Q1 2025 Ligand Pharmaceuticals Inc Earnings Call
Kate: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ligland First Quarter 2025 earnings.
Kate: All lines have been placed on mute to prevent any background noise. After the speaker is remarked, there will be a question and answer session.
Kate: If you would like to ask a question during this time, simply press start, follow me the number one on your telephone keypad. If you would like to withdraw your question, press start one again. Thank you. I would no like to turn the call over to Melanie Herman, Executive Director of Investor Relations, please go ahead.
Joseph Pantginis, Joseph Pantginis, Joseph Pantginis
Melanie Herman: Good morning everyone and welcome to Ligand's first quarter 2025 earnings call.
Melanie Herman: During the call today, we will review the financial results we released earlier today and provide commentary on our partner pipeline and business development activity followed by a question and answer session.
Melanie Herman: Before we get started, I would like to point out that we will be discussing non-GAAP results, which excludes certain items such as stock-based compensation, amortization of intangible assets, amortization, or impairment of financial assets.
Melanie Herman: Losses from derivative assets and expenses incurred to incubate the pulp of business amongst others.
Melanie Herman: I encourage you to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP measures which can be found in today's release available on our website. We believe these suggested measures provide valuable insight into our core operating performance both historically and going forward.
Melanie Herman: Our range release and a link to today's webcast can be found in the Investor Relations section of our website at ligand.com
Melanie Herman: With me on the call today, our CEO , Todd Davis, Chief Financial Officer, Toboe Espinoza, Rich Baxter, Senior Vice President of Investment Operations, and Vice President of Strategic Planning and Investment Analytics, Lauren Hay.
Melanie Herman: This call is being recorded and the audio portion will be archived in the investor section of our website. On today's call, we will make forward-looking statements regarding our financial results and other matters related to the company's business.
Thank you. Thank you.
Melanie Herman: Please refer to this State Parish statement related to these forward-looking statements which are subject to risks and uncertainties.
Melanie Herman: We remind you that actual events or results made different materially from those projected or discussed, and that all forward-looking statements are based upon current available information.
Melanie Herman: Ligand assumes no obligation to update these statements. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Ligand files with the Securities and Exchange Commission or SEC.
Todd Davis: That can be found on Ligand's website at Ligand.com or on the SEC's website at SEC.gov With that, I will now turn the call over to Todd
Todd Davis: Thank you, Melanie. Good morning, everyone, and thank you for joining our call.
Todd Davis: I'm pleased to share that we have had a strong start to 2025, setting the stage for what we believe will be another solid year of growth and execution for Ligand
Todd Davis: Over the past 15 months, we have experienced incredible momentum across our royalty portfolio, driven by 10 new investments and 4 FDA approvals.
Todd Davis: As we have mentioned in previous calls, we believe that Merck's kept Vaxiv, Verona's O2 there.
Trivier's Phil Spari, Record Adiz Karziba, and Peltos's Jill Submi.
will be significant contributors to our Royalty Revenue Growth in 2025 and beyond.
Todd Davis: We also continue to build a strong pipeline of Phase 2 and Phase 3 development stage assets.
Todd Davis: including DeFi, which we added to our portfolio in February of this year following our investment with Castle Creek by our Sciences.
Todd Davis: This deal is exemplary of our approach where we look for quality teams combined with quality assets that are aiming to solve for areas of significant unmet clinical need.
Todd Davis: Our portfolio today consists of more than 90 assets and is diversified across various stages of clinical development and therapeutic areas.
Todd Davis: A few weeks ago, we executed a complex strategic transaction to merge our subsidiary Filthos therapeutics with channel therapeutics.
whilst securing substantial financial backing.
Todd Davis: This investment will accelerate the commercialization of zeal suit me, an FDA-approved prescription therapy for Molescombe Phantagiosum, for which we are entitled to a 13% royalty.
Todd Davis: This accomplishment builds on our successful track record of identifying highly differentiated assets and executing customized transactions to maximize their value through equity and royalty rights.
Thank you for tuning in.
Todd Davis: Investments such as this distinguish Ligand's business model and value creation strategy.
Todd Davis: Slide 3 summarizes our financial and portfolio achievements in the first quarter.
