Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 06, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-33093 | |
Entity Registrant Name | LIGAND PHARMACEUTICALS INCORPORATED | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 77-0160744 | |
Entity Address, Address Line One | 3911 Sorrento Valley Boulevard, Suite 110 | |
Entity Address, City or Town | San Diego | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92121 | |
City Area Code | 858 | |
Local Phone Number | 550-7500 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | LGND | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,435,958 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000886163 | |
Current Fiscal Year End Date | --12-31 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 19,275 | $ 45,006 |
Short-term investments | 171,227 | 166,864 |
Accounts receivable, net | 36,003 | 30,424 |
Inventory | 25,392 | 13,294 |
Income taxes receivable | 0 | 4,614 |
Other current assets | 2,097 | 3,399 |
Total current assets | 253,994 | 263,601 |
Deferred income taxes, net | 8,530 | 8,530 |
Intangible assets, net | 314,843 | 342,455 |
Goodwill | 103,770 | 105,673 |
Commercial license rights, net | 6,602 | 10,182 |
Property and equipment, net | 16,178 | 12,482 |
Operating lease right-of-use assets | 6,235 | 10,914 |
Financing lease right-of-use assets | 3,566 | 4,095 |
Equity method investment in Primrose Bio | 13,985 | 0 |
Equity securities in Primrose Bio | 33,097 | 0 |
Other assets | 8,426 | 4,736 |
Total assets | 769,226 | 762,668 |
Current liabilities: | ||
Accounts payable | 2,475 | 5,307 |
Accrued liabilities | 10,635 | 15,681 |
Income taxes payable | 1,204 | 0 |
Current operating lease liabilities | 497 | 670 |
2023 convertible senior notes, net | 0 | 76,695 |
Other current liabilities | 916 | 457 |
Total current liabilities | 15,727 | 98,810 |
Long-term contingent liabilities | 3,515 | 3,456 |
Deferred income taxes, net | 32,586 | 30,615 |
Long-term operating lease liabilities | 5,832 | 10,336 |
Other long-term liabilities | 43,670 | 21,966 |
Total liabilities | 101,330 | 165,183 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 5,000 shares authorized; zero issued and outstanding at September 30, 2023 and December 31, 2022 | 0 | 0 |
Common stock, $0.001 par value; 60,000 shares authorized; 17,421 and 16,951 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 18 | 17 |
Additional paid-in capital | 183,994 | 147,590 |
Accumulated other comprehensive loss | (944) | (984) |
Retained earnings | 484,828 | 450,862 |
Total stockholders' equity | 667,896 | 597,485 |
Total liabilities and stockholders' equity | $ 769,226 | $ 762,668 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock authorized (in shares) | 5,000 | 5,000 |
Preferred stock issued (in shares) | 0 | 0 |
Preferred stock outstanding (in shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock authorized (in shares) | 60,000 | 60,000 |
Common stock issued (in shares) | 17,421 | 16,951 |
Common stock outstanding (in shares) | 17,421 | 16,951 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues: | ||||
Total revenues | $ 32,868 | $ 59,221 | $ 103,213 | $ 145,863 |
Operating costs and expenses: | ||||
Cost of Captisol | 3,485 | 14,153 | 8,871 | 31,213 |
Amortization of intangibles | 8,238 | 8,568 | 25,316 | 25,698 |
Research and development | 5,532 | 9,239 | 19,049 | 26,885 |
General and administrative | 14,656 | 14,920 | 36,798 | 38,931 |
Total operating costs and expenses | 31,911 | 46,880 | 90,034 | 122,727 |
Gain on sale of Pelican | (2,121) | 0 | (2,121) | 0 |
Operating income from continuing operations | 3,078 | 12,341 | 15,300 | 23,136 |
Other income (expense): | ||||
Gain (loss) from short-term investments | (13,184) | (923) | 30,340 | (15,709) |
Interest income | 2,263 | 591 | 6,018 | 1,023 |
Interest expense | (1) | (332) | (525) | (1,559) |
Other (loss) income, net | (4,300) | 677 | (4,570) | 4,980 |
Total other income (expense), net | (15,222) | 13 | 31,263 | (11,265) |
Income (loss) before income taxes from continuing operations | (12,144) | 12,354 | 46,563 | 11,871 |
Income tax benefit (expense) | 1,871 | (2,709) | (10,932) | (2,556) |
Net income (loss) from continuing operations | (10,273) | 9,645 | 35,631 | 9,315 |
Net loss from discontinued operations | 0 | (9,241) | (1,665) | (25,191) |
Net income (loss) | $ (10,273) | $ 404 | $ 33,966 | $ (15,876) |
Earnings per share | ||||
Basic net income from continuing operations per share (in USD per share) | $ (0.59) | $ 0.57 | $ 2.07 | $ 0.55 |
Basic net loss from discontinued operations per share (in USD per share) | 0 | (0.55) | (0.10) | (1.49) |
Basic net income (loss) per share (in USD per share) | $ (0.59) | $ 0.02 | $ 1.97 | $ (0.94) |
Shares used in basic per share calculations (in shares) | 17,380 | 16,888 | 17,241 | 16,860 |
Diluted net income from continuing operations per share (in USD per share) | $ (0.59) | $ 0.56 | $ 2 | $ 0.54 |
Diluted net loss from discontinued operations per share (in USD per share) | 0 | (0.54) | (0.09) | (1.47) |
Diluted net income (loss) per share (in USD per share) | $ (0.59) | $ 0.02 | $ 1.91 | $ (0.93) |
Shares used in diluted per share calculations (in shares) | 17,380 | 17,132 | 17,784 | 17,128 |
Royalties | ||||
Revenues: | ||||
Total revenues | $ 23,863 | $ 19,255 | $ 61,447 | $ 50,507 |
Captisol | ||||
Revenues: | ||||
Total revenues | 8,608 | 35,949 | 24,450 | 77,616 |
Contract revenue | ||||
Revenues: | ||||
Total revenues | $ 397 | $ 4,017 | $ 17,316 | $ 17,740 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (10,273) | $ 404 | $ 33,966 | $ (15,876) |
Unrealized net gain (loss) on available-for-sale securities, net of tax | 23 | 6 | 40 | (143) |
Comprehensive income (loss) | $ (10,250) | $ 410 | $ 34,006 | $ (16,019) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Adjustment | Common Stock | Additional paid in capital | Additional paid in capital Adjustment | Accumulated other comprehensive income (loss) | Retained earnings | Retained earnings Adjustment |
Balance at beginning of period at Dec. 31, 2021 | $ 821,159 | $ (15,997) | $ 17 | $ 372,969 | $ (51,130) | $ (917) | $ 449,090 | $ 35,133 |
Balance at beginning of period (in shares) at Dec. 31, 2021 | 16,767 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes | (5,515) | (5,515) | ||||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes (in shares) | 94 | |||||||
Share-based compensation | 9,044 | 9,044 | ||||||
Unrealized net gain (loss) on available-for-sale securities, net of tax | (114) | (114) | ||||||
Net income (loss) | (15,385) | (15,385) | ||||||
Balance at end of period at Mar. 31, 2022 | 793,192 | $ 17 | 325,368 | (1,031) | 468,838 | |||
Balance at end of period (in shares) at Mar. 31, 2022 | 16,861 | |||||||
Balance at beginning of period at Dec. 31, 2021 | 821,159 | $ (15,997) | $ 17 | 372,969 | $ (51,130) | (917) | 449,090 | $ 35,133 |
Balance at beginning of period (in shares) at Dec. 31, 2021 | 16,767 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | (15,876) | |||||||
Balance at end of period at Sep. 30, 2022 | 816,298 | $ 17 | 348,994 | (1,060) | 468,347 | |||
Balance at end of period (in shares) at Sep. 30, 2022 | 16,894 | |||||||
Balance at beginning of period at Mar. 31, 2022 | 793,192 | $ 17 | 325,368 | (1,031) | 468,838 | |||
Balance at beginning of period (in shares) at Mar. 31, 2022 | 16,861 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes | 604 | 604 | ||||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes (in shares) | 21 | |||||||
Share-based compensation | 9,499 | 9,499 | ||||||
Unrealized net gain (loss) on available-for-sale securities, net of tax | (35) | (35) | ||||||
Net income (loss) | (895) | (895) | ||||||
Balance at end of period at Jun. 30, 2022 | 802,365 | $ 17 | 335,471 | (1,066) | 467,943 | |||
Balance at end of period (in shares) at Jun. 30, 2022 | 16,882 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes | 724 | 724 | ||||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes (in shares) | 12 | |||||||
Share-based compensation | 12,597 | 12,597 | ||||||
Unrealized net gain (loss) on available-for-sale securities, net of tax | 6 | 6 | ||||||
Warrant and bond hedge unwind transactions | 202 | 202 | ||||||
Net income (loss) | 404 | 404 | ||||||
Balance at end of period at Sep. 30, 2022 | 816,298 | $ 17 | 348,994 | (1,060) | 468,347 | |||
Balance at end of period (in shares) at Sep. 30, 2022 | 16,894 | |||||||
Balance at beginning of period at Dec. 31, 2022 | $ 597,485 | $ 17 | 147,590 | (984) | 450,862 | |||
Balance at beginning of period (in shares) at Dec. 31, 2022 | 16,951 | 16,951 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes | $ (762) | (762) | ||||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes (in shares) | 183 | |||||||
Share-based compensation | 5,931 | 5,931 | ||||||
Unrealized net gain (loss) on available-for-sale securities, net of tax | 49 | 49 | ||||||
Final distribution of OmniAb | 1,665 | 1,665 | ||||||
Net income (loss) | 41,949 | 41,949 | ||||||
Balance at end of period at Mar. 31, 2023 | 646,317 | $ 17 | 154,424 | (935) | 492,811 | |||
Balance at end of period (in shares) at Mar. 31, 2023 | 17,134 | |||||||
Balance at beginning of period at Dec. 31, 2022 | $ 597,485 | $ 17 | 147,590 | (984) | 450,862 | |||
Balance at beginning of period (in shares) at Dec. 31, 2022 | 16,951 | 16,951 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | $ 33,966 | |||||||
Balance at end of period at Sep. 30, 2023 | $ 667,896 | $ 18 | 183,994 | (944) | 484,828 | |||
Balance at end of period (in shares) at Sep. 30, 2023 | 17,421 | 17,421 | ||||||
Balance at beginning of period at Mar. 31, 2023 | $ 646,317 | $ 17 | 154,424 | (935) | 492,811 | |||
Balance at beginning of period (in shares) at Mar. 31, 2023 | 17,134 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes | 9,110 | 9,110 | ||||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes (in shares) | 218 | |||||||
Share-based compensation | 7,207 | 7,207 | ||||||
Unrealized net gain (loss) on available-for-sale securities, net of tax | (32) | (32) | ||||||
Net income (loss) | 2,290 | 2,290 | ||||||
Balance at end of period at Jun. 30, 2023 | 664,892 | $ 17 | 170,741 | (967) | 495,101 | |||
Balance at end of period (in shares) at Jun. 30, 2023 | 17,352 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes | 3,285 | $ 1 | 3,284 | |||||
Issuance of common stock under employee stock compensation plans, net of shares withheld for payroll taxes (in shares) | 69 | |||||||
Share-based compensation | 6,884 | 6,884 | ||||||
Unrealized net gain (loss) on available-for-sale securities, net of tax | 23 | 23 | ||||||
Tax return to provision | 3,085 | 3,085 | ||||||
Net income (loss) | (10,273) | (10,273) | ||||||
Balance at end of period at Sep. 30, 2023 | $ 667,896 | $ 18 | $ 183,994 | $ (944) | $ 484,828 | |||
Balance at end of period (in shares) at Sep. 30, 2023 | 17,421 | 17,421 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 33,966 | $ (15,876) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Change in estimated fair value of contingent liabilities | 132 | (1,378) |
Depreciation and amortization of intangible assets | 27,605 | 40,399 |
Amortization of premium on investments, net | (938) | 75 |
Amortization of debt discount and issuance fees | 159 | 639 |
Amortization of commercial license rights | (883) | (163) |
CECL adjustment to commercial license rights | 3,190 | 0 |
Impairment loss of commercial license rights | 924 | 0 |
Gain on sale of Pelican | (2,121) | 0 |
Gain on debt extinguishment | 0 | (4,192) |
Share-based compensation | 20,022 | 31,140 |
Deferred income taxes | 6,761 | (25,570) |
(Gain) loss from short-term investments | (30,340) | 15,709 |
Lease amortization expense | 1,231 | 4,535 |
Other | 215 | (45) |
Changes in operating assets and liabilities, net of acquisition: | ||
Accounts receivable, net | (5,436) | 20,550 |
Inventory | (11,577) | 10,702 |
Accounts payable and accrued liabilities | (7,461) | (405) |
Income tax receivable and payable | 5,818 | 15,111 |
Deferred revenue | 226 | (5,182) |
Other current assets | 918 | (17) |
Other assets and liabilities | (899) | (1,654) |
Net cash provided by operating activities | 41,512 | 84,378 |
Cash flows from investing activities: | ||
Purchase of short-term investments | (107,262) | (39,052) |
Proceeds from sale of short-term investments | 96,318 | 202,552 |
Proceeds from maturity of short-term investments | 37,941 | 24,830 |
Cash paid for Novan acquisition, net of restricted cash received | (10,405) | 0 |
Purchase of property and equipment | (3,104) | (15,792) |
Payments to CVR Holders | 0 | (960) |
Proceeds from commercial license rights | 349 | 0 |
Other | 0 | 80 |
Net cash (used in) provided by investing activities | (1,398) | 170,908 |
Cash flows from financing activities: | ||
Repayment at maturity/repurchase of 2023 Notes | (76,854) | (260,949) |
Proceeds from convertible bond hedge settlement | 0 | 202 |
Net proceeds from stock option exercises and ESPP | 15,922 | 1,831 |
Taxes paid related to net share settlement of equity awards | (4,290) | (6,018) |
Payments to CVR Holders | 0 | (1,545) |
Payments for OmniAb transaction costs | 0 | (4,171) |
Other | (40) | (42) |
Net cash used in financing activities | (65,262) | (270,692) |
Net decrease in cash, cash equivalents and restricted cash | (25,148) | (15,406) |
Cash, cash equivalents and restricted cash at beginning of period | 45,006 | 19,522 |
Cash, cash equivalents and restricted cash at end of period | 19,858 | 4,116 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 288 | 1,139 |
Taxes paid | 10 | 6,630 |
Restricted cash in other assets | 583 | 0 |
Acquisition: | ||
Goodwill | 103,770 | |
Supplemental schedule of non-cash activity: | ||
Accrued Primrose transaction costs | 1,013 | 0 |
Accrued fixed asset purchases | 409 | 3,626 |
Accrued inventory purchases | 521 | 7,676 |
Unrealized gain (loss) on AFS investments, net of tax | 40 | (143) |
Novan, Inc. | ||
Acquisition: | ||
Fair value of tangible assets acquired, net of cash and restricted cash received | 17,101 | 0 |
Goodwill | 2,229 | 0 |
Intangible assets | 17,600 | 0 |
Liabilities assumed | (26,525) | 0 |
Net cash paid for Novan | 10,405 | 0 |
Nucorion | ||
Cash flows from investing activities: | ||
Cash paid for equity method investment | 0 | (750) |
Primrose Bio | ||
Cash flows from investing activities: | ||
Cash paid for equity method investment | $ (15,235) | $ 0 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Business On November 1, 2022, we completed the separation (the “Separation”) of our antibody discovery business and certain related assets and liabilities (the “OmniAb Business”) through a spin-off of OmniAb to Ligand’s shareholders of record as of October 26, 2022 on a pro rata basis (the “Distribution”) and merger (the “Merger”) of OmniAb with a wholly owned subsidiary of a separate public company, OmniAb, Inc. (formerly known as Avista Public Acquisition Corp. II (“New OmniAb”)), in a Reverse Morris Trust transaction pursuant to the Agreement and Plan of Merger, dated as of March 23, 2022 (the “Merger Agreement”), and the Separation and Distribution Agreement, dated as of March 23, 2022 (the “Separation Agreement”) (the Merger Agreement and Separation Agreement, collectively with the other related transaction documents, the “Transaction Agreements”). Pursuant to the Transaction Agreements, Ligand contributed to OmniAb cash and certain assets and liabilities constituting the OmniAb Business, including but not limited to the equity interests of Ab Initio Biotherapeutics, Inc., Crystal Bioscience, Inc., Icagen, LLC, Taurus Biosciences, LLC and xCella Biosciences, Inc. After the spin-off of our OmniAb antibody discovery business, Ligand is a revenue-generating biopharmaceutical company focused on developing or acquiring technologies that help pharmaceutical companies discover and develop medicines. We operate in one business segment: development and licensing of biopharmaceutical assets. Basis of Presentation Our condensed consolidated financial statements include the financial statements of Ligand and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We have included all adjustments, consisting only of normal recurring adjustments, which we considered necessary for a fair presentation of our financial results. These unaudited condensed consolidated financial statements and accompanying notes should be read together with the audited consolidated financial statements included in our 2022 Annual Report. Interim financial results are not necessarily indicative of the results that may be expected for the full year. Discontinued Operations The Company determined that the spin-off of the OmniAb Business in November 2022 met the criteria for classification as a discontinued operation in accordance with ASC Subtopic 205-20, Discontinued Operations (“ASC 205-20”). Accordingly, the accompanying condensed consolidated financial statements have been updated to present the results of all discontinued operations reported as a separate component of loss in the condensed consolidated statements of operations and comprehensive loss (see Note 4, Spin-off of OmniAb ). All disclosures have been adjusted to reflect continuing operations. Significant Accounting Policies We have described our significant accounting policies in Note 1, Basis of Presentation and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in our 2022 Annual Report. