Investment Transactions	9 Months Ended
Sep. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]
Investment Transactions	Investment Transactions Sydnexis: Q3 2026 On September 21, 2026, we entered into a royalty purchase agreement with Sydnexis Product Sub 1, LLC (“Sydnexis”) pursuant to which we acquired 100% of certain royalty and milestone payment rights related to SYD-101 under an existing license and commercialization agreement between Sydnexis and Santen SA (“Santen”) for $23.0 million. The acquired rights include a tiered low-double-digit to high-teens royalty on annual net sales, certain future regulatory and commercial milestones payable by Santen. We accounted for the acquired royalty and milestone payment rights as a financial royalty asset under ASC 310, Receivables. The financial royalty asset was initially recognized based on the consideration allocated to it and is initially accounted for on a non-accrual basis until management is able to reliably estimate the future cash flows. The financial royalty asset is evaluated for expected credit losses under ASC 326, Financial Instruments – Credit Losses. AvenCell Therapeutics: Q3 2026 On September 17, 2026, we entered into a Series C Preferred Stock Purchase Agreement with AvenCell Therapeutics, Inc. (“AvenCell”) pursuant to which we purchased shares of AvenCell Series C-1 preferred stock for $3.0 million and committed to purchase additional shares for up to $3.0 million. On the same date, we entered into a Purchase and Sale Agreement with AvenCell (the “AvenCell Purchase and Sale Agreement”) pursuant to which we paid $6.0 million in exchange for a mid single-digit to low double-digit royalty on worldwide annual net sales of all current and future AvenCell pipeline assets (the “AvenCell Royalty Rights”), and assumed an obligation to pay additional $10.0 million upon a certain predetermined clinical milestone. In connection with the transaction, we also received a warrant to purchase shares of AvenCell Series C-2 preferred stock (the “AvenCell Warrant”). In addition to it, we have options to acquire incremental royalty rights for an additional up to $25.0 million investment, part of which is subject to AvenCell agreement. The Series C Preferred Stock Purchase Agreement and the AvenCell Purchase and Sale Agreement were negotiated concurrently with the same counterparty. Because other investors participated in the Series C-1 financing at the same price per share, we accounted for the two agreements separately and concluded that the consideration for each reflects its fair value. We accounted for each transaction as an asset acquisition. The total cost of both transactions, including $0.7 million of capitalized transaction costs, was $9.7 million, of which $3.2 million was attributed to the Series C-1 preferred stock and $6.5 million to AvenCell Purchase and Sale Agreement. The latter was allocated based on relative fair values as follows: $3.3 million to AvenCell Royalty Rights, $2.6 million to AvenCell embedded derivative and $0.6 million to AvenCell Warrant. We account for $10.0 million contingent consideration in accordance with ASC 450, Contingencies, and will recognize a liability when the contingency is resolved, and the liability becomes payable. No contingent consideration was recognized as of September 30, 2026. Under ASC 323, Investments – Equity Method and Joint Ventures, we concluded that the Series C-1 preferred stock is in-substance common stock and that we have significant influence over AvenCell through our right to designate a member of its board of directors. Accordingly, the Series C-1 preferred stock is accounted for under the equity method in accordance with ASC 323, and is presented within equity method investments in our condensed consolidated balance sheet. We recognize our share of AvenCell’s results within other non-operating income (expense), net. As of September 30, 2026, we owned approximately 10.7% of AvenCell’s outstanding voting shares, and the carrying amount of our equity method investment in AvenCell was $3.2 million. The AvenCell Royalty Rights are accounted for as a financial royalty asset under ASC 310, Receivables, on a non-accrual basis because future cash flows cannot be reliably estimated, and are evaluated for expected credit losses under ASC 326. They, together with the amount allocated to the related funding options, are presented within financial royalty assets, net. No research and development expense was recognized because we concluded that no substantive and genuine transfer of financial risk to us occurred under ASC 730-20. The AvenCell Purchase and Sale Agreement contains a contingent cash payment feature that is an embedded derivative bifurcated from the agreement under ASC 815, Derivatives and Hedging. It is presented within noncurrent derivative assets in our condensed consolidated balance sheet and is subsequently remeasured to fair value at each reporting date, with changes in fair value recognized within other non-operating income (expense), net. The fair value was estimated using a discounted cash flow approach. The significant unobservable assumptions as of September 30, 2026 were the probability and timing of the contingent event that triggers the payment. The embedded derivative is classified within Level 3 of the fair value hierarchy. The AvenCell Warrant is accounted for under ASC 321, Investments – Equity Securities, using the measurement alternative, and is presented within other investments in our condensed consolidated balance sheet. We concluded that AvenCell is a variable interest entity and that we are not its primary beneficiary because we do not have the power to direct the activities that most significantly affect AvenCell’s economic performance. Accordingly, we do not consolidate AvenCell. As of September 30, 2026, our maximum exposure to loss associated with our involvement in AvenCell was approximately $22.7 million, consisting of the aggregate carrying amount of our interests in AvenCell of $9.7 million, a potential additional payment of $10.0 million upon achievement of a specified clinical milestone, and up to $3.0 million of additional committed