Q4 2024 Horizon Technology Finance Corp Earnings Call

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Operator: Greetings and welcome to the Horizon Technology Finance Corporation's fourth quarter 2024 conference call. At this time, all participants will be in listen-only mode. A question and answer session will follow the formal presentation.

Speaker Change: Greetings and welcome to the Horizon Technology Finance Corporation's fourth quarter 2024 conference call.

The simulcast Vince will be in listen only mode.

Speaker Change: A question and answer session will follow the formal presentation.

Operator: If anyone this morning should require operator assistance, please press star zero from your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: If anyone this morning should require operator assistance. Please press star zero from your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded.

Megan Bacon: I'll now turn the conference over to Megan Bacon, Director of Investor Relations and Marketing. Thank you, Megan. You may now begin.

Speaker Change: I'll now turn the conference over to Megan Bacon director of Investor Relations and marketing.

Speaker Change: Thank you Magnus you may now begin.

Megan Bacon: Thank you and welcome to Horizon Technology Finance Corporation's fourth quarter 2024 conference call. Representing the company today are Rob Pomeroy, Chairman and Chief Executive Officer, Gerald Michaud, President, Dan Devorsetz, Chief Operating Officer and Chief Investment Officer, and Dan Trolio, Chief Financial Officer.

Speaker Change: Thank you and welcome to Horizon Technology Finance Corporation's fourth quarter 2024 conference call.

Speaker Change: Presenting the company today are Rob Pomeroy, Chairman and Chief Executive Officer, Jerry Michaud, President Dan divorced a chief operating officer, and Chief Investment Officer, and Dan <unk>, Chief Financial Officer, I would like to point out that the Q4 earnings press release and Form 10-K are available on the.

Megan Bacon: I would like to point out that the Q4 earnings press release and Form 10-K are available on the company's website at horizontechfinance.com.

Speaker Change: Company's website horizon type finance dotcom.

Megan Bacon: Before we begin our formal remarks, I need to remind everyone that during this conference call, the company will make certain forward-looking statements, including statements with regard to the future performance of the company. Words such as believes, expects, anticipates, intends or similar expressions are used to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements, and some of these factors are detailed in the risk factor discussion in the company's filings with the Securities and Exchange Commission, including the company's Form 10-K for the year ended December 31st, 2024.

Speaker Change: Before we begin our formal remarks I need to remind everyone that during this conference call. The company will make certain forward looking statements, including statements with regard to the future performance of the company.

Speaker Change: Words, such as believes expects anticipates intends or similar expressions are used to identify forward looking statements.

Speaker Change: These forward looking statements are subject to the inherent uncertainties in predicting future results and conditions.

Speaker Change: Any factors could cause actual results to differ on a material basis from those projected in these forward looking statements and some of these factors are detailed in the risk factor discussion in the company's filings with the Securities and Exchange Commission, including the company's Form 10-K for the year ended December 31 22.

Megan Bacon: The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Speaker Change: 24.

Speaker Change: The company undertakes no obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise.

Robert Pomeroy: At this time, I would like to turn the call over to Rob Pomeroy. Welcome everyone and thank you for your interest in Horizon. Today, we will update you on our quarterly and annual performance in our current operating environment.

Rob Pomeroy: At this time I would like to turn the call over to Rob Pomeroy.

Rob Pomeroy: Welcome everyone and thank you for your interest in horizon.

Rob Pomeroy: Today, we will update you on our quarterly and annual performance and our current operating environment.

Daniel Devorsetz: Dan Devorsetz will take us through recent business and portfolio development.

Speaker Change: <unk> will take us through recent business and portfolio development.

Robert Pomeroy: Jerry will then discuss the current status of the venture lending market and Dan Trolio will detail our operating performance and financial conditions. We will then take some questions. We ended 2024 with our portfolio growing for the second consecutive quarter.

Speaker Change: Jerry will then discuss the current status of the venture lending market and Dan Trulia will detail, our operating performance and financial condition.

Speaker Change: We will then take some questions.

Speaker Change: We ended 2024 with our portfolio growing for the second consecutive quarter.

Robert Pomeroy: We expect this trend will continue in 2025.

Speaker Change: We expect this trend will continue in 2025.

Robert Pomeroy: While the net investment income we earned in the fourth quarter resulted in our 2024 NII covering our regular monthly distributions, our net asset value was lower at the end of 2000. This resulted from the underperformance of our stressed investors.

Speaker Change: While the net investment income we earned in the fourth quarter resulted in our 2020 for NII covering our regular monthly distributions our net asset value was lower at the end of 2024.

Speaker Change: This resulted from the underperformance of our stressed investments.

Robert Pomeroy: due to the continuance in 2024 of many of the same conditions that were present in 2023, namely ongoing stress in the venture capital ecosystem, tightened capital availability, a muted IPO and M&A market, and continued pressure on portfolio company valuation. Our advisor and its experience and expert team remain focused on our portfolio's credit quality and originating high quality investments in order to maximize the value of our portfolio over the long term.

Speaker Change: Due to the continuous in 2020 for many of the same conditions that were present in 2023, namely ongoing stress in the venture capital ecosystem.

Speaker Change: And capital availability, a muted IPO and M&A market and continued pressure on portfolio company valuations.

Speaker Change: Our adviser and its experienced and expert team remains focused on our portfolio's credit quality and originating high quality investments in order to maximize the value of our portfolio over the long term.

Robert Pomeroy: Recapping our full year 2024 results. We generated net investment income of $1.32 per share, once again covering our declared and paid regular monthly distributions for the year. We achieved a portfolio yield of nearly 16% on our debt investments for the full year, remaining at or near the top of the BDC industry. We finish the year with a committed and approved backlog of $207 million.

Speaker Change: Recapping, our full year 2024 results.

Speaker Change: We generated net investment income of $1 32 per share once again, covering our declared and paid regular monthly distributions for the year.

Speaker Change: We achieved a portfolio yield of nearly 16% on our debt investments for the full year remaining at or near the top of the BDC industry.

Speaker Change: Finished the year with a committed unapproved backlog of $207 million.

Robert Pomeroy: We ended the year with a net asset value of $8.43 per share, primarily the result of the fair value markdowns of our investment. We continue to strengthen our balance sheet during the year by closing a new $100 million senior secured credit facility with Nuveen. raising additional capital through a $20 million convertible debt offering, and raising over $66 million at a premium to our NAV from the sale of equity through our At The Market program. Finally, based on our outlook and our undistributed spillover income of $1.06 per share as of year-end, last week our Board of Directors declared regular monthly distributions of $0.11 per share payable through June of 2025.

Speaker Change: We ended the year with a net asset value of $8 43 per share primarily the result of the fair value markdowns of our investments.

Speaker Change: We continued to strengthen our balance sheet during the year by closing a new $100 million senior secured credit facility with nuveen.

Speaker Change: Raising additional capital through a $20 million convertible debt offering.

Speaker Change: Raising over $66 million at a premium to our NAV.

