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Spin-off of OmniAb | 12 Months Ended
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Dec. 31, 2022
Discontinued Operations and Disposal Groups [Abstract] |
Spin-off of OmniAb | Spin-off of OmniAb On March 23, 2022, we entered into the Separation Agreement to separate our OmniAb Business and the Merger Agreement, pursuant to which Avista Public Acquisition Corp. II (“APAC”) would combine with OmniAb, and acquire Ligand's OmniAb Business, in a Reverse Morris Trust transaction (collectively, the “Transactions”). In connection with the execution of the Merger Agreement, we made organizational changes to better align our organizational structure with our strategy and operations, and management reorganized the reportable segments to better reflect how the business is evaluated by the chief operating decision maker. Beginning in the first quarter of 2022, we operated the following two reportable segments: (1) OmniAb business and (2) Ligand core business. The OmniAb business segment is focused on enabling the discovery of therapeutic candidates for our partners by pairing antibody repertoires generated from our proprietary transgenic animals with our OmniAb business platform screening tools. The Ligand core business segment is a biopharmaceutical business focused on developing or acquiring technologies that help pharmaceutical companies deliver and develop medicines. We performed a fair value analysis utilizing a combination of income approach and market approach to determine the fair value of each segment in order to appropriately allocate the goodwill between the segments as of the announcement date. We reassigned goodwill using a relative fair value allocation method, which resulted in goodwill of a $105.7 million and $75.5 million being allocated to Ligand core business and OminAb business, respectively. After the closing date of the Transactions on November 1, 2022, the historical financial results of OmniAb have been reflected in our consolidated financial statements as discontinued operations under GAAP for all periods presented through the date of the Distribution. Pursuant to the Transaction Agreements, Ligand contributed to OmniAb cash and certain specific assets and liabilities constituting the OmniAb Business. Pursuant to the Distribution, Ligand distributed on a pro rata basis to its shareholders as of October 26, 2022 shares of the common stock of OmniAb representing 100% of Ligand’s interest in OmniAb. Immediately following the Distribution, Orwell Merger Sub Inc., a wholly-owned subsidiary of APAC, merged with and into OmniAb, with OmniAb continuing as the surviving company in the Merger and as a wholly owned subsidiary of New OmniAb. The entire transaction was completed on November 1, 2022, and following the Merger, New OmniAb is an independent, publicly traded company whose common stock trades on NASDAQ under the symbol “OABI.” After the Distribution, we do not beneficially own any shares of common stock in OmniAb and no longer consolidate OmniAb into our financial results for periods ending after November 1, 2022. The transfer of assets and liabilities to OmniAb was effected through a contribution in accordance with the Merger Agreement, as summarized below (in thousands):
| As of November 1, 2022
ASSETS |
Current assets: |
Cash and cash equivalents | $ | 1,842 |
Other current assets | 9,019 |
Total current assets | 10,861 |
Intangible assets, net | 165,422 |
Goodwill | 75,533 |
Property and equipment, net | 19,921 |
Operating lease assets | 21,290 |
Other assets | 1,449 |
Total assets | $ | 294,476 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
Current liabilities: |
Current contingent liabilities | $ | 1,569 |
Deferred revenue | 8,582 |
Current operating lease liabilities | 1,610 |
Current finance lease liabilities | 1 |
Total current liabilities | 11,762 |
Long-term contingent liabilities | 4,175 |
Deferred income taxes, net | 18,978 |
Long-term operating lease liabilities | 24,823 |
Other long-term liabilities | 5,006 |
Total liabilities | 64,744 |
Net assets transferred to OmniAb | $ | 229,732 |
Discontinued operations In connection with the Merger, the Company determined its antibody discovery business qualified for discontinued operations accounting treatment in accordance with ASC 205-20. The following table summarizes revenue and expenses of the discontinued operations for the years ended December 31, 2022, 2021 and 2020 (in thousands):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Revenues: |  |  |  |  |
Royalties | $ | 1,289 |  |  | $ | — |  |  | $ | — |
Contract revenue | 25,275 |  |  | 35,589 |  |  | 22,857 |
Total revenues | 26,564 |  |  | 35,589 |  |  | 22,857 |
Operating costs and expenses: |  |  |  |  |
Amortization of intangibles | 10,847 |  |  | 12,945 |  |  | 11,800 |
Research and development | 38,466 |  |  | 36,907 |  |  | 18,889 |
General and administrative | 13,383 |  |  | 10,693 |  |  | 3,823 |
Total operating costs and expenses | 62,696 |  |  | 60,545 |  |  | 34,512 |
Loss from operations | (36,132) |  |  | (24,956) |  |  | (11,655) |
Other income (expense): |  |  |  |  |
Gain from short-term investments | — |  |  | 1,266 |  |  | 1,900 |
Interest expense | — |  |  | (7) |  |  | (5) |
Other income (expense), net | 554 |  |  | (1,210) |  |  | (2,070) |
Total other expense, net | 554 |  |  | 49 |  |  | (175) |
Loss before income tax | (35,578) |  |  | (24,907) |  |  | (11,830) |
Income tax benefit | 7,436 |  |  | 5,692 |  |  | 2,247 |
Net loss | $ | (28,142) |  |  | $ | (19,215) |  |  | $ | (9,583) |
There were no assets and liabilities related to discontinued operations as of December 31, 2022, as all balances were transferred to OmniAb upon Separation. The following table summarizes the assets and liabilities of the discontinued operations as of December 31, 2021 (in thousands):
| December 31, 2021
ASSETS |
Current assets: |
Other current assets | $ | 1,100 |
Total current assets of discontinued operations | 1,100 |
Intangible assets, net | 174,349 |
Goodwill | 75,533 |
Property and equipment, net | 7,320 |
Operating lease assets | 13,332 |
Finance lease assets | 6 |
Other assets | 243 |
Total assets of discontinued operations | $ | 271,883 |
LIABILITIES |
Current liabilities: |
Current contingent liabilities | $ | 2,538 |
Deferred revenue | 10,342 |
Current operating lease liabilities | 685 |
Current finance lease liabilities | 1 |
Total current liabilities of discontinued operations | 13,566 |
Long-term contingent liabilities | 4,826 |
Deferred income taxes, net | 28,239 |
Long-term operating lease liabilities | 13,238 |
Other long-term liabilities | 9,225 |
Total liabilities of discontinued operations | $ | 69,094 |
The following table summarizes the significant non-cash items, capital expenditures of the discontinued operations, and financing activities that are included in the consolidated statements of cash flows for the years ended December 31, 2022, 2021 and 2020 (in thousands):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Operating activities: |  |  |  |  |
Change in fair value of contingent consideration | $ | (554) |  |  | $ | 1,210 |  |  | $ | 2,070 |
Depreciation and amortization | 13,218 |  |  | 14,553 |  |  | 12,503 |
Stock-based compensation expense | 9,404 |  |  | 9,457 |  |  | 5,602 |
Investing activities: |  |  |  |  |
Cash paid for acquisition, net of cash acquired | $ | — |  |  | $ | — |  |  | $ | (27,127) |
Purchase of property, plant and equipment | (5,572) |  |  | (4,070) |  |  | (1,753) |
Payments to CVR Holders | (960) |  |  | (720) |  |  | — |
Financing activities: |  |  |  |  |
Payments to CVR Holders | $ | (1,545) |  |  | $ | (1,050) |  |  | $ | (2,325) |
Supplemental cash flow disclosures: |  |  |  |  |
Purchases of property, plant and equipment included in accounts payable and accrued expenses | $ | 2,310 |  |  | $ | 1,231 |  |  | $ | — |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI https://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 + Details
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