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results may differ from those estimates. Revenue Our revenue is generated primarily from royalties on sales of products commercialized by our partners, Captisol material sales, and contract revenue for services, license fees and development, regulatory and sales based milestone payments. We apply the following five-step model in accordance with ASC 606, Revenue from Contracts with Customers , in order to determine the revenue: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. Royalties We receive royalty revenue on sales by our partners of products covered by patents that we or our partners own under contractual agreements. We do not have future performance obligations under these license arrangements. We generally satisfy our obligation to grant intellectual property rights on the effective date of the contract. However, we apply the royalty recognition constraint required under the guidance for sales-based royalties which requires a royalty to be recorded no sooner than the underlying sale occurs. Therefore, royalties on sales of products commercialized by our partners are recognized in the quarter the product is sold. Our partners generally report sales information to us on a one quarter lag. Thus, we estimate the expected royalty proceeds based on an analysis of historical experience and interim data provided by our partners including their publicly announced sales. Differences between actual and estimated royalty revenues, which have not been material, are adjusted in the period in which they become known, typically the following quarter. Captisol Sales Revenue from Captisol sales is recognized when control of Captisol material is transferred or intellectual property license rights are granted to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products or rights. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. For Captisol material or intellectual property license rights, we consider our performance obligation satisfied once we have transferred control of the product or granted the intellectual property rights, meaning the customer has the ability to use and obtain the benefit of the Captisol material or intellectual property license right. We recognize revenue for satisfied performance obligations only when we determine there are no uncertainties regarding payment terms or transfer of control. Sales tax and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We have elected to recognize the cost of freight and shipping when control over Captisol material has transferred to the customer as an expense in Cost of Captisol. We expense incremental costs of obtaining a contract when incurred if the expected amortization period of the asset that we would have recognized is one year or less or the amount is immaterial. We did not incur any incremental costs of obtaining a contract during the periods reported. Contract Revenue Our contracts with customers often include variable consideration in the form of contingent milestone payments. We include contingent milestone payments in the estimated transaction price when it is probable a significant reversal in the amount of cumulative revenue recognized will not occur. These estimates are based on historical experience, anticipated results and our best judgment at the time. If the contingent milestone payment is based on sales, we apply the royalty recognition constraint and record revenue when the underlying sale has taken place. Significant judgments must be made in determining the transaction price for our sales of intellectual property. Because of the risk that products in development with our partners will not reach development milestones or receive regulatory approval, we generally recognize any contingent payments that would be due to us upon the development milestone or regulatory approval. Depending on the terms of the arrangement, we may also defer a portion of the consideration received if we have to satisfy a future obligation, which typically occurs with our contracts for R&D services. In general, for R&D services, which has not been significant, we recognize revenue over time and measure our progress using an input method. The input methods we use are based on the effort we expend or costs we incur toward the satisfaction of our performance obligation. Some customer contracts are sublicenses which require that we make payments to an upstream licensor related to license fees, milestones and royalties which we receive from customers. In such cases, we evaluate the determination of gross revenue as a principal versus net revenue as an agent reporting based on each individual agreement. Deferred Revenue Depending on the terms of the arrangement, we may also defer a portion of the consideration received because we have to satisfy a future obligation. The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the consolidated balance sheet. Except for royalty revenue and certain service revenue, we generally receive payment at the point we satisfy our obligation or soon after. Therefore, we do not generally carry any contract asset balance. Any fees billed in advance of being earned are recorded as deferred revenue, which has not been significant. Disaggregation of Revenue The following table represents disaggregation of royalties, Captisol and contract revenue (in thousands): Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Royalties Kyprolis $ 10,537 $ 9,123 $ 24,862 $ 20,872 Evomela 2,497 3,123 7,404 8,218 Teriparatide injection 2,800 4,071 9,913 12,484 Rylaze 3,678 2,099 9,315 6,065 Other 4,351 839 9,953 2,868 $ 23,863 $ 19,255 $ 61,447 $ 50,507 Captisol Captisol - Core $ 8,608 $ 3,582 $ 24,450 $ 13,133 Captisol - COVID (1) — 32,367 — 64,483 $ 8,608 $ 35,949 $ 24,450 $ 77,616 Contract revenue Service revenue 263 90 534 1,047 Milestone — 2,658 15,300 8,651 Other 134 1,269 1,482 8,042 $ 397 $ 4,017 $ 17,316 $ 17,740 Total $ 32,868 $ 59,221 $ 103,213 $ 145,863 (1) Captisol - COVID represents revenue on Captisol supplied for use in formulation with remdesivir, an antiviral treatment for COVID-19. Short-term Investments Our short-term investments consist of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Bank deposits $ 28,972 $ 11 $ (11) $ 28,972 Bond fund 84,811 — (808) 84,003 Commercial paper 18,935 — (4) 18,931 Corporate bonds 8,077 1 (35) 8,043 Corporate equity securities 5,775 — (4,903) 872 Municipal bonds 1,027 — (6) 1,021 US government securities 4,702 — (19) 4,683 Warrants — 22 — 22 $ 152,299 $ 34 $ (5,786) $ 146,547 Viking common stock 24,680 Total short-term investments $ 171,227 December 31, 2022 Bank deposits $ 5,012 $ 2 $ (34) $ 4,980 Bond fund 81,815 — (1050) 80,765 Commercial paper 7,211 3 — 7,214 Corporate bonds 6,701 13 (58) 6,656 Corporate equity securities 5,807 262 (4,239) 1,830 U.S. government securities 2,232 — (70) 2,162 Warrants — 135 — 135 $ 108,778 $ 415 $ (5,451) $ 103,742 Viking common stock 63,122 Total short-term investments $ 166,864 During the nine months ended September 30, 2023, we sold 4.5 million shares of Viking common stock and recognized a realized gain of $37.2 million in total. During the three months ended September 30, 2023, there were no sales of Viking common stock. Gain (loss) from short-term investments in our condensed consolidated statements of operations includes both realized and unrealized gain (loss) from our short-term investments in public equity and warrant securities. Allowances are recorded for available-for-sale debt securities with unrealized losses. This limits the amount of credit losses that can be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. The provisions of the credit losses standard did not have a material impact on our available-for-sale debt securities during the three and nine months ended September 30, 2023. The following table summarizes our available-for-sale debt securities by contractual maturity (in thousands): September 30, 2023 Amortized Cost Fair Value Within one year $ 71,095 $ 71,070 After one year through five years 6,966 6,927 Total $ 78,061 $ 77,997 Our investment policy is capital preservation and we only invest in U.S.-dollar denominated investments. We held a total of 48 investments which were in an unrealized loss position with a total of $0.1 million unrealized losses as of September 30, 2023. We believe that we will collect the principal and interest due on our debt securities that have an amortized cost in excess of fair value. The unrealized losses are largely due to changes in interest rates and not to unfavorable changes in the credit quality associated with these securities that impacted our assessment on collectability of principal and interest. We do not intend to sell these securities and it is not more-likely-than-not that we will be required to sell these securities before the recovery of the amortized cost basis. Accordingly, no credit losses were recognized for the three and nine months ended September 30, 2023. Accounts Receivable and Allowance for Credit Losses Our accounts receivable arise primarily from sales on credit to customers. We establish an allowance for credit losses to present the net amount of accounts receivable expected to be collected. The allowance is determined by using the loss-rate method, which requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivable. Some of these factors include macroeconomic conditions that correlate with historical loss experience, delinquency trends, aging behavior of receivables and credit and liquidity quality indicators for industry groups, customer classes or individual customers. During the three and nine months ended September 30, 2023, we considered the current and expected future economic and market conditions and concluded an increase of $0.1 million and an increase of $0.1 million of allowance for credit losses, respectively. Inventory Inventory, which consists of finished goods, is stated at the lower of cost or net realizable value. We determine cost using the specific identification method. We analyze our inventory levels periodically and write down inventory to net realizable value if it has become obsolete, has a cost basis in excess of its expected net realizable value or is in excess of expected requirements. There were no write-downs recorded against inventory for the three and nine months ended September 30, 2023 and 2022. In addition to finished goods, as of September 30, 2023 inventory consists of Captisol prepayments of $4.7 million, and as of December 31, 2022 inventory consists of Captisol prepayments of $5.9 million. Goodwill and Other Identifiable Intangible Assets Goodwill and other identifiable intangible assets consist of the following (in thousands): September 30, December 31, 2023 2022 Indefinite-lived intangible assets Goodwill $ 103,770 $ 105,673 Definite lived intangible assets Complete technology 49,810 55,211 Less: accumulated amortization (20,176) (22,560) Trade name 2,642 2,642 Less: accumulated amortization (1,677) (1,577) Customer relationships 29,600 29,600 Less: accumulated amortization (18,788) (17,670) Contractual relationships 360,000 362,000 Less: accumulated amortization (86,568) (65,191) Total goodwill and other identifiable intangible assets, net $ 418,613 $ 448,128 Commercial License Rights Commercial license rights consist of the following (in thousands): September 30, 2023 December 31, 2022 Gross Adjustments (1) Net Gross Adjustments (2) Net Elutia and CorMatrix $ 17,696 $ (11,881) $ 5,815 $ 17,696 $ (9,538) $ 8,158 Selexis and Dianomi 10,602 (9,815) 787 10,602 (8,578) 2,024 Total $ 28,298 $ (21,696) $ 6,602 $ 28,298 $ (18,116) $ 10,182 (1) Amounts represent accumulated amortization to principal of $11.1 million, credit loss adjustments of $9.7 million and impairment of $0.9 million as of September 30, 2023. (2) Amounts represent accumulated amortization to principal of $11.6 million and credit loss adjustments of $6.5 million as of December 31, 2022. Commercial license rights represent a portfolio of future milestone and royalty payment rights acquired from Selexis, S.A. (Selexis) in April 2013 and April 2015, CorMatrix Cardiovascular, Inc. (CorMatrix) in May 2016, which was later acquired by Aziyo (Aziyo changed its corporate name to Elutia Inc. ("Elutia") in September 2023) in 2017, and Dianomi Therapeutics, Inc. in January 2019. Commercial license rights acquired are accounted for as financial assets in accordance with ASC 310, Receivables, as further discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in our 2022 Annual Report. We estimated the credit losses at the individual asset level by considering the performance against the programs, the company operating performance and the macroeconomic forecast. In addition, we have judgmentally applied credit loss risk factors to the future expected payments with consideration given to the timing of the payment. Given the higher inherent credit risk associated with longer term receivables, we applied a lower risk factor to the earlier years and progressively higher risk factors to the later years. During the three and nine months ended September 30, 2023, we further considered the current and expected future economic and market conditions and recorded a $3.2 million credit loss adjustment to Elutia commercial license rights based on the assessment of current company performance and nonpayment by Elutia in recent quarters. Management is in process of modifying the payment terms with Elutia and has placed the loan on the non-accrual method during the three months ended September 30, 2023, instead of the effective interest method until we are able to reliably estimate future cash flows. During the three months ended September 30, 2023 we did not recognized revenue related to the Elutia commercial license right. During the nine months ended September 30, 2023 we recognized $0.8 million of revenue related to the Elutia commercial license right. In addition, we recorded a $0.9 million impairment loss for Selexis commercial license rights during the three and nine months ended September 30, 2023 as a result of recently reduced programs. Accrued Liabilities Accrued liabilities consist of the following (in thousands): September 30, December 31, 2023 2022 Compensation $ 2,890 $ 6,201 Subcontractor 1,966 1,756 Professional fees 3,229 662 Customer deposit 621 621 Supplier 303 634 Royalties owed to third parties — 12 Amounts owed to former licensees 45 3,989 Other 1,581 1,806 Total accrued liabilities $ 10,635 $ 15,681 Share-Based Compensation Share-based compensation expense for awards to employees and non-employee directors is a non-cash expense and is recognized on a straight-line basis over the vesting period. The following table summarizes share-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands): Three months ended Nine months ended September 30, September 30, 2023 2022 (a) 2023 2022 (a) SBC - Research and development expenses $ 1,639 $ 3,277 $ 5,362 $ 7,920 SBC - General and administrative expenses 5,245 5,830 14,660 15,297 $ 6,884 $ 9,107 $ 20,022 $ 23,217 (a) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation. The fair-value for options that were awarded to employees and directors was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions: Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Risk-free interest rate 4.3% 2.8% 4.1% 2.9% Dividend yield — — — — Expected volatility 44.7% 50.0% 51.5% 50.0% Expected term (years) 5.2 4.9 5.3 4.8 A limited amount of performance-based restricted stock units (PSUs) contain a market condition based on our relative total shareholder return ranked on a percentile basis against the NASDAQ Biotechnology Index over a three year performance period, with a range of 0% to 200% of the target amount granted to be issued under the award. Share-based compensation cost for these PSUs is measured using the Monte-Carlo simulation valuation model and is not adjusted for the achievement, or lack thereof, of the performance conditions. Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Diluted net loss per share is computed based on the sum of the weighted average number of common shares outstanding during the period. Potentially dilutive common shares consist of shares issuable under the 2023 Notes, stock options and restricted stock. Although we paid off the 2023 Notes in May 2023, it would have a dilutive impact when the average market price of our common stock exceeds the maximum conversion price during the nine months ended September 30, 2023. It was our intent and policy to settle conversions through combination settlement, which involved payment in cash equal to the principal portion and delivery of shares of common stock for the excess of the conversion value over the principal portion. Potentially dilutive common shares from stock options and restricted stock are determined using the average share price for each period under the treasury stock method. In addition, the following amounts are assumed to be used to repurchase shares: proceeds from exercise of stock options and the average amount of unrecognized compensation expense for the awards. See Note 6, Debt and Note 8, Stockholders’ Equity . In accordance with ASC 260, Earnings per Share , if a company had a discontinuing operation, the company uses income from continuing operations, adjusted for preferred dividends and similar adjustments, as its control number to determine whether potential common shares are dilutive. The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in thousands): Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Weighted average shares outstanding: 17,380 16,888 17,241 16,860 Dilutive potential common shares: Restricted stock — 65 82 54 Stock options — 179 302 214 2023 convertible senior notes — — 159 — Shares used to compute diluted income per share 17,380 17,132 17,784 17,128 Potentially dilutive shares excluded from calculation due to anti-dilutive effect 4,762 6,706 4,663 6,503 For the three months ended September 30, 2023, due to the net loss for the period, all of the 0.3 million weighted average equity awards were anti-dilutive. |
