Quarterly report pursuant to Section 13 or 15(d)

Spin-off of OmniAb

Spin-off of OmniAb
6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
Spin-off of OmniAb Spin-off of OmniAb
On March 23, 2022, we entered into the Separation Agreement to separate our OmniAb Business and the Merger Agreement, pursuant to which APAC would combine with OmniAb, and acquire Ligand's OmniAb Business, in a Reverse Morris Trust transaction (collectively, the “Transactions”). In connection with the execution of the Merger Agreement, we made organizational changes to better align our organizational structure with our strategy and operations, and management reorganized the reportable segments to better reflect how the business is evaluated by the chief operating decision maker. Beginning in the first quarter of 2022, we operated the following two reportable segments: (1) OmniAb Business and (2) Ligand core business. The OmniAb Business segment was focused on enabling the discovery of therapeutic candidates for our partners by pairing antibody repertoires generated from our proprietary transgenic animals with our OmniAb Business platform screening tools. The Ligand core business segment is a biopharmaceutical business focused on developing or acquiring technologies that help pharmaceutical companies deliver and develop medicines.
After the closing date of the Transactions on November 1, 2022, the historical financial results of OmniAb have been reflected in our consolidated financial statements as discontinued operations under GAAP for all periods presented through the date of the Distribution. Pursuant to the Transaction Agreements, Ligand contributed to OmniAb cash and certain specific assets and liabilities constituting the OmniAb Business. Pursuant to the Distribution, Ligand distributed on a pro rata basis to its shareholders as of October 26, 2022 shares of the common stock of OmniAb representing 100% of Ligand’s interest in OmniAb. Immediately following the Distribution, Merger Sub merged with and into OmniAb, with OmniAb continuing as the surviving company in the Merger and as a wholly owned subsidiary of New OmniAb. The entire transaction was completed on November 1, 2022, and following the Merger, New OmniAb is an independent, publicly traded company whose common stock trades on NASDAQ under the symbol “OABI.” After the Distribution, we do not beneficially own any shares of common stock in OmniAb and no longer consolidate OmniAb into our financial results for periods ending after November 1, 2022.
Discontinued operations
In connection with the Merger, the Company determined its antibody discovery business qualified for discontinued operations accounting treatment in accordance with ASC 205-20. We recognized a $1.7 million tax provision adjustment related to deferred taxes during the six months ended June 30, 2023 that was attributable to the discontinued operations. There was no revenue or expenses attributable to the discontinued operations during the three months ended June 30, 2023. The following table summarizes revenue and expenses of the discontinued operations for the three and six months ended June 30, 2022 (in thousands):
Three months ended June 30, 2022 Six months ended June 30, 2022
Royalties $ 139  $ 402 
Contract revenue 7,154  16,068 
Total revenues 7,293  16,470 
Operating costs and expenses:
Amortization of intangibles 3,274  6,507 
Research and development 10,651  21,779 
General and administrative 2,499  8,754 
Total operating costs and expenses 16,424  37,040 
Loss from operations (9,131) (20,570)
Other income (expense):
Other income (expense), net (166) 277 
Total other income (expense), net (166) 277 
Loss before income tax (9,297) (20,293)
Income tax (expense) benefit (4,197) 4,343 
Net loss $ (13,494) $ (15,950)

The following table summarizes the significant non-cash items, capital expenditures of the discontinued operations, and financing activities that are included in the consolidated statements of cash flows for the six months ended June 30, 2022 (in thousands):
Six months ended
June 30, 2022
Operating activities:
Change in fair value of contingent consideration $ (277)
Depreciation and amortization 8,132 
Stock-based compensation expense 4,433 
Investing activities:
Purchase of property, plant and equipment (7,005)
Financing activities:
Payments to CVR Holders $ (1,416)
Supplemental cash flow disclosures:
Purchases of property, plant and equipment included in accounts payable and accrued expenses $ 3,601