Ligand Pharmaceuticals Inc 8-K/A, filed Dec 10, 2020

Ligand Pharmaceuticals Inc (LGND)

8-K/A 2020-12-10 For: 2020-10-01

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Added on April 06, 2026

About this 8-K/A

Ligand Pharmaceuticals Inc filed this 8-K/A on December 10, 2020, reporting on events of October 1, 2020.

Items reported

Item 9.01: Financial statements and exhibits

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Delaware	001-33093	77-0160744
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		Identification No.)


3911 Sorrento Valley Boulevard, Suite 110
San Diego
CA						92121
(Address of principal executive offices)						(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	LGND	The Nasdaq Global Market


Exhibit No.			Description
23.1			Consent of KPMG LLP
99.1			Audited Consolidated Financial Statements of Pfenex Inc. as of and for the year ended December 31, 2019
99.2			Unaudited Pro Forma Combined Financial Statements of Ligand Pharmaceuticals Incorporated as of and for the nine months ended September 30, 2020, and as of and for the year ended December 31, 2019
104			Cover Page Interactive Data File (embedded within the Inline XBRL document)


						Page(s)
Reports of Independent Registered Public Accounting Firm						3
Consolidated Balance Sheet						4
Consolidated Statement of Operations						5
Consolidated Statement of Changes in Stockholders’ Equity						6
Consolidated Statement of Cash Flows						7
Notes to Consolidated Financial Statements						8-35


			LIGAND PHARMACEUTICALS INCORPORATED

Date: December 10, 2020			By: /s/ Charles S. Berkman Name: Charles S. Berkman Title: Senior Vice President, General Counsel and Secretary


	December 31,
(in thousands)	2019
Assets
Current assets
Cash and cash equivalents	$	55,624
Restricted cash		200
Accounts and unbilled receivables, net		5,628
Other current assets		2,308
Total current assets		63,760
Property and equipment, net		7,744
Right-of-use asset		3,903
Other long-term assets		170
Intangible assets, net		3,733
Goodwill		5,577
Total assets	$	84,887
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	673
Accrued liabilities		7,351
Current portion of deferred revenue		75
Lease liabilities – short-term		951
Other current liabilities		616
Total current liabilities		9,666
Lease liabilities – long-term		2,896
Other non-current liabilities		26
Total liabilities		12,588
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding		—
Common stock, par value $0.001, 200,000,000 shares authorized at December 31, 2019, 32,266,708 shares issued and outstanding at December 31, 2019		33
Additional paid-in capital		270,008
Accumulated deficit		(197,742)
Total stockholders’ equity		72,299
Total liabilities and stockholders’ equity	$	84,887


	Year Ended
	December 31,
(in thousands, except for per share data)	2019
Revenue
License and service revenue	$	$ 44,497
Product revenue		5,829
Total revenue		50,326
Cost of revenue
License and service		3,042
Product		1,849
Total cost of revenue		4,891
Gross profit		45,435
Operating expense
Research and development		25,533
Selling, general and administrative		19,078
Total operating expense		44,611
Income from operations		824
Other income, net		235
Net income before income taxes		1,059
Income tax provision		(1)
Net income	$	1,058
Net income per common share, basic and diluted	$	0.03
Weighted-average common shares used to compute net income per share
Basic		31,602
Diluted		32,373


	Common Stock				Additional				Total
	Shares		Amount		Paid in Capital		Accumulated Deficit		Stockholders’ Equity
Balance at December 31, 2018		31,468	$	32	$	262,405	$	(201,300)	$	61,137
Adoption of ASC 606 (Note 7)		—		—		—		2,500		2,500
Exercise of stock options		764		1		4,597		—		4,598
Issuance of common stock under employee stock purchase plan		35		—		109		—		109
Stock-based compensation expense		—		—		2,897		—		2,897
Net income		—		—		—		1,058		1,058
Balance at December 31, 2019		32,267	$	33	$	270,008		(197,742)	$	72,299