Speaker Change: From the sale of equity through our at the market program.

Speaker Change: Finally, based on our outlook and our undistributed spillover income of $1 six per share as of year end last week. Our board of directors declared regular monthly distributions of <unk> 11 per share payable through June of 2025.

Robert Pomeroy: to further align our advisor with shareholders. Our advisor agreed this week to waive a portion of its quarterly income incentive fees if after the payment of such portion, the company's net investment income for such quarter would be less than the distributions declared in such quarter. As the macro environment improves and the venture ecosystem recovers, we continue to support and work closely with our portfolio companies as we focus on maximizing the value of our stressed investments and seeking to increase our NAV.

Speaker Change: To further align our advisor with shareholders.

Speaker Change: Advisory agreed this week to waive a portion of its quarterly income incentive fees. If after the payment of such portion the Companys net investment income for such quarter would be less than the distributions declared in such quarter.

Speaker Change: As the macro environment improves in the venture ecosystem recovers, we continue to support and work closely with our portfolio companies as we focus on maximizing the value of our stressed investments and seeking to increase our NAV.

Robert Pomeroy: As we progress through 2025, we remain optimistic about Horizon's prospects for the following reasons. Our portfolio continues to grow, and our portfolio yield remains among the industry's highest, which we expect will lead to increased NII. Our pipeline is full with quality opportunities to invest in new companies. Our liquidity and balance sheet remains strong. And finally, our markets are active and demand for venture debt capital is growing. We look forward to being a key supplier of such capital.

Speaker Change: As we progressed through 2025, we remain optimistic about horizon's prospects for the following reasons our portfolio continues to grow and our portfolio yield remains among the industry's highest which we expect will lead to increased NII or.

Speaker Change: Our pipeline is full with quality opportunities to invest in new companies.

Speaker Change: Our liquidity and balance sheet remains strong.

Speaker Change: And finally, our markets are active and demand for venture debt capital is growing well.

Speaker Change: We look forward to being a key supplier such capital.

Robert Pomeroy: Again, we appreciate your continued interest and support in the Horizon Technology Finance platform.

Dan Trulia: Again, we appreciate your continued interest and support in the Horizon Technology Finance platform I will now turn the call over to Dan Gerry and Dan to give you the details of our fourth quarter results and progress Dan.

Daniel Devorsetz: I will now turn the call over to Dan, Jerry, and Dan to give you the details of our fourth quarter results and progress. Dan? Thanks, Rob, and good morning to everyone. We grew our portfolio in the fourth quarter to $698 million as we continue to originate high-quality loans that more than offset prepayments and amortization in our existing portfolio. In the fourth quarter, we funded seven debt investments totaling $59 million and one equity investment of $2 million. Fifty-five million dollars of the new debt investments for the four new portfolio companies, all well-sponsored companies with growing revenue in our core life science and technology market.

Dan Gerry: Thanks, Rob and good morning to everyone.

Dan Gerry: We grew our portfolio in the fourth quarter to $698 million as we continue to originate high quality loans that more than offset prepayments and amortization in our existing portfolio.

Dan Gerry: In the fourth quarter, we funded seven debt investments totaling $59 million and one equity investment of $2 million 50.

Dan Gerry: $55 million of the new debt investments for the four new portfolio companies, all well sponsored companies with growing revenue in our core life science and technology markets.

Daniel Devorsetz: We continue to see an increasing and healthy volume of high-quality opportunities like these and are well capitalized to execute on these opportunities and originate new loans. We also continue to build a sizable pipeline across our target sectors, which we expect will ensure we continue growing our portfolio throughout 2025. Looking ahead to Q1, we expect another quarter of portfolio growth. In January and February, we funded seven debt investments totaling $79.4 million and one equity investment of $2 million. We were awarded four new venture loan transactions representing $75.8 million in total commitments, which we'll fund over the coming quarters.

Dan Gerry: We continue to see an increasing and healthy volume of high quality opportunities like these and are well capitalized to execute on these opportunities and originate new loans we.

Dan Gerry: We also continue to build a sizable pipeline across our target sectors, which we expect will ensure we continue growing our portfolio throughout 2025.

Dan Gerry: Looking ahead to Q1, we expect another quarter of portfolio growth.

Dan Gerry: In January and February we funded seven debt investments totaling $79 $4 million and one equity investment of $2 million.

Dan Gerry: We were awarded four new venture loan transactions, representing $75 8 million and total commitments, which will fund over the coming quarters.

Daniel Devorsetz: As we seek growth, we will always be disciplined in our approach to originating wellness. During the fourth quarter, we experienced five loan prepayments totaling $13 million in prepaid principal. Net prepayment activity and the associated fee income in the quarter was at the lower end of our recent historical levels, which impacted NII. Based on prepayment activity already realized in Q1 and anticipated additional prepayment activity in the quarter, we expect a more positive impact on NII in Q1, especially when combined with portfolio growth from Q4. Our onboarding debt investment yield of 12.6% during the fourth quarter remained consistent with our historical level.

Dan Gerry: As we see growth will always be disciplined in our approach to originating loans.

Dan Gerry: During the fourth quarter, we experienced five loan prepayments totaling $13 million in prepaid principal net prepayment activity and the associated fee income in the quarter was at the lower end of our recent historical levels, which impacted NII.

Dan Gerry: Based on prepayment activity already realized in Q1 and anticipated additional prepayment activity in the quarter, we expect a more positive impact on NII in Q1, especially when combined with portfolio growth from Q4.

Dan Gerry: Our onboarding debt investment yield of 12, 6% during the fourth quarter remained consistent with our historical levels, we expect.

Daniel Devorsetz: We expect to continue to generate strong onboarding yields with our current pipeline of opportunities, further demonstrating our capabilities to grow our portfolio and generate strong net investment income. Our debt portfolio yield of 14.9% for the quarter was once again one of the highest yielding debt portfolios in the BDC industry. Our ability to generate these industry-leading yields continues to be a testament to the profitability of our venture lending strategy and their execution of that strategy across various market cycles and interest rate environments. As of December 31st, we held warrant and equity positions in 104 portfolio companies with a fair value of $44 million.

Dan Gerry: To continue to generate strong onboarding yields with our current pipeline of opportunities further demonstrating our capabilities to grow our portfolio and generate strong net investment income.

Dan Gerry: Our debt portfolio yield of 14, 9% for the quarter was once again, one of the highest yielding debt portfolios in the BDC industry.

Dan Gerry: Our ability to generate these industry, leading yields continues to be a testament to the profitability of our venture lending strategy and our execution of that strategy across various market cycles and interest rate environments.

Dan Gerry: As of December 31, we held warrant and equity positions in 104 portfolio companies with a fair value of $44 million.

Daniel Devorsetz: I again remind you that structuring investments with warrants and equity rights is a key component of our venture debt strategy and a potential generator of shareholder value. In the fourth quarter, we closed $106 million in new loan commitments and approvals and ended the year with a committed and approved backlog of $207 million, compared to $190 million at the end of the third quarter. We believe our pipeline, combined with our committed backlog, with most of our funding commitments subject to companies achieving certain key milestones, provides solid base to prudently grow our portfolio. As of year-end, 91% of the fair value of our debt portfolio consisted of three and four rated debt investors.

