Q4 2023 Ligand Pharmaceuticals Inc Earnings Call

Operator: Ladies and gentlemen, thank you for standing by. Welcome everyone to the Ligand 4th Quarter 2023 earnings webcast. At this time, all lines have been placed on mute to prevent any background noise.

Ladies and gentlemen, thank you for standing by welcome everyone to the <unk> fourth quarter 2023 earnings webcast. At this time all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and session if you'd like to ask a question. During this time simply press the star followed by the number one on your telephone keypad, if you'd like.

Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number 1 on your telephone keypad. If you'd like to withdraw your question, please press the star followed by the number 1 once again.

Your question. Please press the star followed by the one once again.

Operator: Thank you. I will now hand the call over to Tava Espinosa, Chief Financial Officer. You may begin your conference. Hello, everyone, and welcome to our earnings call for the fourth quarter and year-end 2023. During the call today, we will review the financial results we released prior to today's market open and offer commentary on our partner pipeline and business development activity, after which we will host a question-and-answer session. Our earnings release can be found in the investor relations section of our website at ligand.com. Participating for Ligand today will be our CEO, Todd Davis, our CEO, Matt Kornberg, and myself, Tavo Espinoza, CFO. This call is being recorded, and the audio portion will be archived in the investor section of our website.

Thank you I will now hand, the call over to tablet Espinosa Chief Financial Officer, you May begin your conference.

Tabitha Espinosa: Hello, everyone and welcome to our earnings call for the fourth quarter and year end 2023 during the call today, We will review the financial results. We released prior to today's market open and offer commentary on our partnered pipeline and business development activity after which we will host a question and answer session. Our earnings release can be found in the inverse.

Tabitha Espinosa: Relations section of our website at <unk> Dot com.

Participating for <unk> today will be our CEO, Todd Davis, our CFO, Matt Kornberg and myself.

CFO: CFO. This call is being recorded and the audio portion will be archived in the investors section of our website. It is our intent that all forward looking statements regarding our financial results and commercial activity made during today's call will be protected under the private Securities Litigation Reform Act of 1995.

Operator: It is our intent that all forward-looking statements regarding our financial results and commercial activity made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. However, forward-looking statements are subject to risks and uncertainties, and actual events or results may differ materially from those projected or discussed.

CFO: Forward looking statements are subject to risks and uncertainties actual events or results may differ materially from those projected or discussed all forward looking statements are based on upon current available information and <unk> assumes no obligation to update these statements to better understand the risks and uncertainties that could cause actual results to differ we refer.

Operator: All forward-looking statements are based on current available information, and Ligand assumes no obligation to update these statements. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Ligand has filed with the Securities and Exchange Commission, including our most recent Forms 10-Q and 10-K. With that, I will now turn the call over to Todd. Thank you, Thabo, and welcome to everyone on the call.

CFO: You to the documents that ligand has filed with the Securities and Exchange Commission, including our most recent forms 10-Q, and 10-K with that I will now turn the call over to Todd.

CFO: Thank you Todd, though and welcome to everyone on the call. The end of 2023 marks the completion of my first full year.

Todd: The end of 2023 marks the completion of my first full year as CEO of Ligand, and I'm happy to say that in the last year, we've successfully transformed the company to take Ligand to the next stage of growth. Slide 3 summarizes our financial and portfolio achievements in 2023, which underscores our strong momentum and the strength of our business model. First, we delivered strong financial performance. We grew revenue by more than 20% when you exclude last year's COVID-related capital sales, while reducing 2023 cash operating expenses from above $90 million per year to below $40 million. This resulted in core adjusted diluted earnings per share of $4.06, which is 66% above the prior year. Second, we streamlined and improved the financial profile of the business through restructuring efforts.

Todd: And I'm happy to say that in the last year, we've successfully transformed the company to take ligand to the next stage of growth.

Todd: Slide three summarizes our financial and portfolio achievements in 2023.

Todd: Which underscores our strong momentum and the strength of our business model.

Todd: First we delivered strong financial performance.

Todd: We grew revenue by more than 20% when you exclude last year's Covid related Captisol sales.

Todd: While reducing 2023 cash operating expenses from above $90 million per year to below $40 million per year.

Todd: This resulted in core adjusted diluted earnings per share of $4.06, which is 66% above the prior year.

Todd: Second we streamlined and improved the financial profile of the business through restructuring efforts. In addition to spinning out the Omnia business. We also divested our pelican protein expression platform via equity merger or spin out to form Primrose bio.

Todd: In addition to spinning out the Omniab business... We also divested our Pelican Protein Expression Platform via Equity Merger, or SpinOut, to form Primrose Bio. Both of these businesses are valuable technology platforms, but they required additional investment and infrastructure that was inconsistent with our core financial strategy. This enabled a headcount reduction from over 170 to 35 employees.

Todd: Both of these businesses are valuable technology platforms, but they required additional investment in infrastructure that was inconsistent with our core financial strategy.

Todd: This enabled our head count reduction from over 170 235 employees.

Todd: This operational streamlining was completed even while adding significant talent in the investment, portfolio management, and diligence functions to create a premier investment portfolio. Accordingly, that team began to execute on our newly refined strategy in the second half of 2020. Third, we strengthened our royalty portfolio by adding several innovative and exciting new programs, including Sanofi's T-Zield and Takeda's Ceticlistat. We also expanded existing partnerships, acquiring full rights to the recently-approved Zelsuvme and expanding a royalty investment in Pavela's PTX-022 program, which is in development for microcystic lymphatic malformation. Fourth, as shown on slide four, at our Investor Day in December, we announced for the first time a longer-term outlook where we see royalty revenue CAGR of over 20 percent and an adjusted EPS CAGR exceeding 25 percent over the next five years.

This operational streamlining was completed even while adding significant talent in the investment portfolio management and diligence functions to create a premier investment team.

Todd: Accordingly that team began to execute on our newly refined strategy in the second half of 2023.

Todd: Third we strengthened our royalty portfolio.

Todd: Adding several innovative and exciting new programs, including therapies T field and Takeda has particular stat.

Todd: We also expanded existing partnerships acquiring full rights to the recently approved shell suit me and expanding a royalty investment in <unk> P. T X zero to two program, which is in development for Microsystems lymphatic malformations.

Todd: Fourth as shown on slide four at our Investor Day in December we announced for the first time, a longer term outlook, where we see royalty revenue CAGR of over 20% and then adjusted EPS CAGR exceeding 25% over the next five years.

Todd: The breadth of our asset portfolio provides us with lower volatility and much greater predictability than is typical in the biotech business, which in turn provides us with the confidence to share these longer-term projections. The forecast is driven by our current major commercial program, our existing pipeline, and the expected contribution from the new business development effort. Tabo will cover our financials in a little more detail.

Todd: The breadth of our asset portfolio provides us with a lower volatility and much greater predictability than is typical in biotech businesses.

Todd: Each in turn provides us the confidence to share these longer term projections.

Todd: The forecast is driven by our current major commercial programs, our existing pipeline and the expected contribution from the new business development efforts.

Todd: Todd will cover our financials in a little more detail, but I'd like to highlight that the increase in Viking therapeutics stock price in 2023 has bolstered our balance sheet as we generated approximately $80 million in proceeds from the sale of Viking shares and still hold approximately one 7 million shares.

Todd: But I'd like to highlight that the increase in Viking Therapeutics' stock price in 2023 has bolstered our balance, as we generated approximately $80 million in proceeds from the sale of Viking shares and still hold approximately 1.7 million shares. We are reinvesting these proceeds into new investments that will drive additional growth and value creation in the future. Also, there are several exciting developments across our partnered commercial portfolio and clinical pipeline. During late 2023 and early 2024, there is an opportunity for further value creation through additional important catalysts expected this year. On January 5, 2024, the FDA approved Zelsuvme as a first-in-class medication for the treatment of molluscum contagiosum in adults and pediatric patients one year of age or older. Delsutme is the first and only prescription medication that can be applied by patients, parents, or caregivers at home outside of the physician's office to treat this highly contagious infection.