Todd Davis: We grew top-line revenue by 46% over the same period last year and grew adjusted EPS by 11%.
Todd Davis: Royal T Revenue in the first quarter increased 44% over the same period in 2024.
Thank you for tuning in.
which we can upsize to 200 million.
Todd Davis: We invested nearly 250 million of capital in the last 15 months across 10 investments and continue to see robust activity in our business development pipeline.
Todd Davis: Tobel will provide more detail on our portfolio later on in the call.
Todd Davis: But I wanted to touch on a few of our key commercial stage assets.
Todd Davis: Veronica Farmer's O2AIR continues to have a strong launch trajectory, reporting net sales of 71 million in the first quarter of 25.
Barric Seating, the Analyst Consensus Estimates
Todd Davis: and we're seeing that many of Ronan's analysts are increasing their peak sales estimates for unto
Todd Davis: and if approved, Phil Spari could become the first and only FDA-approved treatment for FSGS, a rare kidney condition and leading cause of kidney failure.
Todd Davis: Additionally, trivia plans to submit an amendment to the REMS S-N-D-A that is currently under the Review for Modification of the Current Liver Monitoring Requirements.
Todd Davis: The FDA indicated that this amendment is not expected to impact the review timeline, and the company continues to expect a REMS modification, Padufa Target Action Date of August 28th.
Todd Davis: We have also been very pleased with the launch trajectory of Merck's Cap Backseave.
Burke reported net sales of 107 million this quarter.
Nearly double consensus estimates. [inaudible]
Todd Davis: Before I move on to the next slide, I wanted to touch on the current biopharmaceutical financing environment.
Todd Davis: With fewer IPOs and a more difficult landscape for private fundraising, it has become challenging for biotech companies to raise the capital they need to develop their pipelines and launch
Todd Davis: Worldly Financing is another tool and a financing tool kit for these companies.
Todd Davis: So it is no surprise that we're seeing a significant increase in the band for this type of financing.
Todd Davis: While we continue to be highly selective in the investments we pursue, we believe this trend represents a positive tailwind for Ligand as we move further into 2025.
Todd Davis: Furthermore, there has been significant activity regarding restructuring and personal changes in government institutions, including the FDA.
Todd Davis: while these changes may cause disruption and uncertainty in the short term.
Todd Davis: We have heard many encouraging comments from the new FDA leadership, which infers and tend to reduce unnecessary regulation while keeping the key oversight requirements in place.
Todd Davis: Specific comments have been made about ways to get medications for severe and rare diseases through the regulatory process more quickly.
Todd Davis: This would be very good for patients in dire need, and that orientation is potentially beneficial to our development stage portfolio and investment strategy as well.
Todd Davis: Turning to slide four, I'd like to discuss a few of our recent investments in current investment pipeline.
to identify the highest value opportunities.
Todd Davis: We have 38 active investment opportunities under review representing an even balance between the creative and pre-approval transactions.
Todd Davis: We close two new investments, including Castle Creek and the Final O-2 Bear Inventor buyout, and executed a transaction with Channel Therapeutics.
Todd Davis: I would note that three deals exemplified three different investment approaches from our talented team.
Todd Davis: and the third was our special situations approach, which in this case involved the acquisition, incubation and setup, followed by the financing and spin-out of the former Novan asset, Zil Sugni.
Todd Davis: I feel extremely positive about the performance of our strategic planning and investment teams and what they have been able to accomplish in just a few short months.
Todd Davis: Moving to slide five, I would like to remind investors of our strategic differentiation.
First is our focus
The guiding objective is to deliver profitable and compounding growth
Todd Davis: From that guiding principle emerges our strategy and all investment decisions.
Second is our Existing Asset Base
Todd Davis: Our diversified and growing portfolio of royalty assets generate consistent and predictable revenues.
Todd Davis: We acquire or generate these world to interest in late-stage development assets and commercial assets where there is superior risk reward
Todd Davis: Third is our team. Our highly qualified team brings decades of royalty investing, clinical, operational, regulatory, and deal structuring experience as well as strong origination networks throughout the industry.
Todd Davis: This enables us to originate and close royalty investments that are targeted on areas of high clinical value with relatively low risk.
Thank you for watching. We'll see you next time.
