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Balance Sheet Account Details | 12 Months Ended
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Dec. 31, 2024
Other Balance Sheet Details [Abstract] |
Balance Sheet Account Details | Balance Sheet Account Details Short-term Investments Excluding our investments in Viking, the following table summarizes the various investment categories at December 31, 2024 and 2023 (in thousands):
| Cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Estimated fair value
December 31, 2024 |  |  |  |  |  |  |
Short-term investments |  |  |  |  |  |  |
U.S. Treasuries | $ | 78,442 |  |  | $ | 19 |  |  | $ | (13) |  |  | $ | 78,448 |
Commercial paper | 23,483 |  |  | 5 |  |  | (6) |  |  | 23,482 |
Certificates of Deposit | 22,812 |  |  | 12 |  |  | (4) |  |  | 22,820 |
Corporate notes/bonds | 15,496 |  |  | 21 |  |  | (8) |  |  | 15,509 |
Corporate equity securities | 9,954 |  |  | — |  |  | (6,595) |  |  | 3,359 |
| $ | 150,187 |  |  | $ | 57 |  |  | $ | (6,626) |  |  | $ | 143,618 |
December 31, 2023 |  |  |  |  |  |  |
Short-term investments |  |  |  |  |  |  |
Bond fund | $ | 63,763 |  |  | $ | — |  |  | $ | (537) |  |  | $ | 63,226 |
Certificates of Deposit | 17,165 |  |  | 12 |  |  | (1) |  |  | 17,176 |
Corporate notes/bonds | 14,850 |  |  | 40 |  |  | (2) |  |  | 14,888 |
Commercial paper | 11,578 |  |  | 9 |  |  | (1) |  |  | 11,586 |
U.S. Treasuries | 6,736 |  |  | 18 |  |  | (3) |  |  | 6,751 |
Municipal bonds | 1,007 |  |  | — |  |  | (4) |  |  | 1,003 |
Corporate equity securities | 5,775 |  |  | — |  |  | (5,235) |  |  | 540 |
| $ | 120,874 |  |  | $ | 79 |  |  | $ | (5,783) |  |  | $ | 115,170 |
Gain (loss) from short-term investments on our consolidated statements of operations includes both realized and unrealized gain (loss) from our short-term investments in public equity and warrant securities, and realized gain (loss) from available-for-sale debt securities. The following table summarizes our available-for-sale debt securities by contractual maturity (in thousands):
| December 31, 2024
| Amortized Cost |  | Fair Value
Within one year | $ | 127,296 |  |  | $ | 127,331 |
After one year through five years | 12,937 |  |  | 12,928 |
Total | $ | 140,233 |  |  | $ | 140,259 |
The following table summarizes our available-for-sale debt securities in an unrealized loss position (in thousands):
| Less than 12 months |  | 12 months or greater |  | Total
| Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value
December 31, 2024 |  |  |  |  |  |  |  |  |  |  |
Certificates of Deposit | $ | (4) |  |  | $ | 6,195 |  |  | $ | — |  |  | $ | — |  |  | $ | (4) |  |  | $ | 6,195 |
Corporate notes/bonds | (1) |  |  | 866 |  |  | (7) |  |  | 3,026 |  |  | (8) |  |  | 3,892 |
Commercial paper | (6) |  |  | 9,344 |  |  | — |  |  | — |  |  | (6) |  |  | 9,344 |
U.S. Treasuries | (4) |  |  | 29,965 |  |  | (9) |  |  | 4,764 |  |  | (13) |  |  | 34,729 |
Total | $ | (15) |  |  | $ | 46,370 |  |  | $ | (16) |  |  | $ | 7,790 |  |  | $ | (31) |  |  | $ | 54,160 |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
Certificates of Deposit | $ | (1) |  |  | $ | 4,175 |  |  | $ | — |  |  | $ | — |  |  | $ | (1) |  |  | $ | 4,175 |
Corporate notes/bonds | (1) |  |  | 1,410 |  |  | (1) |  |  | 1,447 |  |  | (2) |  |  | 2,857 |
Commercial paper | (4) |  |  | 10,222 |  |  | — |  |  | — |  |  | (4) |  |  | 10,222 |
Municipal bonds | (4) |  |  | 1,004 |  |  | — |  |  | — |  |  | (4) |  |  | 1,004 |
U.S. Treasuries | — |  |  | 998 |  |  | (3) |  |  | 1,502 |  |  | (3) |  |  | 2,500 |
Total | $ | (10) |  |  | $ | 17,809 |  |  | $ | (4) |  |  | $ | 2,949 |  |  | $ | (14) |  |  | $ | 20,758 |