equity funding. Primrose Bio Transaction: Q3 2026 In September 2023, we completed the separation of our Pelican Expression Technology business and its merger with Primordial Genetics, Inc., which formed Primrose Bio, Inc. (“Primrose Bio”). In connection with the transaction, we received equity interests and rights to 25% of PeliCRM197 sales revenue above $3.0 million, 35% of PeliCRM197 licensing revenue, and 50% of potential development and certain commercial milestone payments under certain contracts previously entered into by Primordial Genetics. Primrose Bio equity financings during 2024 resulted in adjustments to the carrying value of our investments. On September 16, 2026, we invested $3.4 million to acquire Primrose Bio Series C preferred stock as part of Primrose Bio’s Series C financing. The Series C preferred stock has a liquidation preference senior to Primrose Bio’s Series B and Series A preferred stock. In connection with the financing, we also invested $3.5 million to increase our share in PeliCRM197 licensing revenue from Merck’s pneumococcal vaccines from 35% to 50%. The Series C preferred stock is accounted for under ASC 321, Investments – Equity Securities, using the measurement alternative and is presented within other investments in our condensed consolidated balance sheet. The incremental PeliCRM197 rights were recognized as a financial royalty asset under ASC 310, Receivables. The financial royalty asset is initially accounted for on a non-accrual basis until management is able to reliably estimate the future cash flows. We evaluate the financial royalty asset for expected credit losses under ASC 326, Financial Instruments – Credit Losses. The PeliCRM197 rights obtained with the 2023 transaction continue to be accounted for as contingent consideration and are recognized as the applicable contingencies are resolved. As of September 30, 2026, our Primrose Bio equity securities had a carrying value of $10.1 million. Orchestra Transactions: Q3 2025 and Q2 2026 On July 31, 2025, we entered into a definitive agreement to invest up to $40.0 million to support Orchestra BioMed’s late-stage, partnered cardiology programs. The initial funding consisted of a $20.0 million cash payment at closing and an additional $5.0 million to purchase shares of Orchestra’s common stock in a private placement at $2.75 per share. In exchange, we received a low double-digit royalty on the first $100.0 million of Orchestra’s annual revenues related to the AVIM therapy and Virtue SAB programs across all indications. We will also earn a mid-single-digit royalty on annual revenues exceeding $100.0 million from AVIM therapy in the uncontrolled hypertension and increased cardiovascular risk indications, as well as from Virtue SAB in coronary artery disease indications. We also received warrants to purchase shares of Orchestra’s common stock (the “Orchestra Warrant”). The transaction closed on August 4, 2025. The $5.0 million equity private placement is included in our short-term investments and is subsequently measured at fair value at each reporting period. Of the remaining $20.0 million, $2.3 million was allocated to the Orchestra Warrant, which is accounted for as a derivative asset, and $17.8 million was allocated to the research and development funding arrangement and recognized in research and development expense in the third quarter of 2025. The allocated amounts include the related transaction costs. On May 1, 2026, we funded the second tranche of the Royalty Purchase Agreement by investing an additional $15.0 million. Pursuant to the terms of the original agreement, the second tranche entitled us to an additional 15/35ths portion of the royalty rights and the vesting of an additional portion of the Orchestra Warrant. Management concluded that the second tranche represents a continuation of the original arrangement. Of the $15.0 million second tranche payment, $2.7 million was allocated to the additional Orchestra Warrant and recognized as a derivative asset. The remaining $12.3 million was allocated to the research and development funding arrangement and recognized as research and development expense during the three months ended June 30, 2026. The Orchestra Warrant is presented within noncurrent derivative assets in our condensed consolidated balance sheets. The warrant was initially recognized at fair value on August 4, 2025, upon closing of the transaction, and additional warrants were recognized at fair value on May 1, 2026 upon funding of the second tranche. The warrants are subsequently remeasured to fair value at each reporting date. The fair value of the Orchestra Warrant was estimated using the Black-Scholes option-pricing model. The significant assumptions used in the valuation as of September 30, 2026, May 1, 2026 and December 31, 2025 were as follows: expected term of 8.8 years, 9.3 years and 9.6 years, volatility of 70%, 71% and 72%, risk-free rate of 5.3%, 4.4% and 4.2%, and underlying stock price of $6.22, $3.97 and $4.15, respectively. We accounted for the acquired royalty rights as a research and development funding arrangement under ASC 730-20, Research and Development Arrangements, because (i) Orchestra is contractually required to use our funding for the execution of the pivotal clinical study for AVIM therapy, and (ii) repayment of our funding is contingent upon the research and development activities resulting in future economic benefit. As we do not control or actively participate in the ongoing research and development activities, the funding was expensed in the period incurred. Zerion Pharma Transaction: Q2 2026 On June 22, 2026, we invested $3.3 million in Zerion Pharma A/S (“Zerion”), consisting of $2.3 million for royalty rights and $1.0 million for ordinary shares of Zerion (the “Zerion Transaction”). In connection with the Zerion Transaction, a convertible bridge loan previously issued to Zerion in April 2026 converted into ordinary shares of Zerion upon the closing of the Zerion Transaction, resulting in the issuance of an additional $0.3 million of ordinary shares of Zerion to us. Under the royalty agreement, we are entitled to receive royalties