Todd Davis: We are outcome-oriented and continue to execute on our strategy of acquiring high-growth, low-op
Todd Davis: There's size and will demand and low supply for royalty capital in the life sciences industry, which allows us to invest selectively as we offer a differentiated capital solution for our partners.
Our team works thoroughly to source.
Todd Davis: Delegance and Negotiate Investments with Customized Structures to create proprietary opportunities.
Todd Davis: Our 2024 acquisition of a piron is a prime example of this approach. We can achieve this while maintaining a low level of operating expenses and high operating margins.
Todd Davis: Overall, royalty capital is a very small percentage of the total capital invested in life sciences today.
Todd Davis: We believe our model is differentiated, scalable, and offers immense growth potential for years to come.
Joseph Pantginis, Joseph Pantginis,
Todd Davis: Turning to slide six, I would like to look ahead to 2029 and discuss our five-year royalty receipts outlook.
Todd Davis: As we share during our most recent investor in Analyst Day,
Todd Davis: We believe our long-term royalty revenue growth is on pace to meet or exceed the 22% compound annual growth rate outlined at our investor day in December of 2024.
The Existing Portfolio alone supports Royal Team Receipts Caggar of 18%.
Future investments should add at least 4% to this.
with potential upside on top of the current outlook. . .
Todd Davis: As I mentioned earlier, our business development team is constantly identifying attractive new investment opportunities, and we anticipate another productive year on the investment
Todd Davis: In conclusion, I feel very good about all that we have accomplished since we began executing on our new streamlined and focused strategy in the fourth quarter of 2022.
We are highly optimistic about our future prospects [inaudible]
rich Baxter: I'll now turn it over to Rich Baxter for an update on our recently announced PELTHO's Strategic Transactions
Thank you, Todd.
Speaker Change: I am pleased to share an important update on our progress with Peltos Therapeutics in the Zell Suit Me Asset. Let me begin by providing a brief history of how we got here. As many of you know, our royalty portfolio included rights to Novan's lead asset, SB 206, which is now commercially known as Zell Suit Me.
Speaker Change: In late 2023, just months before the Schedule January 2024 Padufa date, Novand filed for bankruptcy. Recognizing the strategic importance of the asset, we acted swiftly.
Speaker Change: We completely re-underwrote the position, undertook new diligence, checked our assumptions, and provided dip financing, restructured the company, and ultimately secured the product, the platform technology, and the company itself.
Speaker Change: Following FDA approval in early 2024, we established Peltos Therapeutics as a wholly owned subsidiary to lead the commercial launch of Zell Souveme.
Speaker Change: Our primary goal was to attract external capital, recruit an experienced management team, and accelerate patient access all while continuing to generate value for Ligand shareholders.
Speaker Change: That brings me to this strategic transactionally announced in April . [inaudible]
Speaker Change: Peltos will combine with channel therapeutics in a deal that raises 50 million in equity capital and creates a newly public biopharmac company focused on launching Zell Supney. Under the terms of the agreement, channel will acquire 100% of Peltos
Speaker Change: Change its name to Pelfos Therapeutics Inc. and list on the New York Stock Exchange under the ticker PTHS.
Wigand has committed 18 million to combined entity.
Speaker Change: and Merchantson, a Toronto-based investor group, is contributing $32 million, resulting in a $50 million capital raise. On a post-money fully deluded basis, Ligand will initially own approximately 55% of the new company.
Speaker Change: We chose channel not only for its capital commitment, but also for its early stage pain programs, which we believe offer strategic synergies with those who suit me.
Speaker Change: Importantly, we structured the transaction to preserve meaningful equity ownership in Zelsubme.
Speaker Change: as we believe the market has yet to fully recognize its potential. Combined with our 13% royalty, Ligand shareholders stand to benefit from significant long-term value creation.
Speaker Change: We expect the merger to close between June 30th and August 30th, pending SEC review. In the meantime, we are building out the commercial team and preparing for a US launch this summer. Please turn to slide 9. Let's take a closer look at the condition we're treating. Malascom Contagio Sum.
Speaker Change: This is a highly contagious pox virus and one of the most common skin infections seen by dermatologists and pediatricians It affects an estimated 16.7 million people in the United States and spreads easily through contact or contaminated items like towels, toys and furniture
Speaker Change: Children are particularly vulnerable, so are immunocompromised adults, and people who are sexually active with others who have a Malskum Contagiosum infection.
