SWK Holdings Corp (SWKH) 2024 Q1 法說會逐字稿

Good morning, everyone, and welcome to the SWK Holdings first quarter 2024 conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Jason Rando. Sir, the floor is yours.

大家早安，歡迎參加 SWK Holdings 2024 年第一季電話會議。（操作員說明）現在我很高興將發言權交給主持人 Jason Rando。先生，地板是你的了。

Good morning, everyone, and thank you for joining SWK Holdings first quarter 2024 financial and corporate results call. Yesterday evening, SWK Holdings issued a press release detailing its financial results for the three months ended March 31, 2024. The press release can be found in the Investor Relations section of swkhold.com under news releases.

大家早安，謝謝您參加 SWK Holdings 2024 年第一季財務與企業業績電話會議。昨天晚上，SWK Holdings 發布了一份新聞稿，詳細介紹了截至 2024 年 3 月 31 日的三個月的財務表現。新聞稿可在 swkhold.com 投資者關係部分的新聞稿下找到。

Before beginning today's call, I would like to make the following statement regarding forward-looking statements. Today, we will be making certain forward-looking statements about future expectations, plans, events, and circumstances. These statements about our strategy, future operations and our expectations regarding our capital allocation and cash resources. These statements are based on our current expectations, and you should not place undue reliance on these statements. Actual results may differ materially due to our risks and uncertainties, including those detailed in the Risk Factors section of SWK Holdings 10-K filed with the SEC and other filings we make with the SEC from time to time. SWK Holdings disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or otherwise.

在開始今天的電話會議之前，我想就前瞻性陳述發表以下聲明。今天，我們將對未來的期望、計劃、事件和情況做出某些前瞻性陳述。這些聲明涉及我們的策略、未來營運以及我們對資本配置和現金資源的期望。這些陳述是基於我們目前的預期，您不應過度依賴這些陳述。由於我們的風險和不確定性，包括向 SEC 提交的 SWK Holdings 10-K 的風險因素部分以及我們不時向 SEC 提交的其他文件中詳細說明的風險和不確定性，實際結果可能會存在重大差異。SWK Holdings 不承擔更新這些前瞻性聲明中所含資訊的義務，無論是由於新資訊、未來事件或其他原因。

Joining me from SWK Holdings on today's call is Jody Staggs, President and CEO, who will provide an update on activities first quarter 2024 corporate and financial results.

SWK Holdings 總裁兼執行長 Jody Staggs 與我一起參加今天的電話會議，他將提供 2024 年第一季度公司活動和財務業績的最新資訊。

Jody, go ahead.

喬迪，繼續。

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

謝謝傑森，謝謝大家參加我們的第一季電話會議。SWK 2024 年第一季的業績突出表現在，金融部門收入增長24%，達到近乎歷史最高的1150 萬美元，而我們的Enteris 部門與戰略合作夥伴簽署了獨家選擇權和購買協議，這減少了運營消耗，並可能導致收購某些與 CDMO 相關的有形資產。SWK 的核心業務融資、商業階段生命科學產品公司提供第一留置權定期貸款和特許權使用費，重點關注 500 萬至 2500 萬美元的投資。

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

十多年來，我們專注於這個利基市場，並在直接信貸公司的三個核心職能（發起、承保和投資組合管理）方面建立了廣泛的網絡和豐富的經驗。這些能力在第一季得到了證明，我們的金融部門的應收帳款投資組合總額年增 10.3%，達到 2.745 億美元，有效收益率為 14.2%，已實現收益率為 16.3%。

These achievements led to a 24% year-over-year increase in segment revenue to $11.5 million. This performance enabled our finance segment to remain profitable in the quarter, generating $1 billion of GAAP net income and $2.7 million of adjusted non-GAAP net income despite being negatively impacted by $6 million impairment in our loan book. We are constructive on the fife science finance market and are actively pursuing multiple loan and royalty opportunities while remaining cognizant of increased competition in certain pockets of the life science finance market.

