Company: LGNZZ
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000886163-25-000012
Chunk: 173

Company: LIGAND PHARMACEUTICALS INC
Filing Date: 2025-02-28
Form: 10-K
Item: Item 8
Chunk 173
---
58,524 common shares. We account for the Palvella common shares as a short-term investment included in our consolidated balance sheet. Other Assets and Other Current AssetsOther assets include economic rights related to the 2023 expansion of our strategic partnership with Palvella to accelerate Phase 3 development of Qtorin rapamycin for the treatment of Microcystic Lymphatic Malformations (“Microcystic LM”). According to the terms of the second amendment to our development funding and royalties agreement with Palvella (the “Palvella Second Amendment”), Palvella received an upfront payment of $5 million from Ligand. In return for the upfront payment, among other contractual changes, the tiered royalty payable by Palvella to Ligand was increased to between 8.0% and 9.8% based on annual aggregate worldwide net sales of Qtorin rapamycin. We are not obligated to provide additional funding to Palvella for development or commercialization of Qtorin.We determined the economic rights related to Palvella should be characterized as a funded research and development arrangement, because the contract designated the funds usage for research and development activities, and thus we account for them in accordance with ASC 730-20, Research and Development Arrangement. We reduce our asset as the funds are expended by Palvella. As of December 31, 2024, of the $5 million upfront funding related to the Palvella Second Amendment, $1.2 million of the funding to Palvella was expended. Our CEO and director, Todd Davis, is a director of Palvella. Mr. Davis recused himself from both board's consideration of the agreement between us and Palvella, including any financial analysis, the terms of the Palvella Second Amendment and the vote to approve the Palvella Second Amendment and the related transactions.In June 2024, we funded Palvella $2.5 million in exchange for a convertible note with a maturity of three years, which is included in other assets in the consolidated balance sheets. In conjunction with Pavella's merger with Pieris as discussed above, the convertible note automatically converted into Pavella common shares. The $2.6 million principal and interest converted into 184,595 shares, using a conversion price of $13.9965 per share. We account for the Palvella common shares as a short-term investment in our consolidated balance sheet. Other current assets primarily include $10.0 million current portion of financial royalty