Q1 2024 SWK Holdings Corp Earnings Call

Operator: Good morning everyone, and welcome to the SWK Holdings first quarter 2024 conference call. At this time, all participants have been placed in a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jason Rando. Sir, the floor is yours.

And what are the S. W. K holdings first quarter 2020 for conference calls.

Speaker Change: At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation.

Speaker Change: It is now my pleasure to turn the floor over to your host Jason Rando, Sir the floor is yours.

Jason Rando: Good morning, everyone. Thank you for joining SWK Holdings' first quarter 2024 financial and corporate results call. Yesterday evening, SWK Holdings issued a press release detailing its financial results for the three months ended March 31, 2024. The press release can be found in the investor relations section of swkhold.com under news or Before beginning today's call, I would like to make the following statement regarding forward-looking statements. Today we'll be making certain forward-looking statements about future expectations, plans, events, and circumstances.

Speaker Change: Good morning, everyone and thank you for joining us educate holdings first quarter 2024 financial and corporate results call yesterday evening SDK Holdings issued a press release detailing its financial results for the three months ended March 31, 2024 press.

Speaker Change: Press release can be found in the Investor Relations section of SDK whole dot com under newsroom.

Jason Rando: Including statements about our strategy, future operations, and our expectations regarding our capital allocation and cash resources. These statements are based on our current expectations, and you should not place undue reliance on these statements. Actual results may differ materially due to our risks and uncertainties, including those detailed in the Risk Factors section of SWK Holdings' 10-K filed with the SEC and other filings we make with the SEC from time to time. SWK Holdings disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise. Joining me on today's call is Jody Staggs, President and CEO, who will provide an update on SWK's first quarter 2024 corporate and finance results.

Speaker Change: Before beginning todays call I would like to make the following statement regarding forward looking statements.

Today, we'll be making certain forward looking statements about future expectations plans events and circumstances.

Speaker Change: The things statements about our strategy future operations, and our expectations regarding our capital allocation and cash resources you.

Speaker Change: These statements are based on our current expectations and you should not place undue reliance on these statements.

Speaker Change: Actual results may differ materially due to our risks and uncertainties.

Speaker Change: And those detailed in the risk factors section of SMP Holdings, 10-K filed with the SEC and other filings, we make with the SEC from time to time.

Speaker Change: S didn't get holdings disclaims any obligation to update information contained in these forward looking statements.

Speaker Change: As a result of new information future events or otherwise.

Speaker Change: Joining me from Exterran Holdings on today's call is <unk>, President and CEO, who will provide an update on its first quarter 2020 for corporate and financial results.

Speaker Change: You already go ahead.

Jody Staggs: Thank you, Jason. And thanks, everyone, for joining our first quarterly conference call. SWK's first quarter of 2024 results were highlighted by 24% growth in finance segment revenue to a near all-time high of $11.5 million, while our interests segment signed an exclusive option to purchase agreement with a strategic partner that reduces the operating burn and may lead to the acquisition of certain CDMO related tangible assets. SWK's core business is financing commercial stage life science product companies through first-link term loans and royalties with a focus on $5 million to $25 million investors.

Thank you, Jason and thanks to everyone for joining our first quarter conference call.

Speaker Change: So the case first quarter of 2024 results were highlighted by 24% growth in finance segment revenue to a near all time high of 11 5 billion, while our interior segment signed an exclusive option to purchase agreement with a strategic partner.

Speaker Change: Reduces operating burn and may lead to the acquisition of certain chemo related intangible assets.

Speaker Change: <unk> core business is financing commercial stage life science product companies do first lien term loans and royalties with a focus on slide $25 million investments. We have concentrated on this niche for over a decade and as adults and extensive network and strong experience spanning the three core functions of a direct credit firms origination underwriting.

