Financial Royalty Assets, net

9 Months Ended

Sep. 30, 2025

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Financial royalty assets consist of the following (in thousands):


	September 30, 2025						December 31, 2024
	Gross carrying value(2)		Allowance (1)		Net carrying value (2)		Gross carrying value(2)		Allowance (1)		Net carrying value
Qarziba	$	112,052	$	(517)	$	111,535	$	105,329	$	(484)	$	104,845
Agenus Bot/Bal (see Note 3)	40,815		(408)		40,407		40,815		(408)		40,407
Tolerance Therapeutics (Tzield®)	25,363		(99)		25,264		25,613		(101)		25,512
Ohtuvayre inventors	15,608		(142)		15,466		15,969		(157)		15,812
Elutia (CorMatrix)	8,466		(1,316)		7,150		9,418		(2,268)		7,150
AT220 (Tyenne)	4,751		(143)		4,608		—		—		—
UGN-301 (Urogen)	4,144		(41)		4,103		—		—		—
Primrose mRNA	3,281		(98)		3,183		—		—		—
Others	7,224		(192)		7,032		1,443		(120)		1,323
Total financial royalty assets, net	$	221,704	$	(2,956)	$	218,748	$	198,587	$	(3,538)	$	195,049

(1) The amounts of allowance include accumulated allowance for changes in expected cash flows and current expected credit losses.

(2) The amounts include current portion of financial royalty assets which represents an estimation for current quarter royalty receipts that are to be collected during the subsequent quarter. The current portion of financial royalty assets amounted to $12.4 million and $10.0 million were presented in a separate line on our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, respectively.

Financial royalty assets represent future economic rights acquired by Ligand in various transactions. As discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, with the early adoption of ASU 2025-07, certain economic rights in partner programs that were previously accounted for as derivative assets (UGN-301 and other Agenus partner programs, Primrose mRNA, and Castle Creek milestone) are now accounted for as financial royalty assets.

There was no impairment loss for the three and nine months ended September 30, 2025. During nine months ended September 30, 2024, we recorded a $26.2 million impairment loss for Ovid (Soticlestat) financial royalty asset and a $0.3 million impairment loss for Selexis financial royalty asset.

Apeiron Programs

As discussed in Note 4, Apeiron Acquisition, we acquired certain financial royalty assets within the Apeiron Acquisition, including Qarziba and certain InvIOs programs, recorded at $104.9 million and $1.3 million, respectively, as of the Apeiron Acquisition date. As Qarziba is a commercial phase program, we are able to reasonably estimate future cash flows and, as such, we recognized income from Qarziba financial royalty assets starting from the Apeiron Acquisition effective date. We account for InvIOs financial royalty assets using the non-accrual method until we are able to reliably estimate future cash flows.

Agenus Programs

As discussed in Note 3, Investment Transactions, we acquired a synthetic royalty on future global net sales of Agenus’ novel immuno-oncology botensilimab in combination with balstilimab (“Bot/Bal”) program, which was accounted for as a financial royalty asset.

In addition to Bot/Bal, we acquired economic rights in certain partner programs (including UGN-301 with Urogen). We initially accounted for such economic rights as derivative assets, but reclassified them to financial royalty assets on January 1, 2025 with the adoption of ASU 2025-07. Refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, for additional information related to the adoption of ASU 2025-07.

All Agenus program financial royalty assets are accounted for using the non-accrual method as management cannot reliably estimate future cash flows from these programs.

Tzield

In November 2023, we acquired Tolerance Therapeutics for $20 million in cash. Tolerance Therapeutics was a holding company, owned by the inventors of Tzield (teplizumab), and is owed a royalty of less than 1% on worldwide net sales of Tzield. Tzield is marketed by Sanofi, starting in 2023. For tax purposes this transaction was treated as a stock deal, so there is no step-up in basis and tax attributes. Therefore, a deferred tax liability of $5.5 million was recognized in 2024 on the book basis and tax basis difference and recorded to the book value of the Tolerance Therapeutics’ financial royalty asset. Due to the early stages of Tzield’s commercialization, management has placed this financial royalty asset on the non-accrual method until we are able to reliably estimate future cash flows.

Ohtuvayre Inventors

In March 2024, August 2024 and January 2025, we acquired future milestone and royalty rights related to Ohtuvayre from certain Ohtuvayre inventors for a total of $3.8 million, $13.6 million and $1.8 million, respectively. On June 26, 2024, Verona Pharma plc received FDA approval for ensifentrine for the maintenance treatment of patients with chronic obstructive pulmonary disease (“COPD”). During the third quarter of 2024, Verona started commercial sales of ensifentrine (marketed as OhtuvayreTM) in the U.S. Due to the early stages of Ohtuvayre’s commercialization, management has placed the investment on the non-accrual method until we are able to reliably estimate future cash flows.

Elutia

In 2016, Ligand entered into a purchase agreement to acquire certain financial royalty assets from CorMatrix. In 2017, CorMatrix sold its marketed products to Elutia where Elutia assumed the Ligand royalty obligation. In 2017, we amended the terms of the royalty agreement with Elutia where we received $10 million to buydown the royalty rates on the products CorMatrix sold to Elutia (the “CorMatrix Asset Sale”). Per the amended agreement with Elutia, we will receive a 5% royalty, with certain annual minimum payments, on the products Elutia acquired in the CorMatrix Asset Sale and up to $10 million of milestones tied to cumulative net sales of these products. The royalty agreement will terminate on May 31, 2027.

In January 2024, we executed an amendment to our agreement with Elutia which will allow us to reliably estimate future cash flows. As such, the Elutia asset was switched from the non-accrual method to the effective interest method during the first quarter of 2024. We further considered the current and expected future economic and market conditions, current company performance and recent payments received from Elutia. In May 2025, we executed a second amendment to our agreement with Elutia where we received $2.3 million of Elutia common stock in lieu of cash payment, which was recorded to short-term investments in our condensed consolidated balance sheet. During the three months ended September 30, 2025 and 2024, we recorded a reduction of $0.2 million and $0.3 million, respectively, to Elutia allowance of expected credit loss. During the nine months ended September 30, 2025 and 2024, we recorded a reduction of $1.0 million and $4.9 million, respectively, to Elutia allowance of expected credit loss.

Arecor Programs

As discussed in Note 3, Investment Transactions, we acquired certain financial royalty assets within the Arecor Transaction, including AT220 (Tyenne) and AT292 programs, recorded at $4.8 million and $1.9 million, respectively, as of the Arecor Transaction closing date. As AT220 is a commercial phase program, we are able to reasonably estimate future cash

flows for this financial royalty asset and, as such, we recognized income from the AT220 financial royalty assets starting from the Arecor Transaction closing date. We account for the AT292 financial royalty asset using the non-accrual method until we are able to reliably estimate future cash flows.

Primrose mRNA

On September 18, 2023, we entered into a merger agreement, pursuant to which our subsidiary, Pelican Technology Holdings, Inc. (“Pelican”) became a wholly owned subsidiary of Primrose Bio. Simultaneous with the merger, we entered into a purchase and sale agreement with Primrose Bio and contributed $15 million in exchange for 50% of potential development milestones and certain commercial milestones from two contracts previously entered into by Primordial Genetics. A portion of the consideration was initially recognized as derivative assets and adjusted to fair value each reporting period. Upon the adoption of ASU 2025-07, we reclassified the fair value of this asset to financial royalty asset as of January 1, 2025. The asset is currently put under the non-accrual method as management cannot reliably estimate future cash flows from this program. Refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, for additional information related to the adoption of ASU 2025-07.