這些成就導致該部門營收年增 24%，達到 1,150 萬美元。這一業績使我們的金融部門在本季度保持盈利，儘管受到貸款帳簿 600 萬美元減值的負面影響，但仍產生 10 億美元的 GAAP 淨利潤和 270 萬美元的調整後非 GAAP 淨利潤。我們對生命科學金融市場持建設性態度，並積極尋求多種貸款和特許權使用費機會，同時仍認識到生命科學金融市場某些領域的競爭日益激烈。

While many of our competitors have grown to a size where they must focus on large, sponsor-backed opportunities, we believe SWK's focus on the less competitive sub-$25 million market remains a competitive differentiator.

雖然我們的許多競爭對手已經發展到必須專注於大型、贊助商支持的機會的規模，但我們相信 SWK 專注於競爭不那麼激烈的 2500 萬美元以下市場仍然是一個競爭優勢。

During the first quarter, our Enteris division signed an exclusive option and asset purchase agreement with the strategic partner, granting the partner a two-year exclusive option to purchase certain Enteris tangible assets in exchange for option fees and guaranteed revenue payments. In April, we received the first low single-digit million-dollar option fee.

第一季度，我們的 Enteris 部門與策略合作夥伴簽署了獨家選擇權和資產購買協議，授予合作夥伴為期兩年的獨家選擇權，可以購買某些 Enteris 有形資產，以換取選擇權費和保證收入支付。四月份，我們收到了第一筆低個位數的百萬美元選擇權費。

The guaranteed revenue payments are chewed up every six months, and we expect to receive the first guaranteed revenue payments in the third quarter. Our first quarter financial results did not include any revenue from either the option fee or guaranteed revenue payments. As we highlighted on our fourth quarter call, the agreement immediately reduces the cash burn on Enteris, and we believe the business will be breakeven or better over the duration of the agreement. The agreement also provides our colleagues at Enteris the opportunity to work with our partner to increase the project pipeline and generate new business while allowing SWK to prioritize our specialty finance business focused on investing in small and midsized commercial stage life science companies.

保證收入付款每六個月進行一次，我們預計將在第三季收到第一筆保證收入付款。我們第一季的財務表現不包括任何來自選擇權費或保證收入支付的收入。正如我們在第四季度電話會議上所強調的那樣，該協議立即減少了 Enteris 的現金消耗，我們相信在協議期間該業務將實現盈虧平衡或更好。該協議還為我們 Enteris 的同事提供了與我們的合作夥伴合作的機會，以增加專案管道並創造新業務，同時允許 SWK 優先考慮我們專注於投資中小型商業階段生命科學公司的專業金融業務。

Turning to our share repurchase program, we bought back 58,298 shares at a total cost of $1 billion during the quarter. Since quarter close, we repurchased an additional 19,000 shares for a total cost of $300,000. At March 30, 2024, our book value per share was $22.46, a 5% increase compared to $21.39 in the year ago period. Non-GAAP tangible financing book value per share totaled $19.69 and approximately 17% increase from the year ago period. For the first quarter of 2024, the realized yield on finance receivables portfolio was 16.3% versus 15%, approximately 15% for the same period in the prior year. In summary, first quarter of 2024 was largely as expected, with the exception of the $6 million loan impairment. For the remainder of 2024, we will prioritize selectively closing commercial stage life science loan and royalty transactions that fit our underwriting criteria, working with our nonaccrual borrower partners to realize positive outcomes, exploring paths for additional capital and returning capital to shareholders via our buyback program.

