Equity Investments

12 Months Ended

Dec. 31, 2021

Equity Method Investments And Joint Ventures [Abstract]

Equity Investments

(12) Equity Investments

(a) Nimbus

The Company provides collaboration services for Nimbus under the terms of a master services agreement executed on May 18, 2010, as amended. Collaboration agreements are separate from the transaction that resulted in equity ownership and related fees are paid in cash to the Company. As Nimbus is a limited liability company and the Company is not a passive investor due to its collaboration with Nimbus on a number of drug discovery targets, the Company's management determined that it has significant influence over the entity and therefore accounts for the investment as an equity method investment.

The Company has concluded that the carrying value of its equity investment in Nimbus should reflect its contractual rights to substantive profits. The Company further determined that the HLBV method for valuing contractual rights to substantive profits provides the best representation of its financial position in Nimbus.

The HLBV method is a balance sheet-oriented approach to equity method accounting. Under the HLBV method, the Company determines its share of earnings or losses by comparing its claim on the book value at the beginning and end of each reporting period. This claim is calculated as the amount that the Company would receive (or be obligated to pay) if the investee were to liquidate all of its assets at recorded amounts, determined as of the balance sheet date in accordance with U.S. GAAP, and distribute the resulting cash to creditors and investors in accordance with their respective priorities.

The carrying value of the Nimbus investment was zero as of December 31, 2021 and December 31, 2020. The Company has no obligation to fund Nimbus losses in excess of its initial investment. The Company reported losses of zero, $2,977, and $4,180 on the Nimbus investment during 2021, 2020, and 2019, respectively.

(b) Morphic

The Company accounts for its investment in Morphic Holding, Inc. (“Morphic”) at fair value based on the share price of Morphic’s common stock at the measurement date.

During 2021, 2020, and 2019 the Company reported gains of $11,548, $13,685, and $14,102 on the Morphic investment, respectively. As of December 31, 2021 and December 31, 2020, the carrying value of the Company’s investment in Morphic was $39,561 and $28,013, respectively.

(c) Petra

Prior to May 2020, the Company had concluded that its equity investment in Petra Pharma Corporation (“Petra”) should be valued as a non-marketable equity security as the Company did not exercise significant influence over Petra.

During May 2020, Petra entered into a merger agreement with a third party. In connection with the merger, the Company received $4,582 of merger consideration in exchange for the Company’s shares of Petra common stock and is eligible to receive potential earn-outs tied to the achievement of specified development, regulatory, and commercial milestones. The Company is also eligible to receive $361 in escrow payments. During 2021, the Company received escrow payments of $335.

(d) Ravenna

In connection with the Petra merger, the Company received 2,676,191 shares of common stock of Ravenna Pharmaceuticals, Inc. (“Ravenna”). The Company concluded that its equity investment in Ravenna should be valued as a non-marketable equity security as the Company does not exercise significant influence over Ravenna. As of each of December 31, 2021 and December 31, 2020, the carrying value of the Company’s investment in Ravenna was $19 and $94, respectively. The Company reported losses of $75, zero, and zero on the Ravenna investment during 2021, 2020, and 2019, respectively.

(e) Relay

In July 2020, Relay successfully completed an initial public offering. The Company accounts for its investment in Relay at fair value based on the share price of Relay’s common stock at the measurement date. In January 2021, the Company disposed of its equity stake in Relay for aggregate consideration of $15,735, resulting in a loss of $1,821 for 2021. The Company reported a gain of $17,556 on the Relay investment for the year ended December 31, 2020. There was no gain or loss on the Relay investment for 2019, as Relay was not a public company during this period.

(f) Ajax

In May 2021, the Company purchased 631,377 shares of Series B preferred stock of Ajax Therapeutics, Inc. (“Ajax”) for $1,700 in cash. The Company has concluded that its equity investment in Ajax should be valued as a non-marketable equity security as the Company does not exercise significant influence over Ajax. As of December 31, 2021 and December 31, 2020, the carrying value of the Company’s investment in Ajax was $1,700 and zero, respectively.

(g) ShouTi

In July 2021, the Company purchased 494,035 shares of Series B preferred stock of ShouTi for $2,000 in cash. As ShouTi is structured as a company limited by shares, incorporated under the laws of the Cayman Islands and the Company is not a passive investor due to its collaboration with ShouTi on a number of drug discovery targets, the Company’s management determined that it has significant influence over the entity and therefore accounts for the investment as an equity method investment.

The Company has determined that the HLBV method for valuing contractual rights to substantive profits provides the best representation of its financial position in ShouTi. The carrying value of ShouTi was $1,887 and zero as of December 31, 2021 and December 31, 2020, respectively. The Company has no obligation to fund ShouTi losses in excess of its initial investment. The Company recorded a loss of $113 on the ShouTi investment during the year ended December 31, 2021.