include the costs associated with internal research and development and research and development conducted for the Company by third parties. These costs primarily consist of salaries, pre-clinical and clinical trials, outside consultants, and supplies. All research and development costs discussed above are expensed as incurred. Third-party expenses reimbursed under research and development contracts, which are not refundable, are recorded as a reduction to pharmaceutical manufacturing research and development expense in the unaudited condensed consolidated statements of (loss) income. Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (Topic 848), which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. These transactions include: (i) contract modifications, (ii) hedging relationships, and (iii) sales or transfers of debt securities classified as held-to-maturity. ASU 2020-04 is effective from March 12, 2020 through December 31, 2022. An entity may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. An entity may elect to apply the amendments in ASU 2020-04 to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020 and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. The one-time election to sell, transfer, or both sell and transfer debt securities classified as held-to-maturity may be made at any time after March 12, 2020 but no later than December 31, 2022. The Company expects that it will elect to apply some of the expedients and exceptions provided in ASU 2020-04; however, the Company is still evaluating the guidance, and therefore, the impact of the adoption of ASU 2020-04 on the Company’s financial condition and results of operations has not yet been determined. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The new standard adds an impairment model, known as the current expected credit loss (“CECL”) model, that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of losses. The ASU describes the impairment allowance as a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. Credit losses relating to available-for-sale debt securities should be measured in a manner similar to current GAAP; however, the amendments in this update require that credit losses be presented as an allowance rather than as a write-down, which will allow an entity the ability to record reversals of credit losses in current period net income. On November 15, 2019, the FASB issued ASU 2019-10, “Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates,” which finalized various effective dates delay for private companies, not-for-profit organizations, and certain smaller reporting companies. Under ASU 2019-10, the effective date for implementation of CECL for smaller reporting companies was extended to fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company is currently evaluating the new guidance but believes it is likely to incur more upfront losses on its portfolio under the new CECL model. |
Net (Loss) Income per Share
Net (Loss) Income per Share | 3 Months Ended |
Mar. 31, 2020 | |
Net Loss Income Per Share | |
Net (Loss) Income per Share | Note 2. Net (Loss) Income per Share Basic net (loss) income per share is computed using the weighted-average number of outstanding shares of common stock. Diluted net income per share is computed using the weighted-average number of outstanding shares of common stock, and when dilutive, shares of common stock issuable upon exercise of options and warrants deemed outstanding using the treasury stock method. The following table shows the computation of basic and diluted net (loss) income per share for the following periods (in thousands, except per share amounts): Three Months Ended 2020 2019 Numerator: Net (loss) income $ (4,660 ) $ 6,559 Denominator: Weighted-average shares outstanding 12,913 12,906 Effect of dilutive securities — 3 Weighted-average diluted shares 12,913 12,909 Basic net (loss) income per share $ (0.36 ) $ 0.51 Diluted net (loss) income per share $ (0.36 ) $ 0.51 For the three months ended March 31, 2020 and 2019, outstanding stock options, restricted stock units and warrants to purchase shares of common stock in an aggregate of approximately 460,000 and 400,000, respectively, have been excluded from the calculation of diluted net (loss) income per share as all such securities were anti-dilutive. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | Note 3. Business Combinations On August 26, 2019, Enteris, a biotechnology company offering innovative formulation solutions utilizing its proprietary oral drug delivery technology, became a wholly-owned subsidiary of the Company. The total merger consideration was $34.6 million, which included contingent consideration of $14.5 million. The purchase price was subject to certain adjustments with respect to cash, debt, working capital, transaction expenses and the value of the contingent consideration agreement entered into, in connection with the transaction. The acquisition was accounted for under the acquisition method of accounting. Accordingly, the merger consideration was allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition. The excess of the merger consideration over the estimated fair value of the net assets of Enteris was recorded as goodwill, which consists largely of synergies and the acquisition of intangible assets. The resulting goodwill is not expected to be deductible for tax purpose. The allocation of the merger consideration has been prepared on a preliminary basis and changes to the allocation to certain assets, liabilities, including tax estimates and potential indemnities, may be revised as additional information becomes available. The Company will finalize the acquisition accounting within the required measurement period of one year. The following table summarizes the allocation of the merger consideration (at fair value) to the assets and liabilities of Enteris as of August 26, 2019 (the date of acquisition) (in thousands): Cash $ 334 Accounts receivable 145 Inventory 274 Prepaid expenses and other current assets 121 Property and equipment 1,324 Patents and other intangible assets 29,850 Right of use operating lease asset 348 Other assets 110 Goodwill 8,404 Accounts payable (255 ) Accrued expenses and other current liabilities (1,365 ) Deferred revenue (385 ) Lease liability (348 ) Deferred tax liability (3,988 ) Total purchase price $ 34,569 Unaudited Supplemental Pro Forma Information The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2019, the earliest period presented herein (in thousands): Three Months Ended 2019 Revenues $ 10,871 Net income 2,812 The pro forma financial information includes adjustments that are directly attributable to the business combination and are factually supportable. The pro forma adjustments include incremental amortization and depreciation of intangible assets and property and equipment based on preliminary values of each asset and acquisition-related expenses. The pro forma financial information excludes non-recurring acquisition-related expenses. These pro forma results are illustrative only and not indicative of the actual results of operations that would have been achieved nor are they indicative of future results of operations. Goodwill There was no change in the carrying amount of goodwill from December 31, 2019 to March 31, 2020, and net book value remains at $8.4 million. The net book value of goodwill is solely related to the Enteris acquisition in 2019. As of March 31, 2020, the Company concluded that it is more likely than not that fair value of the reporting unit is greater than its carrying value, and goodwill is not considered to be impaired. Intangible Assets As of March 31, 2020, the gross book value and accumulated amortization of acquired intangible assets were as follows (in thousands, except estimated useful life data): As of March 31, 2020 Gross Book Accumulated Net Book Estimated Licensing agreement $ 29,400 $ 8,174 $ 21,226 10 Patents 146 28 118 1 - 20 Trade names and trademarks 210 13 197 10 Customer relationships 240 14 226 10 29,996 8,229 21,767 Deferred patent costs 29 — 29 N/A Total intangibles $ 30,025 $ 8,229 $ 21,796 Amortization expense from the acquisition of Enteris was $3.4 million for the period ended March 31, 2020 and was recorded in depreciation and amortization expense. Based on amounts recorded at March 31, 2020, the Company will recognize acquired intangible asset amortization as follows (in thousands): 2020 (remaining) $ 8,850 2021 3,019 2022 1,764 2023 1,764 2024 1,421 Thereafter 4,949 $ 21,767 |
Finance Receivables, Net