Sale of Pelican Business and In
Sale of Pelican Business and Investment in Primrose Bio | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Sale of Pelican Business and Investment in Primrose Bio | Sale of Pelican Business and Investment in Primrose Bio On September 18, 2023, we entered into a merger agreement, pursuant to which our subsidiary, Pelican Technology Holdings, Inc. (“Pelican”) became a wholly owned subsidiary of Primrose Bio. Primrose Bio is a private company focused on synthetic biology. Pelican has developed technology related to PET (protein expression technology) and PelicCRM197 (vaccine material), and has property and equipment, as well as leased property in San Diego, CA. As part of the transaction, we received 2,146,957 common shares, 4,278,293 preferred shares and 474,746 restricted shares of Primrose Bio. Simultaneous with the merger, we entered into a Purchase and Sale Agreement with Primrose Bio and contributed $15.0 million in exchange for 50.0% of potential development milestones and certain commercial milestones from two contracts previously entered into by Primordial Genetics. In addition, starting January 1, 2025, we will receive 25% of sales revenue of PeliCRM197 above $3.0 million and 35% of all PeliCRM197 licensing revenue in perpetuity. We retained contractual relationships utilizing the Pelican Expression Technology, including the commercial royalty rights to Jazz’s RYLAZE, Merck’s VAXNEUVANCE and V116 vaccines, Alvogen’s Teriparatide, Serum Institute of India’s vaccine programs, including Pneumosil and MenFive vaccines, among others. We determined that the sale of Pelican meets the definition of a deconsolidation of a business. Net assets sold together with allocated goodwill and cash consideration paid were as follows (in thousands): Property and equipment, net $ 8,250 Intangible assets 19,895 Other assets 717 Operating lease right-of-use assets 8,693 Financing lease right-of-use assets 20 Accrued liabilities (630) Deferred revenue (495) Long-term operating lease liabilities (8,445) Other liabilities (74) Net assets sold 27,931 Allocated goodwill 4,132 Cash consideration paid 15,000 $ 47,063 Fair value of the consideration received includes the following (in thousands): Equity method investment $ 13,706 Equity securities 32,278 Derivative assets 3,200 $ 49,184 Goodwill allocated to the selling business based on the relative fair value of the Pelican business and Ligand that was written off was $4.1 million, resulting in a $2.1 million gain on sale of Pelican recorded to income (loss) from operations for the three and nine months ended September 30, 2023. Transaction costs of $1.2 million were allocated to the equity method investment and equity securities based on the relative fair value. As described above, we will receive 25% of sales revenue of PeliCRM197 above $3.0 million and 35% of all PeliCRM197 licensing revenue in perpetuity. The considerations were recognized as contingent consideration under the loss recovery model and they will be measured based on the gain contingency model under ASC 450, Contingencies , and thus, will be recognized as the underlying contingencies are resolved. In addition, we will receive 50.0% of potential development milestones and certain commercial milestones from two contracts previously entered into by Primordial Genetics. The considerations were recognized as derivative assets with a fair value of $3.2 million, at the disposition date, which was included under other long-term asset in our condensed consolidated balance sheet. They are recognized as derivative assets under ASC 815, Derivatives and Hedging , as they have two underlyings (development and commercial milestones) and (i) the commercial milestones are dependent on the development milestones and (ii) the commercial milestone underlying is not determined to be predominate. The derivative assets are recorded at fair value as of September 18, 2023, and will be marketed to fair value at each reporting period going forward. Investment in Primrose Bio We received 2,146,957 common shares, 4,278,293 preferred shares and 474,746 restricted shares of Primrose Bio in consideration for the sale of Pelican. We apply the equity method to investments in common stock and to other investments in entities that have risk and reward characteristics that are substantially similar to an investment in the investee’s common stock. Since the preferred stock and restricted share investment in Primrose Bio has a substantive liquidation preference, it is not substantially similar to the common stock investment and is therefore recorded as an equity security under ASC 321, Investments - Equity Securities . We account for our common stock investment in Primrose Bio under the equity method as we have the ability to exercise significant influence over its operating and financial results. In applying the equity method, we record the investment at fair value. Ligand's proportionate share of net loss of Primrose Bio is recorded in our condensed consolidated statements of operations for the three and nine months ended September 30, 2023. Our equity method investments are reviewed for indicators of impairment at each reporting period and are written down to fair value if there is evidence of a loss in value that is other-than-temporary. Our share of the net losses of Primrose Bio since the divestiture date for the quarter ended September 30, 2023 was $0.07 million; which reduced Ligand's equity method investment accordingly. We determined that the Series A preferred stock investment in Primrose Bio did not have a readily determinable fair value and therefore elected the measurement alternative in ASC 321 to subsequently record the investment at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. When fair value becomes determinable, from observable price changes in orderly transactions, our investment will be marked to fair value. There have been no observable price changes or impairments identified since September 18, 2023. On March 23, 2022, we entered into the Separation Agreement to separate our OmniAb Business and the Merger Agreement, pursuant to which APAC would combine with OmniAb, and acquire Ligand's OmniAb Business, in a Reverse Morris Trust transaction (collectively, the “Transactions”). In connection with the execution of the Merger Agreement, we made organizational changes to better align our organizational structure with our strategy and operations, and management reorganized the reportable segments to better reflect how the business is evaluated by the chief operating decision maker. Beginning in the first quarter of 2022, we operated the following two reportable segments: (1) OmniAb Business and (2) Ligand core business. The OmniAb Business segment was focused on enabling the discovery of therapeutic candidates for our partners by pairing antibody repertoires generated from our proprietary transgenic animals with our OmniAb Business platform screening tools. The Ligand core business segment is a biopharmaceutical business focused on developing or acquiring technologies that help pharmaceutical companies deliver and develop medicines. After the closing date of the Transactions on November 1, 2022, the historical financial results of OmniAb have been reflected in our consolidated financial statements as discontinued operations under GAAP for all periods presented through the date of the Distribution. Pursuant to the Transaction Agreements, Ligand contributed to OmniAb cash and certain specific assets and liabilities constituting the OmniAb Business. Pursuant to the Distribution, Ligand distributed on a pro rata basis to its shareholders as of October 26, 2022 shares of the common stock of OmniAb representing 100% of Ligand’s interest in OmniAb. Immediately following the Distribution, Merger Sub merged with and into OmniAb, with OmniAb continuing as the surviving company in the Merger and as a wholly owned subsidiary of New OmniAb. The entire transaction was completed on November 1, 2022, and following the Merger, New OmniAb is an independent, publicly traded company whose common stock trades on NASDAQ under the symbol “OABI.” After the Distribution, we do not beneficially own any shares of common stock in OmniAb and no longer consolidate OmniAb into our financial results for periods ending after November 1, 2022. Discontinued operations In connection with the Merger, the Company determined its antibody discovery business qualified for discontinued operations accounting treatment in accordance with ASC 205-20. We recognized a $1.7 million tax provision adjustment related to deferred taxes during the nine months ended September 30, 2023 that was attributable to the discontinued operations. There was no revenue or expenses attributable to the discontinued operations during the three months ended September 30, 2023. The following table summarizes revenue and expenses of the discontinued operations for the three and nine months ended September 30, 2022 (in thousands): Three months ended September 30, 2022 Nine months ended September 30, 2022 Revenues: Royalties $ 582 $ 984 Contract revenue 6,285 22,353 Total revenues 6,867 23,337 Operating costs and expenses: Amortization of intangibles 3,250 9,757 Research and development 12,797 34,576 General and administrative 2,525 11,279 Total operating costs and expenses 18,572 55,612 Loss from operations (11,705) (32,275) Other income (expense): Other income (expense), net 208 485 Total other income (expense), net 208 485 Loss before income tax (11,497) (31,790) Income tax (expense) benefit 2,256 6,599 Net loss $ (9,241) $ (25,191) The following table summarizes the significant non-cash items, capital expenditures of the discontinued operations, and financing activities that are included in the consolidated statements of cash flows for the nine months ended September 30, 2022 (in thousands): Nine months ended September 30, 2022 Operating activities: Change in fair value of contingent consideration $ (486) Depreciation and amortization 12,070 Stock-based compensation expense 7,923 Investing activities: Purchase of property, plant and equipment (12,415) Payments to CVR Holders (960) Financing activities: Payments to CVR Holders $ (1,545) Supplemental cash flow disclosures: Purchases of property, plant and equipment included in accounts payable and accrued expenses $ 3,458 |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisition | Acquisition Novan On September 27, 2023, we closed the transaction to acquire certain assets of Novan, Inc. (“Novan”) pursuant to the agreement we entered into with Novan on July 17, 2023 for $15.0 million in cash (which agreement contemplated Novan filing for bankruptcy relief) and provide up to $15.0 million in debtor-in-possession (“DIP”) financing inclusive of a $3.0 million bridge loan funded on the same day. Novan filed for Chapter 11 reorganization on July 17, 2023. On September 27, 2023, the bankruptcy court approved our $12.2 million bid to purchase from Novan its lead product candidate berdazimer gel, 10.3%, all other assets related to the NITRICIL technology platform and the rights to one commercial stage asset. The remaining commercial assets of Novan will be sold to other parties. The approved $12.2 million bid was credited to the $15.0 million DIP financing, with the balance of $2.8 million and accrued interest repaid to us. The acquisition was accounted for as business combination. We recorded $3.3 million of acquisition-related costs for legal, due diligence and other costs in connection with the acquisition within operating expenses in our condensed consolidated statement of operations for the nine months ended September 30, 2023. The following table sets forth an allocation of the preliminary purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed, with the excess recorded to goodwill (in thousands): Restricted Cash $ 583 Property and equipment, net 13,054 Right-of-use asset 3,683 Other assets 364 Intangible assets acquired 17,600 Goodwill 2,229 Deferred revenue (2,342) Lease liabilities (3,683) Other liabilities (20,500) Cash paid for Novan, including restricted cash received 10,988 DIP loan fees and interest 1,162 Total consideration $ 12,150 Acquired intangible assets of $17.6 million related to core technology. The fair value of the core technology was based on the discounted cash flow method that estimated the present value of the potential royalties, milestones, and collaboration revenue streams derived from the licensing of the related technologies. These projected cash flows were discounted to present value using a discount rate of 29%. The fair value of the core technology is being amortized on a straight-line basis over the estimated useful life of 15 years. Acquired other liabilities of $20.5 million related to a royalty and milestone payments purchase agreement, entered by Novan in 2019 and assumed as part of the acquisition, which previously provided Novan $25.0 million of funding used primarily in the clinical development of berdazimer gel, 10.3%. Pursuant to the purchase agreement, Novan will pay ongoing quarterly payments, calculated based on an applicable percentage per product of any upfront fees, milestone payments, royalty payments or equivalent payments received by Novan pursuant to any out-license agreement, net of any upfront fees, milestone payments, royalty payments or equivalent payments paid by Novan to third parties pursuant to any agreements under which Novan has in-licensed intellectual property with respect to such products. If Novan decides to commercialize any product on its own following regulatory approval, as opposed to commercializing through an out-license agreement or other third-party arrangement, Novan will be obligated to pay a low single digits royalty on net sales of such products. This contract liability was fair valued based on the discounted cash flow method that estimated the present value of the potential royalties, milestones, and collaboration revenue streams derived from the related programs mentioned above, by applying a discount rate of 9.6% (our estimated rate of borrowing). The estimated fair values of assets acquired, liabilities assumed and purchased intangibles are provisional. Specifically, the provisional amounts include estimated projections on the completion of the clinical development process and projected revenue related to commercializing products based on the underlying technology. The accounting for these amounts falls within the measurement period and, therefore, we may adjust these provisional amounts to reflect new information obtained about facts and circumstances that existed as of the acquisition date. |
Spin-off of OmniAb