Dan Gerry: Again remind you that structuring investments with warrants and equity rights is a key component of our venture debt strategy and a potential generator of shareholder value.

Dan Gerry: In the fourth quarter, we closed $106 million in new loan commitments and approvals and ended the year with a committed and improved backlog of $207 million compared to $190 million at the end of the third quarter.

Dan Gerry: We believe our pipeline combined with our committed backlog with most of our funding commitment subject to companies achieving certain key milestones provide solid base to prudently grow our portfolio.

Dan Gerry: As of year end, 91% of the fair value of our debt portfolio consisted of three and four rated debt investments comparable with the prior quarter and while 9% of the fair value of our portfolio continued to be rated to World War.

Daniel Devorsetz: comparable with the prior quarter end, while 9% of the fair value of our portfolio continue to be rated 201. As we continue to manage our stressed investments, we continue to collaborate closely with all of our portfolio companies and utilize a variety of strategies to seek to optimize returns and create opportunities for potential future value.

Dan Gerry: As we continue to manage our strict investments we continue to collaborate closely with all of our portfolio companies and utilize a variety of strategies to seek to optimize returns and create opportunities for potential future value.

Daniel Devorsetz: Summarized, we believe we are well positioned to further grow our portfolio in 2025 and to continue to generate NII that covers our regular monthly distributions over time.

Dan Gerry: To summarize we believe we are well positioned to further grow our portfolio in 2025 and to continue to generate NII that covers our regular monthly distributions over time.

Gerald Michaud: With that, I'll turn it over to Jerry for a look at the overall venture industry and current environment. Thank you very much, Dan. Turning to the venture capital environment, according to PitchBook, approximately $75 billion was invested in VC-backed companies in the fourth quarter, a nice spike from the prior quarters and resulting in total investment for the year of $209 billion above 2023's total, but still off the highs of 2021 and 2022. We are pleased to see continued signs of improvement in the VC investment environment, but the road to a full investment recovery will require exit markets for VC-backed tech companies to improve, which will lead to a meaningful return of capital to VC funds and their LPs.

Dan Gerry: With that I'll turn it over to Jerry for a look at the overall venture industry in current environment.

Jerry: Thank you very much Dan.

Turning to the venture capital environment. According to pitch book approximately 75 billion was invested in VC backed companies in the fourth quarter, a nice spike from the prior quarters, resulting in total investment for the year of $209 billion above 2023, total, but still off the highs of 2021.

Jerry: In 2022, we are pleased to see continued signs of improvement in the VC investment environment, but the road to a full investment recovery will require exit markets, where VC backed tech companies to improve which will lead to a meaningful return of capital to VC funds and they're all piece the <unk>.

Gerald Michaud: The higher investment level in 2024 was mainly driven by a few outsized AI-related deals. Thus, there continues to be a backlog of venture capital-backed technology and life science companies that are positioned for an exit by way of M&A or an IPO. While Q4's total exit value of $37 billion resulted in 2024's exit value surpassing the prior years, the total number of exits and exit value in 2024 remained well below the levels achieved from 2019 to 2021. On the positive side, the life science exit markets continues to show significant activity, with five IPOs already completed in 2025 and more in the queue.

Jerry: Our investment level in 2024 was mainly driven by a few outsized AI related deals. Thus there continues to be a backlog of venture capital backed technology and life science companies that are positioned for an exit.

With M&A or an IPO.

Jerry: Well Q4 is total exit value of 37 billion resulted in 2024 as exit values, surpassing the prior years. The total number of exits and extra value in 2024 remained well below the levels achieved in 2019 to 2021.

Jerry: On the positive side the life Science exit markets continues to show significant activity with five Ipos already completed in 2025 and more in the queue. This improvement combined with investors lowering valuations on many private technology and life science companies over the past two years is creating.

Gerald Michaud: This improvement, combined with investors lowering valuations on many private technology and life science companies over the past two years, is creating an M&A market that is more attractive to potential buyers who have been on the sidelines for the past two years. in addition Royalty transaction activity in the life science market is re-emerging. As examples, Biogen closed a $250 million transaction with Royalty Pharma and Castle Creek Biosciences, a Horizon portfolio company, closed a $75 million royalty transaction with Ligand Pharmaceuticals in Q1. As we progress through 2025, there seems to be a clear flight to quality for investors in technology and life science companies, particularly as AI continues to disrupt industries such as healthcare, fintech, manufacturing, and consumer-related markets.

Jerry: And M&A market. It is more attractive to potential buyers who have been on the sidelines for the past two years.

Jerry: In addition.

Jerry: Royalty transaction activity in the life science market is re emerging as examples biogen close to $250 million transaction with royalty pharma and Castle Creek Biosciences, a horizon portfolio company close to $75 million royalty transaction with ligand pharmaceuticals in Q1.

Jerry: As we progress through 2025, there seems to be a clear flight to quality for investors in technology and life science companies, particularly in AI continues to disrupt industries, such as healthcare and tech manufacturing and consumer related markets based on our existing pipeline of more.

Gerald Michaud: Based on our existing pipeline of more than 1 billion of debt investment opportunities, Horizon believes there remains a strong opportunity in the coming quarters to provide venture debt financing to high-quality technology and life science companies that will require additional liquidity while preparing for the exit markets to open up. While the overall VC ecosystem is showing some improvement, we believe that the improving conditions in the VC-backed company exit markets will result in return of capital to VCs and their LPs in 2025, creating a better environment for new VC fundraisers. Other positive factors include the overall macro environment, which appears to be more business friendly, and big pharma companies seeking to acquire new drug candidates as their own drug products come off patent over the next few years.

Jerry: $1 billion of debt investment opportunities Horizon believes there remains a strong opportunity in the coming quarters to provide venture debt financing to high quality technology and life science companies that will require an additional liquidity, while preparing for the exit markets to open up.

Jerry: While the overall VC ecosystem is showing some improvement we believe that the improving conditions in the VC backed company exit markets will result in a return of capital to Vcs in neuro piece in 2025, creating a better environment for new VC fundraising. Other positive factors include the overall Matt.

Jerry: ROE environment, which appears to be more business friendly and big pharma companies seeking to acquire new drug candidates as they run drug products come off patent over the next few years. Accordingly, we remain optimistic about originating new high quality venture debt investments in the weeks and months ahead.

Gerald Michaud: Accordingly, we remain optimistic about originating new, high-quality venture debt investments in the weeks and months ahead. Our optimism is bolstered by our robust pipeline of $1.4 billion of opportunities, a testament to our reputation, brand, and sourcing capabilities.

Jerry: Our optimism is bolstered by a robust pipeline of one $4 billion of opportunities a testament to our reputation brand and sourcing capabilities to sum up we remain committed to sourcing high quality well price investments as we expect to grow our portfolio throughout 2025.

