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EQUITY SECURITIES PORTFOLIO INVESTMENT | 9 Months Ended
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Sep. 30, 2022
Investments, Debt and Equity Securities [Abstract] |
EQUITY SECURITIES PORTFOLIO INVESTMENT | EQUITY SECURITIES PORTFOLIO INVESTMENTOn April 3, 2020, the Company entered into an Option Agreement with LF Equity Income Fund (“Seller”), which included general terms through which the Company was provided the option to purchase life sciences equity securities in a portfolio of public and private companies (“Life Sciences Portfolio”) for an aggregate purchase price of £223.9 million, approximately $277.5 million at the exchange rate on April 3, 2020. On June 4, 2020, the Company executed the Transaction Agreement between Link Fund Solutions Limited, Seller, and the Company. Pursuant to the Transaction Agreement, the Company agreed to purchase from Seller and Seller agreed to transfer to the Company the specified equity securities of all companies in the Life Sciences Portfolio at set prices at various future dates. The transfer dates would vary among the Life Sciences Portfolio companies as the Transaction Agreement gives the Company the exclusive right to determine when to call for transfer of each security, and because each Life Sciences Portfolio company (or its existing equity holders) may be required to approve the transfer due to rights of first refusals and other company-specific terms and conditions. Thus, the execution of the Transaction Agreement resulted in forward contracts for the Company to purchase equity securities in each public and private company at a specified price on a future date. In accordance with the Transaction Agreement, the Company transferred the total purchase price of £223.9 million into an escrow account. Upon the transfer of equity securities in the Life Sciences Portfolio to the Company, the associated funds were released from the escrow account to Seller based on the consideration amount assigned to the equity securities for such Life Sciences Portfolio company in the Transaction Agreement. As of December 31, 2020, all of the equity securities in the Life Sciences Portfolio were transferred to the Company pursuant to the Transaction Agreement. The Company has sold a portion of the equity securities of such Life Sciences Portfolio while retaining an interest in a number of operating businesses, including a controlling interest in one of the companies. During the year ended December 31, 2020, Seller returned a total of £4.5 million of the Company’s prepaid investment upon the failure to obtain the approval of the existing equity holders, pursuant to their rights of first refusals, of one of the companies in connection with the transfer of its securities. In addition, due to an ownership restriction applicable to one of the companies, the Company sold a small portion of an equity securities derivative for £33,000 before the remaining shares of such company could be transferred to us. The Company recognized a net gain of $2.8 million related to the returned prepaid investments and sale of the derivative. For accounting purposes, the total purchase price of the Life Sciences Portfolio was allocated to the individual equity securities based on their individual fair values as of April 3, 2020, in order to establish an appropriate cost basis for each of the acquired securities. The fair values of the public company securities were based on their quoted market price. The fair values of the private company securities were estimated based on recent financing transactions and secondary market transactions and factoring in a discount for the illiquidity of these securities. Included in our consolidated balance sheets as of September 30, 2022 and December 31, 2021, the total fair value of the remaining Life Sciences Portfolio investment was $109.4 million and $343.1 million, respectively. As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired an equity interest in Arix Bioscience PLC (“Arix”), a public company listed on the London Stock Exchange. During the nine months ended September 30, 2022, the Company increased its investment in Arix amounting to approximately 22% as of September 30, 2022. In addition, two members of the Company's Board of Directors (the “Board”) have seats on the board of Arix, which is currently made up of five board members. Although the Company is presumed to have significant influence over operating and financial policies of Arix, we have elected to account for the investment under the fair value method. To date, the Company has not received any dividends from Arix. As of September 30, 2022, this investment does not meet the significance thresholds for additional summarized income statement disclosures, as defined by the SEC. As of September 30, 2022, the aggregate carrying amount of our Arix investment was $33.8 million, and is included in equity securities at fair value, in the consolidated balance sheet. The following unrealized and realized gains or losses from our investment in the Life Sciences Portfolio are recorded in the change in fair value of equity securities and gain or loss on sale of equity securities, respectively, in the consolidated statements of operations:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (In thousands)
Change in fair value of equity securities of public companies | $ | (39,008) |  |  | $ | 243,930 |  |  | $ | (243,106) |  |  | $ | 214,247 |
Change in fair value of equity securities without readily determinable fair value | — |  |  | (180,023) |  |  | — |  |  | (102,067) |
Gain on sale of equity securities of public companies | 36,397 |  |  | 37,112 |  |  | 101,102 |  |  | 52,167 |
Net realized and unrealized (loss) gain | $ | (2,611) |  |  | $ | 101,019 |  |  | $ | (142,004) |  |  | $ | 164,347 |
As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired a majority interest in the equity securities of MalinJ1 (63.9%), which were transferred to the Company on December 3, 2020. The acquisition of the MalinJ1 securities was accounted for as an asset acquisition as there was a change of control of MalinJ1 and substantially all of the fair value of the assets acquired was concentrated in a single identifiable asset, an investment in Viamet Pharmaceuticals Holdings, LLC (“Viamet”). As such, the cost basis of the MalinJ1 securities was used to allocate to the Viamet investment, the single identifiable asset, and no goodwill was recognized. The Company through its consolidation of MalinJ1 accounts for the Viamet investment under the equity method as MalinJ1 owns 41.0% of outstanding shares of Viamet. During the nine months ended September 30, 2022 and 2021, our consolidated earnings on equity investment was $42.9 million and $2.7 million, respectively, included in the consolidated statements of operations. During the nine months ended September 30, 2022, distributions received were $1.2 million to Acacia and $586,000 to noncontrolling interests. Du ring the nine months ended September 30, 2021, distributions received were $1.8 million to Acacia and $906,000 to noncontrolling interests. In April 2022, Viamet received a certain drug approval from the United States Food and Drug Administration ("FDA"). In connection with the FDA approval, MalinJ1 was due a milestone payment in the amount of $40.0 million. The Company's portion of that milestone payment is anticipated to be received before year-end 2022 in the approximate amount of $27.0 million, with interest accrued at 8.5% per year. In June 2022, in connection with the submission to the European Medicines Agency, MalinJ1 was due an additional milestone payment in the amount of $1.8 million. The Company's portion of that milestone payment was received in July 2022 in the approximate amount of $1.2 million. During 2022, the Company has recorded consolidated earnings on equity investment of $42.9 million, including the two milestones and approximately $1.2 million in accrued interest. On October 13, 2021, Adaptix Limited issued £2.95 million, approximately $4.0 million at the exchange rate on October 13, 2021, in limited unsecured notes due in 2026 to Radcliffe 2 Ltd., a subsidiary of Merton Healthcare Holdco II LLC. The interest rate on the notes is 8.0% per year. During the three and nine months ended September 30, 2022, we recorded $70,000 and $221,000, respectively, in interest income related to the notes. As of September 30, 2022 and December 31, 2021, the receivable including interest was $3.5 million and $4.0 million, respectively, and is included in other non-current assets in the consolidated balance sheets.

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