Jody Staggs: We have concentrated on this niche for over a decade and have developed an extensive network and strong experience spanning the three core functions of a direct credit firm, origination, underwriting, and portfolio management. These capabilities were evidenced during the first quarter as our finance segment generated a 10.3% year-over-year increase in its gross finance receivables portfolio to $274.5 million, coupled with a 14.2% effective yield and 16.3% realized yield. These achievements led to a 24% year-over-year increase in segment revenue to $11.5 million.

Speaker Change: Writing a portfolio management.

Speaker Change: These capabilities were evidenced during the first quarter as our finance segment generated a 10, 3% year over year increase in gross finance receivables portfolio up to $274 5 million, coupled with a 14, 2% effective yield at 16, 3% realized yield.

These achievements led to a 24% year over year increase in segment revenue to $11 5 billion.

Jody Staggs: This performance enabled our finance segment to remain profitable in the quarter, generating $1 million of gap net income and $2.7 million of adjusted non-gap net income, despite being negatively impacted by a $6 million impairment in our loan book. We are constructive in the life science finance market and are actively pursuing multiple loan and royalty opportunities, while remaining cognizant of increased competition in certain pockets of the life science finance market. While many of our competitors have grown to a size where they must focus on large sponsor-backed opportunities, we believe SWK's focus on the less competitive sub-$25 million market remains a competitive differentiator.

Speaker Change: This performance enabled our finance segments remained profitable in the quarter generating a.

Speaker Change: $1 billion of GAAP, net income and $2 $7 million of adjusted non-GAAP net income despite being negatively impacted by $6 million impairment in our loan book.

Speaker Change: We are constructive on the life science finance market and are actively pursuing multiple loading world royalty opportunities, while remaining cognizant of increased competition in certain pockets of the Lifesize finance market.

Speaker Change: Well many of our competitors have grown to a size where they must focus on boards sponsored back opportunities. We believe SCB kids focus on the less competitive sub $25 million market remains a competitive differentiator.

Jody Staggs: During the first quarter, our Interest Division signed an Exclusive Option and Asset Purchase Agreement with a strategic partner, granting the partner a two-year exclusive option to purchase certain Interest Tangible Assets in exchange for option fees and guaranteed revenue. In April, we received the first low single-digit million-dollar option fee. The guaranteed revenue payments are due every six months, and we expect to receive the first guaranteed revenue payment in the third quarter.

Speaker Change: During the first quarter, our interest division inside an exclusive option an asset purchase agreement with a strategic partner grading to partner a two year exclusive option to purchase certain and terrorist tangible assets in exchange for options, even guaranteed revenue payments.

Speaker Change: In April we received the first low single digit million dollar option fee.

Speaker Change: The guaranteed revenue payments are chewed up every six months and we expect to receive the first guaranteed revenue payments in the third quarter. Our first quarter financial results did not include any revenue from either the auction fee or guaranteed revenue payments.

Jody Staggs: Our first quarter financial results did not include any revenue from either the option fee or the guaranteed revenue payment. As we highlighted on our fourth quarter call, the agreement immediately reduces the cash burn-out in tariffs, and we believe the business will be break-even or better over the duration of the agreement. The agreement also provides our colleagues at Interis the opportunity to work with our partner to increase the project pipeline and generate new business, while allowing SWK to prioritize its specialty finance business focused on investing in small and mid-sized commercial stage life sciences companies.

Speaker Change: As we highlighted on our fourth quarter call. The agreement immediately reduced the cash burn out and tariffs, we believe the business will be breakeven or better over the duration of the agreement.

Speaker Change: The agreement also provides our colleagues at a terrorist the opportunities to work with our partner to increase the project titled pipeline and generate new business, while allowing us to be case Portage, our specialty finance business focused on investing in small and mid sized commercial stage life science companies.