說到我們的股票回購計劃，我們在本季回購了 58,298 股股票，總成本為 10 億美元。自季度結束以來，我們額外回購了 19,000 股股票，總成本為 300,000 美元。截至 2024 年 3 月 30 日，我們的每股帳面價值為 22.46 美元，比去年同期的 21.39 美元成長 5%。非 GAAP 有形融資每股帳面價值總計 19.69 美元，較去年同期成長約 17%。2024 年第一季度，應收帳款融資組合的實現收益率為 16.3%，而去年同期為 15%，約為 15%。總而言之，除了 600 萬美元的貸款減損之外，2024 年第一季基本上符合預期。在2024 年剩餘時間內，我們將優先選擇性地關閉符合我們承銷標準的商業階段生命科學貸款和特許權使用費交易，與我們的非應計借款人合作夥伴合作以實現積極成果，探索額外資本的途徑並透過我們的回購計畫將資本返還給股東。

With that, let's open the call to questions.

接下來，讓我們開始提問。

(Operator Instructions) Mark Argentino, Lake Street. Your line is live.

（操作員指示）馬克·阿根廷，湖街。您的線路已上線。

Jody, just saw a couple of quick ones. One, can you just touch on the impairment, what was it? And then two, what's your kind of lending base or capacity right now? Thanks.

喬迪，剛剛看到了幾個快速的。第一，您能簡單談談損傷嗎？第二，您現在的貸款基礎或能力是什麼？謝謝。

Yes. Thanks, Mark. Yes, so the impairment was two or three alone, which was carried at $9.6 million at 1230? Yes, the situation remains in workout. There is a restructuring ongoing. So we remain positive towards the potential outcome here. But it's I think the restructuring happened a little quicker than we would have thought it was a little bit more rush than we would have thought. And it goes to the business goes through that there's likely to be some disruptions.

是的。謝謝，馬克。是的，那麼減損就只有兩到三項，在 1230 時的帳面金額為 960 萬美元？是的，情況仍在鍛鍊中。目前正在重組。因此，我們對這裡的潛在結果保持樂觀。但我認為重組發生得比我們想像的快一點，也比我們想像的要倉促一點。而且隨著業務的發展，可能會出現一些中斷。

And given our org structure under the restructure, we felt this impairment was positive -- excuse me, it was not positive -- was appropriate where as we as we get a little further out from it, we'll do a full write-up and analysis of what happened here. It was a UK borrower. We've only done a few of those. I think we need to do a deep dive and understand if that played a role here. There are some other dynamics that I think in my mind happened, and we'll definitely use this as a learning experience.

考慮到重組下我們的組織結構，我們認為這種損害是積極的——對不起，這不是積極的——是適當的，當我們離它更遠時，我們將做一份完整的報告並分析這裡發生的事情。這是一位英國借款人。我們只做了其中的一些。我認為我們需要深入研究並了解這是否在這裡發揮了作用。我認為在我的腦海中還發生了一些其他動態，我們一定會將此作為學習經驗。

In terms of our lending capacity, we have the revolver as we stand today, the revolver's undrawn, I think we've got a few million dollars of cash. So we have plenty of capacity, let's say, $50 million. We've got some undrawn commitments and things like that. But we're in the $45 million to $50 million of capacity fee.

就我們的貸款能力而言，我們擁有今天的左輪手槍，左輪手槍尚未取出，我認為我們有幾百萬美元的現金。所以我們有足夠的產能，比如說 5000 萬美元。我們有一些未兌現的承諾之類的。但我們需要支付 4500 萬至 5000 萬美元的容量費。

I was talking to the team yesterday about what we've done year to date, and I think we would like to close some deals.

昨天我與團隊討論了我們今年迄今為止所做的事情，我認為我們希望完成一些交易。

We actually have submitted about $200 million of proposals here to date, which is up year-over-year and we have about $60 million proposals outstanding. So I think we're running our playbook, we're out there originating, we're out there finding potential partners, we're out there finding so many proposals. The market has turned a bit more competitive, and that's both just sort of general dynamics if you're a new player to in the market plus with active equity markets moving higher, that's an alternative for some of these companies. So I don't think we're going to be doing anything drastically different. But I sort of challenged the team to think through our process, our proposals other hings we should be doing differently. Are we out there hustling every day, making sure that we're staying in front of these companies and they're putting the best proposal forward to get some closings.