equal to 11% of annual revenue up to $15.0 million and 1% of annual revenue above $15.0 million, subject to a minimum annual royalty payment of $0.3 million beginning in 2027. We identified two separate units of account in the Zerion Transaction consisting of royalty rights and an equity investment. The royalty rights, including allocated transaction costs, were recognized as a financial royalty asset under ASC 310, Receivables, and are accounted for using the non-accrual method as management is unable to reliably estimate future cash flows. The equity investment was recorded within other investments and is subsequently accounted for under ASC 321, Investments – Equity Securities, using the measurement alternative. LeonaBio (formerly known as Athira Pharma) Transaction: Q4 2025 On December 18, 2025, we invested $1.0 million to acquire common stock and Series A warrants to acquire common stock (“Series A Warrant”) and Series B warrants to acquire common stock (“Series B Warrant”) and together with Series A Warrant the “LeonaBio Warrants”) of LeonaBio. The common stock is accounted for as equity securities under ASC 321, Investments—Equity Securities, and is measured at fair value each reporting period, because we do not have significant influence over the investee and LeonaBio is publicly traded. The LeonaBio Warrants are accounted for as derivative assets under ASC 815, Derivatives and Hedging. These warrants were initially recognized at fair value on the transaction date and are subsequently remeasured to fair value each reporting period. The Series A Warrant and Series B Warrant are classified as current derivative assets and are presented within other current assets in our condensed consolidated balance sheet as of September 30, 2026. Of the $1.0 million total consideration, $0.7 million was allocated to the common stock, $0.1 million to the Series A Warrant, and $0.2 million to the Series B Warrant. The fair value of the LeonaBio Series A Warrants is determined using a Black-Scholes model with the following assumptions as of September 30, 2026 and December 31, 2025, respectively: expected term of 0.1 years and 0.9 years, volatility of 213% and 80%, risk-free rate of 4.0% and 3.5%, and LeonaBio stock price of $3.57 and $7.57. The fair value of the LeonaBio Series B Warrants is determined using a Black-Scholes model with the following assumptions as of September 30, 2026 and December 31, 2025, respectively: expected term of 0.8 years and 1.6 years, volatility of 106% and 83%, risk-free rate of 4.5% and 3.5%, and LeonaBio common stock price of $3.57 and $7.57. Pelthos Convertible Notes Transaction: Q4 2025 On November 6, 2025, we and certain other investors, for an aggregate purchase price of $18.0 million (of which $9.0 million was paid by us), obtained on a proportional basis: (a) Pelthos private convertible notes (“Pelthos Convertible Notes”), (b) low single-digit royalty rights on U.S. net sales of Pelthos’ Xepi (the “Xepi Rights”), and (c) milestone rights, and low single-digit royalty rights on net sales of Zelsuvmi in Japan by Sato Pharmaceuticals Co, Ltd., if Zelsuvmi is approved in Japan (the “Sato Rights”). The Pelthos Convertible Notes have a principal amount of $18.0 million (across all investors) and are a secured obligation of Pelthos and bear interest at a rate of 8.5% per annum, payable quarterly in arrears or capitalized and payable at maturity (at Pelthos’ election). The Pelthos Convertible Notes will mature on November 6, 2027, unless earlier repurchased, redeemed, or converted into shares of Pelthos common stock in accordance with their terms at a conversion price of $29.73. Our ownership of Pelthos’ common stock is capped at 49.9%. We identified four units of account related to this transaction, (1) the host debt, (2) the embedded conversion option, (3) the Xepi Rights, and (4) the Sato Rights. Out of the $9.0 million Pelthos convertible notes transaction price and the $0.3 million of transaction costs recognized as of the transaction closing date, $4.8 million was allocated to the embedded conversion option at its fair value as of the transaction date, and the remaining amount was allocated among the host debt ($3.8 million), the Xepi Rights ($0.5 million), and the Sato Rights ($0.2 million) based on their relative fair values. The bifurcated embedded conversion option is accounted for as a derivative asset under ASC 815, Derivatives and Hedging, and was recognized at fair value as of the transaction date and will be remeasured at fair value at each subsequent reporting period. The fair value of the embedded conversion option is determined using a Black-Scholes model with the following assumptions as of September 30, 2026 and December 31, 2025, respectively: expected term of 1.1 years and 1.9 years, volatility of 71% and 60%, risk-free rate of 4.4% and 3.5%, and Pelthos’ stock price of $21.01 and $31.00. We recognized mark-to-market losses of $1.8 million and $1.9 million, respectively, for the three and nine months ended September 30, 2026. We account for the convertible note as a receivable under ASC 310, Receivables, and include it within other investments in our condensed consolidated balance sheets. During the three months ended September 30, 2026, we recognized $0.2 million of coupon interest earned (which was capitalized into the principal amount at Pelthos’ election), and $0.5 million of debt discount amortization. During the nine months ended September 30, 2026, we recognized $0.6 million of coupon interest earned (which was capitalized into the principal amount at Pelthos’ election), and $1.3 million of debt discount amortization. We account for the Xepi Rights and Sato Rights as financial royalty assets (loan receivables) under ASC 310, Receivables, and they are currently accounted for under the non-accrual method as management cannot reliably estimate future cash flows from these programs. Arecor Transaction: Q3 2025 On September 24, 2025, we invested $7.0 million to acquire certain economic rights from Arecor Limited (“Arecor”), with an additional $1.0 million of deferred consideration payable in two equal installments at the six- and