Jody Staggs: Turning to our share repurchase program, we bought back 58,298 shares at a total cost of $1 million during the quarter. Since quarter close, we've repurchased an additional 19,000 shares for a total cost of $300,000. At March 30, 2024, our book value per share was $22.46, a 5% increase compared to $21.39 in the year-ago period. Non-GAAP tangible financing book value per share was $19.69, an approximately 17% increase from the year-ago period.

Speaker Change: Turning to our share repurchase program, we bought back 58298 shares at a total cost of $1 billion during the quarter.

Speaker Change: Since quarter close we repurchased an additional 19000 shares for a total cost of 300000.

Speaker Change: At March 31 March 30th 'twenty 'twenty four our book value per share was $22 46 a.

Five 5% increase.

$21 39 in the year ago period.

Speaker Change: non-GAAP tangible financing book value per share totaling $19.69 on approximately 17% increase from the year ago period.

Jody Staggs: For the first quarter of 2024, the realized yield of the finance receivables portfolio was 16.3%, versus approximately 15% for the same period in the prior year. In summary, the first quarter of 2024 was largely as expected with the exception of the $6 million loan impairment. For the remainder of 2024, we will prioritize selectively closing commercial stage life science loan and royalty transactions that fit our underwriting criteria, working with our non-accrual borrow partners to realize positive outcomes, exploring paths for additional capital, and returning capital to shareholders through our buyback program. With that, let's open the call to questions.

Speaker Change: For the first quarter of 2024, the realized children finance receivables portfolio was 16, 3%.

Speaker Change: Versus 15% approximately 15% for the same period in the prior year.

Speaker Change: In summary, first quarter of 2024 was largely as expected with the exception of the $6 million loan impairment.

Speaker Change: So the remainder of 2024, we will prioritize selectively closing commercial stage life science loan and royalty transactions that fit our underwriting criteria.

Speaker Change: Working with our nonaccrual borrower partners to realize positive outcomes.

Exploring paths for additional capital.

Speaker Change: Returning capital to shareholders via our buyback program.

Speaker Change: With that let's open the call to questions.

Operator: Certainly. Everyone, at this time. We are conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while you are posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from Mark Argentino on Lake Street. Your line is live.

Speaker Change: Sorry, everyone. At this time, we are conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time.

We do ask the world posing a question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.

Speaker Change: Once again, if you have any questions or comments. Please press star one on your phone.

Speaker Change: Your first question is coming from Mark Argentino from Lake Street. Your line is live.

Mark Nicholas Argento: Hey Jody, just a couple quick ones. One, could you just touch on the impairment, you know, what it was? And then two, what's your kind of lending base or capacity right now? Thanks.

Mark Nicholas Argento: Hey, Jerry just a couple quick ones. One can you just touch on the impairment.

Mark Nicholas Argento: What was that and then two what's your kind of lending base capacity right now.

Jody Staggs: Yeah, thanks Mark. Yeah, so the impairment was to our TRIO loan, which was carried at $9.6 million at $1230K. Yeah, the situation remains in workout. There is a restructuring ongoing. So, you know, we remain positive about the potential outcome here, but it's, I think the restructuring happened a little quicker than we would have thought, it was a little bit more rushed than we would have thought, and as the business goes through that, there's likely to be some disruptions.

Jerry: Yeah. Thanks, Mark Yeah. So the impairment was to or trio alone, which was carried at $9 6 million a 12 30.

Mark Nicholas Argento: <unk>.

Mark Nicholas Argento: Yeah.

Mark Nicholas Argento: The situation remains and work out there there is a restructuring ongoing so we remain.

Mark Nicholas Argento: Positive towards the potential outcome here, but it's I think the the restructuring happened a little quicker than we would've thought it was a little bit more rush than we would've thought and you know as it goes with the business goes through that there's likely to be some disruptions given that given our org structure under the restructuring we felt this impairment was positive.

Jody Staggs: Given that, given our structure under the restructuring, we felt this impairment was positive, excuse me, was not positive, was appropriate. We're, you know, as we get a little further out from it, we'll do a full write-up and analysis of what happened here. It was a UK borrower.