Speaker Change: Clinically, Malskin presents his raised, flesh-colored bumps on the skin, appearing on the face, trunk, genitals, and even behind the knees. Patients may experience discomfort, secondary infections, and significant social stigma. Please turn to slide 10.
Our market research underscored how disrupted this disease can be.
Speaker Change: We heard stories of children being excluded from daycare school and sports and have sibling spreading the infection to each other The emotional toll is real, especially for those affected for long periods of time, months of night years Currently the standard of care is often watch and wait Most pediatricians don't treat moscom actively
Speaker Change: Whether due to lack of training, limited tools or concerns about treatment safety. [inaudible]
Eventually, many families ever referred to dermatologist. [inaudible]
Speaker Change: who may use cryotherapy or blistering agents, both painful and requiring multiple visits. Across our research and advisory boards, the message has been consistent. The market is ready for a safe, effective, and at-home treatment option. That treatment is self-subing.
Please turn to slide 11
They'll suit me.
Speaker Change: is the first and only FDA-approved at-home prescription therapy for moscom contagious osam.
Speaker Change: Approved for patients as young as 12 months, it is safe, effective, and designed for at-home use by parents, caregivers, and patients themselves. That home use distinction is powerful.
Providers are eager for solutions that don't rely on in-office
Speaker Change: Techniques. We believe Zelsoumi will become the first line therapy by reducing lesion counts, minimizing the need for procedures and lowering the frequency of office visits.
Speaker Change: We're excited to bring this therapy to pediatrician's dermatologist and their patients. Please turn to slide 12.
Speaker Change: From Ligand's perspective, they'll suit me represents a compelling investment. It targets a large underserved market and stands as the only FDA-approved treatment of its kind. It is backed by a robust intellectual property portfolio, including 14 orange booklisted patents as well as significant manufacturing know-how and trade secrets that extend those barriers to the entry beyond 2037.
Speaker Change: We estimate that if just 100,000 of the 16.7 million affected patients received two prescriptions over a 12-week course, Zelsuvmi would become a highly successful product for both Ligand and Peltos. We have assembled the right team to execute and achieve that outcome. This transaction also exemplifies the kind of complex value-creating strategies and investments that Ligand specializes in, particularly in just-
Speaker Change: Drester Special Situations. We believe these opportunities will become more prevalent in today's market environment. In closing, we're proud to have executed this merger and financing and look forward to delivering Zelsugme to patients, caregivers, and providers. They deserve a new, effective and accessible therapy to manage Molliskum safely from their own. And with that, I'll turn it over to Tavo for the financial update. Thank you.
Thank you, Rich.
Speaker Change: I'm pleased to report a strong start to the year, with the first quarter result that position as well to achieve both our 2025 financial guidance and our longer-term growth objectives.
Let me begin with a few highlights.
Speaker Change: Total revenue for the quarter was just over $45 million, driven by 44% growth in royalty revenue, which totaled $27.5 million. Adjusted earnings per share came in at $1.33
Speaker Change: As Todd mentioned, we continue to maintain a strong financial position. We ended the quarter with $209 million in cash and investments after deploying $50 million in cash toward our Phase 3 DeFi asset in partnership with Castle Creek.
Speaker Change: including our available credit facility, we have over $400 million in deployable capital.
Slide 16 provides a closer look at the numbers
Speaker Change: Total revenue for Q1 2025 was $45 million, up from $31 million in the same period last year. That's a 46% increase.
Speaker Change: Growth was broad-based across all three revenue lines, but royalties drove the largest contribution.
Speaker Change: Key drivers of that Royalty growth included strong performance from Browness, Otuber, Trevier's Charles Sparrie, Recordaudi's Karziba, and Merck's Cat Baxes.
Speaker Change: We also saw increased catasaw sales primarily due to Gilead restocking of, Gilead's restocking of veterinary, their COVID-19 antiviral.
Speaker Change: Let me expand briefly on a few of these programs. We're especially encouraged by Verona's US launch of O2Vare for COPD. They reported Q1 2025 sales of $71.3 million, almost doubled their Q4 results.
