Company: LGNZZ
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0000886163-25-000036
Chunk: 62

Company: LIGAND PHARMACEUTICALS INC
Filing Date: 2025-05-09
Form: 10-Q
Item: Item 8
Chunk 62
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 current quarter royalty receipts which are collected during the subsequent quarter. This portion is presented in other current assets on our condensed consolidated balance sheets, net of the allowance for expected credit losses.For additional information, see Note 5, Financial Royalty Assets, net.Research and Development Funding ExpenseWe enter into transactions where we agree to fund a portion of the research and development (“R&D”) performed by our partners for products undergoing late-stage clinical trials in exchange for future royalties or milestones if the products are successfully developed and commercialized. In accordance with ASC 730, Research and Development, we account for the funded amounts as R&D expense when we have the ability to obtain the results of the R&D, the transfer of financial risk is genuine and substantive and, at the time of entering into the transaction, it is not yet probable that the product will receive regulatory approval. If these conditions are not met, we may record the funded amounts as a financial royalty asset. We may fund R&D upfront or over time as the underlying products undergo clinical trials.Royalties earned on successfully commercialized products generated from R&D arrangements are recognized as Revenue from intangible royalty assets in the same period in which the sale of the commercialized product occurs. Fixed or milestone payments receivable based on the achievement of contractual criteria for products arising out of our R&D arrangements are recognized as Contract revenue and other income in the period that the milestone threshold is met. Derivative AssetsDerivative assets include instruments used for risk-management purposes, and other instruments. Derivative assets which are not used for risk management purposes, include: (a) rights to receive from Primrose Bio 50% of milestone payments on two contracts previously entered into by Primordial Genetics (“Primrose mRNA”), (b) acquired rights in future milestone and royalty payments from Agenus Partnered Programs (as defined in Note 3, Castle Creek and Agenus Transactions), (c) Agenus Warrant (as defined in Note 3, Castle Creek and Agenus Transactions), (d) Castle Creek Warrant (as defined in Note 3, Castle Creek and Agenus Transactions), and (e) Castle Creek Milestone (as defined in Note 3, Castle Creek and Agenus Transactions).All derivatives are measured at fair value on the condensed consolidated balance sheets. Derivative assets consist of the following (in thousands):March 31,December 31,20252024Castle Creek Warrant$5,693 $— Castle Creek Milestone1,833 — Prim