Mark Nicholas Argento: Excuse me it was not positive was appropriate.

Jody Staggs: We've only done a few of those. I think we need to do a deep dive and understand if that played a role here. There's some other dynamics that, you know, I think in my mind, happened, and we'll definitely use this as a learning experience. In terms of our lending capacity, we, Unknown Speaker, The Revolver, as we stand today, the revolvers undrawn, I think we've got a few million dollars of cash.

Mark Nicholas Argento: Sure.

Mark Nicholas Argento: As we as we get a little further out from it we will do a full write up and our analysis of what happened here it wasn't UK borrower.

Mark Nicholas Argento: We've only done a few of those and I think we need to do a deep dive and understand if that played a role here there are some other dine.

Speaker Change: Dynamics that you know I think in my mind are happening and we'll definitely use it as a learning experience.

Speaker Change: In terms of.

Speaker Change: Linear capacity we.

Jody Staggs: So we have plenty of capacity, let's say 50 to 50 million. We've got some undrawn commitments and things like that. But we're in the, you know, 45 to $50 million range of capacity. The [inaudible] The market has turned a bit more competitive, and that's both the sort of general dynamic of, you know, a new player or two in the market, plus with equity markets moving higher, you know, that's an alternative for some of these companies.

Speaker Change: The revolver as we stand today, the revolver is undrawn and I think we've got a few million dollars of cash. So we have plenty of capacity, let's say 50 to 50 million, we've got some undrawn commitments and things like that but we're in the $45 million to $50 million in capacity.

Speaker Change: It was talking to the team yesterday about what we've done year to date and you know I think we would have liked to have closed some deals we actually have submitted about $200 million of proposals year to date, which is up year over year, and we have about $60 million of proposals outstanding. So I think we're we're doing.

Speaker Change: We're running our playbook, we're out there originating are we're out there fighting.

Speaker Change: Finding potential partners were out there. So many proposals the market has turned a bit a bit more competitive and that's both just sort of general dynamics.

Speaker Change: Our new player or two in the market plus with equity markets moving higher that's an alternative for some of these companies. So.

Jody Staggs: So I don't think we're going to be doing anything drastically different. But I sort of challenge the team to think through our process, our proposals, are there things we should be doing differently? Are we out there hustling every day? You know, making sure that we're staying in front of these companies and putting the best proposal forward to get some closings.

Speaker Change: I don't think we're gonna be doing anything drastically different but I've sort of challenged the team to think through our process. Our proposals are there things we should be doing differently are we out there hustling every day, making sure that we're staying in front of these companies and they are putting the best proposal for to get some closings.

Jody Staggs: That's helpful. And then, you know, how do any of your portfolio companies access the equity markets, in terms of raising additional equity capital, or how do you guys deal with the broader capital markets right now? Unknown AttendeeYes, yes. So we

Speaker Change: That's helpful and then.

Speaker Change: Is any of your portfolio companies access the equity markets.

Speaker Change: Timber raising additional equity capital or how do you guys.

Speaker Change: Broader capital markets right now.

Jody Staggs: Yes, so we do have some private companies that have raised capital recently, one public company as well, and I suspect others are evaluating that given that those are open. So it's a double-edged sword; it's great for our portfolio companies; more equity; we finance Cash for Earnings Life Science Company, so it's important that they have some ability to raise equity, particularly when things are good. It does make originating new loans, you know, obviously, modestly more challenging.

Speaker Change: Yes, yes, so we do have some private companies that have raised capital recently, one public company as well.

Speaker Change: I suspect others or are evaluating that given its those are open. So it's you know it's a double edged sword its great for our portfolio companies more equity.

Speaker Change: We refinanced cash sporting life Science company. So it's important that they have some ability to raise equity, particularly when things are good it does make originating new loans.

Speaker Change: I would say modestly more challenging.