	Year Ended December 31,
(in thousands)	2019
Cash flows from operating activities
Net income	$	1,058
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		1,294
Amortization of intangible assets		515
Stock-based compensation expense		2,897
Gain on disposal of property and equipment		(97)
Changes in operating assets and liabilities
Accounts and unbilled receivables		(457)
Other current assets		(198)
Other long-term assets		(90)
Accounts payable		(1,354)
Accrued liabilities		(2,454)
Deferred revenue		(5,242)
Net cash used in operating activities		(4,128)
Cash flows from investing activities
Acquisitions of property and equipment		(1,442)
Proceeds from sales of equipment		597
Net cash used in investing activities		(845)
Cash flows from financing activities
Repayments of financial lease obligation		(330)
Proceeds from exercise of stock options and other stock issuances		4,707
Net cash provided by financing activities		4,377
Net decrease in cash, cash equivalents and restricted cash		(596)
Cash, cash equivalents and restricted cash
Beginning of year		56,420
End of year	$	55,824
Supplemental schedule of cash flow information
Cash paid for interest	$	22
Cash paid for taxes	$	2
Adoption of ASC 606 - impact on deferred revenue	$	(2,500)
Adoption of ASC 842 - ROU assets	$	4,540
Adoption of ASC 842 - lease liabilities	$	(4,755)
Non-cash financing and investing transactions
Asset acquisitions in accounts payable and accrued expenses	$	603


	Impact of Changes in Accounting Policies ($ thousands)
Three months ended December 31, 2019 (unaudited)	As reported		Adjustments		Balances without adoption of ASC 606
License and service revenue	$	23,413	$	—	$	23,413
Product revenue		992		—		992
Total revenues		24,405		—		24,405
Income from operations		11,595		—		11,595
Net income	$	11,634		—	$	11,634

Year ended December 31, 2019
License and service revenue	$	44,497	$	2,500	$	46,997
Product revenue		5,829		—		5,829
Total revenues		50,326		2,500		52,826
Income from operations		824		2,500		3,324
Net income	$	1,058		2,500	$	3,558


	Year ended December 31, 2019
	License and service		Product		Total
Customers	(in thousands)
Alvogen	$	11,133	$	2,334	$	13,467	(w)
Jazz		28,742		—		28,742	(x)
Arcellx		2,231		—		2,231	(y)
BARDA		1,541		—		1,541	(y)
Other		850		3,495		4,345	(z)
Total		44,497		5,829	$	50,326
(w) - Revenue recognized at point in time except for immaterial portion of the $2.5 million upfront payment that was constrained until FDA approval of PF708.
(x) - $26 million recognized at a point-in-time and $2.7 million recognized over time
(y) - Revenue recognized over time
(z) - Revenue recognized at point in time


	Fair Value Measurements at Reporting Data Using
(in thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2019
Cash and money market funds	$	55,824	$	55,824	$	—	$	—
Total assets measured at fair value	$	55,824	$	55,824	$	—	$	—


	December 31, 2019
	(in thousands)
Operating lease right-of-use assets	$	3,124
Finance lease right-of-use assets		779
Total right-of-use assets	$	3,903

Operating lease liability-short-term	$	761
Operating lease liability-long-term		2,895
Finance lease liability-short-term		190
Finance lease liability-long-term		1
Total lease liabilities	$	3,847

Weighted average remaining lease term - operating leases	4.2 years
Weighted average remaining lease term - finance leases	0.6 years
Weighted average discount rate	5%


	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	1,175
Lease liabilities arising from obtaining ROU asset	$	—


	Payment Amounts
	Finance Leases		Operating Leases
	(in thousands)
2020	$	198	$	927
2021		1		941
2022		—		967
2023		—		995
2024 and thereafter		—		244
Total future minimum lease payments	$	199	$	4,074


	Year Ended December 31,
	2019
Risk-free interest rate		2.4	%
Expected volatility		72.6	%
Expected dividend yield		0.0	%
Expected life of options in years		6.2


