LIGAND PHARMACEUTICALS INCLGND
LIGAND PHARMACEUTICALS INC Leases Disclosure
Leases
Finance Lease
In May 2020 and January 2021, we entered into an agreement and the first amendment with Hovione, our third-party manufacturer, to increase our manufacturing of Captisol, respectively. The agreements are considered to include an embedded finance lease under ASC 842, Leases, as it provides the Company the right to use the underlying equipment to exclusively manufacture Captisol. As of December 31, 2021, we had fully paid consideration of $69.1 million for prepaid inventory and capacity ramp-up fee. We assigned consideration in the agreements between lease and non-lease components using relative standalone prices. Since the inception of the agreements, we have assigned $50.2 million of the consideration paid to the non-lease component which is accounted for as prepaid inventory and being amortized to cost of Captisol based on the usage. The remaining balance of $18.9 million was recognized as a right of use asset.
We recorded a $9.8 million of impairment charge based on the fair value of the right of use asset which has been recognized in cost of Captisol in our consolidated statement of operations for the year ended December 31, 2022. As of December 31, 2022, the remaining right of use asset balance was $4.0 million which will be amortized straight-line over the remaining 6 years lease term. During the years ended December 31, 2025, 2024 and 2023, no impairment to this asset group was recorded as there were no indicators of impairment. As of December 31, 2025 and 2024, the remaining right of use asset balance is $2.0 million and $2.7 million, respectively.
Operating Lease
We lease certain administration office facilities, research and development facilities and equipment primarily under various operating leases. Our operating leases have remaining contractual terms up to seven years, some of which include options to extend the leases for up to five years. Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term, including upfront lease payments made and lease incentives, calculated using our incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised.
In addition to base rent, certain of our operating leases require variable payments, such as insurance and common area maintenance. These variable lease costs, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred. Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheets, and the expense for these short-term leases and for operating leases is recognized on a straight-line basis over the lease term.The depreciable life of lease assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
Operating and finance lease assets and liabilities (in thousands) are as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Lease assets | |||||||||||
| $ | 5,152 | $ | 6,907 | ||||||||
| 2,071 | 2,766 | ||||||||||
| Total lease assets | $ | 7,223 | $ | 9,673 | |||||||
| Lease liabilities | |||||||||||
| Current operating lease liabilities | $ | 1,095 | $ | 1,266 | |||||||
| 24 | 24 | ||||||||||
| 1,119 | 1,290 | ||||||||||
| Long-term operating lease liabilities | 4,204 | 5,815 | |||||||||
| 26 | 49 | ||||||||||
| Total lease liabilities | $ | 5,349 | $ | 7,154 | |||||||
Maturity of operating and finance lease liabilities as of December 31, 2025 are as follows (in thousands):
| Maturity Dates | Operating Leases | Finance Leases | |||||||||
| 2026 | $ | 1,142 | $ | 27 | |||||||
| 2027 | 1,214 | 18 | |||||||||
| 2028 | 1,124 | 9 | |||||||||
| 2029 | 886 | 2 | |||||||||
| 2030 | 836 | — | |||||||||
| Thereafter | 1,249 | — | |||||||||
| Total lease payments | 6,451 | 56 | |||||||||
| Less tenant improvement allowance | — | — | |||||||||
| Less imputed interest | (1,150) | (6) | |||||||||
| Present value of lease liabilities | $ | 5,301 | $ | 50 | |||||||
As of December 31, 2025, our operating leases had a weighted-average remaining lease term of 5.5 years and a weighted-average discount rate of 6.8%. As of December 31, 2024, our operating leases had a weighted-average remaining lease term of 5.8 years and a weighted-average discount rate of 7.5%. Cash paid for amounts included in the measurement of operating lease liabilities was $1.1 million, $1.3 million and $1.4 million, respectively, for the years ended December 31, 2025, 2024 and 2023. Operating lease expense was $0.9 million (net of sublease income of $0.2 million), $1.3 million (net of sublease income of $0.1 million), and $1.4 million (net of sublease income of $0.3 million) for the years ended December 31, 2025, 2024 and 2023, respectively.
As of December 31, 2025, our finance leases had a weighted-average remaining lease term of 2.4 years and a weighted-average discount rate of 6.6%. As of December 31, 2024, our finance leases had a weighted-average remaining lease term of 3.3 years and a weighted-average discount rate of 6.6%. We excluded the Hovione equipment lease in the calculation of weighted average remaining lease term and weighted average discount rate because the Hovione lease was fully paid off as of December 31, 2021. Cash paid for amounts included in the measurement of these finance lease liabilities was $0.02 million, $0.02 million and $0.05 million, respectively, for the years ended December 31, 2025, 2024 and 2023. Finance lease expense was $0.7 million, $0.5 million and $0.7 million, respectively, for the years ended December 31, 2025, 2024 and 2023.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 26, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.