Spin-off of OmniAb | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Spin-off of OmniAb | Sale of Pelican Business and Investment in Primrose Bio On September 18, 2023, we entered into a merger agreement, pursuant to which our subsidiary, Pelican Technology Holdings, Inc. (“Pelican”) became a wholly owned subsidiary of Primrose Bio. Primrose Bio is a private company focused on synthetic biology. Pelican has developed technology related to PET (protein expression technology) and PelicCRM197 (vaccine material), and has property and equipment, as well as leased property in San Diego, CA. As part of the transaction, we received 2,146,957 common shares, 4,278,293 preferred shares and 474,746 restricted shares of Primrose Bio. Simultaneous with the merger, we entered into a Purchase and Sale Agreement with Primrose Bio and contributed $15.0 million in exchange for 50.0% of potential development milestones and certain commercial milestones from two contracts previously entered into by Primordial Genetics. In addition, starting January 1, 2025, we will receive 25% of sales revenue of PeliCRM197 above $3.0 million and 35% of all PeliCRM197 licensing revenue in perpetuity. We retained contractual relationships utilizing the Pelican Expression Technology, including the commercial royalty rights to Jazz’s RYLAZE, Merck’s VAXNEUVANCE and V116 vaccines, Alvogen’s Teriparatide, Serum Institute of India’s vaccine programs, including Pneumosil and MenFive vaccines, among others. We determined that the sale of Pelican meets the definition of a deconsolidation of a business. Net assets sold together with allocated goodwill and cash consideration paid were as follows (in thousands): Property and equipment, net $ 8,250 Intangible assets 19,895 Other assets 717 Operating lease right-of-use assets 8,693 Financing lease right-of-use assets 20 Accrued liabilities (630) Deferred revenue (495) Long-term operating lease liabilities (8,445) Other liabilities (74) Net assets sold 27,931 Allocated goodwill 4,132 Cash consideration paid 15,000 $ 47,063 Fair value of the consideration received includes the following (in thousands): Equity method investment $ 13,706 Equity securities 32,278 Derivative assets 3,200 $ 49,184 Goodwill allocated to the selling business based on the relative fair value of the Pelican business and Ligand that was written off was $4.1 million, resulting in a $2.1 million gain on sale of Pelican recorded to income (loss) from operations for the three and nine months ended September 30, 2023. Transaction costs of $1.2 million were allocated to the equity method investment and equity securities based on the relative fair value. As described above, we will receive 25% of sales revenue of PeliCRM197 above $3.0 million and 35% of all PeliCRM197 licensing revenue in perpetuity. The considerations were recognized as contingent consideration under the loss recovery model and they will be measured based on the gain contingency model under ASC 450, Contingencies , and thus, will be recognized as the underlying contingencies are resolved. In addition, we will receive 50.0% of potential development milestones and certain commercial milestones from two contracts previously entered into by Primordial Genetics. The considerations were recognized as derivative assets with a fair value of $3.2 million, at the disposition date, which was included under other long-term asset in our condensed consolidated balance sheet. They are recognized as derivative assets under ASC 815, Derivatives and Hedging , as they have two underlyings (development and commercial milestones) and (i) the commercial milestones are dependent on the development milestones and (ii) the commercial milestone underlying is not determined to be predominate. The derivative assets are recorded at fair value as of September 18, 2023, and will be marketed to fair value at each reporting period going forward. Investment in Primrose Bio We received 2,146,957 common shares, 4,278,293 preferred shares and 474,746 restricted shares of Primrose Bio in consideration for the sale of Pelican. We apply the equity method to investments in common stock and to other investments in entities that have risk and reward characteristics that are substantially similar to an investment in the investee’s common stock. Since the preferred stock and restricted share investment in Primrose Bio has a substantive liquidation preference, it is not substantially similar to the common stock investment and is therefore recorded as an equity security under ASC 321, Investments - Equity Securities . We account for our common stock investment in Primrose Bio under the equity method as we have the ability to exercise significant influence over its operating and financial results. In applying the equity method, we record the investment at fair value. Ligand's proportionate share of net loss of Primrose Bio is recorded in our condensed consolidated statements of operations for the three and nine months ended September 30, 2023. Our equity method investments are reviewed for indicators of impairment at each reporting period and are written down to fair value if there is evidence of a loss in value that is other-than-temporary. Our share of the net losses of Primrose Bio since the divestiture date for the quarter ended September 30, 2023 was $0.07 million; which reduced Ligand's equity method investment accordingly. We determined that the Series A preferred stock investment in Primrose Bio did not have a readily determinable fair value and therefore elected the measurement alternative in ASC 321 to subsequently record the investment at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. When fair value becomes determinable, from observable price changes in orderly transactions, our investment will be marked to fair value. There have been no observable price changes or impairments identified since September 18, 2023. On March 23, 2022, we entered into the Separation Agreement to separate our OmniAb Business and the Merger Agreement, pursuant to which APAC would combine with OmniAb, and acquire Ligand's OmniAb Business, in a Reverse Morris Trust transaction (collectively, the “Transactions”). In connection with the execution of the Merger Agreement, we made organizational changes to better align our organizational structure with our strategy and operations, and management reorganized the reportable segments to better reflect how the business is evaluated by the chief operating decision maker. Beginning in the first quarter of 2022, we operated the following two reportable segments: (1) OmniAb Business and (2) Ligand core business. The OmniAb Business segment was focused on enabling the discovery of therapeutic candidates for our partners by pairing antibody repertoires generated from our proprietary transgenic animals with our OmniAb Business platform screening tools. The Ligand core business segment is a biopharmaceutical business focused on developing or acquiring technologies that help pharmaceutical companies deliver and develop medicines. After the closing date of the Transactions on November 1, 2022, the historical financial results of OmniAb have been reflected in our consolidated financial statements as discontinued operations under GAAP for all periods presented through the date of the Distribution. Pursuant to the Transaction Agreements, Ligand contributed to OmniAb cash and certain specific assets and liabilities constituting the OmniAb Business. Pursuant to the Distribution, Ligand distributed on a pro rata basis to its shareholders as of October 26, 2022 shares of the common stock of OmniAb representing 100% of Ligand’s interest in OmniAb. Immediately following the Distribution, Merger Sub merged with and into OmniAb, with OmniAb continuing as the surviving company in the Merger and as a wholly owned subsidiary of New OmniAb. The entire transaction was completed on November 1, 2022, and following the Merger, New OmniAb is an independent, publicly traded company whose common stock trades on NASDAQ under the symbol “OABI.” After the Distribution, we do not beneficially own any shares of common stock in OmniAb and no longer consolidate OmniAb into our financial results for periods ending after November 1, 2022. Discontinued operations In connection with the Merger, the Company determined its antibody discovery business qualified for discontinued operations accounting treatment in accordance with ASC 205-20. We recognized a $1.7 million tax provision adjustment related to deferred taxes during the nine months ended September 30, 2023 that was attributable to the discontinued operations. There was no revenue or expenses attributable to the discontinued operations during the three months ended September 30, 2023. The following table summarizes revenue and expenses of the discontinued operations for the three and nine months ended September 30, 2022 (in thousands): Three months ended September 30, 2022 Nine months ended September 30, 2022 Revenues: Royalties $ 582 $ 984 Contract revenue 6,285 22,353 Total revenues 6,867 23,337 Operating costs and expenses: Amortization of intangibles 3,250 9,757 Research and development 12,797 34,576 General and administrative 2,525 11,279 Total operating costs and expenses 18,572 55,612 Loss from operations (11,705) (32,275) Other income (expense): Other income (expense), net 208 485 Total other income (expense), net 208 485 Loss before income tax (11,497) (31,790) Income tax (expense) benefit 2,256 6,599 Net loss $ (9,241) $ (25,191) The following table summarizes the significant non-cash items, capital expenditures of the discontinued operations, and financing activities that are included in the consolidated statements of cash flows for the nine months ended September 30, 2022 (in thousands): Nine months ended September 30, 2022 Operating activities: Change in fair value of contingent consideration $ (486) Depreciation and amortization 12,070 Stock-based compensation expense 7,923 Investing activities: Purchase of property, plant and equipment (12,415) Payments to CVR Holders (960) Financing activities: Payments to CVR Holders $ (1,545) Supplemental cash flow disclosures: Purchases of property, plant and equipment included in accounts payable and accrued expenses $ 3,458 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Assets and Liabilities Measured on a Recurring Basis The following table presents the hierarchy for our assets and liabilities measured at fair value (in thousands): September 30, 2023 December 31, 2022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Short-term investments, excluding Viking (1) $ 5,555 $ 140,970 $ 22 $ 146,547 $ 3,992 $ 99,615 $ 135 $ 103,742 Investment in Viking common stock 24,680 — — 24,680 63,122 — — 63,122 Derivative assets (3) — — 3,281 3,281 — — — — Total assets $ 30,235 $ 140,970 $ 3,303 $ 174,508 $ 67,114 $ 99,615 $ 135 $ 166,864 Liabilities: CyDex contingent liabilities $ — $ — $ 164 $ 164 $ — $ — $ 84 $ 84 Metabasis contingent liabilities (2) — 3,431 — 3,431 — 3,429 — 3,429 Amounts owed to former licensor — — — — 44 — — 44 Total liabilities $ — $ 3,431 $ 164 $ 3,595 $ 44 $ 3,429 $ 84 $ 3,557 1. Excluding our investment in Viking, our short-term investments in marketable debt and equity securities are classified as available-for-sale securities based on management's intentions and are at level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Short-term investments in bond funds are valued at their net asset value (NAV) on the last day of the period. We have classified marketable securities with original maturities of greater than one year as short-term investments based upon our ability and intent to use any and all of those marketable securities to satisfy the liquidity needs of our current operations. In addition, we have investment in warrants resulting from Seelos Therapeutics Inc. milestone payments that were settled in shares during the first quarter of 2019 and are at level 3 of the fair value hierarchy, based on Black-Scholes value estimated by management on the last day of the period. 2. In connection with our acquisition of Metabasis in January 2010, we issued Metabasis stockholders four tradable CVRs, one CVR from each of four respective series of CVR, for each Metabasis share. The CVRs entitle Metabasis stockholders to cash payments as frequently as every six months as cash is received by us from proceeds from the sale or partnering of any of the Metabasis drug development programs, among other triggering events. The liability for the CVRs is determined using quoted prices in a market that is not active for the underlying CVR. The carrying amount of the liability may fluctuate significantly based upon quoted market prices and actual amounts paid under the agreements may be materially different than the carrying amount of the liability. Several of the Metabasis drug development programs have been outlicensed to Viking, including VK2809. VK2809 is a novel selective TR-β agonist with potential in multiple indications, including hypercholesterolemia, dyslipidemia, NASH, and X-ALD. Under the terms of the agreement with Viking, we may be entitled to up to $375.0 million of development, regulatory and commercial milestones and tiered royalties on potential future sales including a $10.0 million payment upon initiation of a Phase 3 clinical trial. During the three and nine months ended September 30, 2023, we adjusted the balance of the Metabasis CVR liability by decreasing $0.1 million and increasing $0.002 million to mark to market, respectively. 3. In connection with the Purchase and Sale Agreement with Primrose Bio, we will receive 50.0% of potential development milestones and certain commercial milestones from two contracts previously entered into by Primordial Genetics. The considerations were recognized as derivative assets included under other long-term asset in our condensed consolidated balance sheet. They are recognized as derivative assets under ASC 815, Derivatives and Hedging, as they have two underlyings (development and commercial milestones) and (i) the commercial milestones are dependent on the development milestones and (ii) the commercial milestone underlying is not determined to be predominate. The fair value of the derivative assets was determined using a discounted cash flow approach using a discount rate inline with the stages of the underlying contracts. A reconciliation of the level 3 liabilities as of September 30, 2023 is as follows (in thousands): Fair value of level 3 financial instruments as of December 31, 2022 $ 84 Payments to CVR holders and other contingent payments (50) Fair value adjustments to contingent liabilities 130 Fair value of level 3 financial instruments as of September 30, 2023 $ 164 Assets Measured on a Non-Recurring Basis We apply fair value techniques on a non-recurring basis associated with valuing potential impairment losses related to our goodwill, indefinite-lived intangible assets and long-lived assets. We evaluate goodwill and indefinite-lived intangible assets annually for impairment and whenever circumstances occur indicating that goodwill might be impaired. We determine the fair value of our reporting unit based on a combination of inputs, including the market capitalization of Ligand, as well as Level 3 inputs such as discounted cash flows, which are not observable from the market, directly or indirectly. We determine the fair value of our indefinite-lived intangible assets using the income approach based on Level 3 inputs. Other than a reduction in goodwill resulting from the sale of Pelican business disclosed in Note 2, Sale of Pelican Business and Investment in Primrose Bio, and a $0.9 million impairment loss for Selexis commercial license rights based on fair value of the program disclosed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies , there was no impairment of our goodwill, indefinite-lived assets, or long-lived assets recorded during the three and nine months ended September 30, 2023 and September 30, 2022. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt 0.75% Convertible Senior Notes due 2023 In May 2018, we issued $750.0 million aggregate principal amount of 2023 Notes, bearing cash interest at a rate of 0.75% per year, payable semi-annually. The net proceeds from the offering, after deducting the initial purchasers' discount and offering expenses, were approximately $733.1 million. In connection with the issuance of the 2023 Notes, we incurred $16.9 million of issuance costs, which primarily consisted of underwriting, legal and other professional fees, and is being amortized to interest expense using the effective interest method over the five year expected life of the 2023 Notes. The effective interest rate for the nine months ended September 30, 2023 is 0.5%. During the nine months ended September 30, 2023 we recognized a total of $0.6 million in interest expense which includes $0.4 million in contractual interest expense and $0.2 million in amortized issuance costs. On May 15, 2023, the 2023 Notes maturity date, we paid the remaining $76.9 million principal amount and $0.3 million accrued interest in cash. Convertible Bond Hedge and Warrant Transactions In conjunction with the 2023 Notes, in May 2018, we entered into convertible bond hedges and sold warrants covering 3,018,327 shares of our common stock to minimize the impact of potential dilution to our common stock and/or offset the cash payments we were required to make in excess of the principal amount upon conversion of the 2023 Notes. The convertible bond hedges have an exercise price of $206.65 per share and were exercisable when and if the 2023 Notes were converted. We paid $140.3 million for these convertible bond hedges. If upon conversion of the 2023 Notes, the price of our common stock had been above the exercise price of the convertible bond hedges, the counterparties would have delivered shares of common stock and/or cash with an aggregate value approximately equal to the difference between the price of common stock at the conversion date and the exercise price, multiplied by the number of shares of common stock related to the convertible bond hedge transaction being exercised. The convertible bond hedges and warrants described below are separate transactions entered into by us and are not part of the terms of the 2023 Notes. Holders of the 2023 Notes and warrants did not have any rights with respect to the convertible bond hedges. Concurrently with the convertible bond hedge transactions, we entered into warrant transactions whereby we sold warrants covering approximately 3,018,327 shares of common stock with an exercise price of approximately $315.38 per share, subject to certain adjustments. We received $90.0 million for these warrants. The warrants have various expiration dates ranging from August 15, 2023 to February 6, 2024. The warrants will have a dilutive effect to the extent the market price per share of common stock exceeds the applicable exercise price of the warrants, as measured under the terms of the warrant transactions. The common stock issuable upon exercise of the warrants will be in unregistered shares, and we do not have the obligation and do not intend to file any registration statement with the SEC registering the issuance of the shares under the warrants. In January 2021, in connection with the repurchases of approximately $20.3 million in principal of the 2023 Notes for approximately $19.1 million in cash, including accrued interest of $0.1 million, during the quarter ended December 31, 2020, we entered into amendments with Barclays Bank PLC, Deutsche Bank AG, London Branch, and Goldman Sachs & Co. LLC to the convertible note hedges transactions we initially entered into in connection with the issuance of the 2023 Notes. The amendments provide that the options under the convertible note hedges corresponding to such repurchased 2023 Notes will remain outstanding notwithstanding such repurchase. |