Jody Staggs: Unknown Speaker All right. Thanks. Yeah, thank you, Mark. I appreciate the question.

Speaker Change: Great. Thanks.

Mark Nicholas Argento: Yes. Thank you Mark I appreciate the questions.

Operator: Thank you. Once again, everyone, if you have any questions or comments, please press star, then 1 on your phone. Your next question is coming from William Koch.

Speaker Change: Thank you once again, everyone. If you have any questions or comments. Please press star then one on your phone.

Speaker Change: Your next question is coming from William Couch. Your line is live.

William Koch: Hi, uh, this is Bill Koch calling. I am a shareholder, not a financial person. In fact, I'm, hi, hi, I appreciate this opportunity. In fact, I'm a criminal defense lawyer; I don't, you know, all the financial numbers are, I think, great with this company. The only reason why I'm a shareholder, though, is, and this is my question, questions. I actually have a lot of questions. The only reason why I'm a shareholder is because SWK owns Interis, and I owned Unigine stock 20-25 years ago. Yeah, I'm like, uh, I've, I've...

Hi.

bill Koch: This is bill Koch calling.

Unknown Attendee: I'm, a shareholder I'm not a financial person.

Speaker Change: Exactly Hi, Hi, I appreciate this opportunity.

Speaker Change: In fact, I'm, a criminal defense lawyer I don't [laughter].

Speaker Change: All the financial numbers are I think great with this company.

Speaker Change: The only reason why I am a shareholder though is and this is my question questions actually I have a lot of questions.

Speaker Change: The reason why I'm, a shareholder was because S. W K Jones and tariffs.

Speaker Change: And I owned unit gene stock 2025 years ago.

Uh huh.

William Koch: So, um, it's almost like I'd like to have a lot of questions that I couldn't really, I mean, I know what they are, but I couldn't really formulate them, given the fact that I just found out last night that this conference call was going to be this morning. But, you know, going back to stuff that Unigine did, some of the situations they were in, like with Pfizer and... How they competed with Emisphere through the years, all the deals, the big deals they had that Unigine had and then Interis had, sort of potentially, it never worked out, but potential blockbuster drugs. So I'm not sure if I should just start asking questions or if I could send you an email.

Speaker Change: So it's it's almost like a I'd like to have like a lot of questions that I couldn't really.

Speaker Change: I know, what they are but I couldn't really formulate them.

Speaker Change: Given the given that I just found out last night that this conference call is gonna be this morning.

Speaker Change: But you know going back to stuff that unit gene did some of the some of the situations that we're in like with Pfizer and <unk>.

Speaker Change: How they competed with M. A sphere through the years all the deals the big deals they had that Union gene had and then in tourists had with.

Speaker Change: Sort of potentially had never worked out but potential block.

Speaker Change: Blockbuster drugs, so I'm not sure if I could just start asking questions or if I could send yeah. Let me let me, let me maybe kind of kind of the frame. It. This way maybe it makes sense for us to get on a call to cause I can walk you through kind of what's happened you know S&P case involvement and in a lot of specifics around unit gene and the transition so we.

Jody Staggs: Yeah, let me maybe kind of frame it this way, and maybe it would make sense for us to get on a call, too, because I can walk you through kind of what's happened, you know, SWK's involvement, and a lot of specifics around Unigine and the transition. So, you know, we purchased Interus, it's been over four years ago, it might have been five years ago, and at the time, the thesis really was, hey, this is a cool technology; they're helping peptides and certain small molecules go from IV to oral.

Speaker Change: We purchased and terrorists spent over four years ago might've been five years ago and at the time. The thesis really was hey, this is cool technology.

Speaker Change: They're helping peptide and in certain small molecules go from IV to oral there were some interesting things in the pipeline and you know we saw the atmosphere transaction and that's where their involvement with G. O P ones that we thought Wow This is pretty cool.