twelve-month anniversaries of the closing date. We accounted for the transaction as an asset acquisition. In connection with the transaction, we acquired economic rights in two partnered programs: 1) a single-digit royalty on global net sales of AT220, an Arestat®-enhanced biosimilar marketed by a global pharmaceutical company; and 2) potential annual technology access fees and milestone payments related to AT292 (efdoralprin alfa/SAR447537/INBRX-101), a partnered program with Sanofi SA (“Sanofi”). We account for the rights to future royalties as financial royalty assets (loan receivables) under ASC 310, Receivables. The AT220 financial royalty asset is recognized under the accrual method, because the product is commercially available. In addition, we have the right to collect royalties earned but not yet received by Arecor, which are recorded as a receivable within other current assets in our condensed consolidated balance sheets. The AT292 financial royalty asset is accounted for on non‑accrual status, as the program remains in development and management cannot reliably estimate future cash flows. In addition to the economic rights, we received warrants to purchase 1,002,739 ordinary shares of Arecor Therapeutics Plc, exercisable over a ten-year period (“Arecor Warrant”). We account for the Arecor Warrant as a derivative asset under ASC 815, Derivatives and Hedging, recognizing it at fair value as of the transaction date and remeasuring it at fair value at each subsequent reporting period. The Arecor Warrant is presented within noncurrent derivative assets line in our condensed consolidated balance sheets. The fair value of the Arecor Warrant is determined using a Black-Scholes model with the following assumptions as of September 30, 2026 and December 31, 2025, respectively: expected term of 9.0 years and 9.7 years, volatility of 38% and 33%, risk-free rate of 6.2% and 4.6%, and Arecor’s stock price of $0.73 and $0.81. Out of the $7.0 million Arecor transaction price and the $1.0 million of deferred consideration recognized as of the transaction closing date, $0.5 million was assigned to the Arecor Warrant; $4.8 million and $1.9 million were assigned to the AT220 and AT292 financial royalty assets, respectively; and $0.8 million was assigned to the AT220 receivable. We are also obligated to pay up to $3.0 million in contingent consideration tied to commercial milestones in the AT292 partnered program. We account for this contingent consideration in accordance with ASC 450, Contingencies, and will recognize a liability when the contingency is resolved, and the liability becomes payable. No contingent consideration was recognized as of September 30, 2026 or December 31, 2025. Castle Creek Investment: Q1 2025 On February 24, 2025, we entered into a Purchase and Sale Agreement (the “Castle Creek Investment”) with Castle Creek Biosciences, Inc. and Castle Creek Biosciences, LLC (collectively, “Castle Creek”), together with a syndicate of co-investors for which we served as representative (collectively, including us, the “Purchasers”). The Castle Creek Investment supports Castle Creek’s Phase 3 clinical study of FCX-007 (dabocemagene autoficel) (“D-Fi”), and autologous human fibroblast, cell-based gene therapy genetically modified to express COL7. D-Fi is Castle Creek’s lead candidate for the treatment of dystrophic epidermolysis bullosa (“DEB”). Pursuant to the Castle Creek Investment, we and the other Purchasers obtained, for an aggregate purchase price of $75.0 million ($50.0 million paid by us and $25.0 million paid collectively by the other Purchasers) on a proportional basis: (a) a high single digit royalty on worldwide sales of D-Fi; and (b) a warrant to purchase shares of Castle Creek’s Series D-1 Preferred Stock, exercisable until February 24, 2035 (“Castle Creek Warrant”). As part of the Castle Creek Investment, Castle Creek granted the Purchasers a security interest in certain assets related to the programs covered by the agreement, subject to customary exceptions. In connection with the Castle Creek Investment, on February 24, 2025, we acquired a portion of unsecured subordinated promissory notes (with an aggregate principal amount of $8.3 million payable upon FDA approval of D-Fi) from a Castle Creek related party for $1.8 million (“Milestone Buyout” and such asset, the “Castle Creek Milestone”). Management concluded that the individual prices of the Castle Creek Investment and the Milestone Buyout each reflect the fair value of the related assets acquired on a standalone basis. We accounted for the Milestone Buyout as a financial royalty asset. We identified two units of account within the Castle Creek Investment: (1) the Castle Creek Warrant, accounted for as a derivative asset; and (2) the D-Fi royalty rights, accounted for as a research and development funding arrangement under ASC 730-20, Research and Development Arrangements, because (a) Castle Creek is contractually required to use our funding to conduct the Phase 3 clinical study for D-Fi and (b) the repayment of our funding depends solely on the research and development results having future economic benefits. Out of the $50.1 million Castle Creek Investment transaction price, including transaction costs, $5.8 million was allocated to the Castle Creek Warrant (based on its estimated fair value as of the effective date), and the remaining $44.3 million was allocated to the D-Fi royalty rights, and recognized as research and development expense for the period, as we do not control or actively participate in the related research and development activities. The Castle Creek Warrant derivative is presented within noncurrent derivative assets in our condensed consolidated balance sheets. The Castle Creek Warrant was initially recorded at fair value as of February 24, 2025, and is remeasured at fair value at each subsequent reporting period. The fair value of the Castle Creek Warrant is determined using a Black-Scholes model with the following assumptions as of September 30, 2026 and December 31, 2025, respectively: expected term of 3.9 years and 2.7 years, volatility of 90% and 110%, and risk-free rate of 5.1% and 3.5%.