Our investment policy is capital preservation and we only invested in U.S.-dollar denominated investments. We held a total of 45 securities which were in an unrealized loss position with a total of $0.03 million unrealized losses as of December 31, 2024. We believe that we will collect the principal and interest due on our debt securities that have an amortized cost in excess of fair value. The unrealized losses are largely due to changes in interest rates and not to unfavorable changes in the credit quality associated with these securities that impacted our assessment on collectability of principal and interest. In July 2024, we sold certain securities before the recovery of the amortized cost basis to fund the Apeiron Acquisition. Accordingly, we wrote down the amortized cost of $0.05 million during the second quarter of 2024. We do not intend to sell these securities and it is unlikely that we will be required to sell these securities before the recovery of the amortized cost basis as of December 31, 2024. Accordingly, there was no credit loss recognized for the year ended December 31, 2024. There was no credit losses recognized for the year ended December 31, 2023. Short-term Investments: Investment in Viking We held 1.0 million shares of Viking common stock as of December 31, 2024, and we account for it as an investment in available-for-sale equity securities, which is measured at fair value, with changes in fair value recognized in net income. As of December 31, 2024 and December 31, 2023, our investment in Viking was $40.2 million and $32.2 million, respectively, and was included in short-term investments on the consolidated balance sheets. During the year ended December 31, 2024, we sold 0.7 million shares of Viking common stock and recognized a total realized gain of $60.0 million. During the year ended December 31, 2023, we sold 5.0 million shares of Viking common stock and recognized a total realized gain of $44.4 million. There were no sales of Viking common stock during the year ended December 31, 2022. Property and equipment, net Property and equipment are stated at cost and consist of the following (in thousands):
| December 31,
| 2024 |  | 2023
Lab and office equipment | $ | 6,868 |  |  | $ | 7,068 |
Leasehold improvements | 10,464 |  |  | 10,363 |
Computer equipment and software | 1,850 |  |  | 716 |
Construction in progress | 4,219 |  |  | 4,115 |
| 23,401 |  |  | 22,262 |
Less accumulated depreciation and amortization | (8,268) |  |  | (6,655) |
| $ | 15,133 |  |  | $ | 15,607 |
Depreciation of equipment is computed using the straight-line method over the estimated useful lives of the assets which ranges from one to nine years. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or their related lease term, whichever is shorter. Depreciation expense of $2.3 million, $2.9 million, and $3.8 million was recognized for the years ended December 31, 2024, 2023, and 2022, respectively, and was included in general and administrative and research and development expenses in our consolidated statements of operations. Goodwill and intangible assets, net Goodwill and identifiable intangible assets consist of the following (in thousands):
| December 31,
| 2024 |  | 2023
Indefinite-lived intangible assets |  |  |
Goodwill | $ | 105,250 |  |  | $ | 103,370 |
Definite-lived intangible assets |  |  |
Completed technology | 39,249 |  |  | 42,911 |
Less: Accumulated amortization | (19,710) |  |  | (20,894) |
Trade name | 2,642 |  |  | 2,642 |
Less: Accumulated amortization | (1,843) |  |  | (1,710) |
Customer relationships | 29,600 |  |  | 29,600 |
Less: Accumulated amortization | (20,652) |  |  | (19,161) |
Contractual relationships | 360,000 |  |  | 360,000 |
Less: Accumulated amortization | (122,638) |  |  | (93,782) |
Total goodwill and other identifiable intangible assets, net | $ | 371,898 |  |  | $ | 402,976 |
