Company: LGNZZ
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0000886163-25-000063
Chunk: 32

Company: LIGAND PHARMACEUTICALS INC
Filing Date: 2025-11-07
Form: 10-Q
Item: Item 1
Chunk 32
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. Our investment included a $20 million cash payment payable at the transaction closing date, with an additional $15 million contingent consideration to be recogzined when paid, at the nine-month anniversary of the transaction closing date. Ligand invested an additional $5 million in an equity private placement at the public offering price of $2.75 per share. In exchange, we will receive a low double-digit royalty on the first $100 million in commercial revenues from Orchestra’s atrioventricular interval modulation (“AVIM”) therapy and Virtue SAB programs in all indications. We will also earn a mid-single-digit royalty on annual revenues exceeding $100 million in commercial revenues from AVIM therapy in the uncontrolled hypertension and increased cardiovascular risk indication and Virtue SAB in coronary artery disease indications. The $5 million equity private placement is included in our a short-term investments and subsequently marked to market during each reporting period. The remaining $20 million was allocated $2.3 million to the Orchestra Warrant derivative asset 

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and $17.8 million to the research and development funding arrangement and recognized in research and development expenses for the three and nine months ended September 30, 2025.The Orchestra Warrant is presented in the noncurrent derivative assets line in our condensed consolidated balance sheet. The derivative asset was recorded at fair value as of August 4, 2025, and is marked to fair value at each subsequent reporting period. The fair value of the Orchestra Warrant was determined using a Black-Scholes model with the following assumptions as of August 4, 2025, and September 30. 2025, respectively: 1) volatility of 73% and 72%; and 2) risk-free rates of 4.4% and 4.2%.We accounted for the acquired royalty rights as a research and development funding arrangement under ASC 730-20, Research and Development Arrangements, because (a) Orchestra is contractually required to use Ligand’s capital for the execution of the Phase 3 clinical study for AVIM Therapy, and (b) the repayment of Ligand funding solely depends on the research and development results having future economic benefits. As Ligand will not be controlling or actively involved in the ongoing research and development efforts, this amount was expensed in the period of funding.Castle Creek Transaction: Q1 2025On February 24, 2025, we entered into a Purchase and Sale Agreement (the “Castle