On September 21, 2026, we entered into a royalty purchase agreement with Sydnexis Product Sub 1, LLC (“Sydnexis”) pursuant to which we acquired 100% of certain royalty and milestone payment rights related to SYD-101 under an existing license and commercialization agreement between Sydnexis and Santen SA (“Santen”) for $23.0 million. The acquired rights include a tiered low-double-digit to high-teens royalty on annual net sales, certain future regulatory and commercial milestones payable by Santen.

We accounted for the acquired royalty and milestone payment rights as a financial royalty asset under ASC 310, Receivables. The financial royalty asset was initially recognized based on the consideration allocated to it and is initially accounted for on a non-accrual basis until management is able to reliably estimate the future cash flows. The financial royalty asset is evaluated for expected credit losses under ASC 326, Financial Instruments – Credit Losses.

On September 17, 2026, we entered into a Series C Preferred Stock Purchase Agreement with AvenCell Therapeutics, Inc. (“AvenCell”) pursuant to which we purchased shares of AvenCell Series C-1 preferred stock for $3.0 million and committed to purchase additional shares for up to $3.0 million.

On the same date, we entered into a Purchase and Sale Agreement with AvenCell (the “AvenCell Purchase and Sale Agreement”) pursuant to which we paid $6.0 million in exchange for a mid single-digit to low double-digit royalty on worldwide annual net sales of all current and future AvenCell pipeline assets (the “AvenCell Royalty Rights”), and assumed an obligation to pay additional $10.0 million upon a certain predetermined clinical milestone. In connection with the transaction, we also received a warrant to purchase shares of AvenCell Series C-2 preferred stock (the “AvenCell Warrant”). In addition to it, we have options to acquire incremental royalty rights for an additional up to $25.0 million investment, part of which is subject to AvenCell agreement.

The Series C Preferred Stock Purchase Agreement and the AvenCell Purchase and Sale Agreement were negotiated concurrently with the same counterparty. Because other investors participated in the Series C-1 financing at the same price per share, we accounted for the two agreements separately and concluded that the consideration for each reflects its fair value. We accounted for each transaction as an asset acquisition. The total cost of both transactions, including $0.7 million of capitalized transaction costs, was $9.7 million, of which $3.2 million was attributed to the Series C-1 preferred stock and $6.5 million to AvenCell Purchase and Sale Agreement. The latter was allocated based on relative fair values as follows: $3.3 million to AvenCell Royalty Rights, $2.6 million to AvenCell embedded derivative and $0.6 million to AvenCell Warrant.

We account for $10.0 million contingent consideration in accordance with ASC 450, Contingencies, and will recognize a liability when the contingency is resolved, and the liability becomes payable. No contingent consideration was recognized as of September 30, 2026.

Under ASC 323, Investments – Equity Method and Joint Ventures, we concluded that the Series C-1 preferred stock is in-substance common stock and that we have significant influence over AvenCell through our right to designate a member of its board of directors. Accordingly, the Series C-1 preferred stock is accounted for under the equity method in accordance with ASC 323, and is presented within equity method investments in our condensed consolidated balance sheet. We recognize our share of AvenCell’s results within other non-operating income (expense), net. As of September 30, 2026, we owned approximately 10.7% of AvenCell’s outstanding voting shares, and the carrying amount of our equity method investment in AvenCell was $3.2 million.

The AvenCell Royalty Rights are accounted for as a financial royalty asset under ASC 310, Receivables, on a non-accrual basis because future cash flows cannot be reliably estimated, and are evaluated for expected credit losses under ASC 326. They, together with the amount allocated to the related funding options, are presented within financial royalty assets, net. No research and development expense was recognized because we concluded that no substantive and genuine transfer of financial risk to us occurred under ASC 730-20.

The AvenCell Purchase and Sale Agreement contains a contingent cash payment feature that is an embedded derivative bifurcated from the agreement under ASC 815, Derivatives and Hedging. It is presented within noncurrent derivative assets in our condensed consolidated balance sheet and is subsequently remeasured to fair value at each reporting date, with changes in fair value recognized within other non-operating income (expense), net. The fair value was estimated using a discounted cash flow approach. The significant unobservable assumptions as of September 30, 2026 were the probability and timing of the contingent event that triggers the payment. The embedded derivative is classified within Level 3 of the fair value hierarchy.

We concluded that AvenCell is a variable interest entity and that we are not its primary beneficiary because we do not have the power to direct the activities that most significantly affect AvenCell’s economic performance. Accordingly, we do not consolidate AvenCell. As of September 30, 2026, our maximum exposure to loss associated with our involvement in AvenCell was approximately $22.7 million, consisting of the aggregate carrying amount of our interests in AvenCell of $9.7 million, a potential additional payment of $10.0 million upon achievement of a specified clinical milestone, and up to $3.0 million of additional committed equity funding.