Finance Receivables, Net | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Finance Receivables, Net | Note 4. Finance Receivables, Net Finance receivables are reported at their determined principal balances net of any unearned income, cumulative charge-offs and unamortized deferred fees and costs. Unearned income and deferred fees and costs are amortized to interest income based on all cash flows expected using the effective interest method. As of March 31, 2020, the Company had a credit loss allowance of $8.4 million. Of the total $8.4 million, $1.2 million and $0.6 million are associated with the Company’s Cambia® and Besivance® royalties, respectively. The remaining $6.6 million is related to the ABT Molecular Imaging, Inc. (“ABT”), now known as Best ABT, Inc. (“Best”), second lien term loan that was recognized in order to reflect the Best royalty at its estimated fair value of $4.1 million. The carrying values of finance receivables are as follows (in thousands): Portfolio March 31, December 31, Term loans $ 156,592 $ 150,453 Royalty purchases 29,777 30,760 Total before allowance for credit losses 186,369 181,213 Allowance for credit losses (8,388 ) (8,388 ) Total carrying value $ 177,981 $ 172,825 The following table presents nonaccrual and performing finance receivables by portfolio segment, net of credit loss allowance (in thousands): March 31, 2020 December 31, 2019 Nonaccrual Performing Total Nonaccrual Performing Total Term loans $ 8,337 $ 148,255 $ 156,592 $ 8,337 $ 142,116 $ 150,453 Royalty purchases, net of credit loss allowance 7,614 13,775 21,389 7,614 14,758 22,372 Total carrying value $ 15,951 $ 162,030 $ 177,981 $ 15,951 $ 156,874 $ 172,825 As of March 31, 2020 and December 31, 2019, the Company had three finance receivables in nonaccrual status: (a) the term loan to B&D Dental Corporation (“B&D”), with a net carrying value of $8.3 million, (b) the Best royalty, with a net carrying value of $4.1 million, and (c) the Tissue Regeneration Therapeutics, Inc. (“TRT”) royalty, with a net carrying value of $3.5 million. Although in nonaccrual status, the B&D term loan and the TRT royalty were not considered impaired as of both March 31, 2020 and December 31, 2019. The Company did not collect any cash on its nonaccrual royalties during the three months ended March 31, 2020. (Please see B&D, Best, and TRT below for further details regarding nonaccrual and impaired finance receivables). B&D On December 10, 2013, the Company entered into a five-year credit agreement to provide B&D a senior secured term loan with a principal amount of $6.0 million funded upon close, net of an arrangement fee of $60,000. The loan was scheduled to mature on December 10, 2018. Subsequently, the terms of the loan have been amended, and the Company has funded additional amounts to B&D. As of December 31, 2019, the total amount funded was $8.3 million. B&D is currently evaluating strategic options, including a potential sale of the business. B&D is currently in default under the terms of the credit agreement, and as a result, the Company classified the loan to nonaccrual status as of September 30, 2015. During 2016 and 2018, the Company executed three additional amendments to the loan to advance an additional $0.7 million in order to directly pay critical vendors and protect the value of the collateral. The Company obtained a third-party valuation of B&D as of December 31, 2019. As a result of the third-party valuation and facts and circumstances regarding B&D’s operations, the Company believes its collateral position is greater than the unpaid balance; thus, accrued interest has not been reversed nor has an allowance been recorded as of March 31, 2020. Best On October 31, 2018, ABT announced that it entered into an asset purchase agreement with Best, a wholly-owned subsidiary of Best Medical International, Inc. for aggregate consideration of (i) $500,000, paid over ten years in equal quarterly installments, plus (ii) a ten percent royalty on ABT’s net sales, including any commercialized improvements made to ABT’s technology, paid quarterly for the ten year period from closing pursuant to a royalty security agreement by and between Best and SWK Funding LLC, a wholly-owned subsidiary of the Company (“SWK Funding”). SWK Funding will receive 100 percent of the consideration. On November 8, 2018, the Bankruptcy Court approved the asset sale transaction, and the Company has no further funding liabilities. During the year ended December 31, 2018, the Company re-evaluated its collateral position, considering the expected outcome of the Chapter 11 process, and as a result, the Company recognized an impairment expense of $5.3 million to write off the second lien term loan, as well as provision for credit losses of $5.0 million to reflect the Best royalty at its estimated fair value of $5.7 million. During the year ended December 31, 2019, the Company re-evaluated the value of the Best royalty based on 2019 business trends, and as a result, the Company recognized a provision for credit losses of $1.6 million to reflect the Best royalty at its estimated fair value of $4.1 million. TRT On June 13, 2013, the Company purchased royalties from TRT related to its technology licenses in the family cord banking services sector for $2.0 million, and on October 20, 2014, funded an additional $1.25 million upon the achievement of royalty receipts-based milestones. During the quarter ended March 31, 2016, royalty payments from the primary U.S. licensee ended as a result of the licensee terminating a technology license. The Company and TRT continue to evaluate both options in regard to enforcing TRT’s intellectual property rights against this licensee, as well as seeking additional U.S. licensees. TRT’s Canadian licensee continues to pay royalties. The Company is in discussions with TRT to restructure the purchase agreement. Given uncertainties regarding the outcome of the negotiations and the ultimate timing of cash flows related to the U.S. intellectual property, the Company has placed the TRT royalty on non-accrual status, although does not consider it impaired as of March 31, 2020. The Company evaluated several factors in this determination, including input from intellectual property counsel regarding the strength of the related intellectual property, continued receipt of Canadian licensee royalty payments and anticipated terms of the restructured purchase agreement. |
Marketable Investments and Corp
Marketable Investments and Corporate Debt Securities | 3 Months Ended |
Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Investments and Corporate Debt Securities | Note 5. Marketable Investments Investments in corporate debt securities and equity securities at March 31, 2020 and December 31, 2019 consist of the following (in thousands): March 31, December 31, Corporate debt securities $ 285 $ 466 Equity securities 912 1,802 Total marketable investments $ 1,197 $ 2,268 The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale debt securities as of March 31, 2020 and December 31, 2019, are as follows (in thousands): March 31, 2020 Amortized Gross Gross Fair Value Corporate debt securities $ 285 $ — $ — $ 285 December 31, 2019 Amortized Gross Gross Fair Value Corporate debt securities $ 466 $ — $ — $ 466 The following table presents unrealized net losses on equity securities during the three months ended March 31, 2020 and 2019 (in thousands): Three Months Ended 2020 2019 Unrealized net loss on equity securities reflected in the unaudited condensed consolidated statements of (loss) income $ (890 ) $ — Equity Securities As of March 31, 2020, the Company’s equity securities include 96,810 shares of Misonix, Inc. (“Misonix”) common stock received pursuant to Misonix’s purchase of Solsys Medical, Inc. (“Solsys”) on September 27, 2019. During the three months ended September 30, 2019 and prior to the acquisition, the Company exercised its Solsys warrants in a cashless transaction to purchase Solsys preferred stock and exercised its preemptive right to protect against dilution of its Solsys equity position. Of the total 109,472 shares of Misonix common stock received for its Solsys equity interests, 12,662 shares are held in escrow by Misonix, are subject to reduction based on terms of the acquisition agreement, and any shares remaining at the end of the escrow period will be released within 15 to 18 months post closing of the acquisition. The 96,810 shares are subject to a one year lock-up that expires on September 27, 2020. As of March 31, 2020, the 96,810 shares of Misonix common stock are reflected at their estimated fair value of $0.9 million. Debt Securities On July 9, 2013, the Company entered into a note purchase agreement to purchase, at par, $3.0 million of a total of $100.0 million aggregate principal amount of senior secured notes due in November 2026. The agreement allows the first interest payment date to include paid-in-kind notes for any cash shortfall, of which the Company received $0.1 million on November 15, 2013. The notes are secured only by certain royalty and milestone payments associated with the sales of pharmaceutical products. The senior secured notes have been placed on non-accrual status as of June 30, 2016. Total cash collected during the three months ended March 31, 2020 and 2019 was $17,660 and $21,000, respectively, which was credited to the notes’ carrying value. During the three months ended March 31, 2020, impairment expense of $0.2 million was recognized in order to reflect the notes at their estimated fair value of $0.3 million. The notes are included in long-term marketable investments in the unaudited condensed consolidated balance sheets. |
