Company: LGNZZ
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0000886163-25-000063
Chunk: 100

Company: LIGAND PHARMACEUTICALS INC
Filing Date: 2025-11-07
Form: 10-Q
Item: Item 8
Chunk 100
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447537/INBRX-101), a partnered program with Sanofi. We accounted for both partner programs rights (except for the past period royalty rights) as financial royalty assets (loan receivables) under ASC 310, Receivables. AT220 royalty rights for the pre-transaction period have been recorded as other current assets. The AT220 financial royalty asset is placed on the accrual method as this drug is commercially available. The AT292 financial royalty asset is currently put under the non-accrual method as this drug is still under development and management cannot reliably estimate future cash flows from this program. In addition to the economic rights, Ligand received warrants to purchase 1,002,739 ordinary shares of Arecor Therapeutics Plc, exercisable over a ten-year period. We accounted for the Arecor warrants (“Arecor Warrant”) as derivative assets under ASC 815, Derivatives and Hedging, recognizing them at fair value as of the transaction date and marking them to fair value at each subsequent reporting period. Arecor Warrant is presented in noncurrent derivative assets line in our condensed consolidated balance sheet. The fair value of the Arecor Warrant is determined using a Black-Scholes model with the following assumptions as of September 24, 2025, and September 30, 2025, respectively: 1) volatility of 32% and 33%; and 2) risk-free rates of 4.7% and 4.8%.Out of the $7 million Arecor transaction price and the $1 million of deferred consideration recognized as of the transaction closing date, $0.5 million was allocated to the Arecor Warrant, $4.8 million and $1.9 million were allocated to AT220 and AT292 financial royalty assets, respectively, and $0.8 million was allocated to past period royalties of AT220 (recorded as other current assets).We are also obligated to pay up to $3 million in contingent consideration tied to commercial milestones in the AT292 partnered program. We accounted for this contingent consideration in accordance with ASC 450, Contingencies, and will recognize respective liability when the contingency is resolved, and the liability becomes payable. No contingent consideration was recognized as of the acquisition date or as of September 30, 2025.Orchestra Transaction: Q3 2025On August 4, 2025, we invested $25 million in strategic capital to fund Orchestra