EQUITY SECURITIES PORTFOLIO INVESTMENT

3 Months Ended

Mar. 31, 2023

Investments, Debt and Equity Securities [Abstract]

EQUITY SECURITIES

Equity securities for the periods presented were comprised of the following:


Security Type	Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(In thousands)
March 31, 2023:
Equity securities - Life Sciences Portfolio	$	28,498	$	15,337	$	(562)	$	43,273
Equity securities - other common stock	30,659		2,585		(15,793)		17,451
Total	$	59,157	$	17,922	$	(16,355)	$	60,724

December 31, 2022:
Equity securities - Life Sciences Portfolio	$	28,498	$	14,815	$	(617)	$	42,696
Equity securities - other common stock	34,885		4		(15,977)		18,912
Total	$	63,383	$	14,819	$	(16,594)	$	61,608

Equity Securities Portfolio Investment

On April 3, 2020, the Company entered into an Option Agreement with LF Equity Income Fund, which included general terms through which the Company was provided the option to purchase the Life Sciences Portfolio for an aggregate purchase price of £223.9 million, approximately $277.5 million at the exchange rate on April 3, 2020.

For accounting purposes, the total purchase price of the Life Sciences Portfolio was allocated to the individual equity securities based on their individual fair values as of April 3, 2020, in order to establish an appropriate cost basis for each of the acquired securities. The fair values of the public company securities were based on their quoted market price. The fair values of the private company securities were estimated based on recent financing transactions and secondary market transactions and factoring in a discount for the illiquidity of these securities. Included in our consolidated balance sheets as of March 31, 2023 and December 31, 2022, the total fair value of the remaining Life Sciences Portfolio investment was $69.0 million and $68.4 million, respectively.

As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired an equity interest in Arix Bioscience PLC (“Arix”), a public company listed on the London Stock Exchange. As of March 31, 2023 and December 31, 2022, the Company's investment in Arix was approximately 26%. In addition, two members of the Company's Board of Directors (the “Board”) have seats on the board of Arix, which is currently made up of five board members. Although the Company is presumed to have significant influence over operating and financial policies of Arix, we have elected to account for the investment under the fair value method. To date, the Company has not received any dividends from Arix. As of March 31, 2023, this investment does not meet the significance thresholds for additional summarized income statement disclosures, as defined by the SEC. As of March 31, 2023, the aggregate carrying amount of our Arix investment was $43.3 million, and is included in equity securities in the consolidated balance sheet.

The following unrealized and realized gains or losses from our investment in the Life Sciences Portfolio are recorded in the change in fair value of equity securities and gain or loss on sale of equity securities, respectively, in the consolidated statements of operations:


	Three Months Ended March 31,
		2023		2022
		(In thousands)
Change in fair value of equity securities of public companies		$	577	$	(171,640)


Gain on sale of equity securities of public companies		—		59,488


Net realized and unrealized gain (loss)		$	577	$	(112,152)

As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired a majority interest in the equity securities of MalinJ1 (63.9%), which were transferred to the Company on December 3, 2020. The acquisition of the MalinJ1 securities was accounted for as an asset acquisition as there was a change of control of MalinJ1 and substantially all of the fair value of the assets acquired was concentrated in a single identifiable asset, an investment in Viamet Pharmaceuticals Holdings, LLC (“Viamet”). As such, the cost basis of the MalinJ1 securities was used to allocate to the Viamet investment, the single identifiable asset, and no goodwill was recognized. The Company through its consolidation of MalinJ1 accounts for the Viamet investment under the equity method as MalinJ1 owns 41.0% of outstanding shares of Viamet. As of March 31, 2023 and 2022, this investment does not meet the significance thresholds for additional summarized income statement disclosures, as defined by the SEC. During the three months ended March 31, 2023 and 2022, our consolidated earnings on equity investment was zero. No distributions were received during the three months ended March 31, 2023 and 2022.