Gerald Michaud: To sum up, we remain committed to sourcing high-quality, well-priced investments as we to grow our portfolio throughout 2025, which, when combined with more historically normalized prepayment activity, should generate NII that will continue to cover our regular monthly distributions over time, consistent with our historic distribution performance.

<unk>, which when combined with more historically normalized prepayment activity should generate NII. It will continue to cover a regular month.

Jerry: Lee distributions over time, consistent with our historic distribution performance.

Daniel Trolio: With that, I will now turn the call over to Dan Trolio. Thanks, Jerry, and good morning, everyone. As Rob and Jerry noted, in 2024, we generated NII that covered our regular monthly distributions while actively strengthening our balance sheet. In addition, we continue to diligently work with all of our companies in order to optimize our outcomes for our portfolio and further enhance our credit quality. To recap 2024, our portfolio at the end of the year stood at $698 million, up 2% compared to $684 million as of September 30, 2024. We further strengthened our balance sheet in June by closing a new $100 million Senior Secured Credit Facility with Nuveen, which contains an accordion feature to expand the facility to $200 million.

Speaker Change: With that I will now turn the call over to Dan Trillium.

Speaker Change: Thanks, Jerry and good morning, everyone. It's Robin Jerry noted in 2024, we generated NII that covered our regular monthly distributions.

Speaker Change: Strengthening our balance sheet. In addition, we continue to diligently work with all of our companies in order to optimize our outcomes for our portfolio and further enhance our credit quality.

Speaker Change: To recap 2020 for our portfolio at the end of the year stood at 698 million up 2% compared to 684 million as of September 32024.

Speaker Change: We further strengthened our balance sheet in June by closing, a new 100 million senior secured credit facility with Nuveen, which contains an accordion feature to expand the facility to $200 million.

Daniel Trolio: In October, we raised $20 million of debt capital through the issuance of our seven-and-an-eighth unsecured convertible notes due 2031. The notes may only be converted into common stock at a price greater or equal to our NAV. We always seek to add flexibility and diversity to our capital sources, and we believe that Convertible Notes achieve that. Finally, we successfully and equitably sold over 6.3 million shares of our ATM program during the year, raising over 66 million, further demonstrating our continued ability to opportunistically access the equity market. As a result of our actions and our stronger balance sheet, we believe we remain well positioned to further grow our portfolio and create additional value for shareholders in 2025.

Speaker Change: And I Kohlberg, we raised $20 million of debt capital through the issuance of our seven and eight unsecured convertible notes due 2031.

Speaker Change: The notes may only be converted into common stock at a price greater or equal to our NAV.

Speaker Change: We always seek to add flexibility and diversity to our capital sources and we believe the convertible notes to achieve that.

Speaker Change: Finally, we successfully and aggressively sold over $6 3 million shares through our ATM program during the year raising over $66 million.

Speaker Change: Further demonstrating our continued ability to opportunistically access the equity markets.

Speaker Change: As a result of our actions and our stronger balance sheet. We believe we remain well positioned to further grow our portfolio and create additional value for shareholders in 2025.

Daniel Trolio: As of December 31st, we had $131 million in available liquidity, consisting of $101 million in cash and $30 million in funds available to be drawn under our existing credit facility. We currently have no borrowings outstanding under our $150 million KeyBank credit facility, $181 million outstanding on our $250 million New York Life credit facility, and $75 million outstanding on our $100 million Nuveen credit facility, leaving us with ample capacity to grow our portfolio of debt investors. Our net equity ratio stood at 1.4 to 1 at December 31st and netting out cash in our balance sheet, our net leverage was approximately 1.1 to 1, which is well within our target leverage.

Speaker Change: As of December 31, we had 131 million in available liquidity, consisting of $101 million in cash and $30 million in funds available to be drawn under our existing credit facility.

Speaker Change: We currently have no borrowings outstanding under our $150 million Keybank credit facility.

Speaker Change: 181 million outstanding on our 250 million, New York Life credit facility.

Speaker Change: And 75 million outstanding on our 100 million Nuveen credit facility.

Speaker Change: Leaving us with ample capacity to grow our portfolio of investments.

Speaker Change: Our debt to equity ratio stood at one four to one at December 31st and netting out cash in our balance sheet. Our net leverage was approximately one one to one which is well within our target leverage.

Daniel Trolio: Based on our cash position and our borrowing capacity on our credit facilities, our potential new investment capacity as of December 31st was $342 million.

Speaker Change: Based on our cash position and our borrowing capacity on our credit facilities are potential new investment capacity as of December 31st with $342 million.

Daniel Trolio: Turning to our operating results for the fourth quarter, we earned investment income of $24 million compared to $28 million in the prior period. primarily due to lower interest income and fee income on our debt investment portfolio. Our net investment portfolio on a net cost basis stood at $678 million as of December 31, up 4% compared to $654 million as of September 30, 2024. For the fourth quarter of 24, we achieved onboarding yields of 12.6% compared to 13.2% achieved in the third quarter. Our loan portfolio yield was 14.9% for the fourth quarter compared to 16.8% for last year's fourth quarter.

Turning to our operating results for the fourth quarter, we earned investment income up 24 million compared to $28 million in the prior year period pre.

Speaker Change: Primarily due to lower interest income and fee income on our debt investment portfolio.

Speaker Change: Our debt investment portfolio on a net cost basis stood at 678 million as of December 31st up four.

Speaker Change: And compared to 654 million as of September 30th 2024.

Speaker Change: For the fourth part of our 24, we achieved onboarding yields of 12, 6% compared to 13, 2% achieved in the third quarter.

Speaker Change: Our loan portfolio yield was 14, 9% for the fourth quarter compared to 16, 8% for last year's fourth quarter.

Daniel Trolio: Total expenses for the quarter were $12.8 million compared to $12.2 million in the fourth quarter of 2023. Our interest expense increased to $8.2 million from $7.6 million in last year's fourth quarter due to an increase in our average borrowing. Our base management fee was $3.1 million, down from $3.2 million in the prior period. We received no performance-based incentives fees in the fourth quarter as we continue to experience a deferral of incentive fees otherwise earned by our advisor under our incentive fee cap and deferral mechanism. The deferral in the quarter is driven by net realized and unrealized losses on our portfolio.

Speaker Change: Total expenses for the quarter were $12 8 million compared to $12 2 million in the fourth quarter of 'twenty three are.

Speaker Change: Our interest expense increased to $8 2 million from $7 6 million in last year's fourth quarter due to an increase in our average borrowings.

Speaker Change: Our base management fee was $3 1 million down from $3 2 million in the prior year period.

Speaker Change: We received no performance based incentive fees in the fourth quarter as we continued to experience a deferral of incentive fees otherwise earned by our adviser under our incentive fee cap and deferral mechanism.

Speaker Change: The deferral in the quarter was driven by net realized and unrealized losses on our portfolio.