In September 2023, we completed the separation of our Pelican Expression Technology business and its merger with Primordial Genetics, Inc., which formed Primrose Bio, Inc. (“Primrose Bio”). In connection with the transaction, we received equity interests and rights to 25% of PeliCRM197 sales revenue above $3.0 million, 35% of PeliCRM197 licensing revenue, and 50% of potential development and certain commercial milestone payments under certain contracts previously entered into

On September 16, 2026, we invested $3.4 million to acquire Primrose Bio Series C preferred stock as part of Primrose Bio’s Series C financing. The Series C preferred stock has a liquidation preference senior to Primrose Bio’s Series B and Series A preferred stock. In connection with the financing, we also invested $3.5 million to increase our share in PeliCRM197 licensing revenue from Merck’s pneumococcal vaccines from 35% to 50%.

The Series C preferred stock is accounted for under ASC 321, Investments – Equity Securities, using the measurement alternative and is presented within other investments in our condensed consolidated balance sheet. The incremental PeliCRM197 rights were recognized as a financial royalty asset under ASC 310, Receivables. The financial royalty asset is initially accounted for on a non-accrual basis until management is able to reliably estimate the future cash flows. We evaluate the financial royalty asset for expected credit losses under ASC 326, Financial Instruments – Credit Losses. The PeliCRM197 rights obtained with the 2023 transaction continue to be accounted for as contingent consideration and are recognized as the applicable contingencies are resolved.

On July 31, 2025, we entered into a definitive agreement to invest up to $40.0 million to support Orchestra BioMed’s late-stage, partnered cardiology programs. The initial funding consisted of a $20.0 million cash payment at closing and an additional $5.0 million to purchase shares of Orchestra’s common stock in a private placement at $2.75 per share. In exchange, we received a low double-digit royalty on the first $100.0 million of Orchestra’s annual revenues related to the AVIM therapy and Virtue SAB programs across all indications. We will also earn a mid-single-digit royalty on annual revenues exceeding $100.0 million from AVIM therapy in the uncontrolled hypertension and increased cardiovascular risk indications, as well as from Virtue SAB in coronary artery disease indications. We also received warrants to purchase shares of Orchestra’s common stock (the “Orchestra Warrant”). The transaction closed on August 4, 2025.

The $5.0 million equity private placement is included in our short-term investments and is subsequently measured at fair value at each reporting period. Of the remaining $20.0 million, $2.3 million was allocated to the Orchestra Warrant, which is accounted for as a derivative asset, and $17.8 million was allocated to the research and development funding arrangement and recognized in research and development expense in the third quarter of 2025. The allocated amounts include the related transaction costs.

On May 1, 2026, we funded the second tranche of the Royalty Purchase Agreement by investing an additional $15.0 million. Pursuant to the terms of the original agreement, the second tranche entitled us to an additional 15/35ths portion of the royalty rights and the vesting of an additional portion of the Orchestra Warrant. Management concluded that the second tranche represents a continuation of the original arrangement. Of the $15.0 million second tranche payment, $2.7 million was allocated to the additional Orchestra Warrant and recognized as a derivative asset. The remaining $12.3 million was allocated to the research and development funding arrangement and recognized as research and development expense during the three months ended June 30, 2026.

The Orchestra Warrant is presented within noncurrent derivative assets in our condensed consolidated balance sheets. The warrant was initially recognized at fair value on August 4, 2025, upon closing of the transaction, and additional warrants were recognized at fair value on May 1, 2026 upon funding of the second tranche. The warrants are subsequently remeasured to fair value at each reporting date. The fair value of the Orchestra Warrant was estimated using the Black-Scholes option-pricing model. The significant assumptions used in the valuation as of September 30, 2026, May 1, 2026 and December 31, 2025 were as follows: expected term of 8.8 years, 9.3 years and 9.6 years, volatility of 70%, 71% and 72%, risk-free rate of 5.3%, 4.4% and 4.2%, and underlying stock price of $6.22, $3.97 and $4.15, respectively.

We accounted for the acquired royalty rights as a research and development funding arrangement under ASC 730-20, Research and Development Arrangements, because (i) Orchestra is contractually required to use our funding for the execution of the pivotal clinical study for AVIM therapy, and (ii) repayment of our funding is contingent upon the research and development activities resulting in future economic benefit. As we do not control or actively participate in the ongoing research and development activities, the funding was expensed in the period incurred.

On June 22, 2026, we invested $3.3 million in Zerion Pharma A/S (“Zerion”), consisting of $2.3 million for royalty rights and $1.0 million for ordinary shares of Zerion (the “Zerion Transaction”). In connection with the Zerion Transaction, a convertible bridge loan previously issued to Zerion in April 2026 converted into ordinary shares of Zerion upon the closing of the Zerion Transaction, resulting in the issuance of an additional $0.3 million of ordinary shares of Zerion to us. Under the

We identified two separate units of account in the Zerion Transaction consisting of royalty rights and an equity investment. The royalty rights, including allocated transaction costs, were recognized as a financial royalty asset under ASC 310, Receivables, and are accounted for using the non-accrual method as management is unable to reliably estimate future cash flows. The equity investment was recorded within other investments and is subsequently accounted for under ASC 321, Investments – Equity Securities, using the measurement alternative.

