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Available for Sale Debt Securities | 12 Months Ended
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Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract] |
Available for Sale Debt Securities | Available for Sale Debt Securities Cytokinetics Commercial Launch Funding On January 7, 2022, we entered into a long-term funding agreement with Cytokinetics, Incorporated (“Cytokinetics”) to support further development of aficamten and potential commercialization of omecamtiv mecarbil, both development-stage products. During 2022, we amended the funding agreement to increase the required draw amount, extend the draw period and modify the return for the second and third tranches. As part of the funding agreement, we agreed to provide capital (“Cytokinetics Commercial Launch Funding”) of up to $300 million, which is comprised of five tranches, including an initial tranche of $50 million that was funded upon closing. Cytokinetics is required to draw $50 million if a certain contingency is met and has the option to draw the remaining $200 million upon the occurrence of certain regulatory and clinical development milestones (“Cytokinetics Funding Commitments”). Each tranche has an interest-free and payment-free period of six calendar quarters, followed by 34 calendar quarters of installment re-payments totaling 1.9 times the amount drawn, except for the second and third tranches, which each total 2.0 times the amount drawn. As of December 31, 2022, we expect $125 million of the optional $200 million to remain available under the Cytokinetics Commercial Launch Funding due to the likelihood that certain regulatory milestones will not be met by March 31, 2023. We elected the fair value option to account for the Cytokinetics Commercial Launch Funding, recorded within Available for sale debt securities on the consolidated balance sheets, as it most accurately reflects the nature of the funding arrangement. The Cytokinetics Funding Commitments, which include options and forwards over the subsequent tranches, are recognized at fair value within Other liabilities as of December 31, 2022 on the consolidated balance sheets. The changes in the fair value of the funded Cytokinetics Commercial Launch Funding and the Cytokinetics Funding Commitments are recorded within Losses/(gains) on available for sale debt securities in the consolidated statements of operations. MorphoSys Development Funding Bonds On June 2, 2021, we announced a long-term strategic funding partnership with MorphoSys AG (“MorphoSys”) to support its acquisition of Constellation Pharmaceuticals, Inc. which closed on July 15, 2021. As part of the funding agreement, we agreed to provide MorphoSys up to $350 million of capital (the “Development Funding Bonds”), of which MorphoSys was required to draw a minimum of $150 million. Our commitment to fund at least $150 million of the Development Funding Bonds was recognized as the Development Funding Bond Forward as of December 31, 2021. In September 2022, we funded $300 million of the Development Funding Bonds, which represents additional funding of $150 million above the minimum funding commitment (“Additional Funding”) and the Development Funding Bond Forward was settled at the same time. We expect to receive a return of 2.2 times the amount funded on the Development Funding Bonds payable on a quarterly basis over nine years, with the first payment beginning in the fourth quarter of 2024. As of December 31, 2022, we have no remaining funding commitment under the Development Funding Bonds. We elected the fair value option to account for the funded amount of the Development Funding Bonds and the Development Funding Bond Forward as it most accurately reflects the nature of the instruments. The funded amount of the Development Funding Bonds and the Development Funding Bond Forward are recorded within Available for sale debt securities on the consolidated balance sheets. The changes in the fair values of the funded amount of the Development Funding Bonds and the Development Funding Bond Forward are recorded within Losses/(gains) on available for sale debt securities in the consolidated statements of operations. Biohaven Preferred Shares Series A Biohaven Preferred Shares On April 5, 2019, RPIFT purchased 2,495 Series A Biohaven Preferred Shares from Biohaven Pharmaceutical Holding Company Ltd (“Biohaven”) at a price of $50,100 per preferred share, for a total of $125 million. The approval of Nurtec ODT by the U.S. Food and Drug Administration (“FDA”) in February 2020 resulted in a payment due to us of two times the original purchase price of the Series A Biohaven Preferred Shares beginning in the first quarter of 2021 through the fourth quarter of 2024. In the first quarter of 2021, we began receiving payments of $15.6 million from the quarterly redemption of the Series A Biohaven Preferred Shares. The Series A Biohaven Preferred Shares were classified as Available for sale debt securities on the consolidated balance sheet as of December 31, 2021. The unrealized changes in the fair value of the Series A Biohaven Preferred Shares were recorded within Unrealized gains on available for sale debt securities in the consolidated statements of comprehensive income. In 2022, 2021 and 2020, $53.4 million, $50.9 million and $20.6 million of unrealized gains were reclassified from other comprehensive income to Interest income on the consolidated statements of operations, respectively. Series B Biohaven Preferred Shares On August 7, 2020, we entered into the Series B Biohaven Preferred Share Purchase Agreement (“Series B Biohaven Preferred Share Agreement”) with Biohaven where we committed to acquire 3,992 shares of Series B Biohaven Preferred Shares at a price of $50,100 per preferred share (the “Commercial Launch Preferred Equity”), for a total of $200 million payable on a quarterly basis between the first quarter of 2021 and the fourth quarter of 2024. Our commitment to purchase the Series B Biohaven Preferred Shares was recognized as the Series B Forwards. We elected the fair value option to account for the Series B Biohaven Preferred Shares and the Series B Forwards, which were recorded within Available for sale debt securities on the consolidated balance sheet as of December 31, 2021. We believe the fair value option most accurately reflects the nature of these instruments. The changes in fair value of the Series B Biohaven Preferred Shares and Series B Forwards were recorded within Losses/(gains) on available for sale debt securities in the consolidated statements of operations. In 2022, 2021 and 2020, we recognized gains of $122.5 million, $13.5 million and $18.6 million, respectively, related to Series B Biohaven Preferred Shares within Losses/(gains) on available for sale debt securities in the consolidated statements of operations. On October 3, 2022, Pfizer Inc. (“Pfizer”) acquired Biohaven, which was a change of control event that accelerated the issuance of all unissued Series B Biohaven Preferred Shares and the redemption of all outstanding Series A Biohaven Preferred Shares and Series B Biohaven Preferred Shares. We purchased all remaining unissued Series B Biohaven Preferred Shares simultaneously with the redemption of all outstanding Series B Biohaven Preferred Shares at a price equal to approximately 1.8 times the original purchase price. The Series A Biohaven Preferred Shares were redeemed at a price equal to two times the original purchase price. As of December 31, 2022, we no longer hold any Series A Biohaven Preferred Shares or Series B Biohaven Preferred Shares. The table below summarizes our available for sale debt securities recorded at fair value as of December 31, 2022 and 2021 (in thousands):
| Cost |  | Unrealized (Losses)/Gains |  | Fair Value |  |  | Current Assets |  | Non-Current Assets |  | Current Liabilities |  | Non-Current Liabilities |  | Total
As of December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities (1) | $ | 359,400 |  |  | $ | (131,800) |  |  | $ | 227,600 |  |  |  | $ | 1,300 |  |  | $ | 226,300 |  |  | $ | — |  |  | $ | — |  |  | $ | 227,600 |
Funding commitments (2) | (9,400) |  |  | 6,900 |  |  | (2,500) |  |  |  | — |  |  |  |  | — |  |  | (2,500) |  |  | (2,500) |
Total available for sale debt securities | $ | 350,000 |  |  | $ | (124,900) |  |  | $ | 225,100 |  |  |  | $ | 1,300 |  |  | $ | 226,300 |  |  | $ | — |  |  | $ | (2,500) |  |  | $ | 225,100 |
As of December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities (3) | $ | 204,509 |  |  | $ | 49,191 |  |  | $ | 253,700 |  |  |  | $ | 66,000 |  |  | $ | 187,700 |  |  | $ | — |  |  | $ | — |  |  | $ | 253,700 |
Forwards (4) | — |  |  | 16,700 |  |  | 16,700 |  |  |  | — |  |  | 16,700 |  |  | — |  |  | — |  |  | 16,700 |
Total available for sale debt securities | $ | 204,509 |  |  | $ | 65,891 |  |  | $ | 270,400 |  |  |  | $ | 66,000 |  |  | $ | 204,400 |  |  | $ | — |  |  | $ | — |  |  | $ | 270,400 |
(1)The cost associated with the funded Cytokinetics Commercial Launch Funding reflects the fair value on the purchase date. The cost of the Development Funding Bonds represents the amounts funded. (2)The cost associated with the Cytokinetics Funding Commitments represents the fair value on the purchase date. (3)The cost for the Series A Biohaven Preferred Shares represents amortized cost. The cost for the Series B Biohaven Preferred Shares represents the amounts paid to purchase the instruments. These instruments were fully redeemed during 2022. (4)There are no costs associated with the forwards.

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