Speaker Change: As a reminder, we now earn a 3% royalty on O2 bear following our strategic investment of roughly 20 million dollars over the last year to acquire an additional 1% royalty interest.
Speaker Change: At our investor day last December , we projected that O2Vare would reach 1.2 billion in sales by 2029, implying annual royalty revenue of over $35 million to Ligand. Some analysts now forecast hitting that milestone as early as 2027.
Speaker Change: O2 bear is shaping up to be a major long-term growth driver for us and we look forward to updating our long-term projections later this year.
Turning to Phil Sparrie
Phil Sparri: For a year report, it reported first quarter U.S. sales of $56 million, beating consensus and representing more than 180% year-over-year growth and 13% sequential growth.
Phil Sparri: Ligand earns a 9% royalty-on-false party sales, including those generated in Europe via CSLB4.
Phil Sparri: We were pleased to see that the EU's recent full approval of Phil Sparry and were closely watching
Phil Sparri: The potential Rammes Modification with an August 28th Purdue Fattarget Action Date and an FDA update on the SNBA for FSGS, which could receive approval this fall.
Phil Sparri: With a potential expansion into FSGS, Phil Sparry could become our largest royalty-generating asset approaching $50 million in annualized royalties by mid-2026.
Phil Sparri: Merck's cat-backed tip also posted strong results, reporting $107 million in Q1 sales.
Phil Sparri: That's more than doubled the prior quarter and well ahead of expectations.
Phil Sparri: We did see some offset from kite prowlis, and Jim reported Q1 sales of $324 million for kite prowlis, down 14% year over year, primarily due to competitive pressures.
Phil Sparri: On the cap to solve front, we recorded $13.5 million in material sales this quarter compared to $9.2 million in Q1 2024. This growth was driven by timing of shipments and higher demand from Gilead for Becklery.
Phil Sparri: We expect a more even shipment cadence over the remaining quarters
Phil Sparri: Turning to operating expenses, combined R&D and GNA increased this quarter, primarily due to a one-time 44 million charge related to our royalty financing agreement with Castle Creek. This supports the Phase III clinical study of D5 and is accounted for under ASC730-20 research and development arrangements.
Phil Sparri: Additional increases reflect headcount growth and continued investments in the Peltos business.
Phil Sparri: For the quarter, GNA and R&D expenses were $19 million and $50 million respectively, compared to $11 million and $6 million in Q1, 2020-24.
Phil Sparri: GapNet loss for the quarter was $42.5 million or $2.21 per share compared to net income of $86.1 million or $4.75 per diluted share in the prior year.
Phil Sparri: The variance is largely due to the game we recorded last year from our investment in viking therapeutics versus the R&D charge we booked this quarter.
Phil Sparri: On a non-GAAP basis, Core Adjusted Net Income for Q1 2025 was $26.6 million or $1.33 per share. That's up from $21.8 million or $1.20 per share in Q1 2024, driven primarily by top line growth.
Phil Sparri: Turning to the balance sheet, we ended the quarter with 209 million in cash and short-term investments, including 24 million of biking stock
Phil Sparri: We believe this level of liquidity, combined with our expected cash flow, positions as well to fund our investment plans for the foreseeable future.
Finally, we are reaffirming our full year 2025 financial guidance.
Phil Sparri: We continue to expect royalty revenue between $135 and $140 million.
Phil Sparri: Captain Salt Sales between $35 and $40 million. Contract revenue between $10 and $20 million.
Phil Sparri: Total revenue between $180 and $200 million and core adjusted EPS between $6 and $6.25 [inaudible]
Phil Sparri: We are, of course, continuing to monitor legislative and geopolitical developments.
Phil Sparri: Based on what we know today, if terrorists were to be expanded more broadly into pharmaceutical products, we do not expect a material impact to our capital business or to ligand more broadly.
Todd Davis: That concludes my remarks. I'll now turn the call back to Todd for closing comments.
Todd Davis: Thank you, Tavo. To some of us, we're off to a great start in 2025.
Todd Davis: and we're excited about the trajectory of the recently approved programs.
Todd Davis: as well as our robust development stage pipeline. Additionally, our investment capabilities offer us the ability to materially grow our asset portfolio. Our diversified portfolio, including our major commercial royalty generating programs, and the late stage pipeline, form the foundation of our growing success.