Revolving Credit Facility
Revolving Credit Facility | 3 Months Ended |
Mar. 31, 2020 | |
SWKHP Holdings LP [Member] | |
Revolving Credit Facility | Note 6. Revolving Credit Facility On June 29, 2018, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with State Bank and Trust Company as a lender and the administrative agent (“State Bank”) pursuant to which State Bank will provide the Company with up to a $20 million revolving senior secured credit facility, which the Company can draw down and repay until maturity, subject to borrowing base eligibility. The Loan Agreement matures on June 29, 2021. The Loan Agreement accrues interest at the Daily LIBOR Rate, with a floor of 1.00 percent, plus a 3.25 percent margin and principal is repayable in full at maturity. Interest is generally required to be paid monthly in arrears. The Loan Agreement requires the payment of an unused line fee of 0.50 percent, which will be recorded as interest expense. The Company paid $0.5 million in fees at closing, which have been capitalized as deferred financing costs and are being amortized on a straight-line basis over the term of the Loan Agreement. The Loan Agreement has an advance rate against the Company’s finance receivables portfolio, including 85 percent against senior first lien loans, 70 percent against second lien loans and 50 percent against royalty receivables, subject to certain eligibility requirements as defined in the Loan Agreement. The Loan Agreement contains certain affirmative and negative covenants including minimum asset coverage and minimum interest coverage ratios. During both the three months ended March 31, 2020 and 2019, the Company recognized $0.1 million of interest expense. On March 17, 2020, the Company drew $15.0 million on its revolving credit facility in order to support existing business partners and to finance future investment opportunities. As of March 31, 2020, $14.3 million was outstanding under the revolving credit facility, and $5.7 million was available for borrowing. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 7. Related Party Transactions On September 6, 2013, in connection with entering into a credit facility, the Company issued warrants to an affiliate of a stockholder, Carlson Capital, L.P. (the “Stockholder”), for 100,000 shares of the Company’s common stock at a strike price of $13.88 per share. The warrants have a price anti-dilution mechanism that was triggered by the price that shares were sold by the Company in a rights offering in 2014, and as a result, the strike price of the warrants was reduced to $13.48 per share. Due to certain provisions within the warrant agreement, the warrants meet the definition of a derivative and do not qualify for a scope exception, as it is not considered indexed to the Company’s stock. As such, the warrants are reflected as a warrant liability in the unaudited condensed consolidated balance sheets. The Company recorded a nominal loss for the three months ended March 31, 2020. The Company determined the fair value using the Black-Scholes option pricing model with the following assumptions: March 31, December 31, Dividend rate — — Risk-free rate 0.15 % 1.6 % Expected life (years) 0.4 0.7 Expected volatility 69.9 % 31.8 % The changes on the value of the warrant liability during the three months ended March 31, 2020 were as follows (in thousands): Fair value – December 31, 2019 $ 76 Issuances — Changes in fair value 53 Fair value – March 31, 2020 $ 129 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8. Commitments and Contingencies Unfunded Commitments As of March 31, 2020, the Company’s unfunded commitments were as follows (in millions): Aimmune Therapeutics, Inc. $ 1.3 eTon Pharmaceuticals, Inc. 5.0 Total unfunded commitments $ 6.3 All unfunded commitments are contingent upon reaching an established revenue threshold or other performance metrics on or before a specified date or period of time per the terms of the royalty purchase or credit agreements, and in the case of loan transactions, are only subject to being advanced as long as an event of default does not exist. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 9. Stockholders’ Equity Stock Compensation Plans During the three months ended March 31, 2020 and 2019, the Company’s Board of Directors (the “Board”) approved compensation for Board services by granting 5,937 and 4,725 shares, respectively, of common stock as compensation for the non-employee directors. During the three months ended March 31, 2020 and 2019, the Company recorded approximately $0.1 million and $47,000, respectively, in Board stock-based compensation expense. The aggregate stock-based compensation expense, including the quarterly Board grants, recognized by the Company for the three months ended March 31, 2020 and 2019 was $0.2 million and $0.1 million, respectively. Share Repurchase Programs On December 21, 2018, September 5, 2019 and March 26, 2020, the Board authorized share repurchase programs, which are more fully described in Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 10. Fair Value Measurements The Company measures and reports certain financial and non-financial assets and liabilities on a fair value basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. The following is a description of the three hierarchy levels. Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Active markets are considered to be those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in inactive markets. Level 3 Unobservable inputs are not corroborated by market data. This category is comprised of financial and non-financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies using significant inputs that are generally less readily observable from objective sources. Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no transfers between any levels during the three months ended March 31, 2020. The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying unaudited condensed consolidated financial statements and the related market or fair value. The disclosures include financial instruments and derivative financial instruments, other than investment in affiliates. Following are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to those models and significant assumptions utilized. Cash and cash equivalents The carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets’ fair values. Marketable Investments Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices). Finance Receivables The fair values of finance receivables are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the finance receivables. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. These receivables are classified as Level 3. Finance receivables are not measured at fair value on a recurring basis, but estimates of fair value are reflected below. Contingent Consideration The Company recorded contingent consideration related to the August 2019 acquisition of Enteris and sharing of certain milestone and royalties due to Enteris pursuant to the License Agreement. Please refer to Note 3, Business Combinations The fair value measurements of contingent consideration obligations and the related intangible assets arising from business combinations are classified as Level 3 estimates under the fair value hierarchy as these items have been valued using unobservable inputs. These inputs include: (a) the estimated amount and timing of projected cash flows; (b) the probability of the achievement of the factors on which the contingency is based; and (c) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Significant increases or decreases in any of those inputs in isolation could result in a significantly lower or higher fair value measurement. As of March 31, 2020 and December 31, 2019, the Company’s contingent consideration was recorded at its estimated fair value of $14.5 million. Marketable Investments and Derivative Securities Marketable Investments If active market prices are available, fair value measurement is based on quoted active market prices and, accordingly, these securities would be classified as Level 1. If active market prices are not available, fair value measurement is based on observable inputs other than quoted prices included within Level 1, such as prices for similar assets or broker quotes utilizing observable inputs, and accordingly these securities would be classified as Level 2. If market prices are not available and there are no observable inputs, then fair value would be estimated by using valuation models including discounted cash flow methodologies, commonly used option-pricing models and broker quotes. Such securities would be classified as Level 3, if the valuation models and broker quotes are based on inputs that are unobservable in the market. If fair value is based on broker quotes, the Company checks the validity of received prices based on comparison to prices of other similar assets and market data such as relevant bench mark indices. Available-for-sale securities are measured at fair value on a recurring basis, while securities with no readily available fair market value are not, but estimates of fair value are reflected below. Derivative Securities For exchange-traded derivatives, fair value is based on quoted market prices, and accordingly, would be classified as Level 1. For non-exchange traded derivatives, fair value is based on option pricing models and are classified as Level 3. The following table presents financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 (in thousands): Total Quoted Prices Significant Significant Financial Assets: Warrant assets $ 1,748 $ — $ — $ 1,748 Marketable investments 1,197 912 — 285 Financial Liabilities: Contingent consideration payable $ 14,500 $ — $ — $ 14,500 Warrant liability 129 — — 129 The following table presents financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 (in thousands): Total Quoted Prices Significant Significant Financial Assets: Warrant assets $ 3,555 $ — $ — $ 3,555 Marketable investments 2,268 1,802 — 466 Financial Liabilities: Contingent consideration payable $ 14,500 $ — $ — $ 14,500 Warrant liability 76 — — 76 The changes on the value of the warrant assets during the three months ended March 31, 2020 were as follows (in thousands): Fair value – December 31, 2019 $ 3,555 Issued — Canceled — Change in fair value (1,807 ) Fair value – March 31, 2020 $ 1,748 The Company holds warrants issued to the Company in conjunction with certain term loan investments. These warrants meet the definition of a derivative and are included in the unaudited condensed consolidated balance sheets. The fair values for warrants outstanding, which do not have a readily determinable value, are measured using the Black-Scholes option pricing model. The following ranges of assumptions were used in the models to determine fair value: March 31, 2020 December 31, 2019 Dividend rate range — — Risk-free rate range 0.37% to 0.55% 1.7% to 1.8% Expected life (years) range 4.3 to 7.1 4.6 to 7.4 Expected volatility range 70.0% to 141.1% 50.3% to 114.6% As of March 31, 2020 and December 31, 2019, the Company had three royalties, Besivance®, Best, and Cambia®, that were deemed to be impaired based on reductions in carrying values in prior periods. The following table presents these royalties measured at fair value on a nonrecurring basis as of March 31, 2020 and December 31, 2019 (in thousands): Total Quoted Prices Significant Significant March 31, 2020 Impaired royalties $ 9,547 $ — $ — $ 9,547 December 31, 2019 Impaired royalties $ 10,004 $ — $ — $ 10,004 There were no liabilities measured at fair value on a nonrecurring basis as of March 31, 2020 and December 31, 2019. The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying unaudited condensed consolidated financial statements and the related market or fair value. The disclosures include financial instruments and derivative financial instruments. As of March 31, 2020 (in thousands): Carry Value Fair Value Level 1 Level 2 Level 3 Financial Assets Cash and cash equivalents $ 24,318 $ 24,318 $ 24,318 $ — $ — Finance receivables 177,981 177,981 — — 177,981 Marketable investments 1,197 1,197 912 — 285 Warrant assets 1,748 1,748 — — 1,748 Financial Liabilities Contingent consideration payable $ 14,500 $ 14,500 $ — $ — $ 14,500 Warrant liability 129 129 — — 129 As of December 31, 2019 (in thousands): Carry Value Fair Value Level 1 Level 2 Level 3 Financial Assets Cash and cash equivalents $ 11,158 $ 11,158 $ 11,158 $ — $ — Finance receivables 172,825 172,825 — — 172,825 Marketable investments 2,268 2,268 1,802 — 466 Warrant assets 3,555 3,555 — — 3,555 Financial Liabilities Contingent consideration payable $ 14,500 $ 14,500 $ — $ — $ 14,500 Warrant liability 76 76 — — 76 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Note 11. Segment Information Selected financial and descriptive information is required to be provided about reportable operating segments, considering a “management approach” concept as the basis for identifying reportable segments. The management approach is based on the way that management organizes the segments within the Company for making operating decisions, allocating resources, and assessing performance. Consequently, the segments are evident from the structure of the Company’s internal organization, focusing on financial information that a Company’s chief operating decision-makers use to make decisions about the Company’s operating matters. As described in Note 1, SWK Holdings Corporation and Summary of Significant Accounting Policies, Segment performance is evaluated based on several factors, including income (loss) from continuing operations before income. Management uses this measure of profit (loss) to evaluate segment performance because the Company believes this measure is indicative of performance trends and the overall earnings potential of each segment. The following tables present financial information for the Company’s reportable segments for the periods indicated (in thousands): Three Months Ended March 31, 2020 Finance Pharmaceutical Holdings Consolidated Revenues $ 7,136 $ 166 $ — $ 7,302 Provision for credit losses and impairment expense 163 — — 163 Interest expense 101 — — 101 Pharmaceutical manufacturing, research and development expense — 1,150 — 1,150 Depreciation and amortization — 3,502 3 3,505 General and administrative 512 1,047 1,481 3,040 Other expense, net (2,697 ) — (53 ) (2,750 ) Provision for income taxes — — 1,253 1,253 Net income (loss) 3,663 (5,533 ) (2,790 ) (4,660 ) Included in Holdings Company and Other are the expenses of the parent holding company and certain other enterprise-wide overhead costs, including public company costs and non-Enteris corporate employees, which have been included for purposes of reconciling to the consolidated amounts. |
SWK Holdings Corporation and _2
SWK Holdings Corporation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations SWK Holdings Corporation (the “Company”) was incorporated in July 1996 in California and reincorporated in Delaware in September 1999. In July 2012, the Company commenced its strategy of building a specialty finance and asset management business. In August 2019, the Company commenced a complementary strategy of building a pharmaceutical development, manufacturing and intellectual property licensing business. The Company’s operations comprise two reportable segments: “Finance Receivables” and “Pharmaceutical Development.” The Company allocates capital to each segment in order to generate income through the sales of life science products by third parties. The Company is headquartered in Dallas, Texas, and as of March 31, 2020, the Company had 32 employees. The Company has net operating loss carryforwards (“NOLs”) and believes that the ability to utilize these NOLs is an important and substantial asset. However, at this time, under current law, the Company does not anticipate that the Finance Receivables or Pharmaceutical Development segments will generate sufficient income to permit the Company to utilize all of its NOLs prior to their respective expiration dates. As such, it is possible that the Company might pursue additional strategies that it believes might result in the ability to utilize more of the NOLs. As of May 11, 2020, and since inception of the strategy, the Company and its partners have executed transactions with 36 different parties under its specialty finance strategy, funding an aggregate $540.1 million in various financial products