Todd: We are reinvesting these proceeds into new investments that will drive additional growth and value creation in the future.

Todd: Also there are several exciting developments across our partnered commercial portfolio and clinical pipeline during.

Todd: During late 2023 in early 2024, and there is an opportunity for further value creation through additional important catalysts expected this year.

Todd: On January five 2024, the FDA approved Zelle suit me as a first in class medication for the treatment of Moleskin molluscum contagiosum in adults and pediatric patients one year of age or older. <unk> is the first and only prescription medication that can be applied by patients.

Todd: Parents or caregivers at home outside of the physicians office to treat this highly contagious infection you.

Todd: You may recall that we own 100% of Gelsoothme Rides after funding Novan through a restructuring process and acquiring a significant portion of their assets in 2023. Additionally, we have two partnered products that have PDUFA dates scheduled during June of 2024. Verona's Incipentrine and Merck's D116, and Syphentrene, if approved, is expected to be the first novel mechanism available for the maintenance treatment of COPD in more than 10 years. Additionally, the FDA accepted for priority review Merck's new BLA for V116, an investigational 21-valent pneumococcal conjugate vaccine specifically designed to help prevent invasive pneumococcal disease and pneumonia in adults. Our royalty rates on encephentrine and D116 are in the low single-digits. Finally, Trevere announced that it received 459 new patient start forms for Felspari in the fourth quarter of 2023 and announced net product sales of approximately $15 million through the fourth quarter, which is an increase of over 80% from the prior quarter. We have a 9% royalty on Philspari, and consensus estimates continue to show $500 million to $1 billion in peak Philspari sales. Shortly, Matt will provide more detail on these and other programs.

Todd: You may recall that we own 100% of Zelle suit me rights after funding no van through a restructuring process and acquiring a significant portion of their assets in 2023.

Todd: Additionally, we have two partnered products that have <unk> date scheduled during June of 2024.

Todd: Corona <unk> train and Merck's PD 116, <unk>. If approved is expected to be the first novel mechanism available for the maintenance treatment of COPD and more than 10 years. Additionally, the FDA accepted for priority review Merck's, New BLA for <unk> <unk>.

Todd: Six and in depth investigational 21, valent pneumococcal conjugate vaccine specifically designed to help prevent invasive pneumococcal disease in pneumonia in adults are royalty rates on <unk> trained and <unk> six are in the low single digit royalty range.

Todd: Finally, <unk> announced that it received 459, new patients start forms for <unk> in the fourth quarter of 2023.

Todd: <unk> announced net product sales of approximately $15 million during the fourth quarter, which is an increase of over 80% from the prior quarter.

Todd: We have a 9% royalty on pillsbury and consensus estimates continue to show $500 to $1 billion in peak sales <unk> sales.

Todd: Shortly Matt will provide more detail around these and other programs.

Todd: Now let's turn to our business development. In 2023, one of our key priorities was assembling a strong and experienced investment team to execute on our strategy, and we are pleased with our progress in this regard. Additionally, I can share today that we've recently added Rich Baxter and Karen Reeves to the team. Rich joins us as SVP of Investment Operations and a member of the Investment Committee.

Todd: Now, let's turn to our business development efforts in 2023, one of our key priorities was assembling a strong and experienced investment team to execute on our strategy and we are pleased with our progress in this regard.

Additionally, I can share today that we've recently added rich Baxter and Doctor Karen Reeves to the team.

Todd: Rich joins us as SVP of investment operations and a member of the investment Committee Rich brings significant commercial pharmaceutical industry experience and private equity investment experience a co founded the health care group for drawbridge special opportunities fund at fortress investment group, which invest.

Todd: Rich brings significant commercial pharmaceutical industry experience and private equity investment experience. He co-founded the Healthcare Group for Drawbridge Special Opportunities Fund at Fortress Investment Group, which invested approximately $1 billion in emerging life science companies. He also served as co-head of the healthcare team at Hafen Capital Managers, which deployed $1.4 billion in capital over four years. Karen is a board-certified physician and joins us as SVP of Clinical Strategy and Investment. She brings more than 20 years of experience in senior roles at top pharmaceutical companies with extensive experience in successful Phase I to Phase IV drug development across multiple therapeutic areas. Most recently, she served as President and Chief Medical Officer of AZ Therapies, a private late-stage clinical biopharmaceutical company focused on neurology.

Todd: Approximately $1 billion in emerging life Science companies. He also served as co head of the healthcare team at <unk> capital management.

Todd: Which deployed $1 4 billion in capital over four years.

Todd: Karen is a board certified physician and joins us as SVP of clinical strategy and investments.

Karen: She brings more than 20 years of experience in senior roles at top pharmaceutical companies with extensive experience and successful phase one through phase for drug development across multiple therapeutic areas.

Karen: Most recently she served as president and Chief Medical Officer of AZ therapies are private late stage clinical biopharmaceutical company focused on neurology.

Todd: Prior to AZ Therapies, Karen held multiple leadership positions at Pfizer, including VP Worldwide R&D, VP Worldwide Safety and Regulatory, and Head of Global Clinical Submission. We welcome both Karen and Rich to the Ligand team. Paul Haddon has been leading our investment origination efforts and was instrumental in increasing our available opportunity set during 2023. Last year, we reviewed over 300 investment opportunities, found 45 CDAs, and closed 5 transactions.

Karen: Prior to AZ therapies, Sharron held multiple leadership positions at Pfizer, including VP worldwide, R&D, VP worldwide safety and regulatory and head of global clinical submissions for quality.

Karen: Both Karen and rich to the ligand team.

Karen: Paul had and has been leading our investment origination efforts and was instrumental in increasing our available opportunity set during 2023.

Karen: Last year, we reviewed over 300 investment opportunities.

Karen: 45, <unk> and closed five transactions.

Todd: We enter 2024 with 130 million in cash, plus we expect to generate approximately $80 million in cash from operations this year. Adding to this is our ownership in Viking Therapeutics stock and a $75 million revolving credit facility with this strong financial position. We feel we are well-positioned to have another successful year, led by investment activity providing exciting growth opportunities. As we discussed in December, the team has built a robust pipeline of investment opportunities that span both a significant breadth of therapeutic areas and diversified transaction types. We are in active dialogue with multiple counterparties and are constantly looking for new, exciting opportunities in which to invest capital.

Karen: We enter 2024 with $130 million.

Karen: And cash plus we expect to generate approximately $80 million in cash from operations. This year.

Karen: Adding to this is our ownership in Viking therapeutics stock and a $75 million revolving credit facility.

Karen: With this strong financial position, we feel we are well positioned to have another successful year led by investment activity, providing exciting growth opportunities for ligand.

Karen: As we discussed in December the team has built a robust pipeline of investment opportunities that span both significant breadth of therapeutic area, but also diversified transaction types. We are in active dialogue with multiple counterparties and are constantly looking for new exciting opportunities.

Karen: In which to invest capital to.

Todd: The team is currently reviewing approximately $1.4 billion in investment opportunities across multiple strategies, including royalty monetization, project finance, M&A, and special opportunities. As a reminder about our investment criteria, we are primarily focused on assets that are within a few years of approval in either Phase 2 or Phase 3, are highly differentiated, offer significant value to patients, provide favorable market exclusivity, and have an above average probability of technical and regulatory success. Ultimately, the number and size of investments we make will depend on the quality of the opportunities we identify. We believe that we have the right team to execute and excel in this high-margin, high-growth strategy. It's important to note that the majority of our diligence assessment is done under confidentiality agreements, providing us with advantageous insight into our investment. Summary.