Jody Staggs: There were some interesting things in the pipeline, and, you know, we saw the Inmasphere transaction and sort of their involvement with GLP-1s, and we thought, wow, this is pretty cool. You know, fast, and they had signed the license with CARA, so we felt like that was validated technology, and we liked that a lot. You know, kind of fast forward. I would say the execution wasn't great, and, you know, we certainly hold responsibility for that. I would say the window was kind of missed.

Speaker Change: You know fast and they had signed the license with Kara. So we felt like that validate the technology and we liked that a lot.

Speaker Change: Kind of fast forward I would say the execution wasn't great and we certainly hope responsibility for that.

Speaker Change: I would say the window was kind of missed so they're still talking to folks about additional licenses and we've we've come close a couple of times, but the window was sort of missed there was probably four or five year window. When there was some opportunities to get some things done and again execution wasn't great. So.

Jody Staggs: So, you know, they're still talking to folks about additional licenses, and we've come close a couple times, but the window was sort of missed. There was probably a four- or five-year window when there was some opportunities to get some things done, and, again, execution wasn't great. So, you know, when the board put me in as CEO, you know, we looked at that business and said, hey, can we really add value doing what we're doing now? And if you look at our financials, it was a cash-burning situation. So we were sending money from our finance business to Interis, which, you know, none of us wanted to do.

Speaker Change: When when the board put me in a C E O. What we looked at that business and said Hey can we really add value doing what we're doing now and if you look at our financials there was a cash burning.

Speaker Change: Situations. So we were sending money from our finance business too and tariffs, which none of us wanted to do.

Jody Staggs: And we made the decision to really downsize that business, so we reduced the head count. There's a new CEO there named Paul Shields, and we've really refocused that around kind of classic CDMO operations. So they're focused right now on some sort of unique dosing types and helping companies evaluate those dosing types in phase one and phase two. So we still have PEP intelligence.

Speaker Change: And we made the decision to really downsize that business. So we reduced the head count there's a new CEO there named Paul Shields, and we've really refocused out around kind of classic CD Moe operation. So they are focused right now on.

Speaker Change: Some sort of unique dosing types in helping companies evaluate those dosing types in phase one and phase two so we still have pet telegent theres still some efforts to do some licenses. There. That's mentioned you know we were talking to people and we've come close a couple of times, but.

William Koch: There are still some efforts to do some licenses there. As mentioned, you know, we were talking to people, and we've come close a couple times. But, you know, unfortunately, I think the window for monetizing that IP, you know, is probably not all the way closed, but it's not where it was five years ago. Okay, Well, I guess I kind of, yeah, because, I mean, I don't know how much time you have, but, you know, all Emysphere had was an oral delivery technology that I believe, Unigene's was actually shown, I think, in those calcitonin studies years ago to be better than Emysphere's technology in terms of delivering the... API into the bloodstream and Emysphere was bought by Novo for over a billion dollars.

Speaker Change: Unfortunately, I think that the window for monetizing that IP.

Speaker Change: It's probably not all the way close but it's it's it's not a not where it was five years ago.

Speaker Change: Okay.

Speaker Change: Well I guess that kind of yeah cause.

Speaker Change: And how much time here, but you know M S.

Speaker Change: Well I'm a sphere had was an oral delivery technology.

Speaker Change: That I believe you know jeans was actually shown I think in those calcitonin studies years ago to be better than then atmospheres technology in terms of delivering the.

Speaker Change: A pea at <unk> into the bloodstream and atmosphere was bought by Novo for over $1 billion. So that's kind of why I felt like Wow This stuff.

William Koch: So that's kind of why I thought like, wow, this could, SWK has money, and maybe they can move. You can take us forward to some, you know, some sort of, you know, huge, big deals like that, but I guess what you're saying is that it won't happen.

Speaker Change: WK has money and maybe they can move.

Speaker Change: And terrorists forward to some you know some sort of you know huge big deals like that but I guess, what you're saying is that's not going to happen.