Daniel Trolio: While we expect the advisor will return to earning incentive fees, as Rob mentioned, the advisor has agreed to waive a portion of any incentive fee in a quarter where we do not earn our distribution. Net investment income for the fourth quarter of 24 was $0.27 per share compared to $0.32 per share in the third quarter of 24 and $0.45 per share for the fourth quarter of 23. For the full year of 2024, we generated NII of $1.32 per share, covering our regular monthly distributions during 2024 of the same amount. The company's understated spillover income as of December 31st was $1.06 per share.

Speaker Change: While we expect the advisor returned to earning incentive fees as Rob mentioned the advisor has agreed to waive a portion of any incentive fee in a quarter or we do not earn our distributions.

Speaker Change: Net investment income for the fourth quarter of 24 27 per share compared to 33 cents per share in the third quarter of 24, and 45 per share for the fourth quarter of 'twenty three.

Speaker Change: For the full year of 2024, we generated NII of $1 32 per share covering our regular monthly distributions during 2024 of the same amount.

Speaker Change: The company's undistributed spillover income as of December 31 was $1 six per share.

Daniel Trolio: We anticipate that the size of our portfolio, along with our portfolio's higher interest rate and our predicted pricing strategy, will enable us to continue generating NII that covers our distribution over time. While the macro environment is gradually improving, we expect repayment activity will remain modest in the near term. To summarize our portfolio activities for the fourth quarter, new originations totaled $61 million, which were partially offset by $12 million in scheduled principal payments and $13 million in principal prepayments and partial paydowns. We ended the year with a total investment portfolio of $698 million. We expect to further grow our portfolio during the first quarter.

Speaker Change: We anticipate that the size of our portfolio along with our portfolios higher interest rate and our predictive pricing strategy will enable us to continue generating NII that covers our distributions over time.

Speaker Change: While the macro environment is gradually improving we expect repayment activity will remain modest in the near term.

Speaker Change: To summarize our portfolio activities for the fourth quarter, new originations totaled $61 million, which were partially offset by 12 million in scheduled principal payments and $13 million in principal prepayments and partial pay downs.

Speaker Change: We ended the year with a total investment portfolio of $698 million.

Speaker Change: We expect to further grow our portfolio during the first quarter.

Daniel Trolio: At December 31st, the portfolio consisted of debt investments in 52 companies with an agri-fare value of $639 million, and a portfolio of warrant, equity, and other investments in 109 companies with an agri-fare value of $59 million.

Speaker Change: At December 31, the portfolio consisted of debt investments in 52 companies with an aggregate fair value of $639 million and a portfolio of warrant and equity and other investments and 109 companies with an aggregate fair value of $59 million.

Daniel Trolio: Based upon our outlook, our board declared monthly distributions of 11 cents per share for April, May, and June 2025. We remain committed to providing our shareholders with distributions that are covered by our net investment income over time. Our NAB as of December 31st was $8.43 for share, compared to $9.06 as of September 30th, 2024, and $9.71 as of December 31st, 2023. The 63 cent reduction in NAV on a quarterly basis was primarily due to adjustments to fair value in our paid distributions partially offset by net investment income and accretive sales of equity. As we've consistently noted, nearly 100% of the outstanding principal amount of our debt investments bear interest at floating rates, with coupons that are structured to increase if interest rates rise, with interest rate floors that will mitigate the impact of decreasing interest rates.

Speaker Change: Based upon our outlook our board declared monthly distributions of <unk> 11 per share for April May and June 2025.

Speaker Change: We remain committed to providing our shareholders with distributions that are covered by our net investment income overtime.

Speaker Change: Alright anything as of December 31 was $8 43 per share compared to $9.06 as of September 32024, and $9.71 as of December 31, 2023.

Speaker Change: The 63 Sam's reduction in any of the on a quarterly basis was primarily due to adjustments to fair value in our paid distributions, partially offset by net investment income and accretive sales of equity.

Speaker Change: As we've consistently noted nearly 100% of the outstanding principal amount of our debt investments bear interest at floating rates with coupons that are structured to increase if interest rates rise with interest rate floors that will mitigate the impact of decreasing interest rates.

Daniel Trolio: This concludes our opening remarks. We'll be happy to take questions you may have at this time. Thank you.

Speaker Change: This concludes our opening remarks, we'll be happy to take questions. You may have at this time.

Speaker Change: Okay.

Operator: We'll now be conducting a question and answer session. To ask a question today, you may press star 1 from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue.

Speaker Change: Thank you well now be conducting a question and answer session.

Speaker Change: I ask a question today, you May press star one from your telephone keypad confirmation tone will indicate your lines in the question queue.

Speaker Change: You May press star two to remove yourself from the queue.

Operator: for Persistence Using Speaker Equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions. That's star one. Thank you.

Speaker Change: For participants using speaker equipment may be necessary to pick up the handset before pressing the star keys.

Speaker Change: One moment, please pull for questions that's styled one thank you.

Doug Carter: And our first question is from the line of Doug Carter with UBS. Please proceed with your question. Sure. Thank you.

Speaker Change: Thank you and our first question is from the line of Doug Harter with UBS.

Please proceed with your question.

Speaker Change: Sure. Thank you I'm, hoping you could walk through what you think the key drivers to get from the <unk>.

Daniel Trolio: I'm hoping you could walk through what you think the key drivers to get from the $0.27 back above the $0.33 dividend rate, how you think about that path back to covering the dividend. Yeah, sure. Good morning. When we look at the NAI and we project it over through the entire year, one thing we comment probably every quarter is with a venture debt portfolio, you always will receive some prepayments throughout the year. how they happen each quarter will fluctuate. As we noted in our remarks, the fourth quarter was very light on the amount of prepayments and the associated fee income that was related to those prepayments and kind of drove the lower NII this quarter.

27 cents back above the 33 cent dividend rate.

Speaker Change: How do you think about that that path.

Speaker Change: Back to covering the dividend.

Joe: Yes, Joe good morning.

Joe: When we look at the NII and we projected over through the entire year, one thing we comment probably every quarter as well.

Joe: With a venture debt portfolio.

Joe: We always will receive some prepayments throughout the year.

Joe: How they happen each quarter will fluctuate as we noted in our remarks, the fourth quarter was very light on the amount of prepayments and the associated fee income that was related to those prepayments and kind of drove the lower NII this quarter.

Daniel Trolio: So we look to harvest the prepayments and we look to grow the balance sheet as we have over the past two quarters and continue to do that through 2025, and those will be really the key drivers to getting back to covering the distribution for on a quarterly basis. I got to appreciate that.

Joe: So we look to harvest the prepayments and we look to grow the balance sheet as we have over the past two quarters and continue to do that to 2025 and those would be really the key drivers too.

Joe: Getting back to covering the distribution for on a quarterly basis.

Joe: Got it I appreciate that I guess, how do you think about it.

Daniel Trolio: I guess, how do you think about, you know, what is, obviously there's no one period that is normal, but what is a normalized level of contribution from, you know, kind of that repayment income? Yeah, like I mentioned, each quarter will be very different. Normalized, you know, probably about anywhere between two to four million dollars of accelerated fee income. Great, appreciate that. Thank you.