Karen: The team is currently reviewing approximately.

Karen: $4 billion in investment opportunities across multiple strategies, including royalty monetization project finance M&A and special opportunities.

Karen: As a reminder, about our investment criteria. We are primarily focused on assets that are within a few years of approval in either phase two or phase III.

Karen: Our highly differentiated offer significant value to patients provide favorable market exclusivity and have above average probability of technical and regulatory success.

Karen: Ultimately the number and size of investments, we make will depend on the quality of the opportunities. We identify we believe that we have the right team to execute and excel in this high margin high growth strategy.

Karen: Important to note that the majority of our diligence assessment is done under confidentiality agreements, which provides us advantageous insight into our investment decisions.

Matt: 2023 was an important year for Ligand in terms of our financial performance, strategic evolution, investment activity, and team building efforts. With these accomplishments, we're looking forward to a busy and productive 2024. Now Matt will cover the portfolio highlights. Thanks, Todd.

Karen: In summary.

Karen: 2023 was an important year for ligand in terms of our financial performance strategic evolution investment activity and team building efforts with these accomplishments were looking forward to a busy and productive 2024.

Karen: Now Matt will cover the portfolio highlights.

Matt: Thanks Todd.

Matt: 2023 was a transformative year for Ligand, and today I'll provide investors with an update on key developments from our partners across our commercial programs and our development portfolio. Ligand's portfolio includes more than 85 partnered programs that drive our royalty revenue, our cap-to-sale material sales, and our licensed milestone and contract revenues. Slide 10 shows our key commercial programs that drive a significant majority of our royalty revenues.

Matt: 2023 was a transformative year for ligand and today I will provide investors with an update on key developments from our partners across our commercial programs in our development portfolio.

Matt: <unk> portfolio includes more than 85 partnered programs that drive our royalty revenue, our captisol material sales and our licensed milestone and contract revenue.

Matt: <unk> 10 shows our key commercial programs that drive the significant majority of our royalty revenue.

Matt: Our current commercial portfolio includes over 25 different royalty streams and 30 commercial drivers overall. These eight programs are expected to contribute over 95% of our royalty revenue in 2024. The team at Ligand is focused on adding additional names to this list. Many of those additions will come organically from our existing partner pipeline portfolio, and some will come through new investments generated out of our now-established field team, as Todd mentioned. A few highlights from 2020

Matt: Our current commercial portfolio includes over 25 different royalty streams and 30 commercial drivers overall these programs are expected to contribute over 95% of the royalty revenue in 2024.

Matt: The team at <unk> is focused on adding additional named to this list.

Matt: Any of those additions will come organically from our existing partner pipeline portfolio and some will come through new investments generated out of our now established deal team as Todd mentioned.

Matt: A few highlights from 2023.

Matt: Piperolis, which is an important drug for multiple myeloma, continued its strong performance with another solid quarter. Prolis is marketed by Amgen in a majority of countries around the world as well as by Ono in Japan and by Beijing in China. In Q4 2023, these companies reported combined quarterly revenue of over $370 million. Year-over-year growth for the product was driven principally by volume growth, with 2023 reported sales exceeding $1.4 billion globally. We earn a tiered royalty of 1.5 to 3% on global sales and expect continued growth in 2020. Partner Trevere is marketing Fils-Phari in the U.S. and IGA Nefropet. Revere reported revenue of $14.7 million for Q4.

Matt: <unk>, which is an important drug for multiple myeloma continued its strong performance with another solid quarter in Q4.

Matt: <unk> is marketed by Amgen and a majority of the countries around the world as well as by Ono in Japan and by Beijing in China.

Matt: Q4, 2023, these companies reported combined quarterly revenue of over $370 million.

Matt: Year over year growth for the product was driven principally by volume growth for 2023 reported sales exceeding $1 4 billion globally.

Matt: Aaron a tiered royalty of one 5% to 3% on global sales and expect continued growth in 2024.

Matt: Okay.

Matt: <unk> marketing first foray in the U S in Iga nephropathy.

Matt: <unk> reported revenue of $14 7 million for Q4.

Matt: We will also continue to disclose the momentum on new patient recruitment. Preveer had 459 new patient forms submitted in Q4, bringing the total since launch to 1,452. Continued addition of potential new stations provides good evidence of future revenue potential. It supports the consensus estimates for 2024, bringing in approximately $110 million of revenue for the year. On the regulatory front, we have announced that the EMA-CHMP has recommended approval for Sarsantan for the treatment of adults with primary IgA nephropathy.

Matt: Also continue to disclose the momentum on new patient recruitment.

Matt: <unk> had 459, new patient form submitted in Q4, bringing the total since launch to 1452.

Matt: The continued addition of potential new patients provides good evidence of future revenue potential and support the consensus estimates for 2020 for sure.

Matt: <unk> had approximately $110 million of revenue for the year.

Matt: On the regulatory front, <unk> announced that the EMA <unk>, which recommended approval for our sand 10 for the treatment of adults with primary Iga nephropathy.

Matt: The company expects the EU approval decision in Q2 2024, and the full U.S. approval decision in Q3 2020. We earn a 9% royalty on net sales, and we expect that this will be a significant driver of our long-term growth for Aurora. Rylase is marketed by our partner, Jazz Pharmaceuticals, as a component of a multi-agent chemotherapeutic regimen for the treatment of children and adults with ALL or LSD. This product continues to do extremely well in a market that was previously constrained by supply issues. At G.P.

Matt: The company expects the EU approval decision in Q2, 2024, and the full U S approval decision in Q3 2024.

Matt: We earn a 9% royalty on net sales and we expect that this will be a significant driver of our long term growth for our royalties.

Matt: <unk> is marketed by our partner jazz pharmaceuticals, as a component of a multi agent chemotherapy <unk> regimen for the treatment of children and adults with al or LDL.

Matt: This product continues to do extremely well in a market that was previously constrained by supply issues at.

Matt: Morgan earlier this year, Jazz highlighted Rylace as one of its three key growth drivers. We received approval for Rye Lays in Europe in September 2023. As confirmed, the first European country launch occurred before the end of last year, and additional European launches will continue on a rolling basis.

Matt: At Jpmorgan earlier this year jazz highlighted relates as one of its three key growth drivers.

Matt: Having received approval for <unk> in Europe in September 2023, jazz confirm the first European country launch occurred before the end of last year and that additional European launches will continue on a rolling basis in 2024.

Matt: In Q3 of 2023 release generated $104 9 million in sales, we look forward to any program updates and the jazz Q4 sales report coming later this week.

Matt: In Q3 of 2023, Riley's generated $104.9 million in sales. We look forward to any program updates in the Jazz Q4 sales report coming later this year. Vax Nuvance is a pneumococcal vaccine utilizing Ligand's CREM197 vaccine carrier protein, our former Pelican Expression Technology Platform. Merck is now marketing back to both the adult population and the pediatric population. Merck announced $176 million in Vaxxnu Vance sales in Q4 2023. The full-year sales for the product came in at $665 million.

Matt: Bakken you've answered the pneumococcal vaccine utilizing <unk> <unk> hundred 97 vaccine carrier protein produced using our former Pelican expression technology platform.

Matt: <unk> is now marketing back events in both the adult population and the pediatric population.

Matt: <unk> announced a $176 million in vaccine advanced sales in Q4 2023, our full year sales for the product came in at $665 million.

Matt: <unk> is a low single digit royalty on vacuum.