Jody Staggs: I would say it's, you know, we haven't, we haven't given up, you know, there's still some effort there. But look, look, you're, you're exactly saying our thesis. That is exactly what we thought. You know, we purchased it for, I think, 19 million bucks, you know, we got some of the care license.

Speaker Change: I would say, it's you know.

Speaker Change: We haven't we haven't given up you know theres still some efforts there, but look what you're.

Speaker Change: You're exactly saying our thesis that is exactly what we thought we purchased it for I think 19 million Bucks, we got some the Cara license. So that your thesis is exactly what we thought and you at the time.

Dan: I think we thought and there was some work in the pipeline on G. L. P. One Dan I don't want to get too in the weeds here, but so we saw all those same things about this this could be a huge upside scenarios. So again I don't think it was a crazy idea didn't work out like we would've hoped.

Jody Staggs: So your thesis is exactly what we thought. And, you know, at the time, I think we thought, and there was some work in the pipeline on GLP ones. And, you know, I don't want to get too in the weeds here. But we saw all those same things and thought this could be a huge upside scenario. So again, I don't think it was a crazy idea, you know; it didn't work out like we would have hoped. But yeah, I think your points are well taken.

Dan: But yeah, I think your point's well taken and it just I guess last call, but I would say is if you look at any of these dosing companies' technologies.

Dan: Most of the large pharma.

Dan: They have some of them.

Jody Staggs: And just, I guess, the last comment I would say is, you know, if you look at any of these dosing companies and technologies, most of the large pharma, you know, biotech companies, they have some of them. They do have internal capabilities, and you're right, like the pet intelligence technology is, you know, from what we've seen from data and talking to partners, it's the best out there in terms of getting certain API However, is that a differentiating enough factor to get someone to pay royalties?

Dan: They do have an internal capabilities and.

Youre right like the <unk> technology is.

From what we've seen from data from talking to partners. It's the best out there in terms of getting a certain API, where it needs to go however.

Speaker Change: Is it is that a differentiating enough factor to get someone to pay a royalty that's always a challenge. So if you can get 10% of the API, where it needs to go versus 5%.

Jody Staggs: That's always a challenge. So if you can get 10% of the API where it needs to go versus 5%, that's awesome. That's great. But is it valuable enough for someone to pay a royalty? Or do they say, you know what? 5%, we can maybe up the milligram and still get the coverage we need. So that's what you're always wrestling with there. Okay.

William Koch: Okay. All right.

Speaker Change: Awesome, that's great is it valuable enough for someone to pay a royalty or they say you know what 5%.

Speaker Change: We can maybe up the milligram and still get the coverage we need so that that's what you always wrestling with there.

Speaker Change: Okay Alright.

Speaker Change: I appreciate it.

Jody Staggs: Absolutely. Yeah, feel free to call. I'm happy to chat about that. And we'd love to hear your views on sort of what happened there. Okay, all right.

Speaker Change: Yeah, I feel free to call him I'm happy to chat on that.

Speaker Change: And would love to hear your views.

Speaker Change: On sort of what happened there.

Jody Staggs: Okay, all right. Thank you. Thanks, Bill

Speaker Change: Alright, thank you thanks.

Bill: Thanks Bill.

Speaker Change: Uh huh.

Operator: There are no further questions in the queue.

Speaker Change: There are no further questions in the queue.

Speaker Change: Okay.

Jody Staggs: Great. Well, thanks for the questions, Mark and Bill, and thanks for joining the call. I'm around today. The team's around today. It's more if you'd like to reach out. I hope everyone has a good day. Bye-bye.

Speaker Change: Great well, thanks for the questions Mark and Bill and thanks for joining the call I'm around today are the teams around today, it's more if you'd like to reach out and hope everyone has a good day bye bye.

Speaker Change: Okay.

Operator: Thank you, everyone. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.

Speaker Change: Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.