Income Tax
Income Tax | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Tax | Income TaxOur effective tax rate may vary from the U.S. federal statutory tax rate due to the change in the mix of earnings in various state jurisdictions with different statutory rates, benefits related to tax credits, and the tax impact of non-deductible expenses, stock award activities and other permanent differences between income before income taxes and taxable income. The effective tax rate for continuing operations for the three and nine months ended September 30, 2023 and 2022 was 15.4% and 21.9%, and 23.5% and 21.5%, respectively. The variance from the U.S. federal statutory tax rate of 21% for the three and nine months ended September 30, 2023 was primarily due to Internal Revenue Code Section 162(m) limitation on deduction for officer compensation, non-deductible incentive stock option (ISO) related stock compensation expense, which were partially offset by foreign derived intangible income tax benefit during the period. The variance from the U.S. federal statutory tax rate of 21% for the three and nine months ended September 30, 2022 was primarily due to the tax deductions related to foreign derived intangible income tax benefit as well as the research and development tax credits, which were partially offset by Section 162(m) limitation during the period. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity We grant options and awards to employees and non-employee directors pursuant to a stockholder approved stock incentive plan, which is described in further detail in Note 9, Stockholders’ Equity , of the Notes to Consolidated Financial Statements in our 2022 Annual Report. The following is a summary of our stock option and restricted stock activity and related information: Stock Options Restricted Stock Awards Shares Weighted-Average Exercise Price Shares Weighted-Average Grant Date Fair Value Balance as of December 31, 2022 2,991,473 $ 61.31 348,453 $ 75.60 Granted 518,332 $ 73.21 203,752 $ 83.39 Options exercised/RSUs vested (362,926) $ 44.03 (169,854) $ 75.26 Forfeited (338,742) $ 65.09 (15,980) $ 63.69 Balance as of September 30, 2023 2,808,137 $ 65.29 366,371 $ 80.61 As of September 30, 2023, outstanding options to purchase 1.8 million shares were exercisable with a weighted average exercise price per share of $64.22. Employee Stock Purchase Plan The price at which common stock is purchased under the Amended Employee Stock Purchase Plan, or ESPP, is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. As of September 30, 2023, 32,363 shares were available for future purchases under the ESPP. At-the Market Equity Offering Program On September 30, 2022, we filed a registration statement on Form S-3 (the “Shelf Registration Statement”), which became automatically effective upon filing, covering the offering of common stock, preferred stock, debt securities, warrants and units. On September 30, 2022, we also entered into an At-The-Market Equity Offering Sales Agreement (the “Sales Agreement”) with Stifel, Nicolaus & Company, Incorporated (the “Agent”), under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $100.0 million in “at the market” offerings through the Agent (the “ATM Offering”). The Shelf Registration Statement included a prospectus covering the offering, issuance and sale of up to $100.0 million of our common stock from time to time through the ATM Offering. The shares to be sold under the Sales Agreement may be issued and sold pursuant to the Shelf Registration Statement. To date, we have not issued any shares of common stock in the ATM Offering. Share Repurchases Our Board of Directors has approved a stock repurchase program authorizing, but not requiring, the repurchase of up to $50.0 million of our common stock from time to time through April 2026. We expect to acquire shares, if at all, primarily through open-market transactions in accordance with all applicable requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The timing and amount of repurchase transactions will be determined by management based on our evaluation of market conditions, share price, legal requirements and other factors. Authorization to repurchase $50.0 million of our common stock remained available as of September 30, 2023. |
Commitment and Contingencies
Commitment and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitment and Contingencies | Commitment and Contingencies Legal Proceedings We record an estimate of a loss when the loss is considered probable and estimable. Where a liability is probable and there is a range of estimated loss and no amount in the range is more likely than any other number in the range, we record the minimum estimated liability related to the claim in accordance with ASC 450, Contingencies . As additional information becomes available, we assess the potential liability related to our pending litigation and revises our estimates. Revisions in our estimates of potential liability could materially impact our results of operations. On October 31, 2019, we received three civil complaints filed in the U.S. District Court for the Northern District of Ohio on behalf of several Indian tribes. The Northern District of Ohio is the Court that the Judicial Panel on Multi-District Litigation (“JPML”) has assigned more than one thousand civil cases which have been designated as a Multi-District Litigation (“MDL”) and captioned In Re: National Prescription Opiate Litigation. The allegations in these complaints focus on the activities of defendants other than the Company and no individualized factual allegations have been advanced against us in any of the 3 complaints. We reject all claims raised in the complaints and intend to vigorously defend these matters. From time to time, we may also become subject to other legal proceedings or claims arising in the ordinary course of our business. We currently believe that none of the claims or actions pending against us is likely to have, individually or in aggregate, a material adverse effect on our business, financial condition or results of operations. Given the unpredictability inherent in litigation, however, we cannot predict the outcome of these matters. Operating Leases |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Revolving Credit Facility On October 12, 2023, we entered into a $75.0 million revolving credit facility (the “Revolving Credit Facility”) with Citibank, N.A. as the Administrative Agent. We, our material domestic subsidiaries, as Guarantors (as defined in the Credit Agreement), and the Lenders (as defined in the Credit Agreement) entered into a credit agreement (the “Credit Agreement”) with the Administrative Agent, under which the Lenders, the Swingline Lender and the L/C Issuer (each as defined in the Credit Agreement) agreed to make loans and other financial accommodations to us in an aggregate amount of up to $75.0 million. At our option, borrowings under the Revolving Credit Facility accrue interest at a rate equal to either Term SOFR Rate or a specified base rate plus an applicable margin linked to our leverage ratio, ranging from 1.75% to 2.50% per annum for Term SOFR Rate loans and 0.75% to 1.50% per annum for base rate loans. The Revolving Credit Facility is subject to a commitment fee payable on the unused Revolving Credit Facility commitments ranging from 0.30% to 0.45%, depending on our leverage ratio. During the term of the Revolving Credit Facility, we may borrow, repay and re-borrow amounts available under the Revolving Credit Facility, subject to voluntary reductions of the swing line, letter of credit and revolving credit commitments. Borrowings under the Credit Agreement are secured by certain of our collateral and that of the Guarantors. In specified circumstances, additional guarantors are required to be added. The Credit Agreement contains customary affirmative and negative covenants, including certain financial maintenance covenants, and events of default applicable to us. In the event of violation of the representations, warranties and covenants made in the Credit Agreement, we may not be able to utilize the Revolving Credit Facility or repayment of amounts owed thereunder could be accelerated. As of the date of this filing, no amounts have been borrowed under the Revolving Credit Facility. The maturity date of the Revolving Credit Facility is October 12, 2026. Ovid Therapeutics On October 18, 2023, we entered into an agreement with Ovid Therapeutics Inc. (“Ovid”) to acquire a 13% interest in all royalties and milestones owed to Ovid related to the potential approval and commercialization of soticlestat. We have paid Ovid $30.0 million, less certain reimbursable expenses, to acquire these royalty and milestone interests. Tolerance |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net income (loss) | $ (10,273) | $ 2,290 | $ 41,949 | $ 404 | $ (895) | $ (15,385) | $ 33,966 | $ (15,876) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Business On November 1, 2022, we completed the separation (the “Separation”) of our antibody discovery business and certain related assets and liabilities (the “OmniAb Business”) through a spin-off of OmniAb to Ligand’s shareholders of record as of October 26, 2022 on a pro rata basis (the “Distribution”) and merger (the “Merger”) of OmniAb with a wholly owned subsidiary of a separate public company, OmniAb, Inc. (formerly known as Avista Public Acquisition Corp. II (“New OmniAb”)), in a Reverse Morris Trust transaction pursuant to the Agreement and Plan of Merger, dated as of March 23, 2022 (the “Merger Agreement”), and the Separation and Distribution Agreement, dated as of March 23, 2022 (the “Separation Agreement”) (the Merger Agreement and Separation Agreement, collectively with the other related transaction documents, the “Transaction Agreements”). Pursuant to the Transaction Agreements, Ligand contributed to OmniAb cash and certain assets and liabilities constituting the OmniAb Business, including but not limited to the equity interests of Ab Initio Biotherapeutics, Inc., Crystal Bioscience, Inc., Icagen, LLC, Taurus Biosciences, LLC and xCella Biosciences, Inc. After the spin-off of our OmniAb antibody discovery business, Ligand is a revenue-generating biopharmaceutical company focused on developing or acquiring technologies that help pharmaceutical companies discover and develop medicines. We operate in one business segment: development and licensing of biopharmaceutical assets. |
Basis of Presentation | Basis of PresentationOur condensed consolidated financial statements include the financial statements of Ligand and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We have included all adjustments, consisting only of normal recurring adjustments, which we considered necessary for a fair presentation of our financial results. These unaudited condensed consolidated financial statements and accompanying notes should be read together with the audited consolidated financial statements included in our 2022 Annual Report. Interim financial results are not necessarily indicative of the results that may be expected for the full year. |
Discontinued Operations | Discontinued Operations The Company determined that the spin-off of the OmniAb Business in November 2022 met the criteria for classification as a discontinued operation in accordance with ASC Subtopic 205-20, Discontinued Operations (“ASC 205-20”). Accordingly, the accompanying condensed consolidated financial statements have been updated to present the results of all discontinued operations reported as a separate component of loss in the condensed consolidated statements of operations and comprehensive loss (see Note 4, Spin-off of OmniAb ). All disclosures have been adjusted to reflect continuing operations. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results may differ from those estimates. |
Revenue | Revenue Our revenue is generated primarily from royalties on sales of products commercialized by our partners, Captisol material sales, and contract revenue for services, license fees and development, regulatory and sales based milestone payments. We apply the following five-step model in accordance with ASC 606, Revenue from Contracts with Customers , in order to determine the revenue: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. Royalties We receive royalty revenue on sales by our partners of products covered by patents that we or our partners own under contractual agreements. We do not have future performance obligations under these license arrangements. We generally satisfy our obligation to grant intellectual property rights on the effective date of the contract. However, we apply the royalty recognition constraint required under the guidance for sales-based royalties which requires a royalty to be recorded no sooner than the underlying sale occurs. Therefore, royalties on sales of products commercialized by our partners are recognized in the quarter the product is sold. Our partners generally report sales information to us on a one quarter lag. Thus, we estimate the expected royalty proceeds based on an analysis of historical experience and interim data provided by our partners including their publicly announced sales. Differences between actual and estimated royalty revenues, which have not been material, are adjusted in the period in which they become known, typically the following quarter. Captisol Sales Revenue from Captisol sales is recognized when control of Captisol material is transferred or intellectual property license rights are granted to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products or rights. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. For Captisol material or intellectual property license rights, we consider our performance obligation satisfied once we have transferred control of the product or granted the intellectual property rights, meaning the customer has the ability to use and obtain the benefit of the Captisol material or intellectual property license right. We recognize revenue for satisfied performance obligations only when we determine there are no uncertainties regarding payment terms or transfer of control. Sales tax and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We have elected to recognize the cost of freight and shipping when control over Captisol material has transferred to the customer as an expense in Cost of Captisol. We expense incremental costs of obtaining a contract when incurred if the expected amortization period of the asset that we would have recognized is one year or less or the amount is immaterial. We did not incur any incremental costs of obtaining a contract during the periods reported. Contract Revenue Our contracts with customers often include variable consideration in the form of contingent milestone payments. We include contingent milestone payments in the estimated transaction price when it is probable a significant reversal in the amount of cumulative revenue recognized will not occur. These estimates are based on historical experience, anticipated results and our best judgment at the time. If the contingent milestone payment is based on sales, we apply the royalty recognition constraint and record revenue when the underlying sale has taken place. Significant judgments must be made in determining the transaction price for our sales of intellectual property. Because of the risk that products in development with our partners will not reach development milestones or receive regulatory approval, we generally recognize any contingent payments that would be due to us upon the development milestone or regulatory approval. Depending on the terms of the arrangement, we may also defer a portion of the consideration received if we have to satisfy a future obligation, which typically occurs with our contracts for R&D services. In general, for R&D services, which has not been significant, we recognize revenue over time and measure our progress using an input method. The input methods we use are based on the effort we expend or costs we incur toward the satisfaction of our performance obligation. Some customer contracts are sublicenses which require that we make payments to an upstream licensor related to license fees, milestones and royalties which we receive from customers. In such cases, we evaluate the determination of gross revenue as a principal versus net revenue as an agent reporting based on each individual agreement. Deferred Revenue |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit LossesOur accounts receivable arise primarily from sales on credit to customers. We establish an allowance for credit losses to present the net amount of accounts receivable expected to be collected. The allowance is determined by using the loss-rate method, which requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivable. Some of these factors include macroeconomic conditions that correlate with historical loss experience, delinquency trends, aging behavior of receivables and credit and liquidity quality indicators for industry groups, customer classes or individual customers. |