Matt: Turning to slide 11, we list a selection of our partnered pipeline products that will have meaningful clinical or regulatory catalysts in the coming year.

Matt: First program on the list is relatively.

<unk> acquired this product through our <unk> acquisition in 2023, and subsequently received approval for the program on January five 2024.

Matt: Ligand earns a low single-digit royalty on back... Turning to slide 11, we list a selection of our partner pipeline products that will have meaningful clinical or regulatory catalysts in the coming years. The first program on the list is... Ligand acquired this product through our Novant acquisition in 2023 and subsequently received approval for the program on January 5th, 2024. SELSUMI is approved for the treatment of molluscum contagiosum in adults and pediatric patients one year of age or older. Gilsuvi is the first and only topical prescription medication that can be applied by patients, parents, or caregivers at home, outside of a physician's office, or other medical facility, to treat this highly contagious viral.

Matt: <unk> is approved for the treatment of molluscum contagiosum in adults and pediatric patients one year of age or older. So assuming the first and only topical prescription medication can be applied by patients parents or caregivers at home outside of a physician's office or other medical setting.

Matt: It's used to treat this highly contagious viral skin infection.

Speaker Change: Team is extremely excited about the potential for this program. We are in process of building a new Standalone company called helped us therapeutics that will commercialize <unk> Sydney.

Speaker Change: Company creation effort is very similar to our prior efforts related to Viking therapeutics in Primrose Bio helped also the operated fully independent of ligand. So we expect to own a significant equity stake in a business at inception.

Matt: The team is extremely excited about the potential for this project. We're in the process of building a new stand-alone company called Peltos Therapeutics that will commercialize... The company creation effort is very similar to our prior efforts related to Viking Therapeutics and Primrose Biome. Peltos will be operating fully independent of Ligand, but we expect to own a significant equity stake in a business having set up. While we are having discussions with potential strategic licensing partners, we're also making good progress towards the creation of Pelthos and the launch of Delta. We expect that Pelthos will launch, they'll sue me in late 2024, and the program will join our key contributors to Ligand's royalty record. Verona submitted its NDA to the FDA in June 2023 for approval of ensophentrine for the maintenance treatment of patients with COPD.

While we are having discussions with potential strategic licensing partners.

Speaker Change: So making good progress towards the creation of <unk> and the launch of <unk>.

Speaker Change: We expect that <unk> will launch <unk> in late 2024, and the program will join our key contributors to <unk> royalty revenue line.

Speaker Change: Corona submitted its NDA to the FDA in June 2023 for approval of <unk> for the maintenance treatment of patients with COPD.

Speaker Change: Could you today for the product has been established as June 26, 2024, and drone is building its commercial infrastructure as we speak by again benefits from a low single digit royalty on <unk> and we believe the program will be another of our key growth drivers and.

Speaker Change: <unk> is a first in class drug candidate using a novel mechanism of action combining dual inhibition of <unk> three and PD four.

Speaker Change: <unk> estimates that there are over 8 million COPD patients currently receiving chronic treatment in the U S alone over half of whom are dissatisfied with their current treatment regimen.

Speaker Change: If approved <unk> could offer an effective and highly safe and tolerable add on or alternative treatment to address both symptoms and exacerbations.

Speaker Change: Market is developing <unk> six as part of its pneumococcal vaccine franchise.

Matt: Fidufide for the Product has been established since June 26, 2024. Adrona is building its commercial infrastructure as... Ligand benefits from a low single-digit royalty on NSF entry, and we believe the program will be another of our key growth drivers. Fidufide is a first-in-class drug candidate using a novel mechanism of action combining dual inhibition of PDE3 and PDE4. Corona estimates that there are over 8 million COPD patients currently receiving chronic treatment in the U.S. alone, over half of whom are dissatisfied with their current treatment. If approved, Encephentrine could offer an effective and highly safe and tolerable add-on or alternative treatment to address both symptoms and exacerbations.

Speaker Change: <unk> is targeted specifically at adults as shown benefits over the existing standard of care.

Speaker Change: After reporting positive phase III data last year in June and filing our BLA in November Theres now with a <unk> date of June 17 2024.

Speaker Change: The successful approval, we believe <unk> will continue to drive the Merck franchise growth benefit log into our low single digit royalty.

Speaker Change: <unk> received breakthrough therapy designation for <unk>, and if approved <unk> would be the first pneumococcal conjugate vaccine specifically designed to address the serotypes that cause most adult invasive pneumococcal disease.

Speaker Change: Takeda is developing <unk>, which is a first in class novel compound with the potential to reduce seizure susceptibility.

Speaker Change: Takeda is currently running two phase III trials and expect data in its fiscal year 2024.

Matt: Merck is developing V116 as part of its pneumococcal vaccine framework. It is targeted specifically at adults and has shown benefits over the existing standard of care. After reporting positive phase 3 data last year in June and filing a BLA in November, there is now a PDUFA date of June 17, 2021. With successful approval, we believe B.1.1.6 will continue to drive Merck franchise growth and benefit Ligand for our low single digits. Merck received breakthrough therapy designation for V116, and if approved, V116 would be the first pneumococcal conjugate vaccine specifically designed to address the serotypes that cause post-adult. Decade is developing Ceticlistat, which is a first-in-class novel compound with the potential to reduce seizure susceptibility. It is currently running two phase three trials and expects data in its fiscal year of 2020. Ligand earns a tiered royalty of up to 22.6% on this drug if it is successfully commercialized, as well as up to 86 million miles. There remains a high unmet need for rare pediatric epilepsy.

Speaker Change: IGN earns a tiered royalty of up to 22, 6% on this drug if successfully commercialized as well as up to $86 million of milestones.

Speaker Change: It remains high unmet need in rare pediatric epilepsies, and <unk> is uniquely positioned to deliver value to patients and caregivers through its demonstrated seizure reduction capability as well as its strong safety profile and ability to be combined with a broad range of anti epileptic treatments.

Speaker Change: Finally during the second quarter of 2023, Viking announced positive topline results from the phase <unk> voyage study evaluating <unk> in patients with biopsy confirmed Nash company expect to report data from the secondary and exploratory objectives of the voyage study, including the evaluation of histologic changes assessed by hepatic biopsy over 50.

Two weeks of treatment in the first half of 2024.

Speaker Change: We expect that following these results Viking would move forward into phase III with this important program.

Speaker Change: Or is it three 5% to seven 5% royalty on potential sales of <unk> as well as significant clinical regulatory and commercial milestones Nash is a very large potential market and if <unk> is successful in their development products. In this category are estimated to be multibillion dollar opportunities.

Speaker Change: On slide 10, I'll provide sorry, excuse me on slide 12, I'll provide an update on our Captisol business.

Speaker Change: <unk> sales for 2023 outperformed our expectation for the year customer demand remains strong for both clinical and commercial Captisol as partners continue to find benefit from our technology platform.

Matt: The Texel Stat is uniquely positioned to deliver value to patients and caregivers through its demonstrated seizure reduction capability, as well as its strong safety profile and ability to be combined with a broad range of anti-epileptic treatments. Finally, during the second quarter of 2023, Viking announced positive top-line results from the Phase 2b VOYAGE study evaluating VK2809 in patients with biopsy-confirmed, the company expects to report data from the secondary and exploratory objectives of the VOYAGE study, including the evaluation of histologic changes assessed by hempatic biopsy over 52 weeks of treatment, in the first half of 2020. We expect that following these results, Viking will move forward into Phase 3 with this important program. Viking earns a 3.5% to 7.5% royalty on potential sales of VK2809, as well as significant clinical, regulatory, and commercial mileage.

Speaker Change: 'twenty three saw six new partner agreements and we've already signed a few more in 2024.