Joe: Is obviously, there's no one period that is normal, but what is a normalized level of contribution from kind.

Joe: Kind of a.

Joe: Repayment income.

Joe: Yeah, you know like I mentioned, each quarter will be very different normalized you know probably about anywhere between $2 million to $4 million of accelerated fee income.

Joe: Great I appreciate that.

Joe: Thank you.

Operator: As a reminder, to ask a question, you press star 1.

Speaker Change: As a reminder, ask a question you May press Star one.

Paul Johnson: The next question is from the line of Paul Johnson with KBW. Please receive your question. Yeah, thanks. Good morning.

Speaker Change: The next question is from the line of Paul Johnson, Okay, VW wins, you're seeing with your question.

Paul Johnson: Yeah. Thanks, good morning, Thanks for taking my questions.

Daniel Devorsetz: Thanks for taking I was just wondering if you can kind of comment on what primarily drove the decision to go portfolio marks this quarter. maybe more broadly. I don't know how much of that is from the debt portfolio. Sure.

Paul Johnson: I was just wondering if you can kind of comment on kind of what primarily drove.

Paul Johnson: The portfolio marks this quarter.

Paul Johnson:

Paul Johnson: In terms of investments as well as just kind of.

Paul Johnson: Maybe more broadly if you can what how much of that is from the debt portfolio versus the equity.

Daniel Devorsetz: Hi, Paul. This is Dan Devorsetz. The marks were, you know, we go through our fair value process and look at each asset, of course. There are several, a couple that are in the process of either fundraising or getting themselves acquired. And there's a couple that are in positions where we're unsure of what that outcome is going to be and took some sizable markdowns primarily on the debt investments in the portfolio. That's a high level answer to the question. It's really a matter of a continued fundraising and exit market that is a challenge for some companies in our stage.

Dan: Sure Hi, Paul This is Dan divorced Thats.

Paul Johnson: The marks were.

Paul Johnson: Both of our fair value process and look at each asset of course, there are several a couple that are in the process of either fund raising or getting themselves acquired and there is there's a couple that are in positions, where we're unsure of what that outcome is going to be and took some.

Paul Johnson: Some sizable markdowns, primarily on the debt investments in the portfolio.

Paul Johnson: The high level.

Paul Johnson: The answer to the question.

Paul Johnson: It's really a matter of.

Paul Johnson: A continued fundraising and exit market that is a challenge for some companies in our stage we are seeing.

Gerald Michaud: We are seeing a good deal. We're seeing anecdotal evidence of positive developments in fundraising, but there are still several in the portfolio that are in situations where the markdown was appropriate. Thanks for that.

Paul Johnson: Good deal were seeing anecdotal evidence of of positive developments in fundraising, but there is still <unk>.

Paul Johnson: Several in the portfolio that are in situations, where the markdown was appropriate.

Paul Johnson: Appropriate right now.

Speaker Change: Okay. Thanks for that.

Gerald Michaud: And then, if I can ask just about two specific credits. I noticed last quarter in the queue, I think, that portion of Evola Bioscience. on PICC accrual. I noticed that was taken off this quarter. I was wondering what happened there and if there was any... co-ordinated all. and Avalo.

Paul Johnson:

Paul Johnson: And then if I can ask just about two specific credits.

Paul Johnson: I noticed last quarter in the Q I think that.

Paul Johnson: Of <unk> Biosciences was on Pic accrual I noticed that was taken off this quarter.

Paul Johnson:

Paul Johnson: Just wondering what happened there and if there was any income recorded at all from from <unk> in the fourth quarter.

Gerald Michaud: Yeah, hi, this is Jerry. So, yeah, we've moved Avello to the other asset bucket of our assets. The company, any recovery on Avello going forward is based on basically the sale or otherwise contractual transactions that Avello can do relative to its assets, which would be its intellectual property and some other assets it's owned. So, it's no longer an active loan. It's more of a recovery asset at this point. And there is some expectation based on contracts that are in place that there will be further recovery on that over the coming quarters and coming years, so.

Jerry: Yeah, Hi, this is Jerry.

Paul Johnson: Yeah.

Paul Johnson: Ah Belo too.

Paul Johnson: The other asset bucket of our assets.

Paul Johnson: The company.

Paul Johnson: Any any recovery on the Belo going forward is based on.

Paul Johnson: Basically the sale or to do or otherwise contractual.

Paul Johnson: Transactions that a bill can do relative to its.

Paul Johnson: Its assets, which would be its intellectual property and some other assets.

Paul Johnson: So it's no longer an active long term, it's more of a recovery asset at this point and there.

Paul Johnson: There is some expectation based on contracts that are in place that there will be further recovery on that over the coming quarters in coming years actually.

Gerald Michaud: Appreciate that and then the other one just the was on non-accrual last quarter Swift Health It looked like it might have been restructuring, wondering if you could just kind of talk about what the outcome of that was. at how you were able. Thank you.

Paul Johnson: Okay I appreciate that and then the other one just was on non accrual last quarter Swift health systems.

Speaker Change: It looks like it might have been restructuring I'm wondering if you could just kind of talk about what the outcome of that was in and how you were able to resolve that company.

Gerald Michaud: Sure, that one, it's not resolved. That's one of the ones that did take a bit of a further markdown. And it's an example of what I was talking about earlier, that they are in an extended fundraising process. We were able to bring in capital last year with some new investors, some new high-quality investors, but that was the first step in an ongoing process of capital raising, which they are still in. So it is not yet resolved, and it is an active fundraise as we speak.

Speaker Change: Sure that one it's it's not resolved that's one of the ones that did take a bit of a further mark down there and it's an example of what I was talking about earlier.

Speaker Change: Earlier that they are in an extended fundraising process. They we.

Speaker Change: We're able to bring in capital last year with some new investors and new high quality investors, but that was the first step in an ongoing process of capital raising which they are still in so it is not yet resolved and it is an active and active fund raise as we speak.

Gerald Michaud: Thanks for that and then how are you guys feeling I guess about the portfolio maybe particularly like in the life science doge risk or spending cuts. Great, interesting question. You know, and it's based on everything that we have seen on other people in the industry that we know well, who have a great deal of experience talked about.

Speaker Change: Thanks for that and then how are you guys feeling I guess about the portfolio.

Speaker Change: Maybe particularly like in the life sciences about any sort of.

Speaker Change: Those risks are spending cuts from the federal government.

Great and interesting question.

Speaker Change: No.

Based on everything that we've seen on other people in the industry that we know well have a great deal of experience talked about.

Speaker Change: It's not a clear cut one way or the other.

Gerald Michaud: It's, it's not a clear cut one way or the other, clearly, companies that might be involved in vaccine discovery certainly have some reasons for concern based on who the new HHS secretary is. On the other hand, there does seem to be a more open and aggressive posture with the the HHS relative to drug development and getting those drugs to market both sooner and cheaper. And so the school is definitely still out relative to how all that's going to play out. I think, you know, on balance, probably a favorable environment, certainly in the near Overall, I think regulatory issues also play into that.