迄今為止，我們實際上已經在這裡提交了約 2 億美元的提案，這一數字逐年增加，我們還有約 6,000 萬美元的未完成提案。所以我認為我們正在運行我們的劇本，我們在那裡發起，我們在那裡尋找潛在的合作夥伴，我們在那裡尋找很多提案。市場競爭變得更加激烈，如果您是市場新參與者，這只是一般動態，而且隨著活躍的股票市場走高，這對其中一些公司來說是一種選擇。所以我認為我們不會做任何完全不同的事情。但我有點挑戰團隊思考我們的流程、我們的建議以及其他我們應該採取不同做法的事情。我們是否每天都在忙碌，確保我們走在這些公司的前面，他們正在提出最好的建議以達成一些交易。

That's helpful. And then has any of your portfolio companies access the equity markets in terms of raising additional equity capital or how do you guys look at broader capital markets right now?

這很有幫助。然後，您的投資組合公司中是否有任何一家透過籌集額外股本資本進入股票市場？

Yes, yes. So we do have some private companies that have raised capital recently, one public company as well. And I suspect others are evaluating that, given it's those are open. So it's a double-edged sword. It's great for our portfolio companies, more equity, we finance cash supporting life science company. So it's important that they have some ability to raise equity, particularly when things are good, it does make originating new loans, I would say, modestly more challenging.

是的是的。所以我們確實有一些私人公司最近籌集了資金，還有一家上市公司。我懷疑其他人正在評估這一點，因為這些都是開放的。所以這是一把雙面刃。這對我們的投資組合公司來說非常好，更多的股權，我們為生命科學公司提供現金支援。因此，重要的是，他們有一定的籌集股本的能力，特別是當情況良好時，我想說，這確實使發放新貸款更具挑戰性。

Great. Thanks.

偉大的。謝謝。

Thank you, Mark. Appreciate the questions.

謝謝你，馬克。感謝您提出的問題。

William Koch.

威廉·科赫.

Hi. This is Bill Koch calling. I'm a shareholder. I'm not a financial person. I appreciate this opportunity. In fact, I'm criminal defense lawyer and I don't hit all the financial numbers are, I think great with this company. And the only reason why I am a shareholder, though is and this is my question on questions that you have a lot of questions on. You always want the shareholders because SWK. Jones and tariffs on an island of Eugene stock 20, 25 years ago, you don't like a lot. So it's almost like I'd like to have like a lot of questions that I can really I mean, I know what they are but I can really formulate them the given that I just found out last night that this conference call is going to be this morning and but going back to stuff that know, did some of that some of the situations they were in like with Pfizer, how they competed with Emisphere through the years, all the deals, the big deals they had that Unigene had and then Enteris had sort of potentially never worked out but the potential blockbuster drugs. So I'm not sure if I could just start asking questions or if I could send you an email.

你好。這是比爾·科赫打來的電話。我是股東。我不是一個金融人。我很珍惜這個機會。事實上，我是刑事辯護律師，我並沒有達到所有的財務數字，我認為這家公司很棒。不過，我成為股東的唯一原因是，這是我針對你們有很多疑問的問題所提出的問題。你總是想要股東，因為 SWK。瓊斯和 20、25 年前尤金島的關稅，你不太喜歡。所以這幾乎就像我想要有很多問題，我真的可以我的意思是，我知道它們是什麼，但我真的可以闡述它們，因為我昨晚剛發現這次電話會議將是今天早上，但回到已知的事情，他們做了一些事情，例如與輝瑞（Pfizer）的一些情況，多年來他們如何與Emisphere 競爭，所有交易，他們與Unigene 和Enteris 進行的大交易有一種可能永遠不會成功但可能會引起轟動的藥物。所以我不確定我是否可以開始提問或是否可以給您發送電子郵件。

Yes, you know what let me maybe kind of kind of frame it this way and maybe it makes sense for us to get on a call, too, because I can walk you through kind of what's happened in the SWK's involvement and a lot of specifics around the Unigene transition. So we purchased Enteris, it's been over four years ago, might have been five years ago. And at the time, the thesis really was, hey, this is a cool technology and they're helping peptide and certain small molecules go from IV to oral. There's some interesting things in the pipeline. And yes, we saw the Emisphere transaction and sort of their involvement with GLP ones that we thought wow, this is pretty cool it fast and they have signed the license with Cara. So we felt like that validated technology and we like that a lot.