Speaker Change: Last month, we saw ACI announced the approval of the IV formulation of their drug <unk> comp.

Speaker Change: That marks the 16th approved Captisol enabled drug around the world and we see the potential for another floor approvals in 2024.

Speaker Change: Traction on this business as exemplified by the number and piece of approvals as well as the volume of material that we sold since acquiring the business.

In addition to highlighting the names of all 16 approved drugs along with our timing of approval. The chart on the right shows vertical bars annually that represent the cumulative volume of Captisol that we sold and demonstrates the continued momentum of the business.

Speaker Change: We report our Captisol sales on a separate line from our royalties.

Speaker Change: This is another of our major drivers of revenue cash flow and profitability gross profit from capsule in 2023 equated to about $17 million, which exceeded our largest current single royalty other than kyprolis.

Tableau: That concludes my summary of the portfolio highlights and I will turn the call back over to tableau for a financial update.

Tableau: Thanks, Matt.

Tableau: First I wanted to highlight that I will be discussing non-GAAP results, which exclude certain items, including stock based compensation amortization of intangible assets unrealized gains from short term investments our share of losses absorbed from accounting or invest our investment in primrose bio under the equity method expenses incurred to incubate the recently acquired.

Matt: Mass is a very large potential market, and if Viking is successful in their development, products in this category are estimated to be multi-billion dollar... On slide 10, I'll provide, sorry, excuse me, on slide 12, I'll provide an update on our capsule. Forecasted capsule sales for 2023 outperformed our expectation for the, and customer demand remains strong for both clinical and commercial Captisol as partners continue to find benefit from our technology platform. 2023 saw six new partner agreements, and we've already signed a few more in 2020. Last month, we saw Acai announce the approval of their IV formulation of their drugs by comp... That marks the 16th approved captosol-enabled drug around the world, and we see the potential for another four approvals in 2024.

Tableau: No band business amongst others. In addition to help investors just around the performance of our core business results, we subtract captisol sales related to COVID-19, and realized gains from the sale of Viking Therapeutics stock.

Tableau: I encourage you to review the GAAP reconciliation of these non-GAAP measures, which can be found in today's release available on our website.

Tableau: We delivered strong results in 2023 that met or exceeded the high end of our guidance range with total revenue of $131 million and core adjusted earnings per share of $4 six.

Tableau: We ended the year with $170 million in cash and investments and no debt on the balance sheet.

Tableau: Slide 14 frames up our financial results in more detail for both the fourth quarter and the full year I'll focus my discussion on the full year results.

Matt: Traction on this business is exemplified by the number and pace of approvals, as well as the volume of material that we've sold since acquiring it. In addition to highlighting the names of all 16 approved drugs along with their timing of approval, the chart on the right shows vertical bars annually that represent the cumulative volume of Captisol that we've sold and demonstrates the continued momentum of production. We report our capital sales on a separate line from our royalties. This business is another of our major drivers of revenue, cash flow, and profitability. Gross profit from Capsol in 2023 equated to about $17 million, which exceeded our largest current single royalty other than Capsol. That concludes my summary of portfolio highlights, and I'll turn the call back over to Tavo for financial updates. Thanks, Matt.

Tableau: Excluding last year's contribution from Covid Captisol sales all of 2023 revenue grew 21% versus 2022.

Tableau: Royalty revenue increased 16% to $83 9 million from $72 5 million a year ago with the growth driven by strength in amgen's, Kyprolis <unk> and <unk> new bands.

Tableau: The increase in royalty revenue was offset by a decrease in tariff Paradise.

Tableau: We have been anticipating generic competition to enter the market and it appears that maybe beginning to materialize.

Tableau: <unk> reported total of 2023 type product sales of $1 4 million.

Tableau: The $1 billion, which was 13% above the prior year and they attributed most of the increase to volume growth broke announced total sales of $665 million <unk>, which is an almost 300% increase over 2022.

Tableau: We believe these products along with <unk> <unk>, we will continue to drive royalty revenue growth in the future.

Tavo: First, I want to highlight that I will be discussing non-GAAP results, which exclude certain items, including stock-based compensation, amortization of intangible assets, unrealized gains from short-term investments, our share of losses absorbed from accounting, or our investment in Primrose Bio under the equity method, and expenses incurred to incubate the recently acquired Novan business, amongst others. In addition, to help investors discern the performance of our core business results, we subtract capital sales related to COVID-19 and realized gains from the sale of Viking Therapeutics common stock. I encourage you to review the gap reconciliation of these non-gap measures, found in today's release available on our website. We delivered strong results in 2023 that met or exceeded the high end of our guidance range, with total revenue of $131 million and core adjusted earnings per share of $4.06. We ended the year with $170 million in cash and investments and no debt on the balance.

Tableau: Captisol sales were $28 4 million in 2023% core Captisol sales of $16 4 million in 2022 with the increase due to timing of customer orders totaled.

Tableau: Total captisol sales in 2020 to $104 $5 million with $88 $1 million of that related to COVID-19, we did not have any COVID-19 related captisol sales this year.

Tableau: Contract revenue this year was 19 million versus $19 2 million in 2022.

Tableau: Total R&D and G&A operating expenses decreased by 27% in 2023 to primarily to lower head count related expenses associated with the spin out of Pelikan <unk>.

Tableau: The decrease in operating expenses was offset by investments made to build up our investment team in Boston as well as the increase in expenses associated with incubating the know van business.

Tableau: <unk> and R&D expenses were $52 8 million and $24 5 million in 2023 versus $70 1 million and $36 1 million in 2022, respectively.

Tavo: Slide 14 frames up our financial results in more detail for both the fourth quarter and the full year. I'll focus my discussion first on the full year results, including last year's contribution from COVID capital sales. Total 2023 revenue grew 21% versus 2022, and royalty revenue increased 16% to $83.9 million from $72.5 million a year ago, with the growth driven by strength in Amgen's Kyprolis, Yaz's Rylase, and Merck's Nuban. The increase in royalty revenue was offset by a decrease in terra paratide.

Tableau: GAAP net income in 2023 was $53 6 million or $3 <unk> per diluted share versus a GAAP net loss of $5 2 million or <unk> 31 per share in 2022.

Tableau: The increase in GAAP net income is due largely to the increase in operating income and gains from short term investments due to the increase in value on our holdings of Viking stock.

Tableau: Excluding the impact of gains from sales of biking stock and COVID-19, Captisol sales or adjusted net income was $71 6 million or $4 <unk> or.

Tableau: Our diluted share in 2023 versus $41 9 million or $2 44 per diluted share in 2022.

Tavo: We have been anticipating generic competition entering the market, and it appears that may be beginning to materialize. Amgen reported total 2023 Kyprolis sales of $1.4 billion, which was 13% above the prior year, and they attributed most of the increase to volume growth. Merck announced total sales of $665 million for Rex Newbounds, which is an almost 300% increase over 2022.

Tableau: Adjusted net income for 2023 was 170, $107 3 million or $6 <unk> per diluted share compared with $82 2 million or $4 79 per <unk>.

Tableau: Per diluted share in 2022.

Tableau: Now focusing on the quarter.

Tableau: Total revenue for the quarter increased about 5%, excluding COVID-19, Captisol sales in Q4 2022 royalty revenue overall increased slightly driven by Kyprolis Riley's backed new band <unk> offset by a decrease in <unk>.

Tavo: We believe these products, along with Rylai's and Philspari, will continue to drive royalty revenue growth in the future. Capsosol sales were $28.4 million in 2023 versus core Capsosol sales of $16.4 million in 2022, with the increase due to timing of customer orders. Total capital sales in 2022 were $104.5 million, with $88.1 million of that related to COVID-19. We did not have any COVID-19 related capital sales this year. Contract revenue this year was $19 million versus $19.2 million in 2022.