Inventory | Inventory Inventory, which consists of finished goods, is stated at the lower of cost or net realizable value. We determine cost using the specific identification method. |
Commercial License Rights | Commercial license rights represent a portfolio of future milestone and royalty payment rights acquired from Selexis, S.A. (Selexis) in April 2013 and April 2015, CorMatrix Cardiovascular, Inc. (CorMatrix) in May 2016, which was later acquired by Aziyo (Aziyo changed its corporate name to Elutia Inc. ("Elutia") in September 2023) in 2017, and Dianomi Therapeutics, Inc. in January 2019. Commercial license rights acquired are accounted for as financial assets in accordance with ASC 310, Receivables, as further discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in our 2022 Annual Report. We estimated the credit losses at the individual asset level by considering the performance against the programs, the company operating performance and the macroeconomic forecast. In addition, we have judgmentally applied credit loss risk factors to the future expected payments with consideration given to the timing of the payment. Given the higher inherent credit risk associated with longer term receivables, we applied a lower risk factor to the earlier years and progressively higher risk factors to the later years. During the three and nine months ended September 30, 2023, we further considered the current and expected future economic and market conditions and recorded a $3.2 million credit loss adjustment to Elutia commercial license rights based on the assessment of current company performance and nonpayment by Elutia in recent quarters. Management is in process of modifying the payment terms with Elutia and has placed the loan on the non-accrual method during the three months ended September 30, 2023, instead of the effective interest method until we are able to reliably estimate future cash flows. During the three months ended September 30, 2023 we did not recognized revenue related to the Elutia commercial license right. During the nine months ended September 30, 2023 we recognized $0.8 million of revenue related to the Elutia commercial license right. In addition, we recorded a $0.9 million impairment loss for Selexis commercial license rights during the three and nine months ended September 30, 2023 as a result of recently reduced programs. |
Share-Based Compensation | Share-Based Compensation Share-based compensation expense for awards to employees and non-employee directors is a non-cash expense and is recognized on a straight-line basis over the vesting period. The following table summarizes share-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands): Three months ended Nine months ended September 30, September 30, 2023 2022 (a) 2023 2022 (a) SBC - Research and development expenses $ 1,639 $ 3,277 $ 5,362 $ 7,920 SBC - General and administrative expenses 5,245 5,830 14,660 15,297 $ 6,884 $ 9,107 $ 20,022 $ 23,217 (a) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation. The fair-value for options that were awarded to employees and directors was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions: Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Risk-free interest rate 4.3% 2.8% 4.1% 2.9% Dividend yield — — — — Expected volatility 44.7% 50.0% 51.5% 50.0% Expected term (years) 5.2 4.9 5.3 4.8 |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Diluted net loss per share is computed based on the sum of the weighted average number of common shares outstanding during the period. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Revenue by Source | The following table represents disaggregation of royalties, Captisol and contract revenue (in thousands): Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Royalties Kyprolis $ 10,537 $ 9,123 $ 24,862 $ 20,872 Evomela 2,497 3,123 7,404 8,218 Teriparatide injection 2,800 4,071 9,913 12,484 Rylaze 3,678 2,099 9,315 6,065 Other 4,351 839 9,953 2,868 $ 23,863 $ 19,255 $ 61,447 $ 50,507 Captisol Captisol - Core $ 8,608 $ 3,582 $ 24,450 $ 13,133 Captisol - COVID (1) — 32,367 — 64,483 $ 8,608 $ 35,949 $ 24,450 $ 77,616 Contract revenue Service revenue 263 90 534 1,047 Milestone — 2,658 15,300 8,651 Other 134 1,269 1,482 8,042 $ 397 $ 4,017 $ 17,316 $ 17,740 Total $ 32,868 $ 59,221 $ 103,213 $ 145,863 (1) Captisol - COVID represents revenue on Captisol supplied for use in formulation with remdesivir, an antiviral treatment for COVID-19. |
Schedule of Short-Term Investments | Our short-term investments consist of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Bank deposits $ 28,972 $ 11 $ (11) $ 28,972 Bond fund 84,811 — (808) 84,003 Commercial paper 18,935 — (4) 18,931 Corporate bonds 8,077 1 (35) 8,043 Corporate equity securities 5,775 — (4,903) 872 Municipal bonds 1,027 — (6) 1,021 US government securities 4,702 — (19) 4,683 Warrants — 22 — 22 $ 152,299 $ 34 $ (5,786) $ 146,547 Viking common stock 24,680 Total short-term investments $ 171,227 December 31, 2022 Bank deposits $ 5,012 $ 2 $ (34) $ 4,980 Bond fund 81,815 — (1050) 80,765 Commercial paper 7,211 3 — 7,214 Corporate bonds 6,701 13 (58) 6,656 Corporate equity securities 5,807 262 (4,239) 1,830 U.S. government securities 2,232 — (70) 2,162 Warrants — 135 — 135 $ 108,778 $ 415 $ (5,451) $ 103,742 Viking common stock 63,122 Total short-term investments $ 166,864 |
Schedule of Available-for-Sale Debt Securities | The following table summarizes our available-for-sale debt securities by contractual maturity (in thousands): September 30, 2023 Amortized Cost Fair Value Within one year $ 71,095 $ 71,070 After one year through five years 6,966 6,927 Total $ 78,061 $ 77,997 |
Schedule of Goodwill and Other Identifiable Intangible Assets | Goodwill and other identifiable intangible assets consist of the following (in thousands): September 30, December 31, 2023 2022 Indefinite-lived intangible assets Goodwill $ 103,770 $ 105,673 Definite lived intangible assets Complete technology 49,810 55,211 Less: accumulated amortization (20,176) (22,560) Trade name 2,642 2,642 Less: accumulated amortization (1,677) (1,577) Customer relationships 29,600 29,600 Less: accumulated amortization (18,788) (17,670) Contractual relationships 360,000 362,000 Less: accumulated amortization (86,568) (65,191) Total goodwill and other identifiable intangible assets, net $ 418,613 $ 448,128 |
Schedule of Commercial License Rights | Commercial license rights consist of the following (in thousands): September 30, 2023 December 31, 2022 Gross Adjustments (1) Net Gross Adjustments (2) Net Elutia and CorMatrix $ 17,696 $ (11,881) $ 5,815 $ 17,696 $ (9,538) $ 8,158 Selexis and Dianomi 10,602 (9,815) 787 10,602 (8,578) 2,024 Total $ 28,298 $ (21,696) $ 6,602 $ 28,298 $ (18,116) $ 10,182 (1) Amounts represent accumulated amortization to principal of $11.1 million, credit loss adjustments of $9.7 million and impairment of $0.9 million as of September 30, 2023. (2) Amounts represent accumulated amortization to principal of $11.6 million and credit loss adjustments of $6.5 million as of December 31, 2022. |
Schedule of Accrued Liabilities | Accrued liabilities consist of the following (in thousands): September 30, December 31, 2023 2022 Compensation $ 2,890 $ 6,201 Subcontractor 1,966 1,756 Professional fees 3,229 662 Customer deposit 621 621 Supplier 303 634 Royalties owed to third parties — 12 Amounts owed to former licensees 45 3,989 Other 1,581 1,806 Total accrued liabilities $ 10,635 $ 15,681 |
Schedule of Accounting for Share-Based Compensation | The following table summarizes share-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands): Three months ended Nine months ended September 30, September 30, 2023 2022 (a) 2023 2022 (a) SBC - Research and development expenses $ 1,639 $ 3,277 $ 5,362 $ 7,920 SBC - General and administrative expenses 5,245 5,830 14,660 15,297 $ 6,884 $ 9,107 $ 20,022 $ 23,217 (a) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation. |
Schedule of Fair-Value Options Awarded to Employees and Directors | The fair-value for options that were awarded to employees and directors was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions: Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Risk-free interest rate 4.3% 2.8% 4.1% 2.9% Dividend yield — — — — Expected volatility 44.7% 50.0% 51.5% 50.0% Expected term (years) 5.2 4.9 5.3 4.8 |
Schedule of Computation of Basic and Diluted Earnings per Share | The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in thousands): Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Weighted average shares outstanding: 17,380 16,888 17,241 16,860 Dilutive potential common shares: Restricted stock — 65 82 54 Stock options — 179 302 214 2023 convertible senior notes — — 159 — Shares used to compute diluted income per share 17,380 17,132 17,784 17,128 Potentially dilutive shares excluded from calculation due to anti-dilutive effect 4,762 6,706 4,663 6,503 |
Sale of Pelican Business and _2
Sale of Pelican Business and Investment in Primrose Bio (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Carrying Amounts of Major Classes of Assets and Liabilities Related to Assets Held for Sale | We determined that the sale of Pelican meets the definition of a deconsolidation of a business. Net assets sold together with allocated goodwill and cash consideration paid were as follows (in thousands): Property and equipment, net $ 8,250 Intangible assets 19,895 Other assets 717 Operating lease right-of-use assets 8,693 Financing lease right-of-use assets 20 Accrued liabilities (630) Deferred revenue (495) Long-term operating lease liabilities (8,445) Other liabilities (74) Net assets sold 27,931 Allocated goodwill 4,132 Cash consideration paid 15,000 $ 47,063 Three months ended September 30, 2022 Nine months ended September 30, 2022 Revenues: Royalties $ 582 $ 984 Contract revenue 6,285 22,353 Total revenues 6,867 23,337 Operating costs and expenses: Amortization of intangibles 3,250 9,757 Research and development 12,797 34,576 General and administrative 2,525 11,279 Total operating costs and expenses 18,572 55,612 Loss from operations (11,705) (32,275) Other income (expense): Other income (expense), net 208 485 Total other income (expense), net 208 485 Loss before income tax (11,497) (31,790) Income tax (expense) benefit 2,256 6,599 Net loss $ (9,241) $ (25,191) The following table summarizes the significant non-cash items, capital expenditures of the discontinued operations, and financing activities that are included in the consolidated statements of cash flows for the nine months ended September 30, 2022 (in thousands): Nine months ended September 30, 2022 Operating activities: Change in fair value of contingent consideration $ (486) Depreciation and amortization 12,070 Stock-based compensation expense 7,923 Investing activities: Purchase of property, plant and equipment (12,415) Payments to CVR Holders (960) Financing activities: Payments to CVR Holders $ (1,545) Supplemental cash flow disclosures: Purchases of property, plant and equipment included in accounts payable and accrued expenses $ 3,458 |
Schedule of Fair Value of the Consideration | Fair value of the consideration received includes the following (in thousands): Equity method investment $ 13,706 Equity securities 32,278 Derivative assets 3,200 $ 49,184 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table sets forth an allocation of the preliminary purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed, with the excess recorded to goodwill (in thousands): Restricted Cash $ 583 Property and equipment, net 13,054 Right-of-use asset 3,683 Other assets 364 Intangible assets acquired 17,600 Goodwill 2,229 Deferred revenue (2,342) Lease liabilities (3,683) Other liabilities (20,500) Cash paid for Novan, including restricted cash received 10,988 DIP loan fees and interest 1,162 Total consideration $ 12,150 |
Spin-off of OmniAb (Tables)