	Number of Options (in thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2019		4,155	$	6.12
Granted		1,390		4.94
Exercised		(764)		6.02
Cancelled (forfeited)		(778)		7.09
Outstanding at December 31, 2019		4,003	$	5.55		7.63	$	22,781
Vested and expected to vest at December 31, 2019		3,512	$	5.66		7.46	$	19,699
Vested and exercisable at December 31, 2019		1,858	$	6.65		6.35	$	9,078


	December 31,
	2019
	(in thousands)
Beginning balance of unrecognized tax benefits	$	1,394
Additions based on tax positions related to the current year		232
Additions based on tax positions of prior years		16
Reductions for tax positions of prior years		—
Ending balance of unrecognized tax benefits	$	1,642


	2019
	(in thousands)
Stock-based compensation from:
Stock options	$	2,809
Employee stock purchase plan		88
Total	$	2,897


	December 31,
	2019
(in thousands, except per share data)
Net income	$	1,058
Weighted average shares used to compute basic net income per share		31,602
Dilutive effect of employee stock option plans		771
Dilutive weighted-average common shares outstanding		32,373
Basic and diluted net income per common share	$	0.03


	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Year Ended December 31
	(in thousands, except for per share data)
2019(a)(b)
Revenues	$	7,862	$	2,811	$	15,248	$	24,405	$	50,326
Cost of revenues		1,566		1,119		1,145		1,061		4,891
Gross profit		6,296		1,692		14,103		23,344		45,435
Operating expenses		12,423		9,332		11,108		11,748		44,611
Other income, net		69		71		55		40		235
Income tax provision		—		—		—		(1)		(1)
Net income (loss)		(6,058)		(7,569)		3,051		11,634		1,058
Net income (loss) per share, basic	$	(0.19)	$	(0.24)	$	0.10	$	0.37	$	0.03
Net income (loss) per share, diluted	$	(0.19)	$	(0.24)	$	0.10	$	0.35	$	0.03
Weighted-average common shares used in calculating net income (loss) per share:
Basic		31,487		31,527		31,595		31,805		31,602
Diluted		31,487		31,527		31,595		33,398		32,373
(a) - Due to the adoption of ASC 606, Q1-2019 revenue is $2.5 million less than the amount reported in the Q1-2019 10-Q. Refer to Note 7 for more information on this adjustment.
(b) - Due to the adoption of ASC 718, cost of revenues and operating expenses is immaterially different than the amounts reported in the Q1-2019, Q2-2019, and Q3-2019 10-Qs.


UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2020

	Historical
(in thousands)	Ligand		Pfenex		Pro Forma Adjustments		Notes	Pro Forma Combined
ASSETS
Current assets
Cash and cash equivalents	$	456,916	$	51,407	$	(438,306)	3(a)	$	70,017
Short-term investments	338,154		—		—			338,154
Accounts and unbilled receivables, net	32,907		1,114		—			34,021
Inventory	13,430		—		—			13,430
Other current assets	3,191		4,835		4,028		3(b), 3(d)	12,054
Assets held for sale	13,143		—		—			13,143
Total current assets	857,741		57,356		(434,278)			480,819
Deferred income taxes, net	27,026		—		—			27,026
Intangible assets, net	224,582		3,354		415,646		3(g)	643,582
Goodwill	102,136		5,577		100,385		2(b)	208,098
Commercial license and other economic rights, net	10,834		—		—			10,834
Property and equipment, net	7,157		9,227		(1,393)		2(a)	14,991
Operating lease right-of-use asset	4,269		2,618		453		3(c), 3(e)	7,340
Other long-term assets	13,704		81		100		3(e)	13,885
Total assets	$	1,247,449	$	78,213	$	80,913		$	1,406,575
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	10,169	$	6,814	$	62	3(h)	$	17,045
Accrued liabilities	14,498		9,460		40,892		3(c), 3(f), 3(e)	64,850
Income tax payable	674		—		(674)		3(b)	—
Current portion of contingent liabilities	1,194		—		—			1,194
Current portion of deferred revenue	5,404		2,842		196		3(i)	8,442
Liability related to assets held for sale	10,361		—		—			10,361
Total current liabilities	42,300		19,116		40,476			101,892
2023 convertible senior notes, net	454,973		—		—			454,973
Long-term contingent liabilities	9,604		—		—			9,604
Deferred income taxes, net	13,508		—		87,990		3(k)	101,498
Long-term operating lease liabilities	3,920		2,290		(26)		3(c)	6,184
Other non-current liabilities	25,320		1,258		(97)		3(e), 3(i)	26,481
Total liabilities	549,625		22,664		128,343			700,632
Commitments and contingencies
Stockholders’ equity
Preferred Stock	—		—		—			—
Common stock	16		35		(35)		3(j)	16
Additional paid-in capital	313,057		293,369		(293,369)		3(j)	313,057
Accumulated other comprehensive loss	(1,441)		—		—			(1,441)
Retained earnings (accumulated deficit)	386,192		(237,855)		245,974		3(j)	394,311
Total stockholders’ equity	697,824		55,549		(47,430)			705,943
Total liabilities and stockholders’ equity	$	1,247,449	$	78,213	$	80,913		$	1,406,575


UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the nine months ended September 30, 2020

	Historical				Pro Forma Adjustments
(in thousands, except per share data)	Ligand		Pfenex		Reclassification Adjustments		Pro Forma Adjustments		Notes	Pro Forma Combined
Revenues:
Royalties	$	22,751	$	—	$	—	$	—		$	22,751
Captisol	68,966		—		—		—			68,966
Contract revenue	24,712		2,784		—		—			27,496
Total revenue	116,429		2,784		—		—			119,213
Cost of revenue:
Cost of Captisol	18,680		—		—		—			18,680
Cost of contract revenue	—		2,045		(2,045)		—			—
Total cost of revenue	18,680		2,045		(2,045)		—			18,680
Gross profit	97,749		739		2,045		—			100,533
Operating costs and expenses:
Amortization of intangibles	11,285		—		378		24,740		3(g)	36,403
Research and development	37,476		16,939		2,045		2,099		3(l), 3(o), 3(q)	58,559
Selling, general and administrative	34,353		23,229		(378)		(14,465)		3(l), 3(o), 3(p), 3(q)	42,739
Total operating expense	83,114		40,168		2,045		12,374			137,701
Net income (loss) from operations	14,635		(39,429)		—		(12,374)			(37,168)
Other income (expense):
Loss from short-term investment	(17,143)		—		—		—			(17,143)
Interest income	7,690		—		—		—			7,690
Interest expense	(21,030)		—		—		—			(21,030)
Other expense, net	1,940		479		—		—			2,419
Total other income (loss), net	(28,543)		479		—		—			(28,064)
Net loss from before income taxes	(13,908)		(38,950)		—		(12,374)			(65,232)
Income tax benefit (expense)	5,162		(4)		—		19,053		3(m)	24,211
Net loss	$	(8,746)	$	(38,954)	$	—	$	6,679		$	(41,021)

Net loss per common share:
Basic	$	(0.54)							3(r)	$	(2.53)
Diluted	$	(0.54)							3(r)	$	(2.53)
Weighted average common shares
Basic	16,222									16,222
Diluted	16,222									16,222


UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the year ended December 31, 2019