Tableau: Total operating expenses are lower compared to the prior year quarter large part due to the spinout of Pelican offset by investments made in building up our investment team in Boston as well as costs associated with the <unk> business.

Tableau: As mentioned on our third quarter earnings call, we expect to incur incremental operating costs associated with incubating that <unk> business. Our intent is to spin out and our out license and no van business and therefore, we are adjusting out these expenses for purposes of reporting adjusted non-GAAP earnings.

GAAP net income for the fourth quarter of 2023 was $18 million or $1 <unk> per diluted share versus GAAP net loss of $14 5 million or <unk> 86 per <unk>.

Tavo: Total R&D and G&A operating expenses decreased by 27% in 2023 due primarily to lower headcount related expenses associated with the spin-out of Pelican. However, the decrease in operating expenses was offset by investments made to build up our investment team in Boston, as well as the increase in expenses associated with incubating the No Van business. DNA and R&D expenses were $52.8 million and $24.5 million in 2023 versus $70.1 million and $36.1 million in 2022, respectively. Gap net income in 2023 was $53.6 million, or $3.02 per diluted share, versus a gap net loss of $5.2 million, or $0.31 per share, in 2023.

Tableau: Sure in the fourth quarter of 2022.

Tableau: The increase in GAAP net income is due largely to gains from from short term investments as a result of the increase in value on our holdings of Viking stock as well as lower operating expense.

Tableau: Excluding the impact of gains from Viking stock and COVID-19, Captisol sales or adjusted net income was $18 5 million or $1 <unk> per share in Q4, 'twenty three versus $13 million or <unk> 75 per share in Q4 2002 <unk>.

Tableau: Adjusted net income for the fourth quarter of 2023 was $24 3 million or $1 38 per share compared with $23 5 million $1 36 per share the prior year quarter.

Tableau: Turning to the balance sheet as of December 31, 2023, and cash and short term investments of $170 million, which includes $32 million of our holdings in Viking common stock.

Tavo: The increase in gap net income is due largely to the increase in operating income and gains from short-term investments, and an increase in value of our holdings of Viking stock, excluding the impact of gains from sales of biking stock and COVID-19 capsule sales. Adjusted net income was $71.6 million or $4.06 per diluted share in 2023 versus $41.9 million or $2.44 per diluted share in 2022. Adjusted net income for 2023 was $107.3 million, or $6.08 per diluted share, compared with $82.2 million, or $4.79 per diluted share, in 2022. Now I'm focusing on the quarter. Total revenue for the quarter increased about 5%, excluding COVID-19 capital sales in Q4, 2022. Royalty revenue overall increased slightly, driven by Kypralis, Rylai's, Bax Nuban, and Philspari, with an opposite decrease in Terraparatide.

We expect that current cash plus annual cash flow generation will be sufficient to fund the investment activity, we anticipate over the foreseeable future.

Tableau: Turning now to guidance on slide 15, we are reaffirming the 2024 financial guidance, we introduced at Investor Day in December we expect 2020 for royalty revenue will be in the range of 90% to 90% $95 million sales of Captisol sales in the range of 25% to $27 million and contract.

Tableau: <unk> revenue in the range of $15 million to $20 million. These revenue components resulted in total revenue guidance of 130 million to $142 million and adjusted earnings per diluted share of $4 25.

Tableau: $4 75.

Speaker Change: And as Todd mentioned, we also introduced in December for the first time, and we reiterate today a longer term outlook, where we see royalty revenue growing at a compound annual growth rate above 20% from 2022% to 2028 and adjusted core EPS growing even faster at a compound annual growth rate above 20.

Tavo: Total operating expenses were lower compared to the prior year quarter, in large part due to the spin-out of Pelican, costs associated with investments made, and building up our investment team in Boston, as well as costs associated with the no-bans. As mentioned on our third quarter earnings call, we expect to incur incremental operating costs associated with incubating the NoVan business. Our intent is to spin out and or out-license the NoVan business, and therefore, we are adjusting out these expenses for purposes of reporting adjusted non-GAAP earnings. Gap net income for the fourth quarter of 2023 was $18 million or $1.02 per diluted share versus gap net loss of $14.5 million or $0.86 per share in the fourth quarter of 2022.

Speaker Change: 5%.

Speaker Change: As a reminder, we exclude captisol for COVID-19 related sales from guidance and we'll update investors as orders are received and shipped each quarter.

Speaker Change: Finally, I'd like to direct listeners to our fourth quarter earnings press release issued earlier today, which is available on our website for a reconciliation of our adjusted financial results to the GAAP results I talked about today.

Speaker Change: I'll now turn the call over to Todd for closing comments.

Todd: Thank you Tom in summary, we're very pleased with our 2023 financial results as well as the progress we've made over the last year, improving our investment capabilities and growing our asset portfolio.

Todd: Our diversified portfolio, including our major commercial royalty generating programs and late stage pipeline form the foundation for compounding growth. This portfolio provides us with substantial cash flow to reinvest in new alright.

Tom: Alright value enhancing royalty opportunities, we are well positioned to execute against our goals in 2024 and deliver attractive growth and shareholder returns over the long term.

Tavo: The increase in gap net income is due largely to gains from short-term investments as a result of the increase in value of our holdings of Viking stock, as well as lower operating costs. Excluding the impact of gains from biking stock and COVID-19 capsule sales, adjusted net income was $18.5 million or $1.05 per share in Q4-23 versus $13 million or $0.75 per share in Q4-21. Adjusted net income for the fourth quarter of 2023 was $24.3 million, or $1.38 per share, compared with $23.5 million, or $1.36 per share, the prior year quarter. Turning to the balance sheet, as of December 31st, 2023, we had cash and short-term investments of $170 million, which included $32 million of our holdings in Viking Common Stock.

Speaker Change: Thank you everyone for joining us for todays earnings call and we will now pass it back to the operator and open it up for questions.

Speaker Change: Yes.

Speaker Change: Thank you Sir if any participant would like to ask a question. Please press the star followed up on the number one on your telephone keypad, we will pause for just a moment to compile the Q&A master.

Speaker Change: Our first question comes from the line of Matt Hewitt from Craig Hallum Capital Group. Please go ahead.

Matthew Gregory Hewitt: Good morning, congratulations on the strong finish to the year.

Matthew Gregory Hewitt: I guess several different operation maybe the first one regarding the <unk>.

Matthew Gregory Hewitt: Opportunity, how should we be thinking about timing and potential structure.

Matthew Gregory Hewitt: <unk> partnership or.

Speaker Change: Your intentions with that operating asset.

Speaker Change: Thanks, Matt.

Tavo: I expect that current cash plus annual cash flow generation will be sufficient to fund the investment activity we anticipate over the foreseeable future. Turning now to guidance on slide 15, we are reaffirming the 2024 financial guidance we introduced at Investor Day in December. We expect 2024 royalty revenue will be in the range of $90 to $95 million, sales of capital in the range of $25 to $27 million, and contract revenue in the range of $15 to $20 million. These revenue components result in total revenue guidance of $130 million to $142 million and adjusted earnings per diluted share of $4.25 to $4.75.

Matthew Gregory Hewitt: Yes so.

Matthew Gregory Hewitt: Yes.

Matthew Gregory Hewitt: Very similar to way, we have done in the past creating.

Matthew Gregory Hewitt: Primrose bio recently in back in $2014 15, creating Viking and then eventually spinning out Viking as a Standalone company.

Matthew Gregory Hewitt: In 2015 with the IPO.

Matthew Gregory Hewitt: One of the things that we're pursuing with no van assets is creating this company called health those therapeutics that is just getting started.