across the life science sector. The Company’s portfolio includes senior and subordinated debt backed by royalties and synthetic royalties paid by companies in the life science sector, and purchased royalties generated by sales of life science products and related intellectual property. On August 26, 2019, the Company commenced its Pharmaceutical Development segment with the acquisition of Enteris BioPharma, Inc. (“Enteris”). SWK Products Holdings LLC (“SWK Products”), a wholly-owned subsidiary of the Company, entered into a merger agreement pursuant to which Enteris became a wholly-owned subsidiary of SWK Products. Enteris is a clinical stage biopharmaceutical company offering innovative formulation solutions built around its proprietary oral drug delivery technologies, the Peptelligence® platform. Since its founding in 2013, Enteris has advanced multiple internal and external programs leveraging Peptelligence®, which enables the oral delivery of molecules that are typically injected, including peptides and BCS Class II, III, and IV small molecules, in an enteric-coated tablet formulation. Peptelligence® utilizes a unique multifaceted approach to increase the solubility and absorption of peptides and small molecules, addressing the complex challenges regarding solubility and permeability of therapeutics with low oral bioavailability. Peptelligence® is protected by an extensive patent estate that extends until 2036. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The consolidated financial statements include the accounts of all subsidiaries and affiliates in which the Company holds a controlling financial interest as of the financial statement date. Normally a controlling financial interest reflects ownership of a majority of the voting interests. The Company consolidates a variable interest entity (“VIE”) when it possesses both the power to direct the activities of the VIE that most significantly impact its economic performance and the Company is either obligated to absorb the losses that could potentially be significant to the VIE or the Company holds the right to receive benefits from the VIE that could potentially be significant to the VIE, after elimination of intercompany accounts and transactions. The Company owns interests in various partnerships and limited liability companies, or LLCs. The Company consolidates its investments in these partnerships or LLCs, where the Company, as the general partner or managing member, exercises effective control, even though the Company’s ownership may be less than 50 percent, the related governing agreements provide the Company with broad powers, and the other parties do not participate in the management of the entities and do not effectively have the ability to remove the Company. The Company has reviewed each of the underlying agreements to determine if it has effective control. If circumstances change and it is determined this control does not exist, any such investment would be recorded using the equity method of accounting. Although this would change individual line items within the Company’s consolidated financial statements, it would have no effect on its operations and/or total stockholders’ equity attributable to the Company. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The unaudited condensed consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, 2020. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 30, 2020. |
Reclassification | Reclassification Certain prior year amounts have been reclassified to conform to current year presentation. The amounts for prior periods have been reclassified to be consistent with current year presentation and have no impact on previously reported total assets, total stockholders’ equity or net (loss) income. |
Use of Estimates | Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in the determination of revenue recognition; stock-based compensation; valuation of accounts receivable; impairment of financing receivables; long-lived assets; property, plant and equipment; intangible assets; goodwill; valuation of warrants; contingent consideration; income taxes; and contingencies and litigation, among others. Some of these judgments can be subjective and complex, and consequently, actual results may differ from these estimates. The Company’s estimates often are based on complex judgments, probabilities and assumptions that it believes to be reasonable but that are inherently uncertain and unpredictable. For any given individual estimate or assumption made by the Company, there may also be other estimates or assumptions that are reasonable. The Company regularly evaluates its estimates and assumptions using historical experience and other factors, including the economic environment. As future events and their effects cannot be determined with precision, the Company’s estimates and assumptions may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause changes to those estimates and assumptions. Market conditions, such as illiquid credit markets, health crises such as the COVID-19 global pandemic, volatile equity markets, and economic downturns, can increase the uncertainty already inherent in the Company’s estimates and assumptions. The Company adjusts its estimates and assumptions when facts and circumstances indicate the need for change. Those changes generally will be reflected in our consolidated financial statements on a prospective basis unless they are required to be treated retrospectively under the relevant accounting standard. It is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. |
Business Combination | Business Combinations We account for business combinations under the acquisition method of accounting. This method requires the recording of acquired assets and assumed liabilities at their acquisition date fair values. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Results of operations related to business combinations are included prospectively beginning with the date of acquisition and transaction costs related to business combinations are recorded within selling, general and administrative expenses. Refer to Note 3, Business Combinations |
Segment Reporting | Segment Information The Company earns revenues from its two U.S.-based business segments: its specialty finance and asset management business offering customized financing solutions to a broad range of life-sciences companies, and as of August 26, 2019, the Company’s business offering oral therapeutic formulation solutions built around Enteris’ pharmaceutical Peptelligence® platform, which enables the oral delivery of molecules that are typically injected, including peptides and BCS Class II, III, and IV small molecules in an enteric-coated tablet formulation. The financial results of Enteris are included in the Pharmaceutical Development segment as of the acquisition date. |
Revenue Recognition | Revenue Recognition The Company’s Pharmaceutical Development segment enters into collaboration and licensing agreements with strategic partners, under which it may exclusively license rights to research, develop, manufacture and commercialize its product candidates to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, upfront license fees; reimbursement of certain costs; customer option exercise fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products. Deferred revenue includes amounts that have been billed per the contractual terms but have not been recognized as revenue. The Company classifies as current the portion of deferred revenue that is expected to be recognized within one year from the balance sheet date. Deferred revenue was $0.7 million and $0.1 million as of March 31, 2020 and December 31, 2019, respectively, and is included in accounts payable and accrued liabilities in the unaudited condensed consolidated balance sheets. |
