Ligand(US:LGND)2023-02-28 21:03Revenue Performance - Total revenue from continuing operations decreased by $45.3 million, or 19%, to $196.2 million in 2022 compared to $241.5 million in 2021, primarily due to a $52.8 million decrease in sales of COVID-related Captisol[240]. - Royalty revenue increased by $23.6 million, or 48%, to $72.5 million in 2022 compared to $48.9 million in 2021, driven by increased sales of drugs using the Pelican platform[241]. - Contract revenue decreased by $9.1 million, or 32%, in 2022 compared to 2021, primarily due to the timing of partner milestone events[241]. - Core Captisol sales were $16.4 million in 2022, down from $23.4 million in 2021, attributed to the timing of customer orders[241]. - The effective royalty rate for Kyprolis was 2.4% in both 2022 and 2021, with total sales of $1.3 billion in 2022 generating $30.1 million in royalty revenue[245]. - Total revenue from continuing operations in 2021 was $241.5 million, an increase of $78.0 million, or 48%, compared to $163.6 million in 2020, primarily due to increased demand for COVID-related Captisol[243]. Operating Costs and Expenses - Total operating costs and expenses from continuing operations increased by $55.5 million, or 40%, to $193.2 million in 2022 compared to $137.7 million in 2021[248]. - General and administrative expenses increased by $23.3 million in 2022 compared to 2021, primarily due to increases in stock compensation and headcount-related expenses[250]. Investment Performance - Gain from short-term investments was $28.5 million in 2022, a significant increase compared to a loss of $5.3 million in 2021, driven by changes in the fair value of ownership in Viking common stock[258]. - Interest income increased by 131% to $2.0 million in 2022, primarily due to significant interest rate increases by the Federal Reserve[258]. - As of December 31, 2022, the company's investment portfolio included $166.9 million in available-for-sale securities, with $63.1 million invested in Viking common stock[302]. Net Income and Tax Rate - The net income from continuing operations for FY 2022 was $(5,219) thousand, a decline of $81,572 thousand or 107% compared to $76,353 thousand in FY 2021[265]. - The effective tax rate for FY 2022 was 114%, a significant increase from (6)% in FY 2021, influenced by discrete tax expenses and limitations on stock-based compensation deductions[265]. Cash and Financing Activities - As of December 31, 2022, the company had approximately $211.9 million in cash, cash equivalents, and short-term investments, a decrease of $129.2 million from the previous year[268]. - The company repurchased $266.4 million in principal of the 2023 Notes for $261.4 million in cash during 2022, leaving $76.9 million in principal amount outstanding as of December 31, 2022[271]. - The company entered into an At-The-Market Equity Offering Sales Agreement to sell shares of common stock with an aggregate offering price of up to $100.0 million, but had not issued any shares as of December 31, 2022[270]. Research and Development - The company recognized revenue from R&D services over time, measuring progress based on input methods, which requires significant estimates and judgments[284]. Goodwill and Intangible Assets - The company performed goodwill impairment testing using quantitative analyses for the OmniAb business and Ligand core business due to a reorganization, reallocating goodwill based on relative fair value[289]. - The company evaluates the recoverability of intangible assets by comparing carrying amounts to undiscounted cash flows, recording impairment losses if necessary[291]. Foreign Currency Risk - The company is exposed to foreign currency risk, particularly from transactions in currencies other than the U.S. dollar, affecting royalty revenues[303]. - The company does not currently hedge against foreign currency fluctuations, and a 10% change in exchange rates would not materially impact financial results[304]. Investment Policy and Share-Based Compensation - The company’s investment policy focuses on capital preservation and liquidity, typically investing in highly rated securities[305]. - The company recognizes share-based compensation expense based on the fair value of awards, which is reassessed at each reporting period[297]. Deferred Tax Assets - The company assesses deferred tax assets regularly, establishing a valuation allowance when future realization is deemed unlikely[295].