Matthew Gregory Hewitt: <unk>.

We will create as a standalone independent company.

Matthew Gregory Hewitt: And we will seek external capital to fund at least a portion of.

And then.

Matthew Gregory Hewitt: La again would license it assets the same way, we license Viking four or five assets.

Matthew Gregory Hewitt: And set it up as a standalone company and that companies will be.

Tavo: And as Todd mentioned, we also introduced in December for the first time, and we reiterate today, a longer-term outlook where we see royalty revenue growing at a compound annual growth rate above 20% from 2022 to 2028 and adjusted core EPS growing even faster at a compound annual growth rate above 25%. As a reminder, we exclude caps to solve for COVID-19 related sales from guidance and will update investors as orders are received and shipped each quarter. Finally, I'd like to direct listeners to our fourth quarter earnings press release issued earlier today, which is available on our website, for a reconciliation of our adjusted financial results to the GAAP results I talked about today. I'll now turn the call over to Todd for closing comments. Thank you, Thabo.

Matthew Gregory Hewitt: Prepared to commercialize and launch the product.

Matthew Gregory Hewitt: Later this year when the products ready to be launched so.

Speaker Change: It's one avenue that we're exploring and right now it's the one that we think is pretty high probability, but we're exploring all alternatives, including our license with the asset to a strategic.

Speaker Change: Got it that's helpful and then.

Speaker Change: Regarding to your contract.

Speaker Change: And milestone guidance for this year, 15% to $20 million with <unk> dates in Q2.

Speaker Change: Would it make sense to be factoring in a little bit more heavy weighting if you will in that quarter maybe.

Speaker Change: Kind of assuming one of the two has a positive outcome or how should we be thinking about the cadence for the contract revenues.

Yes.

Speaker Change: Tableau is taking a look just to make sure we have the numbers correct, but as we've talked about there is an approval milestone for.

Todd: In summary, we are very pleased with our 2023 financial results and disclose the progress we've made over the last year in improving our investment capabilities and growing our asset portfolio. Our diversified portfolio, including our major commercial royalty-generating programs and late-stage pipelines, forms the foundation for compounding growth. This portfolio provides us with substantial cash flow to reinvest in new, high-value-enhancing royalty opportunities. We are well positioned to execute against our goals in 2024 and deliver attractive growth and shareholder returns over the long term. Thank you everyone for joining us for today's earnings call, and we will now pass it back to the operator and open it up for questions. Thank you, sir. If any participant would like to ask a question, please press the star followed by the number 1 on your telephone keypad.

Speaker Change: The <unk> asset that is about $5 million that will hit if it's approved in.

Speaker Change: June is expected so other than that one one big milestone I don't think Theres anything else <unk>. Yes. There is there is there is the.

Speaker Change: <unk>.

Speaker Change: European approval and a number of other milestones that we probability risk adjust.

Speaker Change: And so that's.

Speaker Change: We do take we do take the Paducah dates into consideration in arriving at a range there.

Speaker Change: Okay got it and then maybe one last one for me as far as you touched on this a little bit obviously, you've built out a really strong team to evaluate potential investment opportunities.

Speaker Change: You've got a nice backlog there funnel if you will.

Speaker Change: As far as timing is concerned is it really just about when the deals come together versus are you targeting.

Operator: We will pause for just a moment to compile the Q&A. Our first question comes from Liner Matt Hewitt from Craig Hallam Capital Group. Please go ahead. Good morning.

Hey, we'd like to have two this quarter to next quarter, how should we be thinking about the timing on on those thank you.

Matthew Gregory Hewitt: Congratulations on the strong finish to the year. I guess there are several different topics, but maybe the first one regarding the Pelthos opportunity. How should we be thinking about timing and the potential structure of a partnership or your intentions with that operating asset? Thanks, Matt. Yeah, so as...

Speaker Change: Yes, the timing on these have to be flexible because you want to make sure you get all the way through diligence.

Speaker Change: And you don't have a deal done until you are clear diligence and final term. So there is you know it.

Speaker Change: There isn't any investment business.

Todd: Very similar to the way we've done in the past, creating Primrose Bio recently and, back in 2014-2015, creating Viking and then eventually spinning out Viking as a standalone company in 2015 with the IPO. One of the things that we're pursuing with the Novant assets is creating this company called Pelthos Therapeutics, which is just getting started. We'll create it as a standalone independent company, and we will seek external capital to fund at least a portion of it. And then Ligand would license its assets the same way we license Viking's four or five assets and set it up as a stand-alone company, and that company would be prepared to commercialize and launch the product later this year when the product's ready to be launched. So it's one avenue that we're exploring, and right now, it's the one that we think is pretty high probability, but we're exploring all alternatives, including a license of the assets.

Speaker Change: There'll be periods, where there is.

Speaker Change: A lack of activity seemingly in terms of closes.

Speaker Change: And then there'll be periods, where there is significant activity in terms of closes, but theres always this underlying deal activity going on where you are originating deals evaluating screening taking a certain number of those that pass the screen into deeper diligence and then.

Speaker Change: Without perfect predictability, a certain amount of those get to a close so theres just a natural process to this and we don't want to commit to closing a certain number of deals or certain timing within a year, because you really want the flexibility to maintain investment discipline around that process.

Speaker Change: Got it alright, thank you.

Speaker Change: Thanks, Matt.

Speaker Change: Yes.

Speaker Change: Thank you. Our next question comes from the line of Laura <unk> from CJS Securities. Please go ahead.

Laura: Hi, good morning, Larry.

Laura: Just a couple of questions I guess I guess the first question just on the and you guys called it out on the royalty is a little bit down versus Q3, and usually the cheering up so you called out Terra power Todd.

Todd: Got it. That's helpful. And then regarding your contract and milestone guidance for this year, 15 to 20 million, with two PDUFA dates in Q2, would it make sense to be factoring in a little bit more heavy weighting, if you will, in that quarter? Maybe kind of assuming one of the two has a positive outcome, or how should we be thinking about the cadence for the contract revenues? Yeah, Tom was taking a look just to make sure we have the numbers correct. But as we've talked about, there's an approval milestone for the ends of entry, an asset that is about 5 million US dollars that will be hit if it's approved. June, as expected, so other than that one big milestone, I don't think there's anything else.

Laura: The driver behind that just curious as you look out to 'twenty four.

Laura: So a few moving parts here does the Terra paratype number and that guidance does that does that lower now.

Laura: They are an offset to that how would you kind of expected that I guess it was only a couple months ago.

Laura: And then I guess just on the royalty outlook I guess, you kind of mentioned.

Todd: Yeah, there's the TREVIR, European approval, and a number of other milestones that we probability risk adjust for, and so that's, we do take the PDUFA dates into consideration when arriving at our range there. Okay, got it. And then maybe one last one for me as far as you touched on this a little bit, obviously, you've built out a really strong team to evaluate potential investment opportunities. You've got a nice backlog, their funnel, if you will. As far as timing is concerned, is it really just about when the deals come together versus when you target, you know, hey, we'd like to have this quarter to next quarter, how should we be thinking about the timing on those?

Laura: So far a consensus is like 110. So I guess are you guys kind of assuming that number in your in your guidance. Maybe you can just give us a little color on those couple of moving parts.

Speaker Change: Yeah, Thanks, Larry So where are we.

Speaker Change: Iterating, what we said in December.

Speaker Change: We've learned a little bit more sense.

Including.

Speaker Change: The new <unk>.

Speaker Change: Consensus number for <unk>.

Speaker Change: And theres, a little bit of upside there, we think that the drivers will continue to be.

Speaker Change: Kyprolis vast new vast Riley.