Todd Davis: On its own, the commercial portfolio should drag growth in the mid-teens for the early 2030s.
Todd Davis: When you add in our development stage portfolio, including but not limited to Pavela's Tutorin, MLM Asset,
Todd Davis: Treviers, FSGS, SNDA submission, and our recent investment in D5 with Castle Creek, we continue to expect EPS growth of over 20%.
Todd Davis: Through investing, we will continue to add to our commercial and late-stage clinical assets as this portfolio provides us with substantial cash flow to reinvest in new high-value enhancing worthy opportunities.
Todd Davis: We are well positioned to execute against our goals in 2025 and deliver attractive growth and share all the returns over the long term [inaudible]
Todd Davis: Thank you everyone for joining us for today's earnings call. I will now pass it back to the operator and open it up for questions.
Speaker Change: At this time, I would like to remind everyone in order to ask a question, please press star then the number one on your telephone keypad. We will pause for a just a moment to compile the Q&A roster. Your first question comes from the line of Doug Pantginis.
Doug Mim: Thanks very much. My question has to do with the, you know, you touched on this recurrent environment for the space, and one might also almost say that you've...
Identifying and potentially bringing in moral fees to project financing or special situations would you?
Doug Mim: Say that you're seeing even more special situations these days, and it's so what the implications for the company may be. Thank you.
Thank you. Thank you.
Doug Mim: Thanks Doug, that's a good question. There is an increasing number of special situations.
Much of that is driven by
Doug Mim: for these companies in the industry and journalists, but recaps, mergers.
Doug Mim: The sale of some of these companies. And it provides a good opportunity set for us too. I mean, a key core thesis of our strategy is that, and this was part of the whole No Van and Joseph Me view, is that sometimes really good assets get trapped in bad situations.
Doug Mim: and that's constantly what we're scouring for. So for us that is a good event, but of course overall we need a healthy market for biotech going forward as does everybody else on both the finance and industry side.
Doug Mim: But long-term, I think that we will have that. There's going to be a lot of changes. We're going through significant short-term disruption due to policy changes.
Doug Mim: of this administration, which views biotech as one of the strategic industries it's supporting.
is to deregulate David.
Doug Mim: and try to get medicines, good medicines to patients more quickly if possible.
So that probably bodes well
Doug Mim: For us, ultimately, I think your best defense in all of these situations is to make sure that the medicine you're focused on are really adding significant clinical value, especially if you're investing at the development stage because you don't have a label yet.
Doug Mim: Your forecast obviously had more assumptions in them and so you really have to be solving significant clinical problems and then ultimately when and if you do get the approval you're going to have a much better conversation with both the payers and the regulators.
and Paul Hadden. Thank you. Thank you.
Which one? Thank you.
Speaker Change: Your next question comes from the line of Matthew Witt with Craig Harlem. Your line is open.
Matt Hewitt: Good morning and congratulations on the strong start to the year. Maybe first up, there's news is broken here over the last 24 hours, I realize it's pretty recent but with the potential
Matt Hewitt: Most favored nation's status for drug pricing. It sounds like it would just be and this is uncertain Medicaid or Medicare, but...
Matt Hewitt: What do you think that that would do to how your partners kind of look at where they launch, when they launch those types of things, what would be the potential impact from that, if any?
Speaker Change: Yeah, that's a great question, Matt. And although this news has broke this morning, you know, there has been I think
Matt Hewitt: Your dislocation in the pricing markets based on different policies across the globe.
and for, you know,
Matt Hewitt: A couple of decades at least and not more, the US has paid premiums for medicines compared to other countries.
Matt Hewitt: And as you know, this administration is also very focused on fair trade and they also have a reputation for starting out with really big asks.
Matt Hewitt: and then trying to get to some deal-making resolution of some sort.
Matt Hewitt: So, I expected that's the direction that this announcement will go as well. And ultimately, though, I think that
Matt Hewitt: The U.S. is the main market. Most of the partners we are partnered with, not all, because Carzibe is launched in Europe , obviously in.
Matt Hewitt: across the globe, really, but not in the U.S. But most of our partners are focused first on the U.S. market and then follow on in the other markets.