Research and Development | Research and Development Research and development expenses include the costs associated with internal research and development and research and development conducted for the Company by third parties. These costs primarily consist of salaries, pre-clinical and clinical trials, outside consultants, and supplies. All research and development costs discussed above are expensed as incurred. Third-party expenses reimbursed under research and development contracts, which are not refundable, are recorded as a reduction to pharmaceutical manufacturing research and development expense in the unaudited condensed consolidated statements of (loss) income. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (Topic 848), which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. These transactions include: (i) contract modifications, (ii) hedging relationships, and (iii) sales or transfers of debt securities classified as held-to-maturity. ASU 2020-04 is effective from March 12, 2020 through December 31, 2022. An entity may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. An entity may elect to apply the amendments in ASU 2020-04 to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020 and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. The one-time election to sell, transfer, or both sell and transfer debt securities classified as held-to-maturity may be made at any time after March 12, 2020 but no later than December 31, 2022. The Company expects that it will elect to apply some of the expedients and exceptions provided in ASU 2020-04; however, the Company is still evaluating the guidance, and therefore, the impact of the adoption of ASU 2020-04 on the Company’s financial condition and results of operations has not yet been determined. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The new standard adds an impairment model, known as the current expected credit loss (“CECL”) model, that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of losses. The ASU describes the impairment allowance as a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. Credit losses relating to available-for-sale debt securities should be measured in a manner similar to current GAAP; however, the amendments in this update require that credit losses be presented as an allowance rather than as a write-down, which will allow an entity the ability to record reversals of credit losses in current period net income. On November 15, 2019, the FASB issued ASU 2019-10, “Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates,” which finalized various effective dates delay for private companies, not-for-profit organizations, and certain smaller reporting companies. Under ASU 2019-10, the effective date for implementation of CECL for smaller reporting companies was extended to fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company is currently evaluating the new guidance but believes it is likely to incur more upfront losses on its portfolio under the new CECL model. |
Net (Loss) Income per Share (Ta
Net (Loss) Income per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Net Loss Income Per Share Tables Abstract | |
Schedule of earnings per share, basic and diluted | The following table shows the computation of basic and diluted net (loss) income per share for the following periods (in thousands, except per share amounts): Three Months Ended 2020 2019 Numerator: Net (loss) income $ (4,660 ) $ 6,559 Denominator: Weighted-average shares outstanding 12,913 12,906 Effect of dilutive securities — 3 Weighted-average diluted shares 12,913 12,909 Basic net (loss) income per share $ (0.36 ) $ 0.51 Diluted net (loss) income per share $ (0.36 ) $ 0.51 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
ABT Molecular Imaging, Inc [Member] | |
Schedule of Business Combination | The following table summarizes the allocation of the merger consideration (at fair value) to the assets and liabilities of Enteris as of August 26, 2019 (the date of acquisition) (in thousands): Cash $ 334 Accounts receivable 145 Inventory 274 Prepaid expenses and other current assets 121 Property and equipment 1,324 Patents and other intangible assets 29,850 Right of use operating lease asset 348 Other assets 110 Goodwill 8,404 Accounts payable (255 ) Accrued expenses and other current liabilities (1,365 ) Deferred revenue (385 ) Lease liability (348 ) Deferred tax liability (3,988 ) Total purchase price $ 34,569 |
Schedule of Unaudited Supplemental Pro Forma Information | The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2019, the earliest period presented herein (in thousands): Three Months Ended 2019 Revenues $ 10,871 Net income 2,812 |
Schedule of Intangible Assets | As of March 31, 2020, the gross book value and accumulated amortization of acquired intangible assets were as follows (in thousands, except estimated useful life data): As of March 31, 2020 Gross Book Accumulated Net Book Estimated Licensing agreement $ 29,400 $ 8,174 $ 21,226 10 Patents 146 28 118 1 - 20 Trade names and trademarks 210 13 197 10 Customer relationships 240 14 226 10 29,996 8,229 21,767 Deferred patent costs 29 — 29 N/A Total intangibles $ 30,025 $ 8,229 $ 21,796 |
Schedule of Intangible Asset Amortization Expense | Amortization expense from the acquisition of Enteris was $3.4 million for the period ended March 31, 2020 and was recorded in depreciation and amortization expense. Based on amounts recorded at March 31, 2020, the Company will recognize acquired intangible asset amortization as follows (in thousands): 2020 (remaining) $ 8,850 2021 3,019 2022 1,764 2023 1,764 2024 1,421 Thereafter 4,949 $ 21,767 |
Finance Receivables (Tables)
Finance Receivables (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Schedule of carrying value of finance receivables | The carrying values of finance receivables are as follows (in thousands): Portfolio March 31, December 31, Term loans $ 156,592 $ 150,453 Royalty purchases 29,777 30,760 Total before allowance for credit losses 186,369 181,213 Allowance for credit losses (8,388 ) (8,388 ) Total carrying value $ 177,981 $ 172,825 |
Schedule of analysis of nonaccrual and performing loans by portfolio segment | The following table presents nonaccrual and performing finance receivables by portfolio segment, net of credit loss allowance (in thousands): March 31, 2020 December 31, 2019 Nonaccrual Performing Total Nonaccrual Performing Total Term loans $ 8,337 $ 148,255 $ 156,592 $ 8,337 $ 142,116 $ 150,453 Royalty purchases, net of credit loss allowance 7,614 13,775 21,389 7,614 14,758 22,372 Total carrying value $ 15,951 $ 162,030 $ 177,981 $ 15,951 $ 156,874 $ 172,825 |
Marketable Investments and Co_2
Marketable Investments and Corporate Debt Securities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of marketable investments | Investments in corporate debt securities and equity securities at March 31, 2020 and December 31, 2019 consist of the following (in thousands): March 31, December 31, Corporate debt securities $ 285 $ 466 Equity securities 912 1,802 Total marketable investments $ 1,197 $ 2,268 |
Schedule of available-for-sale securities reconciliation | The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale debt securities as of March 31, 2020 and December 31, 2019, are as follows (in thousands): March 31, 2020 Amortized Gross Gross Fair Value Corporate debt securities $ 285 $ — $ — $ 285 December 31, 2019 Amortized Gross Gross Fair Value Corporate debt securities $ 466 $ — $ — $ 466 |
Schedule of Proceeds from sales, gross unrealized gains and gross unrealized losses for available-for-sale securities | The following table presents unrealized net losses on equity securities during the three months ended March 31, 2020 and 2019 (in thousands): Three Months Ended 2020 2019 Unrealized net loss on equity securities reflected in the unaudited condensed consolidated statements of (loss) income $ (890 ) $ — |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of assumptions used | The Company determined the fair value using the Black-Scholes option pricing model with the following assumptions: March 31, December 31, Dividend rate — — Risk-free rate 0.15 % 1.6 % Expected life (years) 0.4 0.7 Expected volatility 69.9 % 31.8 % |
Schedule of value of the warrant liability | The changes on the value of the warrant liability during the three months ended March 31, 2020 were as follows (in thousands): Fair value – December 31, 2019 $ 76 Issuances — Changes in fair value 53 Fair value – March 31, 2020 $ 129 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Unfunded Commitments | As of March 31, 2020, the Company’s unfunded commitments were as follows (in millions): Aimmune Therapeutics, Inc. $ 1.3 eTon Pharmaceuticals, Inc. 5.0 Total unfunded commitments $ 6.3 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value assets measured on recurring basis | The following table presents financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 (in thousands): Total Quoted Prices Significant Significant Financial Assets: Warrant assets $ 1,748 $ — $ — $ 1,748 Marketable investments 1,197 912 — 285 Financial Liabilities: Contingent consideration payable $ 14,500 $ — $ — $ 14,500 Warrant liability 129 — — 129 The following table presents financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 (in thousands): Total Quoted Prices Significant Significant Financial Assets: Warrant assets $ 3,555 $ — $ — $ 3,555 Marketable investments 2,268 1,802 — 466 Financial Liabilities: Contingent consideration payable $ 14,500 $ — $ — $ 14,500 Warrant liability 76 — — 76 |