Speaker Change: And.

Speaker Change: And we have been prudent, Ontario paradigm, and we continue to be.

Speaker Change: Prudent going into into the year.

Speaker Change: So we are seeing competition come in we haven't received the full report yet from Alba Jensen Theres still more to be learned but we have been conservative in our assumptions.

Todd: Thank you. Yeah, the timing on these has to be flexible because you want to make sure you get all the way through due diligence. And you don't have a deal done until you clear diligence and final terms. So there will be periods where there's a lack of activity, seemingly, in terms of closes. And then there'll be periods where there's significant activity in terms of closes. But there's always this underlying deal activity going on where you're originating deals, evaluating, screening, taking a certain number of those that pass the screen into deeper diligence, and then, without perfect predictability, a certain amount of those get to close.

Speaker Change: Got it and Youre not assuming anything for zelle soon this year correct.

Speaker Change: No.

Speaker Change: Okay, and then just the thoughts of Verona, obviously, the product and suffering is in their hands, but.

Speaker Change: And then you mentioned I think that they've got some financing.

Speaker Change: So the current believes today.

Speaker Change: Expect to launch that themselves obviously COPD.

Speaker Change: Huge market.

Speaker Change: Lot of.

Speaker Change: Marketing expense in big pharma and their dominant by big pharma is that something they're going to try and go up against or are they actively looking for a partner.

Speaker Change: Yes, Sir we have no obviously specific knowledge on.

Speaker Change: Their plans, but they have a strong team and have over the last couple of years.

Todd: So there's just a natural process to this, and we don't want to commit to closing a certain number of deals or a certain timing within a year because you really want the flexibility to maintain investment discipline around that process. Got it. All right. Thank you. Thank you. Our next question comes from Lionel Lawrence-Solow from CJS Securities. Please go ahead. Hi, good morning.

Speaker Change: <unk> built that up so that they have the ability to launch this themselves.

Speaker Change: And that is that is our assumption in terms of our forecast and guidance around the product, but obviously there is we think significant upside around a potential larger acquisition and this is a product within a category, where we certainly think some larger folks.

Larry Solow: Larry Works. Just a couple questions. I guess the first question, just on the royalties being a little bit down versus Q3, and usually they're tiering up. And you called out Terraparatide as the driver behind that. Just curious, as you look out to 24, a few moving parts here, does the Terraparatide number in that guidance, is that lower now? Is there an offset to that?

Speaker Change: I'd be interested in this asset because.

Speaker Change: It's the first significant innovation in the maintenance of COPD in a long time.

Speaker Change: No absolutely that makes sense and then just lastly could you just remind us how many shares of VK, TX you guys have currently.

Speaker Change: Yes.

Speaker Change: <unk>.

We still hold about one 7 million shares of Viking therapeutics.

Speaker Change: Got it okay appreciate that thanks Todd.

Speaker Change: Okay.

Speaker Change: Thank you as a reminder, if any teleconference participant would like to ask a question. Please press the star followed by the one on your telephone keypad.

Todd: Had you kind of expected that? I guess it was only a couple of months ago. And then I guess just on the royalty outlook, I guess you kind of mentioned the FILFBAR consent, which is like 110. So I guess that you guys kind of assume that number in your guidance. Maybe just give a little color on those couple of moving parts. Yeah, thanks, Larry. So we're reiterating what we said in December. We've learned a little bit more since, including the new consensus number for Phil Sparry. There's a little bit of an upside there.

Barclays: Our next question comes from <unk> <unk> of Barclays. Please go ahead.

Barclays: Hi, Good morning. This is Sean on for <unk>. Thanks for taking our question just a quick one on O'reilly could you add a little bit more color on your comments with regard to the supply constraints and could you also share your view on the short term and the long term our revenue ramp up for these assets and the implications for ligand portfolio. Thank you.

Barclays: Much.

Barclays: Thanks.

Todd: We think that the drivers will continue to be Ky Prowless, Vax Nuvance, and Riley. And we have been prudent on TerraParatide, and we will continue to be prudent going into the year. So we are seeing competition come in. We haven't received the full report yet from Alvagen, so there's still more to be learned, but we have been conservative in our... Got it. And you're not assuming anything for Ze

Speaker Change: As folks know Ryan <unk> marketed by jazz our marketing partner.

Speaker Change: The supply constraints, we were referring to in my prepared comments were.

Speaker Change: Really related to the predecessor product.

Speaker Change: Jazz and <unk>.

Speaker Change: Pelican, our Phoenix, our prior technology platform collaborated to develop <unk> to solve those manufacturing problems historically.

Todd: No. Okay. And then just thoughts of Verona, obviously, the product and preference is in their hands, but you mentioned, I think, that they've gotten some financing. The current belief today is that they expect to launch that themselves. Obviously, COPD is a huge market, a lot of marketing expenses, and big pharma in there, dominated by big pharma. Is that something they're going to try and go up against, or are they actively looking for a partner? We have no, obviously, specific knowledge of their plans, but they have a strong team and have, over the last couple of years, built that up so that they have the ability to launch this themselves.

Speaker Change: And so those are all resolved now.

Speaker Change: And the new product is fully available.

Speaker Change: As much as needed from a manufacturing standpoint.

Speaker Change: In terms of projections for the product or comments on the product's potential.

Speaker Change: We only can report what our partners report and jazz did not provide guidance for <unk>.

Speaker Change: I would point folks to the publicly reported consensus estimates.

Speaker Change: For the product, but last year that product did about 400 million a little bit less I think for the year end.

Speaker Change: We hope to see growth given that jazz highlighted that as one of its three key growth drivers.

Todd: And that is our assumption in terms of our forecast and guidance around the product. But obviously, there's, we think, significant upside to a potential larger acquisition. And this is a product within a category where we certainly think some of the larger folks should be interested in this asset because it's the first significant innovation in the maintenance of COPD in a long time. Absolutely, that makes sense. And just lastly, can you just remind us how many shares of VKTX you guys currently have? We still hold about 1.7 million shares of Viking Therapy.

Speaker Change: Got it thanks.

Speaker Change: Okay.

Speaker Change: There are no further questions at this time thank.

Speaker Change: Thank you ladies and gentlemen, we will conclude today's conference call. We thank you for participating you may now disconnect.

Speaker Change: [music].

Todd: Got it. Okay, I appreciate that. Thanks, Todd.

Larry Solow: Thank you. As a reminder, if any teleconference participant would like to ask a question, please press this bell, followed by the one on your telephone. Our next question comes from the line of Balaji Prasad of Barclays. Please go ahead. Hi, good morning.

Balaji V. Prasad: This is Xiao An from Balaji. Thanks for taking our questions. Just a quick one on Raleigh.

Matt: Could you add a little bit more color to your comments with regard to the supply constraints? And could you also share your view on the short-term and the long-term revenue ramp-up of this asset and the implications for Ligand's portfolio? Thank you so much. As you know, Rylase is marketed by Jazz, our marketing partner. The supply constraints we were referring to in my prepared comments were really related to the predecessor product. Jazz and Pelican or Phoenix, our prior technology platform, collaborated to develop Rylase to solve those manufacturing problems historically. Those are all resolved now, and the new product is fully available, as much as needed from a manufacturer. In terms of projections for the product or comments on the product's potential, we only can report what our partners report, and Jazz did not provide guidance for Riley's. I'd point folks to the publicly reported consensus estimates for the product, but last year the product did about $400 million, a little bit less, I think, for the year, and we hope to see growth given that Jazz highlighted that as one of its three key growth areas.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Operator: God, thanks. There are no further questions at this time. Thank you, ladies and gentlemen. We will conclude today's conference call. We thank you for participating. You may now disconnect.