A change in a goodwill carrying value for the year ended December 31, 2024, relates to finalization of Novan Acquisition purchase accounting in the first quarter of 2024. Amortization of finite-lived intangible assets is computed using the straight-line method over the estimated useful life of the asset of up to 20 years. Amortization expense of $33.0 million, $33.7 million, and $34.2 million were recognized for the years ended December 31, 2024, 2023, and 2022, respectively. Estimated amortization expense for the years ending December 31, 2025 through 2029 is $32.7 million per year. For each of the years ended December 31, 2024, 2023, and 2022, there was no impairment of intangible assets with finite lives. Derivative Assets Derivative assets consist of the following (in thousands):
| December 31,
| 2024 |  | 2023
Primrose mRNA | $ | 3,451 |  |  | $ | 3,531 |
Agenus Partner Programs | 6,326 |  |  | — |
Agenus Warrant (5 years contractual term) | 806 |  |  | — |
Total noncurrent derivative assets | $ | 10,583 |  |  | $ | 3,531 |
A change in the fair value of Agenus Partner Programs and Primrose mRNA derivative that amounted to $(15.0) million and $(0.1) million, respectively, for the year ended December 31, 2024, was included in fair value adjustments to partner program derivatives in the consolidated statement of operations. A net increase in fair value of Viking Share Collar and Viking Share Put that amounted to $7.1 million for the year ended December 31, 2024, was recognized in gain from short-term investments in the consolidated statements of operations. A change in the fair value of other derivatives that amounted to $(12.1) million for the year ended December 31, 2024, was recognized in other non-operating (expense) income, net in the consolidated statements of operations. We acquired the Primrose mRNA derivative on September 18, 2023 with the sale of Pelican business and investment in Primrose Bio transaction. A change in the fair value of the Primrose mRNA derivative that amounted to $0.3 million during the year ended December 31, 2023 was included in the consolidated statements of operations. We did not have any other derivative instruments during the years ended December 31, 2023 and 2022. Other Investments Other investments consist of the following (in thousands):
| December 31,
| 2024 |  | 2023
Equity securities in Primrose Bio | $ | 6,712 |  |  | $ | 32,726 |
InvIOs investment | 4,196 |  |  | — |
Neuritek warrants | — |  |  | 3,000 |
Palvella Series C preferred stock | — |  |  | 1,000 |
Total other investments | $ | 10,908 |  |  | $ | 36,726 |
During the third quarter of 2024, we recognized a full impairment for our investment in Neuritek warrants. On December 13, 2024, Palvella Therapeutics, Inc. (“Palvella”) announced the completion of its previously announced merger with Pieris Pharmaceuticals, Inc. (“Pieris”). The combined company will operate under the name Palvella Therapeutics, Inc., and its shares are expected to begin trading on the Nasdaq Capital Market on December 16, 2024, under the ticker symbol “PVLA”. In conjunction with the transaction, the Series C Preferred Shares we held were converted to common shares using an exchange ratio of approximately 0.3095, converting the 189,112 Series C preferred shares into 58,524 common shares. We account for the Palvella common shares as a short-term investment included in our consolidated balance sheet. Other Assets and Other Current Assets Other assets include economic rights related to the 2023 expansion of our strategic partnership with Palvella to accelerate Phase 3 development of Qtorin rapamycin for the treatment of Microcystic Lymphatic Malformations (“Microcystic LM”). According to the terms of the second amendment to our development funding and royalties agreement with Palvella (the “Palvella Second Amendment”), Palvella received an upfront payment of $5 million from Ligand. In return for the upfront payment, among other contractual changes, the tiered royalty payable by Palvella to Ligand was increased to between 8.0% and 