Schedule of fair value assets measured on recurring basis unobservable input reconciliation | The changes on the value of the warrant assets during the three months ended March 31, 2020 were as follows (in thousands): Fair value – December 31, 2019 $ 3,555 Issued — Canceled — Change in fair value (1,807 ) Fair value – March 31, 2020 $ 1,748 |
Schedule of weighted average assumptions | The following ranges of assumptions were used in the models to determine fair value: March 31, 2020 December 31, 2019 Dividend rate range — — Risk-free rate range 0.37% to 0.55% 1.7% to 1.8% Expected life (years) range 4.3 to 7.1 4.6 to 7.4 Expected volatility range 70.0% to 141.1% 50.3% to 114.6% |
Schedule of fair value assets and liabilities measured on nonrecurring basis | The following table presents these royalties measured at fair value on a nonrecurring basis as of March 31, 2020 and December 31, 2019 (in thousands): Total Quoted Prices Significant Significant March 31, 2020 Impaired royalties $ 9,547 $ — $ — $ 9,547 December 31, 2019 Impaired royalties $ 10,004 $ — $ — $ 10,004 |
Schedule of fair value by balance sheet grouping | The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying unaudited condensed consolidated financial statements and the related market or fair value. The disclosures include financial instruments and derivative financial instruments. As of March 31, 2020 (in thousands): Carry Value Fair Value Level 1 Level 2 Level 3 Financial Assets Cash and cash equivalents $ 24,318 $ 24,318 $ 24,318 $ — $ — Finance receivables 177,981 177,981 — — 177,981 Marketable investments 1,197 1,197 912 — 285 Warrant assets 1,748 1,748 — — 1,748 Financial Liabilities Contingent consideration payable $ 14,500 $ 14,500 $ — $ — $ 14,500 Warrant liability 129 129 — — 129 As of December 31, 2019 (in thousands): Carry Value Fair Value Level 1 Level 2 Level 3 Financial Assets Cash and cash equivalents $ 11,158 $ 11,158 $ 11,158 $ — $ — Finance receivables 172,825 172,825 — — 172,825 Marketable investments 2,268 2,268 1,802 — 466 Warrant assets 3,555 3,555 — — 3,555 Financial Liabilities Contingent consideration payable $ 14,500 $ 14,500 $ — $ — $ 14,500 Warrant liability 76 76 — — 76 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Reportable Segments | The following tables present financial information for the Company’s reportable segments for the periods indicated (in thousands): Three Months Ended March 31, 2020 Finance Pharmaceutical Holdings Consolidated Revenues $ 7,136 $ 166 $ — $ 7,302 Provision for credit losses and impairment expense 163 — — 163 Interest expense 101 — — 101 Pharmaceutical manufacturing, research and development expense — 1,150 — 1,150 Depreciation and amortization — 3,502 3 3,505 General and administrative 512 1,047 1,481 3,040 Other expense, net (2,697 ) — (53 ) (2,750 ) Provision for income taxes — — 1,253 1,253 Net income (loss) 3,663 (5,533 ) (2,790 ) (4,660 ) |
Net (Loss) Income per Share (De
Net (Loss) Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Consolidated net income | $ (4,660) | $ 6,559 |
Denominator: | ||
Weighted-average shares outstanding | 12,913,000 | 12,906,000 |
Effect of dilutive securities | 3,000 | |
Weighted-average diluted shares | 12,913,000 | 12,909,000 |
Basic net (loss) income per share | $ (0.36) | $ 0.51 |
Diluted net (loss) income per share | $ (0.36) | $ 0.51 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares) | 460,000 | 400,000 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Aug. 26, 2019 |
Patents and other intangible assets | $ 30,025 | ||
Goodwill | $ 8,404 | $ 8,404 | |
Enteris BioPharma Inc. [Member] | |||
Cash | $ 334 | ||
Accounts receivable | 145 | ||
Inventory | 274 | ||
Prepaid expenses and other current assets | 121 | ||
Property and equipment | 1,324 | ||
Patents and other intangible assets | 29,850 | ||
Right of use operating lease asset | 348 | ||
Other assets | 110 | ||
Goodwill | 8,404 | ||
Accounts payable | (255) | ||
Accrued expenses and other current liabilities | (1,365) | ||
Deferred revenue | (385) | ||
Lease liability | (348) | ||
Deferred tax liability | (3,988) | ||
Total purchase price | $ 34,569 |
Business Combinations (Details
Business Combinations (Details 2) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Disclosure Business Combinations Details 2Abstract | |
Revenues | $ 10,871 |
Net income | $ 2,812 |
Business Combinations (Detail_2
Business Combinations (Details 3) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2020 | |
Gross Book Value | $ 30,025 | |
Accumulated Amortization | 8,229 | |
Net Book Value | 21,796 | |
Minimum [Member] | ||
Estimated Useful Life | 1 year | |
Maximum [Member] | ||
Estimated Useful Life | 20 years | |
Cara Licensing Agreement [Member] | ||
Gross Book Value | 29,400 | |
Accumulated Amortization | 8,174 | |
Net Book Value | 21,226 | |
Estimated Useful Life | 10 years | |
Patent [Member] | ||
Gross Book Value | 146 | |
Accumulated Amortization | 28 | |
Net Book Value | 118 | |
Trademarks and Trade Names [Member] | ||
Gross Book Value | 210 | |
Accumulated Amortization | 13 | |
Net Book Value | 197 | |
Estimated Useful Life | 10 years | |
Customer Relationships [Member] | ||
Gross Book Value | 240 | |
Accumulated Amortization | 14 | |
Net Book Value | 226 | |
Estimated Useful Life | 10 years | |
Intangible Assets [Member] | ||
Gross Book Value | 29,996 | |
Accumulated Amortization | 8,229 | |
Net Book Value | 21,767 | |
Deferred Patent Costs [Member] | ||
Gross Book Value | 29 | |
Accumulated Amortization | ||
Net Book Value | $ 29 |
Business Combinations (Detail_3
Business Combinations (Details 4) $ in Thousands | Mar. 31, 2020USD ($) |
Total | $ 21,796 |
Intangible Assets [Member] | |
2020 (remaining) | 8,850 |
2021 | 3,019 |
2022 | 1,764 |
2023 | 1,764 |
2024 | 1,421 |
Thereafter | 4,949 |
Total | $ 21,767 |
Finance Receivables (Details)
Finance Receivables (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Portfolio | ||
Total before allowance for credit losses | $ 186,369 | $ 181,213 |
Allowance for credit losses | (8,388) | (8,388) |
Total carrying value | 177,981 | 172,825 |
Life Science Term Loans [Member] | ||
Portfolio | ||
Total before allowance for credit losses | 156,592 | 150,453 |
Total carrying value | 156,592 | 150,453 |
Life Science Royalty Purchases [Member] | ||
Portfolio | ||
Total before allowance for credit losses | 29,777 | 30,760 |
Total carrying value | $ 21,389 | $ 22,372 |
Finance Receivables (Details 2)
Finance Receivables (Details 2) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Nonaccrual | $ 15,951 | $ 15,951 |
Performing | 162,030 | 156,874 |
Total | 177,981 | 172,825 |
Life Science Term Loans [Member] | ||
Nonaccrual | 8,337 | 8,337 |
Performing | 148,255 | 142,116 |
Total | 156,592 | 150,453 |
Life Science Royalty Purchases [Member] | ||
Nonaccrual | 7,614 | 7,614 |
Performing | 13,775 | 14,758 |
Total | $ 21,389 | $ 22,372 |
Finance Receivables (Details Na
Finance Receivables (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2019 | |
Best ABT, Inc. [Member] | ||||
Face amount | $ 4,100 | $ 4,100 | ||
Allowance for credit loss | $ 1,600 | |||
Fair Value of Allowance for Credit Losses | $ 4,100 | |||
Best ABT, Inc. [Member] | First Lien Loan [Member] | ||||
Allowance for credit loss | $ 5,000 | |||
Best ABT, Inc. [Member] | Second Lien Loan [Member] | ||||
Allowance for credit loss | $ 5,700 | |||
Cambia [Member] | ||||
Allowance for credit loss | 1,200 | |||
Besivance [Member] | ||||
Allowance for credit loss | 600 | |||
Tissue Regeneration Therapeutics, Inc. [Member] | ||||
Face amount | 3,500 | 3,500 | ||
B&D Dental [Member] | ||||
Face amount | $ 8,300 | $ 8,300 |
Marketable Investments and Co_3
Marketable Investments and Corporate Debt Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Investments, Debt and Equity Securities [Abstract] | ||
Corporate debt securities | $ 285 | $ 466 |
Equity securities | 912 | 1,802 |
Total | $ 1,197 | $ 2,268 |
Marketable Investments and Co_4
Marketable Investments and Corporate Debt Securities (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2019 | |
Available for Sale Securities: | ||||
Gross Unrealized Gains | ||||
Gross Unrealized Loss | ||||
Equity investment losses reflected in the Consolidated Statements of Income | (890) | |||
Corporate Debt Securities [Member] | ||||
Available for Sale Securities: | ||||
Amortized Cost | 285 | $ 466 | ||
Gross Unrealized Gains | ||||
Gross Unrealized Loss | ||||
Fair Value | $ 285 | $ 466 |
Marketable Investments and Co_5
Marketable Investments and Corporate Debt Securities (Details Narrative) - USD ($) $ in Thousands | Nov. 15, 2013 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Jul. 09, 2013 |