On December 18, 2025, we invested $1.0 million to acquire common stock and Series A warrants to acquire common stock (“Series A Warrant”) and Series B warrants to acquire common stock (“Series B Warrant”) and together with Series A Warrant the “LeonaBio Warrants”) of LeonaBio. The common stock is accounted for as equity securities under ASC 321, Investments—Equity Securities, and is measured at fair value each reporting period, because we do not have significant influence over the investee and LeonaBio is publicly traded. The LeonaBio Warrants are accounted for as derivative assets under ASC 815, Derivatives and Hedging. These warrants were initially recognized at fair value on the transaction date and are subsequently remeasured to fair value each reporting period. The Series A Warrant and Series B Warrant are classified as current derivative assets and are presented within other current assets in our condensed consolidated balance sheet as of September 30, 2026. Of the $1.0 million total consideration, $0.7 million was allocated to the common stock, $0.1 million to the Series A Warrant, and $0.2 million to the Series B Warrant.

The fair value of the LeonaBio Series A Warrants is determined using a Black-Scholes model with the following assumptions as of September 30, 2026 and December 31, 2025, respectively: expected term of 0.1 years and 0.9 years, volatility of 213% and 80%, risk-free rate of 4.0% and 3.5%, and LeonaBio stock price of $3.57 and $7.57. The fair value of the LeonaBio Series B Warrants is determined using a Black-Scholes model with the following assumptions as of September 30, 2026 and December 31, 2025, respectively: expected term of 0.8 years and 1.6 years, volatility of 106% and 83%, risk-free rate of 4.5% and 3.5%, and LeonaBio common stock price of $3.57 and $7.57.

On November 6, 2025, we and certain other investors, for an aggregate purchase price of $18.0 million (of which $9.0 million was paid by us), obtained on a proportional basis: (a) Pelthos private convertible notes (“Pelthos Convertible Notes”), (b) low single-digit royalty rights on U.S. net sales of Pelthos’ Xepi (the “Xepi Rights”), and (c) milestone rights, and low single-digit royalty rights on net sales of Zelsuvmi in Japan by Sato Pharmaceuticals Co, Ltd., if Zelsuvmi is approved in Japan (the “Sato Rights”).

The Pelthos Convertible Notes have a principal amount of $18.0 million (across all investors) and are a secured obligation of Pelthos and bear interest at a rate of 8.5% per annum, payable quarterly in arrears or capitalized and payable at maturity (at Pelthos’ election). The Pelthos Convertible Notes will mature on November 6, 2027, unless earlier repurchased, redeemed, or converted into shares of Pelthos common stock in accordance with their terms at a conversion price of $29.73. Our ownership of Pelthos’ common stock is capped at 49.9%.

We identified four units of account related to this transaction, (1) the host debt, (2) the embedded conversion option, (3) the Xepi Rights, and (4) the Sato Rights. Out of the $9.0 million Pelthos convertible notes transaction price and the $0.3 million of transaction costs recognized as of the transaction closing date, $4.8 million was allocated to the embedded conversion option at its fair value as of the transaction date, and the remaining amount was allocated among the host debt ($3.8 million), the Xepi Rights ($0.5 million), and the Sato Rights ($0.2 million) based on their relative fair values.

The bifurcated embedded conversion option is accounted for as a derivative asset under ASC 815, Derivatives and Hedging, and was recognized at fair value as of the transaction date and will be remeasured at fair value at each subsequent reporting period. The fair value of the embedded conversion option is determined using a Black-Scholes model with the following assumptions as of September 30, 2026 and December 31, 2025, respectively: expected term of 1.1 years and 1.9 years, volatility of 71% and 60%, risk-free rate of 4.4% and 3.5%, and Pelthos’ stock price of $21.01 and $31.00. We recognized mark-to-market losses of $1.8 million and $1.9 million, respectively, for the three and nine months ended September 30, 2026.

We account for the convertible note as a receivable under ASC 310, Receivables, and include it within other investments in our condensed consolidated balance sheets. During the three months ended September 30, 2026, we recognized $0.2 million of coupon interest earned (which was capitalized into the principal amount at Pelthos’ election), and $0.5 million of debt discount amortization. During the nine months ended September 30, 2026, we recognized $0.6 million of coupon interest earned (which was capitalized into the principal amount at Pelthos’ election), and $1.3 million of debt discount amortization. We account for the Xepi Rights and Sato Rights as financial royalty assets (loan receivables) under ASC 310, Receivables, and

On September 24, 2025, we invested $7.0 million to acquire certain economic rights from Arecor Limited (“Arecor”), with an additional $1.0 million of deferred consideration payable in two equal installments at the six- and twelve-month anniversaries of the closing date. We accounted for the transaction as an asset acquisition.