9.8% based on annual aggregate worldwide net sales of Qtorin rapamycin. We are not obligated to provide additional funding to Palvella for development or commercialization of Qtorin. We determined the economic rights related to Palvella should be characterized as a funded research and development arrangement, because the contract designated the funds usage for research and development activities, and thus we account for them in accordance with ASC 730-20, Research and Development Arrangement. We reduce our asset as the funds are expended by Palvella. As of December 31, 2024, of the $5 million upfront funding related to the Palvella Second Amendment, $1.2 million of the funding to Palvella was expended. Our CEO and director, Todd Davis, is a director of Palvella. Mr. Davis recused himself from both board's consideration of the agreement between us and Palvella, including any financial analysis, the terms of the Palvella Second Amendment and the vote to approve the Palvella Second Amendment and the related transactions. In June 2024, we funded Palvella $2.5 million in exchange for a convertible note with a maturity of three years, which is included in other assets in the consolidated balance sheets. In conjunction with Pavella's merger with Pieris as discussed above, the convertible note automatically converted into Pavella common shares. The $2.6 million principal and interest converted into 184,595 shares, using a conversion price of $13.9965 per share. We account for the Palvella common shares as a short-term investment in our consolidated balance sheet. Other current assets primarily include $10.0 million current portion of financial royalty assets (disclosed in “Note (6), Financial Royalty Assets, net (formerly known as Commercial License Rights)”), and $4.5 million inventory (raw materials and work in process related to the manufacturing of finished goods) for the preparation of commercial supplies of ZELSUVMI by Pelthos Therapeutics, a wholly owned subsidiary of Ligand. For additional information on ZELSUVMI, see “Note (3), Acquisitions”. Below is a summary of the ZELSUVMI related inventory included in other current assets (in thousands):
| December 31,
| 2024 |  | 2023
Work in process | $ | 3,923 |  |  | $ | 195 |
Raw materials | 603 |  |  | 420 |
Total Pelthos inventory in other current assets | $ | 4,526 |  |  | $ | 615 |
Accrued liabilities Accrued liabilities consist of the following (in thousands):
| December 31,
| 2024 |  | 2023
Royalties owed to third parties | $ | 6,500 |  |  | $ | 900 |
Compensation | 5,522 |  |  | 4,682 |
UK value-added tax | 5,159 |  |  | — |
Professional fees | 4,858 |  |  | 2,394 |
Subcontractor | 1,756 |  |  | 1,756 |
Customer deposit | 621 |  |  | 621 |
Supplier | — |  |  | 303 |
Amounts owed to former licensees | — |  |  | 45 |
Other | 3,490 |  |  | 1,766 |
Total accrued liabilities | $ | 27,906 |  |  | $ | 12,467 |
Contingent liabilities The following table summarizes roll-forward of contingent liabilities as of December 31, 2024 and 2023 (in thousands):
| December 31, 2022 | Payments | Fair Value Adjustment | December 31, 2023 | Payments | Fair Value Adjustment | December 31, 2024
Cydex | $ | 84 |  | $ | (50) |  | $ | 286 |  | $ | 320 |  | $ | (200) |  | $ | 263 |  | $ | 383 |
Metabasis | 3,429 |  | — |  | (551) |  | 2,878 |  | — |  | 420 |  | 3,298 |
Total | $ | 3,513 |  | $ | (50) |  | $ | (265) |  | $ | 3,198 |  | $ | (200) |  | $ | 683 |  | $ | 3,681 |
Other long-term liabilities Other long-term liabilities consist of the following (in thousands):
| December 31,
| 2024 |  | 2023
Novan (Pelthos) contract liability | $ | 15,938 |  |  | $ | 13,700 |
Unrecognized tax benefits | 14,160 |  |  | 14,039 |
Other long-term liabilities | 65 |  |  | 19 |
Total other long-term liabilities | $ | 30,163 |  |  | $ | 27,758 |

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