Spin-off of OmniAb (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Carrying Amounts of Major Classes of Assets and Liabilities Related to Assets Held for Sale | We determined that the sale of Pelican meets the definition of a deconsolidation of a business. Net assets sold together with allocated goodwill and cash consideration paid were as follows (in thousands): Property and equipment, net $ 8,250 Intangible assets 19,895 Other assets 717 Operating lease right-of-use assets 8,693 Financing lease right-of-use assets 20 Accrued liabilities (630) Deferred revenue (495) Long-term operating lease liabilities (8,445) Other liabilities (74) Net assets sold 27,931 Allocated goodwill 4,132 Cash consideration paid 15,000 $ 47,063 Three months ended September 30, 2022 Nine months ended September 30, 2022 Revenues: Royalties $ 582 $ 984 Contract revenue 6,285 22,353 Total revenues 6,867 23,337 Operating costs and expenses: Amortization of intangibles 3,250 9,757 Research and development 12,797 34,576 General and administrative 2,525 11,279 Total operating costs and expenses 18,572 55,612 Loss from operations (11,705) (32,275) Other income (expense): Other income (expense), net 208 485 Total other income (expense), net 208 485 Loss before income tax (11,497) (31,790) Income tax (expense) benefit 2,256 6,599 Net loss $ (9,241) $ (25,191) The following table summarizes the significant non-cash items, capital expenditures of the discontinued operations, and financing activities that are included in the consolidated statements of cash flows for the nine months ended September 30, 2022 (in thousands): Nine months ended September 30, 2022 Operating activities: Change in fair value of contingent consideration $ (486) Depreciation and amortization 12,070 Stock-based compensation expense 7,923 Investing activities: Purchase of property, plant and equipment (12,415) Payments to CVR Holders (960) Financing activities: Payments to CVR Holders $ (1,545) Supplemental cash flow disclosures: Purchases of property, plant and equipment included in accounts payable and accrued expenses $ 3,458 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value | The following table presents the hierarchy for our assets and liabilities measured at fair value (in thousands): September 30, 2023 December 31, 2022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Short-term investments, excluding Viking (1) $ 5,555 $ 140,970 $ 22 $ 146,547 $ 3,992 $ 99,615 $ 135 $ 103,742 Investment in Viking common stock 24,680 — — 24,680 63,122 — — 63,122 Derivative assets (3) — — 3,281 3,281 — — — — Total assets $ 30,235 $ 140,970 $ 3,303 $ 174,508 $ 67,114 $ 99,615 $ 135 $ 166,864 Liabilities: CyDex contingent liabilities $ — $ — $ 164 $ 164 $ — $ — $ 84 $ 84 Metabasis contingent liabilities (2) — 3,431 — 3,431 — 3,429 — 3,429 Amounts owed to former licensor — — — — 44 — — 44 Total liabilities $ — $ 3,431 $ 164 $ 3,595 $ 44 $ 3,429 $ 84 $ 3,557 1. Excluding our investment in Viking, our short-term investments in marketable debt and equity securities are classified as available-for-sale securities based on management's intentions and are at level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Short-term investments in bond funds are valued at their net asset value (NAV) on the last day of the period. We have classified marketable securities with original maturities of greater than one year as short-term investments based upon our ability and intent to use any and all of those marketable securities to satisfy the liquidity needs of our current operations. In addition, we have investment in warrants resulting from Seelos Therapeutics Inc. milestone payments that were settled in shares during the first quarter of 2019 and are at level 3 of the fair value hierarchy, based on Black-Scholes value estimated by management on the last day of the period. 2. In connection with our acquisition of Metabasis in January 2010, we issued Metabasis stockholders four tradable CVRs, one CVR from each of four respective series of CVR, for each Metabasis share. The CVRs entitle Metabasis stockholders to cash payments as frequently as every six months as cash is received by us from proceeds from the sale or partnering of any of the Metabasis drug development programs, among other triggering events. The liability for the CVRs is determined using quoted prices in a market that is not active for the underlying CVR. The carrying amount of the liability may fluctuate significantly based upon quoted market prices and actual amounts paid under the agreements may be materially different than the carrying amount of the liability. Several of the Metabasis drug development programs have been outlicensed to Viking, including VK2809. VK2809 is a novel selective TR-β agonist with potential in multiple indications, including hypercholesterolemia, dyslipidemia, NASH, and X-ALD. Under the terms of the agreement with Viking, we may be entitled to up to $375.0 million of development, regulatory and commercial milestones and tiered royalties on potential future sales including a $10.0 million payment upon initiation of a Phase 3 clinical trial. During the three and nine months ended September 30, 2023, we adjusted the balance of the Metabasis CVR liability by decreasing $0.1 million and increasing $0.002 million to mark to market, respectively. 3. In connection with the Purchase and Sale Agreement with Primrose Bio, we will receive 50.0% of potential development milestones and certain commercial milestones from two contracts previously entered into by Primordial Genetics. The considerations were recognized as derivative assets included under other long-term asset in our condensed consolidated balance sheet. They are recognized as derivative assets under ASC 815, Derivatives and Hedging, |
Schedule of Reconciliation of Level 3 Financial Instruments | A reconciliation of the level 3 liabilities as of September 30, 2023 is as follows (in thousands): Fair value of level 3 financial instruments as of December 31, 2022 $ 84 Payments to CVR holders and other contingent payments (50) Fair value adjustments to contingent liabilities 130 Fair value of level 3 financial instruments as of September 30, 2023 $ 164 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Schedule of Stock Option Plan Activity | The following is a summary of our stock option and restricted stock activity and related information: Stock Options Restricted Stock Awards Shares Weighted-Average Exercise Price Shares Weighted-Average Grant Date Fair Value Balance as of December 31, 2022 2,991,473 $ 61.31 348,453 $ 75.60 Granted 518,332 $ 73.21 203,752 $ 83.39 Options exercised/RSUs vested (362,926) $ 44.03 (169,854) $ 75.26 Forfeited (338,742) $ 65.09 (15,980) $ 63.69 Balance as of September 30, 2023 2,808,137 $ 65.29 366,371 $ 80.61 |
Schedule of Restricted Stock Activity | The following is a summary of our stock option and restricted stock activity and related information: Stock Options Restricted Stock Awards Shares Weighted-Average Exercise Price Shares Weighted-Average Grant Date Fair Value Balance as of December 31, 2022 2,991,473 $ 61.31 348,453 $ 75.60 Granted 518,332 $ 73.21 203,752 $ 83.39 Options exercised/RSUs vested (362,926) $ 44.03 (169,854) $ 75.26 Forfeited (338,742) $ 65.09 (15,980) $ 63.69 Balance as of September 30, 2023 2,808,137 $ 65.29 366,371 $ 80.61 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) position shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2023 USD ($) position segment shares | Sep. 30, 2022 USD ($) shares | Dec. 31, 2022 USD ($) | |
Property, Plant and Equipment | |||||
Number of business segments | segment | 1 | ||||
Sale of Viking common stock (in shares) | shares | 0 | 4,500,000 | |||
Gain on sale of Viking common stock | $ 37,200,000 | ||||
Number of positions in an unrealized loss position | position | 48 | 48 | |||
Unrealized losses | $ 100,000 | $ 100,000 | |||
Credit losses related to available-for-sale debt securities | 0 | 0 | |||
Allowance for credit losses adjustment related to COVID-19 | 100,000 | 100,000 | |||
Inventory write-down | 0 | $ 0 | 0 | $ 0 | |
Inventory | 25,392,000 | 25,392,000 | $ 13,294,000 | ||
Real estate impairment loss | $ (900,000) | $ (900,000) | |||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect (in shares) | shares | 4,762,000 | 6,706,000 | 4,663,000 | 6,503,000 | |
Total revenues | $ 32,868,000 | $ 59,221,000 | $ 103,213,000 | $ 145,863,000 | |
Elutia | Commercial license rights | |||||
Property, Plant and Equipment | |||||
Provision for loan, lease, and other losses | $ 3,200,000 | $ 3,200,000 | |||
Share-based Compensation | |||||
Property, Plant and Equipment | |||||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect (in shares) | shares | 300,000 | ||||
Restricted Stock Awards | |||||
Property, Plant and Equipment | |||||
Performance period for awards | 3 years | ||||
Restricted Stock Awards | Minimum | |||||
Property, Plant and Equipment | |||||
Payout range (as a percent) | 0% | ||||
Restricted Stock Awards | Maximum | |||||
Property, Plant and Equipment | |||||
Payout range (as a percent) | 200% | ||||
Captisol | |||||
Property, Plant and Equipment | |||||
Inventory | $ 4,700,000 | $ 4,700,000 | $ 5,900,000 | ||
Total revenues | 8,608,000 | 35,949,000 | 24,450,000 | 77,616,000 | |
Royalties | |||||
Property, Plant and Equipment | |||||
Total revenues | 23,863,000 | $ 19,255,000 | $ 61,447,000 | $ 50,507,000 | |
Royalties | Elutia | Commercial license rights | |||||
Property, Plant and Equipment | |||||
Total revenues | $ 800,000 |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies - Revenue by Source (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue | ||||
Total revenues | $ 32,868 | $ 59,221 | $ 103,213 | $ 145,863 |
Royalties | ||||
Disaggregation of Revenue | ||||
Total revenues | 23,863 | 19,255 | 61,447 | 50,507 |
Kyprolis | ||||
Disaggregation of Revenue | ||||
Total revenues | 10,537 | 9,123 | 24,862 | 20,872 |
Evomela | ||||
Disaggregation of Revenue | ||||
Total revenues | 2,497 | 3,123 | 7,404 | 8,218 |
Teriparatide injection | ||||
Disaggregation of Revenue | ||||
Total revenues | 2,800 | 4,071 | 9,913 | 12,484 |
Rylaze | ||||
Disaggregation of Revenue | ||||
Total revenues | 3,678 | 2,099 | 9,315 | 6,065 |
Other | ||||
Disaggregation of Revenue | ||||
Total revenues | 4,351 | 839 | 9,953 | 2,868 |
Captisol | ||||
Disaggregation of Revenue | ||||
Total revenues | 8,608 | 35,949 | 24,450 | 77,616 |
Captisol - Core | ||||
Disaggregation of Revenue | ||||
Total revenues | 8,608 | 3,582 | 24,450 | 13,133 |
Captisol - COVID | ||||
Disaggregation of Revenue | ||||
Total revenues | 0 | 32,367 | 0 | 64,483 |
Contract revenue | ||||
Disaggregation of Revenue | ||||
Total revenues | 397 | 4,017 | 17,316 | 17,740 |
Service revenue | ||||
Disaggregation of Revenue | ||||
Total revenues | 263 | 90 | 534 | 1,047 |
Milestone | ||||
Disaggregation of Revenue | ||||
Total revenues | 0 | 2,658 | 15,300 | 8,651 |
Other | ||||
Disaggregation of Revenue | ||||
Total revenues | $ 134 | $ 1,269 | $ 1,482 | $ 8,042 |
Basis of Presentation and Sum_6
Basis of Presentation and Summary of Significant Accounting Policies - Investment Categories (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Securities, Available-for-sale | ||
Amortized cost | $ 152,299 | $ 108,778 |
Gross unrealized gains | 34 | 415 |
Gross unrealized losses | (5,786) | (5,451) |
Estimated fair value | 146,547 | 103,742 |
Total short-term investments | 171,227 | 166,864 |
Bank deposits | ||
Debt Securities, Available-for-sale | ||
Amortized cost | 28,972 | 5,012 |
Gross unrealized gains | 11 | 2 |
Gross unrealized losses | (11) | (34) |
Estimated fair value | 28,972 | 4,980 |
Bond fund | ||
Debt Securities, Available-for-sale | ||
Amortized cost | 84,811 | 81,815 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | (808) | (1,050) |
Estimated fair value | 84,003 | 80,765 |
Commercial paper | ||
Debt Securities, Available-for-sale | ||
Amortized cost | 18,935 | 7,211 |
Gross unrealized gains | 0 | 3 |
Gross unrealized losses | (4) | 0 |
Estimated fair value | 18,931 | 7,214 |
Corporate bonds | ||
Debt Securities, Available-for-sale | ||
Amortized cost | 8,077 | 6,701 |
Gross unrealized gains | 1 | 13 |
Gross unrealized losses | (35) | (58) |
Estimated fair value | 8,043 | 6,656 |
Corporate equity securities | ||
Debt Securities, Available-for-sale | ||
Amortized cost | 5,775 | 5,807 |
Gross unrealized gains | 0 | 262 |
Gross unrealized losses | (4,903) | (4,239) |
Estimated fair value | 872 | 1,830 |
Municipal bonds | ||
Debt Securities, Available-for-sale | ||
Amortized cost | 1,027 | |
Gross unrealized gains | 0 | |
Gross unrealized losses | (6) | |
Estimated fair value | 1,021 | |
US government securities | ||
Debt Securities, Available-for-sale | ||
Amortized cost | 4,702 | 2,232 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | (19) | (70) |
Estimated fair value | 4,683 | 2,162 |
Warrants | ||
Debt Securities, Available-for-sale | ||
Amortized cost | 0 | 0 |
Gross unrealized gains | 22 | 135 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | 22 | 135 |
Common Stock | ||
Debt Securities, Available-for-sale | ||
Viking common stock | $ 24,680 | $ 63,122 |
Basis of Presentation and Sum_7
Basis of Presentation and Summary of Significant Accounting Policies - Available-for-Sale Debt Securities by Contractual Maturity (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Amortized Cost | |
Within one year | $ 71,095 |
After one year through five years | 6,966 |
Total | 78,061 |
Fair Value | |
Within one year | 71,070 |
After one year through five years | 6,927 |
Total | $ 77,997 |
Basis of Presentation and Sum_8
Basis of Presentation and Summary of Significant Accounting Policies - Goodwill and Other Identifiable Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Goodwill | $ 103,770 | $ 105,673 |
Total goodwill and other identifiable intangible assets, net | 418,613 | 448,128 |
Complete technology | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 49,810 | 55,211 |
Less: accumulated amortization | (20,176) | (22,560) |
Trade name | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 2,642 | 2,642 |
Less: accumulated amortization | (1,677) | (1,577) |
Customer relationships | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 29,600 | 29,600 |
Less: accumulated amortization | (18,788) | (17,670) |
Contractual relationships | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 360,000 | 362,000 |
Less: accumulated amortization | $ (86,568) | $ (65,191) |
Basis of Presentation and Sum_9
Basis of Presentation and Summary of Significant Accounting Policies - Commercial License Rights (Details) - Commercial license rights - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Commercial License and Other Economic Rights | ||
Gross | $ 28,298 | $ 28,298 |
Adjustments | (21,696) | (18,116) |
Net | 6,602 | 10,182 |
Accumulated amortization on finite-lived intangible assets | 11,100 | 11,600 |
Credit loss adjustments of finite-lived intangible assets | 9,700 | 6,500 |
Finite lived intangible asset accumulated impairment | 900 | |
Elutia and CorMatrix | ||
Commercial License and Other Economic Rights | ||
Gross | 17,696 | 17,696 |
Adjustments | (11,881) | (9,538) |
Net | 5,815 | 8,158 |
Selexis and Dianomi | ||
Commercial License and Other Economic Rights | ||
Gross | 10,602 | 10,602 |
Adjustments | (9,815) | (8,578) |
Net | $ 787 | $ 2,024 |
Basis of Presentation and Su_10
Basis of Presentation and Summary of Significant Accounting Policies - Accrued Liabilities and Other Long-Term Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Accrued Liabilities | ||
Compensation | $ 2,890 | $ 6,201 |
Subcontractor | 1,966 | 1,756 |
Professional fees | 3,229 | 662 |
Customer deposit | 621 | 621 |
Supplier | 303 | 634 |
Royalties owed to third parties | 0 | 12 |
Amounts owed to former licensees | 45 | 3,989 |
Other | 1,581 | 1,806 |
Accrued liabilities | $ 10,635 | $ 15,681 |
Basis of Presentation and Su_11
Basis of Presentation and Summary of Significant Accounting Policies - Accounting for Share-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Basis of Presentation | ||||
Share-based compensation expense | $ 6,884 | $ 9,107 | $ 20,022 | $ 23,217 |
SBC - Research and development expenses | ||||
Basis of Presentation | ||||
Share-based compensation expense | 1,639 | 3,277 | 5,362 | 7,920 |
SBC - General and administrative expenses | ||||
Basis of Presentation | ||||
Share-based compensation expense | $ 5,245 | $ 5,830 | $ 14,660 | $ 15,297 |
Basis of Presentation and Su_12
Basis of Presentation and Summary of Significant Accounting Policies - Fair Value Valuation Assumptions (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Risk-free interest rate (as a percent) | 4.30% | 2.80% | 4.10% | 2.90% |
Dividend yield (as a percent) | 0% | 0% | 0% | 0% |
Expected volatility (as a percent) | 44.70% | 50% | 51.50% | 50% |
Expected term (years) | 5 years 2 months 12 days | 4 years 10 months 24 days | 5 years 3 months 18 days | 4 years 9 months 18 days |
Basis of Presentation and Su_13
Basis of Presentation and Summary of Significant Accounting Policies - Earnings (Loss) Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Weighted average shares outstanding (in shares) | 17,380 | 16,888 | 17,241 | 16,860 |
Dilutive potential common shares: | ||||
Shares used to compute diluted income per share (in shares) | 17,380 | 17,132 | 17,784 | 17,128 |
Potentially dilutive shares excluded from calculation due to anti-dilutive effect (in shares) | 4,762 | 6,706 | 4,663 | 6,503 |
Restricted stock | ||||
Dilutive potential common shares: | ||||
Dilutive potential common shares (in shares) | 0 | 65 | 82 | 54 |
Stock Options | ||||
Dilutive potential common shares: | ||||
Dilutive potential common shares (in shares) | 0 | 179 | 302 | 214 |
2023 convertible senior notes | ||||
Dilutive potential common shares: | ||||
Dilutive potential common shares (in shares) | 0 | 0 | 159 | 0 |
Sale of Pelican Business and _3
Sale of Pelican Business and Investment in Primrose Bio - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 18, 2023 USD ($) position shares | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Jan. 01, 2025 USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | ||||||
Gain on sale of Pelican | $ (2,121) | $ 0 | $ (2,121) | $ 0 | ||
Net loss from discontinued operations | 0 | $ 9,241 | 1,665 | $ 25,191 | ||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Pelican Technology Holdings, Inc. | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | ||||||
Consideration paid for an interest in potential development milestone | $ 15,000 | |||||
Goodwill written off | 4,100 | 4,100 | ||||
Gain on sale of Pelican | (2,100) | $ (2,100) | ||||
Business exit costs | $ 1,200 | |||||
Net loss from discontinued operations | $ 70 | |||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Pelican Technology Holdings, Inc. | Common Stock | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | ||||||
Shares received as consideration | shares | 2,146,957 | |||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Pelican Technology Holdings, Inc. | Preferred Stock | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | ||||||
Shares received as consideration | shares | 4,278,293 | |||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Pelican Technology Holdings, Inc. | Restricted Stock Awards | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | ||||||