Speaker Change: Clearly.

Speaker Change: Companies that might be involved in.

Speaker Change: Vaccine discovery certainly have some reasons for concern based on.

Speaker Change: Who is unknown.

Speaker Change: Okay. Just secretary is on the other hand, there does seem to be a more.

Speaker Change: Open.

Speaker Change: And aggressive.

Speaker Change: Last year would be.

Speaker Change:

Speaker Change:

Speaker Change: <unk>, you asked relative to drug drug development and getting those drugs.

Speaker Change: Market, both sooner and cheaper.

Speaker Change: So the school is definitely still out relative to how long that's going to play out.

Speaker Change: Zinc.

Speaker Change: On balance.

Speaker Change: Probably a favorable environment.

Speaker Change: In the near term.

Speaker Change: Overall, I think regulatory issues also play into that I think that we can definitely see more M&A activity.

Gerald Michaud: I think we could definitely see more M&A activity. The other thing I would just mention relative to that is between now and 2030, there is, I think the number I heard was $50 billion of drugs that are going to be coming off of patent by big pharma companies, and those drugs need to be replaced, and they generally get replaced historically by new drug development by biotech companies. So, we think that there could be significant activity in that market over the next couple of years. So, on balance, probably a little bit favorable, but, you know, like many other things in the market today, it's, you know, a lot of people are just kind of holding their breath and waiting to see how this all works out.

Speaker Change: The other thing I would just mentioned relative to that is.

Speaker Change: Between now and 2030.

Speaker Change: There is I think the number I heard was $50 billion of.

Speaker Change:

Speaker Change: Drugs that are going to be coming off of.

Speaker Change: Patent by Big pharma companies and those drugs need to be replaced and they generally get replaced historically by.

Speaker Change: The new drug development by biotech companies. So we think that there could be significant activity in that market over the next couple of years, so on balance probably a little bit favorable, but you know.

Speaker Change: Like many other things in the market today.

Speaker Change: You know a lot of people just kind of holding their breath and waiting to see how this all works out.

Gerald Michaud: God, thanks for that.

Speaker Change: Got it thanks for that.

Speaker Change: Certainly understand things are still in development and then just last question for me I was wondering if I can just kind of ask about.

Gerald Michaud: And then, just last question from me. I was wondering if I could just kind of ask about core sort of debt portfolio yields in the portfolio, how those have kind of held up, I guess. The last year, you know, we've certainly seen a, you know, certain amount of spread compression. Market. But just wondering how much of kind of the portfolio yield decline this quarter was maybe kind of due to the base rates and sort of what your expectation is for spread.

Speaker Change: Core sort of debt portfolio yields in the portfolio.

Speaker Change: How those have kind of held up I guess over the last year. You know, we've certainly seen a certain amount of spread compression in the market I'm just wondering how much of kind of the portfolio yield decline. This quarter was maybe kind of due to the base rates and sort of what your expectation is for <unk>.

Speaker Change: Spreads going forward this year.

Daniel Devorsetz: Yeah, so again, Dan Devorsetz. The onboarding yield is still kind of within our normalized range. It's, you know, small sample size on a quarter-to-quarter basis, so you have to have to look at trends. There is some spread compression due to competitive competition, particularly in the flight to quality that Jerry was talking about, which is normal, but the overall yields are still well within normalized venture portfolio. We benchmark that on a quarterly basis, and I think that the yield, particularly when you factor in some of the prepayment activity that Dan talked about and that we referenced in our prepared remarks that we expect and have visibility into, that the portfolio yield will be within the range that we've been achieving over the past several quarters.

Speaker Change: Yes, so again, Dan divorces the Onboarding yield is still kind of within our normalized range. It's a small.

Speaker Change: A small sample size on a quarter to quarter basis. So you have to have to look at trends. There is some spread compression due to competitive competition, particularly in the flight to quality that Jerry was talking about which is which is normal but the overall yields are still well within <unk>.

Speaker Change: Normalized venture portfolio.

Speaker Change: Yes.

Speaker Change: We benchmark that on a quarterly basis.

Speaker Change: <unk>.

Dan Trulia: That the yield, particularly when you factor in some of the prepayment activity that Dan talked about that we referenced in our prepared remarks.

Dan Trulia: That we expect and have visibility into that the portfolio yield will be.

Dan Trulia: Within the range that we've been achieving over the past several quarters.

Daniel Devorsetz: Yeah, and I'll just add to that. As far as the portfolio yield and where rates are, you know, we mentioned every quarter, our rates float up, but have floors. Today, after the 100 basis points moved down last year, 43% of our portfolio are either at or above today's prime rate. And so any continued movement down in overall rates, which seem like it'll be towards the latter half of this year, will have a smaller impact on our portfolio. Thank you, that's very helpful.

Dan Trulia: Yeah, and I'll, just add to that as far as the portfolio yield and where rates are we mentioned every quarter our rates float up but have floors.

Dan Trulia: Day after the 100 basis points move down last year, 43% of our portfolio are either at or above today's prime rate and so any continued movement down in overall rates, which seemed like it would be towards the latter half of this year, we will have a smaller impact on our portfolio.

Speaker Change: Thank you that's very helpful.

Daniel Trolio: And then just curious, I mean, end of term fees has you know, has that, if portfolio spreads have been kind of... Normal context, how have end-of-term fees helped? Those really haven't changed a whole lot over the last several years. Okay, thank you very much. It's all.

Speaker Change: I'm just curious I mean end of term fees has.

Speaker Change: Has that portfolio.

Speaker Change: Portfolio spreads have been kind of within the normal contacts how it has and.

And the term fees held up I guess versus kind of historically, what you've received.

Speaker Change: Those are those really haven't changed a whole lot over the last several years.

Speaker Change: Okay.

Speaker Change: Okay. Thank you very much that's all from me.

Christopher Nolan: Our next question is from the line of Christopher Nolan with Ludenberg-Salmon. Please proceed with your question. Hi, apologies, I joined the call late. And a follow up to Paul's question on the yields, how much did the Fed easings in the fourth quarter affect your It definitely had an impact, but I would say the third quarter rate cut had a bigger impact in the fourth quarter. If you look at our A's and our Q's, it'll show you rate movement and the overall impact if everything is static and all the rates happen at the beginning of the quarter, but obviously that's not how it normally happens.

Speaker Change: Our next question is from the line of Christopher Nolan with Ladenburg Thalmann. Please proceed with your question.

Speaker Change: Hi, I apologize I joined the call late.

Speaker Change: And a follow up to Paul's question on the yields how much did the fed easings in the fourth quarter affect your yields.

Speaker Change: It had a definitely had an impact but I would say the third quarter.

Speaker Change: Great time had a bigger impact in the fourth quarter.