Matt Hewitt: But I think, you know, in terms of expectations, there's going to be a period of significant short-term disruption as this is sorted out and trade policies around pharmaceuticals are negotiated. But long-term, I think, is probably a good thing.
That's helpful. And then maybe as a follow-up question,
Matt Hewitt: Given, and you noted this in a couple different times in the prepared remarks even, but given some of the disruption that we're seeing and the challenges that
Matt Hewitt: potential partners are having on the funding side. As you look at your investment opportunities, has the sizing changed at all? Or are you still kind of looking kind of as, you know, those bite size, you know, $10, $20 million type investments and spreading your strong balance sheet over multiple shots on goal? Or would you consider something larger? Thank you. Thank you.
Matt Hewitt: Thanks, Matt. I think for the general audience here, I would just say that we're trying to create a very diversified portfolio, and so the general guidance that we're following now at our current market cap
Matt Hewitt: and our current portfolio size is that we believe that 50 million is about the most we want to invest in a binary risk situation.
Matt Hewitt: And so that's about the most we're going to do in a binary situation that was the size of our investment at Castle Creek. We syndicated in.
Matt Hewitt: The other 25 million for that reason, and that's just a portfolio math. We're trying to create a diversified portfolio, not everything will work, and we think that the math really works well at that size.
Matt Hewitt: Where we will upside is in significantly de-risk situation, and the best recent example we have of that as a piron that was already a launched product that had been on the market.
Matt Hewitt: in Europe and the rest of the world for over three years had significantly entrenched, become significantly entrenched in clinical practice.
Matt Hewitt: and the clinical safety and efficacy profile was very well known in a broad population with very high clinical need. So really about as de-risk as you can get, by the way the marketer here is a very good record ID. So we felt really good about that. That was a $100 million deal.
Matt Hewitt: and so we will up size on really de-risk situations that do not have binary risk.
and then long-term as our portfolio grows.
Speaker Change: [noise]. Your next question comes from the line of Trevor Aldrick with Oppenheimer. Your line is open.
Trevor Aldrick: Good morning.
Trevor Aldrick: I had a couple of quick questions is there anything you can say on carziva expectations any of the activities recorded is doing there to expand use.
Speaker Change: Thank you Trevor I'm going to ask Lauren Hay who's on the call with us to address the first question regarding karzeba as she's tracking that from a portfolio management perspective, and then I'll have rich Baxter answer your question on.
Speaker Change: Sure. Thanks for the question. So as you may be aware of record Audi has recently started disclosing kercy basal in there are three year projection presentation. A couple weeks ago that showed impressive growth of 23%.
Speaker Change: 23, and 2024 and then they also increase the peak sales guidance for the oncology franchise. They bumped that up from 250 to 300 million euros to three to 350, there continuing to invest in geographic expansion, which is driving that.
Speaker Change: Upsize Peakier estimate they launched in South Korea last year, Latin American launches expected. This year and then you know as as you're probably aware they are continuing to pursue approval in the U S and the next planned FDA interaction on that.
Speaker Change: So we'll be looking forward to an update there those are some of the shorter term growth drivers and then in terms of medium to longer term there investing in expanding the use of carsiba to induction therapy, both in front line and in the Relatory setting and then.
Speaker Change: Term, they've recently announced a program to expand the use of Tresiba to Ewing sarcoma patients, which would if approved provide pretty dramatic revenue upside in the longer term.
Speaker Change: So I think we we continue to be very optimistic about car seba and record audience commercial success with his product I'll turn it to rich for your second question.
Rich: Thanks, Lauren malls can contigo is primarily seen initially by pediatricians as the condition worsens. These they get referred to pediatric dermatologists or children and dermatologists for adults. So initially.
Rich: It's gonna the sweet spot of the target market or pediatric dermatologist, and dermatologists and pediatricians will be critical for the product going forward.
Rich: Great. Thanks.
Speaker Change: Your next question comes from the line of Annabel semi with Stifel. Your line is open.
Speaker Change: My question Congratulations on a good quarter just following on the Biopharma environment and the number of opportunities that you have I. Appreciate your desire to remain relatively diversified any thoughts as two.
Speaker Change: The investment capacity, you're willing to put out every year I think you've talked about once if you 200 and cap total capital allocations for the year any thought too increase that and taking advantage of the environment.