是的，你知道是什麼讓我可能以這種方式構建它，也許我們接聽電話也有意義，因為我可以向您介紹 SWK 的參與中發生的事情以及許多具體細節圍繞 Unigene 轉型。所以我們買了 Enteris，已經是四年多前，可能是五年前了。當時的論文確實是，嘿，這是一項很酷的技術，他們正在幫助勝肽和某些小分子從靜脈注射到口服。有一些有趣的事情正在醞釀中。是的，我們看到了 Emisphere 交易以及他們對 GLP 交易的參與，我們認為哇，這太酷了，而且他們已經與 Cara 簽署了許可證。所以我們覺得這種技術是經過驗證的，我們非常喜歡它。

Kind of fast forward, I would say the execution wasn't great and we certainly hold responsibility for that. I would say the window was kind of missed. So there's still talking to folks about additional licenses. And we've come close a couple of times, but the window was sort of missed. There was probably four or five year window when there was some opportunities to get some things done. And again, execution wasn't great. So when the Board put me in as CEO, we looked at that business and said, hey, can we really add value doing what we're doing now. And if you look at our financials, it was a cash burning situation. And so we were sending money from our finance business to Enteris, which none of us wanted to do, and we made the decision to really downsize that business. So we reduced head count. There's a new CEO there named Paul Shields, and we've really refocused that around kind of classic CDMO operations. So they're focused right now on some sort of unique dosing types and helping companies evaluate those dosing types in Phase one and Phase two.

有點快進，我想說執行得併不好，我們當然對此負有責任。我想說的是，窗戶有點錯過了。因此，仍在與人們討論額外的許可證。我們有幾次很接近這個目標，但有點錯過了機會。可能有四、五年的窗口期，有機會完成一些事情。再說一次，執行力並不好。因此，當董事會讓我擔任執行長時，我們審視了該業務並說，嘿，我們現在所做的事情真的可以增加價值嗎？如果你看看我們的財務狀況，你會發現這是一種燒錢的情況。因此，我們從金融業務向 Enteris 匯錢，但我們誰都不願意這樣做，因此我們決定真正縮小該業務的規模。所以我們減少了人數。那裡有一位名叫 Paul Shields 的新任首席執行官，我們確實圍繞著經典的 CDMO 運營重新調整了重點。因此，他們現在專注於某種獨特的劑量類型，並幫助公司評估第一階段和第二階段的這些劑量類型。

So we still have Peptelligence.

所以我們仍然有 Peptelligence。

There's still some efforts to do some licenses there that's mentioned. You know, we're talking to people. We've come close a couple of times, but unfortunately, I think the window for monetizing that IP is probably not all the way close, but it's not where it was five years ago.

仍然需要做出一些努力來獲得提到的一些許可。你知道，我們正在與人交談。我們已經有幾次接近這個目標，但不幸的是，我認為知識產權貨幣化的窗口可能還沒有完全接近，但現在已經不是五年前的樣子了。

Okay. Well, I guess I kind of? Yes, because I we don't have that much time here. But all Emisphere had was an oral delivery technology that I believe Unigene was actually shown. I think in those calcitonin studies years ago to be better than than Emisphere's technology in terms of delivering that API into the bloodstream and Emisphere was bought by Novo for over $1 billion. So that's kind of why I thought like, wow, this SWK has money and maybe they can move Enteris forward to some sort of huhge big deals like that. But I guess what you're saying is that's not going to happen.