Shares received as consideration | shares | 474,746 | |||||
Primrose Bio | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | ||||||
Consideration paid for an interest in potential development milestone | $ 15,000 | |||||
Interest in potential development milestone (as a percent) | 50% | |||||
Forecast | Primrose Bio | PeliCRM197 | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | ||||||
Sales revenue milestone | $ 3,000 | |||||
Forecast | Primrose Bio | PeliCRM197 | Below 3 million | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | ||||||
Interest in sales revenue (as a percent) | 25% | |||||
Forecast | Primrose Bio | PeliCRM197 | Above 3 million | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | ||||||
Interest in sales revenue (as a percent) | 35% | |||||
Primordial Genetics | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | ||||||
Number of contracts | position | 2 |
Sale of Pelican Business and _4
Sale of Pelican Business and Investment in Primrose Bio - Net Asset (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations - Pelican Technology Holdings, Inc. $ in Thousands | Sep. 18, 2023 USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | |
Property and equipment, net | $ 8,250 |
Intangible assets | 19,895 |
Other assets | 717 |
Operating lease right-of-use assets | 8,693 |
Financing lease right-of-use assets | 20 |
Accrued liabilities | (630) |
Deferred revenue | (495) |
Long-term operating lease liabilities | (8,445) |
Other liabilities | (74) |
Net assets sold | 27,931 |
Allocated goodwill | 4,132 |
Cash consideration paid | 15,000 |
Total | $ 47,063 |
Sale of Pelican Business and _5
Sale of Pelican Business and Investment in Primrose Bio - Fair Value of the Consideration (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations - Pelican Technology Holdings, Inc. $ in Thousands | Sep. 18, 2023 USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | |
Cash consideration paid | $ 49,184 |
Equity Method Investments | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | |
Cash consideration paid | 13,706 |
Equity Securities | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | |
Cash consideration paid | 32,278 |
Derivative Assets | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | |
Cash consideration paid | $ 3,200 |
Acquisition - Narrative (Detail
Acquisition - Narrative (Details) $ in Thousands | 9 Months Ended | ||
Sep. 27, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Business Acquisition | |||
Cash payments for acquisition | $ 10,405 | $ 0 | |
Novan, Inc. | |||
Business Acquisition | |||
Cash payments for acquisition | $ 15,000 | ||
Liabilities incurred | 15,000 | ||
Intangible assets acquired | $ 17,600 | 17,600 | $ 0 |
Acquired (as a percent) | 10.30% | ||
Cash acquired from acquisition | $ 2,800 | ||
Acquisition related costs | $ 3,300 | ||
Discount rate used to value intangible assets acquired (as a percent) | 29% | ||
Weighted-average estimated useful life of finite-lived intangible assets acquired (in years) | 15 years | ||
Research and development | $ 25,000 | ||
Novan, Inc. | Valuation Technique, Discounted Cash Flow | Discount Rate | |||
Business Acquisition | |||
Contingent liability measurement input (as a percent) | 0.096 | ||
Novan, Inc. | Core Technology | |||
Business Acquisition | |||
Intangible assets acquired | $ 12,200 | ||
Novan, Inc. | Bridge Loan | |||
Business Acquisition | |||
Liabilities incurred | $ 3,000 |
Acquisition - Assets Acquired a
Acquisition - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 27, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Business Acquisition | ||||
Goodwill | $ 103,770 | $ 105,673 | ||
Novan, Inc. | ||||
Business Acquisition | ||||
Restricted Cash | $ 583 | |||
Property and equipment, net | 13,054 | |||
Right-of-use asset | 3,683 | |||
Other assets | 364 | |||
Intangible assets acquired | 17,600 | 17,600 | $ 0 | |
Goodwill | 2,229 | 2,229 | 0 | |
Deferred revenue | (2,342) | |||
Lease liabilities | (3,683) | |||
Other liabilities | (20,500) | |||
Cash paid for Novan, including restricted cash received | $ 10,988 | 10,405 | $ 0 | |
DIP loan fees and interest | 1,162 | |||
Payments to Acquire Businesses, Net of Cash Acquired | $ 12,150 |
Spin-off of OmniAb - Narrative
Spin-off of OmniAb - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2022 segment | Sep. 30, 2023 USD ($) | Oct. 26, 2022 | |
Segment Reporting, Revenue Reconciling Item | |||
Number of reportable segments | segment | 2 | ||
Deferred tax asset adjustment | $ | $ (1.7) | ||
Discontinued operations | |||
Segment Reporting, Revenue Reconciling Item | |||
Percentage of voting interests disposed (as a percent) | 1 |
Spin-off of OmniAb - Schedule o
Spin-off of OmniAb - Schedule of revenue and expenses of the discontinued operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Other income (expense): | ||||
Net loss | $ 0 | $ (9,241) | $ (1,665) | $ (25,191) |
Discontinued operations | OmniAb | ||||
Revenues: | ||||
Total revenues | 6,867 | 23,337 | ||
Operating costs and expenses: | ||||
Amortization of intangibles | 3,250 | 9,757 | ||
Research and development | 12,797 | 34,576 | ||
General and administrative | 2,525 | 11,279 | ||
Total operating costs and expenses | 18,572 | 55,612 | ||
Loss from operations | (11,705) | (32,275) | ||
Other income (expense): | ||||
Total other income (expense), net | 208 | 485 | ||
Loss before income tax | (11,497) | (31,790) | ||
Income tax (expense) benefit | 2,256 | 6,599 | ||
Net loss | (9,241) | (25,191) | ||
Royalties | Discontinued operations | OmniAb | ||||
Revenues: | ||||
Total revenues | 582 | 984 | ||
Contract revenue | Discontinued operations | OmniAb | ||||
Revenues: | ||||
Total revenues | $ 6,285 | $ 22,353 |
Spin-off of OmniAb - Schedule_2
Spin-off of OmniAb - Schedule of non-cash items and capital expenditures of the discontinued operations (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Investing activities: | ||
Payments to CVR Holders | $ 0 | $ (960) |
Financing activities: | ||
Payments to CVR Holders | $ 0 | (1,545) |
Discontinued operations | ||
Operating activities: | ||
Change in fair value of contingent consideration | (486) | |
Depreciation and amortization | 12,070 | |
Stock-based compensation expense | 7,923 | |
Investing activities: | ||
Purchase of property, plant and equipment | (12,415) | |
Payments to CVR Holders | (960) | |
Financing activities: | ||
Payments to CVR Holders | (1,545) | |
Supplemental cash flow disclosures: | ||
Purchases of property, plant and equipment included in accounts payable and accrued expenses | $ 3,458 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Jan. 31, 2010 cvr | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of CVR Series | cvr | 4 | |||
Transferred over Time | Phase 3 clinical trial | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Gross contract asset | $ 10,000 | $ 10,000 | ||
Maximum | Transferred over Time | Development, regulatory, & commercial milestones and tiered royalties | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Investments | 375,000 | 375,000 | ||
Metabasis | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of CVRs issued per acquiree share | cvr | 4 | |||
Number of CVRs issued from each CVR series | cvr | 1 | |||
Frequency of cash payments to CVR holders | 6 months | |||
(Decrease) increase of mark-to-market adjustment of CVR liability | (100) | 2 | ||
Recurring | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Investment in Viking common stock | 24,680 | 24,680 | $ 63,122 | |
Derivative Asset | 3,281 | 3,281 | 0 | |
Total assets | 174,508 | 174,508 | 166,864 | |
Amounts owed to former licensor | 0 | 0 | 44 | |
Total liabilities | 3,595 | 3,595 | 3,557 | |
Recurring | Short-term investments, excluding Viking | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Investments, fair value | 146,547 | 146,547 | 103,742 | |
Recurring | Contingent liabilities | CyDex | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent liabilities | 164 | 164 | 84 | |
Recurring | Contingent liabilities | Metabasis | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent liabilities | 3,431 | 3,431 | 3,429 | |
Recurring | Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Investment in Viking common stock | 24,680 | 24,680 | 63,122 | |
Derivative Asset | 0 | 0 | 0 | |
Total assets | 30,235 | 30,235 | 67,114 | |
Amounts owed to former licensor | 0 | 0 | 44 | |
Total liabilities | 0 | 0 | 44 | |
Recurring | Level 1 | Short-term investments, excluding Viking | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Investments, fair value | 5,555 | 5,555 | 3,992 | |
Recurring | Level 1 | Contingent liabilities | CyDex | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent liabilities | 0 | 0 | 0 | |
Recurring | Level 1 | Contingent liabilities | Metabasis | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent liabilities | 0 | 0 | 0 | |
Recurring | Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Investment in Viking common stock | 0 | 0 | 0 | |
Derivative Asset | 0 | 0 | 0 | |
Total assets | 140,970 | 140,970 | 99,615 | |
Amounts owed to former licensor | 0 | 0 | 0 | |
Total liabilities | 3,431 | 3,431 | 3,429 | |
Recurring | Level 2 | Short-term investments, excluding Viking | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Investments, fair value | 140,970 | 140,970 | 99,615 | |
Recurring | Level 2 | Contingent liabilities | CyDex | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent liabilities | 0 | 0 | 0 | |
Recurring | Level 2 | Contingent liabilities | Metabasis | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent liabilities | 3,431 | 3,431 | 3,429 | |
Recurring | Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Investment in Viking common stock | 0 | 0 | 0 | |
Derivative Asset | 3,281 | 3,281 | 0 | |
Total assets | 3,303 | 3,303 | 135 | |
Amounts owed to former licensor | 0 | 0 | 0 | |
Total liabilities | 164 | 164 | 84 | |
Recurring | Level 3 | Short-term investments, excluding Viking | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Investments, fair value | 22 | 22 | 135 | |
Recurring | Level 3 | Contingent liabilities | CyDex | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent liabilities | 164 | 164 | 84 | |
Recurring | Level 3 | Contingent liabilities | Metabasis | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent liabilities | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Level 3 Financial Instruments (Details) - Level 3 $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Financial and Nonfinancial Liabilities, Fair Value Disclosure | |
Fair value of level 3 financial instruments as of December 31, 2022 | $ 84 |
Payments to CVR holders and other contingent payments | (50) |
Fair value adjustments to contingent liabilities | 130 |
Fair value of level 3 financial instruments as of September 30, 2023 | $ 164 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | ||||
Impairment loss | $ 900 | $ 900 | ||
Tangible asset impairment charges | 0 | $ 0 | 0 | $ 0 |
Goodwill and intangible asset impairment | $ 0 | $ 0 | $ 0 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
May 15, 2023 | Aug. 31, 2022 | Jan. 31, 2021 | May 31, 2018 | Jun. 30, 2022 | Sep. 30, 2023 | Dec. 31, 2021 | |
Debt Instrument | |||||||
Payments to unwind warrants | $ 18.4 | ||||||
2023 convertible senior notes | Convertible Notes | |||||||
Debt Instrument | |||||||
Interest rate (as a percent) | 0.75% | ||||||
Principal amount | $ 750 | ||||||
Proceeds from debt, net of issuance costs | 733.1 | ||||||
Debt issuance costs | $ 16.9 | ||||||
Term of debt instrument | 5 years | ||||||
Effective interest rate (as a percent) | 0.50% | ||||||
Total interest expense | $ 0.6 | ||||||
Contractual interest expense | 0.4 | ||||||
Amortized issuance costs | $ 0.2 | ||||||
Maturities of debt | $ 76.9 | ||||||
Payment of accrued interest | $ 0.3 | $ 0.1 | $ 0.4 | $ 0.3 | |||
Securities called by warrants (in shares) | 3,018,327 | 2,559,254 | |||||
Initial conversion price (in USD per share) | $ 206.65 | ||||||
Payments for convertible bond hedges | $ 140.3 | ||||||
Exercise price (dollars per share) | $ 315.38 | ||||||
Value of warrants issued | $ 90 | ||||||
Repurchased amount of debt instrument | 20.3 | $ 152 | |||||
Repayments of notes | $ 19.1 | $ 156 | |||||
2023 convertible senior notes | Convertible Notes | Notes repurchased in August 2022 | |||||||
Debt Instrument | |||||||
Repayments of notes | $ 223.7 | ||||||
Repurchased amount of debt instrument | $ 227.8 |
Income Tax (Details)
Income Tax (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate (as a percent) | 15.40% | 21.90% | 23.50% | 21.50% |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Plan and Restricted Stock Activity (Details) | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Shares | |
Balance at beginning of period (in shares) | shares | 2,991,473 |
Granted (in shares) | shares | 518,332 |
Options exercised (in shares) | shares | (362,926) |
Forfeited (in shares) | shares | (338,742) |
Balance at end of period (in shares) | shares | 2,808,137 |
Weighted-Average Exercise Price | |
Balance at beginning of period (in USD per share) | $ / shares | $ 61.31 |
Granted (in USD per share) | $ / shares | 73.21 |
Options exercised (in USD per share) | $ / shares | 44.03 |
Forfeited (in USD per share) | $ / shares | 65.09 |
Balance at end of period (in USD per share) | $ / shares | $ 65.29 |
Restricted Stock Awards | |
Restricted Stock Awards | |
Nonvested at beginning of period (in shares) | shares | 348,453 |
Granted (in shares) | shares | 203,752 |
RSUs vested (in shares) | shares | (169,854) |
Forfeited (in shares) | shares | (15,980) |
Nonvested at end of period (in shares) | shares | 366,371 |
Weighted-Average Grant Date Fair Value | |
Nonvested at beginning of period (in USD per share) | $ / shares | $ 75.60 |
Granted (in USD per share) | $ / shares | 83.39 |
RSUs vested (in USD per share) | $ / shares | 75.26 |
Forfeited (in USD per share) | $ / shares | 63.69 |
Nonvested at end of period (in USD per share) | $ / shares | $ 80.61 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Outstanding options that are exercisable (in shares) | shares | 1,800,000 |
Outstanding options that are exercisable, weighted average exercise price (in USD per share) | $ / shares | $ 64.22 |
Employee Stock Purchase Plan | |
Authorized stock repurchase amount | $ 50 |
Remaining authorized stock repurchase amount | 50 |
At-the Market Equity Offering | |
Employee Stock Purchase Plan | |
Sale of stock, authorized offering amount | $ 100 |
Employee Stock Purchase Plan | |
Employee Stock Purchase Plan | |
Share purchase price as percent of market price (as a percent) | 85% |
Shares available for future purchases (in shares) | shares | 32,363 |
Commitment and Contingencies -
Commitment and Contingencies - Narrative (Details) $ in Millions | 9 Months Ended | |
Oct. 31, 2019 complaint | Sep. 30, 2023 USD ($) | |
Loss Contingencies [Line Items] | ||
Increase in operating lease assets | $ 1.1 | |
Increase in operating lease liability | $ 1.1 | |
US District Court for the Northern District of Ohio | ||
Loss Contingencies [Line Items] | ||
Number of civil complaints filed against entity | complaint | 3 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 9 Months Ended | ||||
Oct. 31, 2023 | Oct. 12, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Oct. 18, 2023 | |
Subsequent Events | |||||
Cash payments for acquisition | $ 10,405,000 | $ 0 | |||
Subsequent Event | Tolerance Therapeutics | |||||
Subsequent Events | |||||
Interest in sales revenue (as a percent) | 1% | ||||
Cash payments for acquisition | $ 20,000,000 | ||||
Subsequent Event | Soticlestat | Ovid | |||||
Subsequent Events | |||||
Interest in sales revenue (as a percent) | 13% | ||||
Consideration paid for an interest in potential development milestone | $ 30,000,000 | ||||
Subsequent Event | Revolving Credit Facility | |||||
Subsequent Events | |||||
Maximum borrowing capacity | $ 75,000,000 | ||||
Subsequent Event | Revolving Credit Facility | Minimum | |||||
Subsequent Events | |||||
Line of credit facility, interest rate (as a percent) | 0.30% | ||||
Subsequent Event | Revolving Credit Facility | Minimum | Base Rate | |||||
Subsequent Events | |||||
Variable rate | 0.75% | ||||
Subsequent Event | Revolving Credit Facility | Minimum | Secured Overnight Financing Rate (SOFR) | |||||
Subsequent Events | |||||
Variable rate | 1.75% | ||||
Subsequent Event | Revolving Credit Facility | Maximum | |||||
Subsequent Events | |||||
Line of credit facility, interest rate (as a percent) | 0.45% | ||||
Subsequent Event | Revolving Credit Facility | Maximum | Base Rate | |||||
Subsequent Events | |||||
Variable rate | 1.50% | ||||
Subsequent Event | Revolving Credit Facility | Maximum | Secured Overnight Financing Rate (SOFR) | |||||
Subsequent Events | |||||
Variable rate | 2.50% |
Uncategorized Items - lgnd-2023
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2020-06 [Member] |