	Historical				Pro Forma Adjustments
(in thousands, except per share data)	Ligand		Pfenex		Reclassification Adjustments		Pro Forma Adjustments		Notes	Pro Forma Combined
Revenues:
Royalties	$	46,976	$	—	$	—	$	—		$	46,976
Captisol	31,489		—		—		—			31,489
Contract revenue	41,817		50,326		—		—			92,143
Total revenue	120,282		50,326		—		—			170,608
Cost of revenue:
Cost of Captisol	11,347		—		—		—			11,347
Cost of contract revenue	—		4,891		(4,891)		—			—
Total cost of revenue	11,347		4,891		(4,891)		—			11,347
Gross profit	108,935		45,435		4,891		—			159,261
Operating costs and expenses:
Amortization of intangibles	16,864		—		516		32,975		3(g)	50,355
Research and development	55,908		25,533		4,891		2,143		3(l), 3(o), 3(q)	88,475
Selling, general and administrative	41,884		19,078		(516)		(2,075)		3(l), 3(o), 3(q)	58,371
Total operating expense	114,656		44,611		4,891		33,043			197,201
Gain from sale of Promacta license	812,797		—		—		—			812,797
Net income from operations	807,076		824		—		(33,043)			774,857
Other income (expense):
Gain from Viking	2,888		—		—		—			2,888
Interest income	28,430		—		—		—			28,430
Interest expense	(35,745)		—		—		—			(35,745)
Other income (expense), net	(6,010)		235		—		—			(5,775)
Total other income (loss), net	(10,437)		235		—		—			(10,202)
Net income from before income taxes	796,639		1,059		—		(33,043)			764,655
Income tax expense	167,337		1		—		(6,719)		3(n)	160,619
Net income	$	629,302	$	1,058	$	—	$	(26,324)		$	604,036

Net income per common share:
Basic	$	33.13							3(s)	$	31.80
Diluted	$	31.85							3(s)	$	30.57
Weighted average common shares
Basic	18,995									18,995
Diluted	19,757									19,757


Assets acquired:
Cash and cash equivalents	$	51,407
Restricted cash		200
Accounts and unbilled receivable		1,114
Fixed assets, net(a)		7,835
Operating lease right-of-use assets		3,070
Other assets		1,338
Intangible assets		419,000
Total assets acquired		483,964
Liabilities assumed:
Accounts payable and accrued expenses		18,271
Deferred revenue		3,908
Lease liabilities		3,070
Other liabilities		1,381
Deferred tax liability		87,990
Total liabilities assumed		114,620
Net assets acquired		369,344
Purchase price		475,306
Goodwill recognized(b)	$	105,962


		September 30, 2020
Record a right-of-use asset for operating leases	$	3,070
Remove historic right-of-use asset for operating leases		(2,618)
Record a short-term lease liability for operating leases		806
Remove historic short-term lease liability for operating leases		(804)
Record a long-term lease liability for operating leases		2,264
Remove historic long-term lease liability for operating leases	$	(2,290)


	Approximate Fair Value		Estimated useful life (in years)
Contractual Relationships:
Alvogen	$	147,000	12
Merck	118,000		12
Jazz	80,000		17
SII	49,000		10
Arcellx	2,000		17
Acquired Technologies	23,000		10-19
	$	419,000


	Approximate fair value		Estimated useful life (in years)	Estimated pro forma amortization for the nine months ended September 30, 2020		Estimated pro forma amortization for the year ended December 31, 2019
Contractual Relationships:
Alvogen	$	147,000	12	$	9,188	$	12,250
Merck	118,000		12	7,375		9,833
Jazz	80,000		17	3,529		4,706
SII	49,000		10	3,675		4,900
Arcellx	2,000		17	88		118
Acquired Technologies	23,000		10-19	1,263		1,684
	419,000			25,118		33,491
Elimination of historical balances	(3,354)			(378)		(516)
Total	$	415,646		$	24,740	$	32,975


		September 30, 2019
Record short-term deferred revenue at fair value	$	3,038
Remove historic short-term deferred revenue		(2,842)
Record long-term deferred revenue at fair value		870
Remove historic long-term deferred revenue		(1,036)


	Nine months ended September 30, 2020
	Cost of revenue		Research and development		General and administrative
Depreciation of property and equipment acquired	$	—	$	827	$	—
Reversal of Pfenex historical depreciation	(62)		(904)		(111)
Pro forma adjustment	$	(62)	$	(77)	$	(111)


	Year ended December 31, 2019
	Cost of revenue		Research and development		General and administrative
Depreciation of property and equipment acquired	$	—	$	993	$	—
Reversal of Pfenex historical depreciation	(194)		(897)		(203)
Pro forma adjustment	$	(194)	$	96	$	(203)