好的。嗯，我想我是這樣的？是的，因為我們在這裡沒有那麼多時間。但 Emmisphere 擁有的只是一種口服給藥技術，我相信 Unigene 確實展示過這種技術。我認為在幾年前的降鈣素研究中，在將 API 輸送到血液中方面，Emisphere 的技術比 Emisphere 的技術更好，而 Emisphere 被 Novo 以超過 10 億美元的價格收購。所以這就是為什麼我想，哇，這個 SWK 有錢，也許他們可以推動 Enteris 進行類似的大型交易。但我想你所說的是這不會發生。

I would say it's no, we haven't we haven't given up. There's still some efforts there. But look, you're you're exactly saying our thesis. That is exactly what we thought we purchased it for, I think $19 million bucks we got from the Cara license so that your thesis is exactly what we thought. And you at the time, I think we thought and there was some work in the pipeline on GLP-1 to I don't want to get too in the weeds here. But so we saw all those same things about this could be a huge upside scenario. So again, I don't think it was a crazy idea. Didn't work out like we would have hoped. But yes, I think your points are well taken.

我想說不是，我們沒有，我們還沒放棄。那裡還有一些努力。但你看，你說的正是我們的論點。這正是我們購買它的目的，我想我們從 Cara 許可證中獲得了 1900 萬美元，這樣你的論文正是我們所想的。我想我們當時也認為，GLP-1 方面的一些工作正在進行中，但我不想在這裡過度介入。但我們看到所有這些相同的事情可能會帶來巨大的好處。再說一遍，我不認為這是一個瘋狂的想法。沒有像我們希望的那樣進行。但是，是的，我認為你的觀點得到了很好的接受。

And just I guess last comment I would say is if you look at any of these dosing companies' technologies, most of the large pharma robotics, they have some of them. They do have internal capabilities and you're right, like the Peptelligence technology is from what we've seen from data from talking to partners. It's the best out there in terms of getting certain API where it needs to go. However, is that a differentiating factor to get someone to pay a royalty, that's always a challenge. So if you can get 10% of the API, or it needs to go versus 5%, that's awesome. That's great. Is it valuable enough for someone to pay a royalty or they say, You know what, 5% we can maybe up the milligram and still get the coverage we need so that's what you're always wrestling with there.

我想我想說的最後一句話是，如果你看看這些劑量公司的技術，大多數大型製藥機器人，他們都有一些技術。他們確實有內部能力，你是對的，就像 Peptelligence 技術來自我們從與合作夥伴交談的數據中看到的那樣。就取得某些需要的 API 而言，它是最好的。然而，這是否是讓某人支付版稅的差異化因素，這始終是一個挑戰。因此，如果您可以獲得 10% 的 API，或需要 5%，那就太好了。那太棒了。對於有人支付版稅是否足夠有價值，或者他們說，你知道嗎，5%，我們也許可以增加毫克數，但仍然可以獲得我們需要的承保範圍，所以這就是你一直在努力解決的問題。

Okay. All right. I appreciate it.

好的。好的。我很感激。

Absolutely, yes. And feel free to call, and I'm happy to chat on that, and we'd love to hear your views on sort of what happened there.

絕對沒錯。請隨時致電，我很樂意就此進行討論，我們很想聽聽您對那裡發生的事情的看法。

Okay, thank you.

好的謝謝。

Thanks, Bill.

謝謝，比爾。

There are no further questions in the queue.

隊列中沒有其他問題。

Great.

偉大的。

Well, thanks for the questions, Mark and Bill, and thanks for joining the call. I'm around today. The team is around today and tomorrow if you'd like to reach out and hope everyone has a good day. Bye-bye

好的，感謝馬克和比爾提出的問題，也感謝您參加這次電話會議。我今天就在附近。如果您想與我們聯繫並希望每個人都有美好的一天，我們的團隊今天和明天都會在場。再見

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

謝謝大家。今天的活動到此結束。此時您可能會斷開連接，祝您度過愉快的一天，感謝您的參與。