Senior notes | $ 285 | $ 466 | |||
Paid-in-kind interest | 467 | $ 406 | |||
Agreement To Purchase Senior Secured Notes [Member] | |||||
Senior notes | $ 3,000 | ||||
Paid-in-kind interest | $ 100 | ||||
Cash collected from debt | $ 17 | $ 21 | |||
Tribute [Member] | Agreement To Purchase Senior Secured Notes [Member] | |||||
Senior notes | $ 100,000 |
Revolving Credit Facility (Deta
Revolving Credit Facility (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disclosure Revolving Credit Facility Details Narrative Abstract | ||
Maximum Revolving Credit Available | $ 5,700 | |
Remaining Revolving Credit | 14,300 | |
Interest expense | $ 101 | $ 102 |
Related Party Transactions (Det
Related Party Transactions (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Expected Dividend Rate [Member] | ||
Dividend rate | ||
Loan Credit Agreement [Member] | Expected Dividend Rate [Member] | ||
Dividend rate | ||
Loan Credit Agreement [Member] | Risk Free Interest Rate [Member] | ||
Risk-free rate | 0.15% | 1.60% |
Loan Credit Agreement [Member] | Expected Term [Member] | ||
Expected life (years) | 4 months 24 days | 8 months 12 days |
Loan Credit Agreement [Member] | Price Volatility [Member] | ||
Expected volatility | 69.90% | 31.80% |
Related Party Transactions (D_2
Related Party Transactions (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Fair value at beginning | $ 76 | |
Issuances | ||
Changes in fair value | (1,807) | |
Fair value at ending | $ 129 | |
Warrant Liability [Member] | ||
Fair value at beginning | $ 76 | |
Issuances | ||
Changes in fair value | 53 | |
Fair value at ending | $ 129 |
Related Party Transactions (D_3
Related Party Transactions (Details Narartive) - Delayed Draw [Member] - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Sep. 06, 2013 | |
Number of securities called by warrants or rights (in shares) | 100,000 | |
Exercise price of warrants or rights (in dollars per Share) | $ 13.88 | |
Reduction in strike price | $ 13.48 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Aimmune Therapeutics, Inc. [Member] | |
Total unfunded commitments | $ 1,300 |
eTon Pharmaceuticals, Inc. [Member] | |
Total unfunded commitments | 5,000 |
Unfunded Loan Commitment [Member] | |
Total unfunded commitments | $ 6,300 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stockholders' Equity Note [Abstract] | ||
Compensation for non-employee directors (in shares) | 5,937 | 4,758 |
Allocated share-based compensation | $ 100 | $ 47 |
Value of compensation for non-employee directors | $ 200 | $ 100 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial Assets: | ||
Warrant assets | $ 1,748 | $ 3,555 |
Marketable investments | 1,197 | 2,268 |
Financial Liabilities: | ||
Contingent consideration payable | 14,500 | 14,500 |
Warrant liability | 129 | 76 |
Fair Value, Inputs, Level 1 [Member] | ||
Financial Assets: | ||
Warrant assets | ||
Marketable investments | 912 | 1,802 |
Financial Liabilities: | ||
Contingent consideration payable | ||
Warrant liability | ||
Fair Value, Inputs, Level 2 [Member] | ||
Financial Assets: | ||
Warrant assets | ||
Marketable investments | ||
Financial Liabilities: | ||
Contingent consideration payable | ||
Warrant liability | ||
Fair Value, Inputs, Level 3 [Member] | ||
Financial Assets: | ||
Warrant assets | 1,748 | 3,555 |
Marketable investments | 285 | 466 |
Financial Liabilities: | ||
Contingent consideration payable | 14,500 | 14,500 |
Warrant liability | $ 129 | $ 76 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 2) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Fair Value Disclosures [Abstract] | |
Fair value - December 31, 2017 | $ 3,555 |
Issuances | |
Canceled | |
Change in fair value | (1,807) |
Fair value - June 30, 2018 | $ 1,748 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details 3) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Expected Dividend Rate [Member] | ||
Dividend rate range | ||
Risk Free Interest Rate [Member] | Minimum [Member] | ||
Risk-free rate range | 0.37% | 1.70% |
Risk Free Interest Rate [Member] | Maximum [Member] | ||
Risk-free rate range | 0.55% | 1.80% |
Expected Term [Member] | Minimum [Member] | ||
Expected life (years) range | 4 years 3 months 18 days | 4 years 7 months 6 days |
Expected Term [Member] | Maximum [Member] | ||
Expected life (years) range | 7 years 1 month 6 days | 7 years 4 months 24 days |
Price Volatility [Member] | Minimum [Member] | ||
Expected volatility range | 70.00% | 50.30% |
Price Volatility [Member] | Maximum [Member] | ||
Expected volatility range | 141.10% | 114.60% |
Fair Value Measurements (Deta_4
Fair Value Measurements (Details 4) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial Assets: | ||
Impaired loans | $ 1,748 | $ 3,555 |
Fair Value, Inputs, Level 3 [Member] | ||
Financial Assets: | ||
Impaired loans | 1,748 | 3,555 |
Tribute Warrant [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Financial Assets: | ||
Impaired loans | 9,547 | 10,004 |
Marketable Securities [Member] | Tribute Warrant [Member] | ||
Financial Assets: | ||
Impaired loans | $ 9,547 | $ 10,004 |
Fair Value Measurements (Deta_5
Fair Value Measurements (Details 5) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Financial Assets | ||||
Cash and cash equivalents | $ 24,318 | $ 11,158 | $ 39,183 | $ 20,227 |
Cash and cash equivalents at fair value | 24,318 | 11,158 | ||
Finance receivables | 177,981 | 172,825 | ||
Finance receivables at fair value | 177,981 | 172,825 | ||
Marketable investments | 1,197 | 2,268 | ||
Marketable investments at fair value | 1,197 | 2,268 | ||
Warrant assets | 1,748 | 3,555 | ||
Warrant assets at fair value | 1,748 | 3,555 | ||
Financial Liabilities | ||||
Contingent consideration payable | 14,500 | 14,500 | ||
Contingent consideration payable at fair value | 14,500 | 14,500 | ||
Warrant liability | 129 | 76 | ||
Gross liability at fair value | 129 | 76 | ||
Fair Value, Inputs, Level 1 [Member] | ||||
Financial Assets | ||||
Cash and cash equivalents at fair value | 24,318 | 11,158 | ||
Finance receivables at fair value | ||||
Marketable investments at fair value | 912 | 1,802 | ||
Warrant assets at fair value | ||||
Financial Liabilities | ||||
Contingent consideration payable | ||||
Contingent consideration payable at fair value | ||||
Gross liability at fair value | ||||
Fair Value, Inputs, Level 3 [Member] | ||||
Financial Assets | ||||
Cash and cash equivalents at fair value | ||||
Finance receivables at fair value | 177,981 | 172,825 | ||
Marketable investments at fair value | 285 | 466 | ||
Warrant assets at fair value | 1,748 | 3,555 | ||
Financial Liabilities | ||||
Contingent consideration payable | 14,500 | 14,500 | ||
Contingent consideration payable at fair value | 14,500 | 14,500 | ||
Gross liability at fair value | $ 129 | $ 76 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | $ 7,302 | $ 9,392 |
Provision for credit losses and impairment expense | 163 | |
Interest expense | 101 | 102 |
Pharmaceutical manufacturing, research and development expense | 1,150 | |
Depreciation and amortization | 3,505 | 5 |
General and administrative expense | 3,040 | 1,264 |
Income (loss) from continuing operations before income tax benefit | (3,407) | 7,670 |
Provision for income taxes | 1,253 | 1,111 |
Consolidated net income | (4,660) | $ 6,559 |
Finance Receivables [Member] | ||
Revenues | 7,136 | |
Provision for credit losses and impairment expense | 163 | |
Interest expense | 101 | |
Pharmaceutical manufacturing, research and development expense | ||
Depreciation and amortization | ||
General and administrative expense | 512 | |
Income (loss) from continuing operations before income tax benefit | (2,697) | |
Provision for income taxes | ||
Consolidated net income | 3,663 | |
Pharmaceutical Development [Member] | ||
Revenues | 166 | |
Provision for credit losses and impairment expense | ||
Interest expense | ||
Pharmaceutical manufacturing, research and development expense | 1,150 | |
Depreciation and amortization | 3,502 | |
General and administrative expense | 1,047 | |
Income (loss) from continuing operations before income tax benefit | ||
Provision for income taxes | ||
Consolidated net income | (5,533) | |
Holding Company and Other [Member] | ||
Revenues | ||
Provision for credit losses and impairment expense | ||
Interest expense | ||
Pharmaceutical manufacturing, research and development expense | ||
Depreciation and amortization | 3 | |
General and administrative expense | 1,481 | |
Income (loss) from continuing operations before income tax benefit | (53) | |
Provision for income taxes | 1,253 | |
Consolidated net income | $ (2,790) |