Speaker Change: Question then the second is regarding Nitrocell now that you have palthose oftens they'll Sue me about to launch can you dive into how you might leverage the nitrocell platform to new products or Licensings and what are your next plans for that.
Speaker Change: [noise] sure sure on investment capacity I, I think there's probably a pretty good chance, we invest at above our normal pace. This year, just given the environment. The number of good opportunities we're seeing.
Speaker Change: As was mentioned in the earnings call.
Speaker Change: About half of what we're looking at is currently commercial but still is offering significant returns.
Speaker Change: You know above what we would consider normal market returns. So those we're interested in as well and that could result in a higher deployment level that said, we're going to observe our diversification limits on the deal size and it takes just as much work to do a 5 million dollar deal.
Speaker Change: 75 million dollar deal and get it right. So we have certain bandwidth restrictions as does any investment team and we're gonna go at the pace that we're capable of but everybody here's working pretty hard given the opportunity set right now.
Speaker Change: So that's what I'd expect on you know the investment pace.
Speaker Change: And in terms of the nitrous cell platform. That's a great question I think that I would just comment that this is a special situations, sometimes a special situations require more work and then for consumes more bandwidth and therefore there.
Speaker Change: And that's the case with no van so so the reason that you do that is because of potential outside returns and on the single lead asset Zelou approved on the overall investment there we're gonna make I think very nice equity.
Speaker Change: Single asset, but we do own the intellectual property in across the board in multiple potential therapies and we've got about three different therapies that the team is looking at now.
Speaker Change: Dr. Karen Reeves is looking at that with her team an analyzing what we think will be the best opportunities I suspect what we will do there is look for partners to to develop those as well and I think it's early but the opportunity.
Speaker Change: Is pretty robust I expect you know my expectation is we'll end up with at least two commercial products out of this but hopefully three or four.
Speaker Change: Great. Thank you.
Speaker Change: Your next question comes from the line of John Vlander Mustan with Zachs. Your line is open great. Thank you and another another question on Peltos.
Speaker Change: Is the initial launch timing for Zelsu may dependent on when the deal is able to close the channel or is independent of that.
Speaker Change: [noise], it's fairly independent at this point, but I I think the ven diagram overlaps pretty nicely there works expecting as Ru Rich said to close the merger to close at least the two standard deviation normal range is between June 30th and August 30th.
Speaker Change: And we already have.
Speaker Change: The skeleton of the team we even have some regional sales managers in place they're all preparing for the launch the manufacturing team has been in place and is manufacturing commercial supplies. So the next step will be the higher sales reps, we're gonna have significant.
Speaker Change: The next two to three weeks I think after our initial submission that's gonna tell us a lot about the length of the pathway and we'll probably dial in a little bit our rate of hiring on the sales reps as we get that information. So that's that's.
Speaker Change: The plan currently John I think the financing is secured the merger target along with the required number of votes is secured so really for the most part this is a matter of timing, which we don't totally control with the SEC.
Speaker Change: Okay, and then looking at full Spari.
Speaker Change: All that Lauren Hay comment on that Yeah, I think John is a great question. I think you know we're expecting to see kind of continued momentum from Trivere's partner CSL V for.
Speaker Change: You know I think probably doesn't dramatically change the trajectory there continuing to you know secure country by country reimbursement approvals and further you know invest in the launch. So we'll continue to see I think growth in the coming quarters from them and certainly an.
Speaker Change: Development for for C. S. L V for Entere as well, Okay and last one for Tabo on revenue transfer the year should we expect to see something similar to to last year, where you know a little bit lower in the first quarter and then it jump.
Speaker Change: Contract revenue played somewhat of a role there, but ignoring ignoring that line how do we think it's going to cadence so to speak of of revenues for this year for the rest of this year. Thanks, Thanks, John Yeah pretty pretty balanced cadence on the Captus all you I mean.
Speaker Change: That we're reiterating guidance. So you can you can you can do the math pretty pretty pretty pretty straight line from here on onto the end of the year on on Captasol and then just given the nature of some of the the royalty arrangements with the tier the tier royalty rates with.
Speaker Change: You should expect to see kind of a gradual upfront as is typical on the royalty line great. Thank you.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.