In connection with the transaction, we acquired economic rights in two partnered programs: 1) a single-digit royalty on global net sales of AT220, an Arestat®-enhanced biosimilar marketed by a global pharmaceutical company; and 2) potential annual technology access fees and milestone payments related to AT292 (efdoralprin alfa/SAR447537/INBRX-101), a partnered program with Sanofi SA (“Sanofi”).

We account for the rights to future royalties as financial royalty assets (loan receivables) under ASC 310, Receivables. The AT220 financial royalty asset is recognized under the accrual method, because the product is commercially available. In addition, we have the right to collect royalties earned but not yet received by Arecor, which are recorded as a receivable within other current assets in our condensed consolidated balance sheets. The AT292 financial royalty asset is accounted for on non‑accrual status, as the program remains in development and management cannot reliably estimate future cash flows.

In addition to the economic rights, we received warrants to purchase 1,002,739 ordinary shares of Arecor Therapeutics Plc, exercisable over a ten-year period (“Arecor Warrant”). We account for the Arecor Warrant as a derivative asset under ASC 815, Derivatives and Hedging, recognizing it at fair value as of the transaction date and remeasuring it at fair value at each subsequent reporting period. The Arecor Warrant is presented within noncurrent derivative assets line in our condensed consolidated balance sheets. The fair value of the Arecor Warrant is determined using a Black-Scholes model with the following assumptions as of September 30, 2026 and December 31, 2025, respectively: expected term of 9.0 years and 9.7 years, volatility of 38% and 33%, risk-free rate of 6.2% and 4.6%, and Arecor’s stock price of $0.73 and $0.81.

Out of the $7.0 million Arecor transaction price and the $1.0 million of deferred consideration recognized as of the transaction closing date, $0.5 million was assigned to the Arecor Warrant; $4.8 million and $1.9 million were assigned to the AT220 and AT292 financial royalty assets, respectively; and $0.8 million was assigned to the AT220 receivable.

We are also obligated to pay up to $3.0 million in contingent consideration tied to commercial milestones in the AT292 partnered program. We account for this contingent consideration in accordance with ASC 450, Contingencies, and will recognize a liability when the contingency is resolved, and the liability becomes payable. No contingent consideration was recognized as of September 30, 2026 or December 31, 2025.

On February 24, 2025, we entered into a Purchase and Sale Agreement (the “Castle Creek Investment”) with Castle Creek Biosciences, Inc. and Castle Creek Biosciences, LLC (collectively, “Castle Creek”), together with a syndicate of co-investors for which we served as representative (collectively, including us, the “Purchasers”). The Castle Creek Investment supports Castle Creek’s Phase 3 clinical study of FCX-007 (dabocemagene autoficel) (“D-Fi”), and autologous human fibroblast, cell-based gene therapy genetically modified to express COL7. D-Fi is Castle Creek’s lead candidate for the treatment of dystrophic epidermolysis bullosa (“DEB”).

Pursuant to the Castle Creek Investment, we and the other Purchasers obtained, for an aggregate purchase price of $75.0 million ($50.0 million paid by us and $25.0 million paid collectively by the other Purchasers) on a proportional basis: (a) a high single digit royalty on worldwide sales of D-Fi; and (b) a warrant to purchase shares of Castle Creek’s Series D-1 Preferred Stock, exercisable until February 24, 2035 (“Castle Creek Warrant”). As part of the Castle Creek Investment, Castle Creek granted the Purchasers a security interest in certain assets related to the programs covered by the agreement, subject to customary exceptions.

In connection with the Castle Creek Investment, on February 24, 2025, we acquired a portion of unsecured subordinated promissory notes (with an aggregate principal amount of $8.3 million payable upon FDA approval of D-Fi) from a Castle Creek related party for $1.8 million (“Milestone Buyout” and such asset, the “Castle Creek Milestone”). Management concluded that the individual prices of the Castle Creek Investment and the Milestone Buyout each reflect the fair value of the related assets acquired on a standalone basis.

We accounted for the Milestone Buyout as a financial royalty asset. We identified two units of account within the Castle Creek Investment: (1) the Castle Creek Warrant, accounted for as a derivative asset; and (2) the D-Fi royalty rights, accounted for as a research and development funding arrangement under ASC 730-20, Research and Development Arrangements, because (a) Castle Creek is contractually required to use our funding to conduct the Phase 3 clinical study for D-Fi and (b) the repayment of our funding depends solely on the research and development results having future economic benefits. Out of the

$50.1 million Castle Creek Investment transaction price, including transaction costs, $5.8 million was allocated to the Castle Creek Warrant (based on its estimated fair value as of the effective date), and the remaining $44.3 million was allocated to the D-Fi royalty rights, and recognized as research and development expense for the period, as we do not control or actively participate in the related research and development activities.

The Castle Creek Warrant derivative is presented within noncurrent derivative assets in our condensed consolidated balance sheets. The Castle Creek Warrant was initially recorded at fair value as of February 24, 2025, and is remeasured at fair value at each subsequent reporting period. The fair value of the Castle Creek Warrant is determined using a Black-Scholes model with the following assumptions as of September 30, 2026 and December 31, 2025, respectively: expected term of 3.9 years and 2.7 years, volatility of 90% and 110%, and risk-free rate of 5.1% and 3.5%.