If you look at our pace and our Qs It'll show you know rate movement in the overall impact is everything is static and all the rates happened at the beginning of this quarter.

Speaker Change: But obviously, that's not how it normally happens and how it gets you about 100 basis points, we show its about two cents a quarter.

Daniel Trolio: That would get you about 100 basis points. We show it's about two cents a quarter. That's roughly a static state, but with the cuts in the fourth quarter a little bit towards the latter half of the quarter had a smaller impact.

Speaker Change: So that's kind of roughly a static state, but with the cuts in the fourth quarter, a little bit towards the latter half of the quarter had a smaller impact.

Gerald Michaud: Great, and then also back to the whole Doge thing, given the prospect of tariffs. and then the HHS basically looking to improve transparency, at least they say that on the side. but it very well might be on pricing, too, for drugs. Anecdotally, I hear stories where American consumers are paying a multiple for a drug which is priced otherwise overseas. And how is that affecting how some of these portfolio companies you guys have are thinking about their business model? I mean, is there a lot more uncertainty? Is this affecting their ability to raise new equity? I mean, just a little color around that.

Speaker Change: Great and then also back to the whole Doge thing.

Speaker Change: Given the prospect of tariffs and then the HHS basically looking to improve transparency at least I would say that on the sides.

Speaker Change: But it very well might be on pricing too for drugs.

Speaker Change: Anecdotally I hear stories, where American consumers are paying a multiple for a drug which price otherwise overseas.

Speaker Change: And how is that affecting how some of these portfolio companies you guys have are thinking about their business model. I mean is there a lot more uncertainty is affecting their ability to raise new equity I mean, just a little color around that would be great.

Gerald Michaud: Sure. This is Jerry. So, first of all, the life science industry over the last couple of years, irrespective of who the president was, has had, you know, kind of a tough go relative to raising capital for a whole host of reasons. As we look at the market today, there are certain things that are definitely actually providing a tailwind. One is the cost of developing drugs is coming down significantly relative to the technology that can be used today, including AI technology that is reducing the overall costs. So, there is definitely going to be going forward some benefit relative to the cost of developing drugs.

Sure Hi, this is Jerry.

Speaker Change: So first of all.

Speaker Change: The life science industry over the last couple of years irrespective of who the President was has had.

Speaker Change: Kind of a tough go relative to raising capital for a whole host of reasons.

Speaker Change: As we look at the market.

Speaker Change: Today.

Speaker Change: There are certain things that are definitely actually providing a tailwind one is the lower the cost of developing drugs is coming down significantly relative to the technology that can be used today.

Speaker Change: Including AI technology, it is reducing the overall cost. So there is there is definitely going to be going forward. Some some benefit relative to the cost of developing drugs and then on the regulatory side at least again, it's very early we're in the early days here.

Gerald Michaud: And then, on the regulatory side, at least again, it is very early. We are in the early days here. You know, they are talking about being able to streamline regulatory approval relative to drug development, which, you know, for one drug can cost $300 million to $1 billion to develop, depending on the size of the market, the kind of clinical trials that are needed. So that is kind of all on the positive side. But you're correct. The cost to the consumer is definitely, you know, kind of a an anchor that's weighing all of this down and how these costs are going to be managed going forward, specifically Medicare, Medicaid costs.

Speaker Change: <unk> about being able to streamline regulatory approval.

Speaker Change: Relative to drug development, which you know for one one drunk to cost $300 million to $1 billion to develop depending on the size of the market.

Speaker Change: Kind of.

Speaker Change: Clinical trials that are needed so.

Speaker Change: That is kind of all on the positive side.

Speaker Change: But you're correct the the cost to the consumer is definitely.

Speaker Change: Kind of the.

Speaker Change: It's an anchor.

Speaker Change: It's weighing all of this down and how these costs are going to be managed going forward, specifically Medicare Medicaid cost.

Gerald Michaud: That is the uncertainty there, just the level of uncertainty there definitely causes significant issues relative to being a drug discovery company and trying to determine how you're paid for this $150 million investment you're about to make going forward. And fortunately, we're just in that very uncertain period right now and everyone's trying to, as best they can, figure out what to do about it.

Speaker Change: That is the uncertainty there just a level of uncertainty there.

Speaker Change: Definitely causes significant issues relative to being a drug discovery company and trying to determine.

Speaker Change: You're going to get paid for this $150 million investment youre about to make going forward. So.

Speaker Change: Unfortunately, you know would you.

Speaker Change: Just in that very very uncertain period right now.

Speaker Change: One just trying to as best they can figure out what to do about our daily Yeah. The only thing I would say that that is certain is we have seen more IPO IPO activity in the life science sector over the last two quarters, which is.

Gerald Michaud: The only thing I would say that is certain is we have seen more IPO activity in the life science two quarters, which is a good sign. The participants in the market were saying they want to buy into these higher risk type biotech companies and that's a positive sign. And as I mentioned, there are other kinds of financing now on the life science side that we have historically seen but haven't really seen much of in the last two years that seem to be also picking up some momentum. So it's an interesting market that has to be carefully thought through literally for every company depending on where they are in the market relative to the kind of drugs they're developing and the necessity of them.

Speaker Change: A good sign the market there are participants.

Speaker Change: Participants in the market, who are saying they want to buy into these.

Speaker Change: Higher higher risk type biotech companies and that's that's a positive sign and as I mentioned there are other kinds of financing now on the life science side that we've historically seen but haven't really seen much of in the last two years.

Speaker Change: It did seem to be also picking up some momentum so.

Speaker Change: It's an interesting market.

Speaker Change: It has to be carefully thought through literally for every company depending on where they are in the market relative to the kind of drugs that are developing.

Speaker Change: The necessity.

Gerald Michaud: Great. That's great color. Thank you.

Speaker Change: Great that's great color. Thank you.

Daniel Trolio: I guess just for Dan, how much did Sherry Purchases add to? fourth quarter NAF per share as well as Houston. And the remaining spillover, please. $1.60. Good. Thank you very much. Thank you.

Speaker Change: Just for Dan.

Speaker Change: How much did share repurchases add too.

Speaker Change: Fourth quarter NAV per share please.

Speaker Change: Slide <unk>.

Speaker Change: And the remaining spillover please.

Speaker Change: $1 six.

Speaker Change: Good thank you very much.

Speaker Change: Thank you.

Speaker Change: Thank you.

Robert Pomeroy: At this time, I'll turn the floor back to Mr. Pomeroy for closing remarks. Thank you all for joining us this morning. We appreciate your continued interest and support in Horizon, and we look forward to speaking with you again soon.

Speaker Change: At this time I'll turn the floor back to Mr. Pablo <unk> for closing remarks.

Speaker Change: Thank you all for joining us. This morning, we appreciate your continued interest and support in Horizon, and we look forward to speaking with you again soon.

Operator: This will conclude our call. We thank you for your participation. You may now disconnect your lines.

Speaker Change: This will conclude our call.

Speaker Change: We thank you for your participation you may now disconnect your lines at this time.

Speaker Change: Yeah.