SWK Holdings Corp (SWKH) 2024 Q2 法說會逐字稿

Good day and welcome to the SWK Holdings Second Quarter 2024 conference call. (Operator Instructions) Please note this conference is being recorded. I will now turn the conference over to your host, Mr. Ira Gastin, Investor Relations. Sir, the floor is yours.

美好的一天，歡迎參加 SWK Holdings 2024 年第二季電話會議。（操作員說明）請注意，本次會議正在錄製中。現在我將會議交給東道主投資者關係部門的 Ira Gastin 先生。先生，地板是你的了。

Good morning, everyone, and thank you for joining the SWK Holdings Second Quarter 2024 financial and corporate results call. Yesterday, we issued a press release detailing our financial results for the three months ending June 30, 2024. The press release can be found on the Investor Relations section of our website at swkhold.com under the News Release section.

大家早安，謝謝您參加 SWK Holdings 2024 年第二季財務與企業業績電話會議。昨天，我們發布了一份新聞稿，詳細介紹了截至 2024 年 6 月 30 日的三個月的財務表現。新聞稿可在我們網站 swkhold.com 投資者關係部分的新聞稿部分找到。

Before 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, including statements about our strategy, future operations and our expectations regarding our capital allocation and cash resources. These statements are based on our current expectations and you should not place undue reliance on these statements. Actual results may differ materially due to our risks and uncertainties, including those detailed in the Risk Factors section of the 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，我們將就未來的預期、計劃、事件和情況做出某些前瞻性聲明，包括有關我們的策略、未來營運以及我們對資本配置和現金資源的預期的聲明。這些聲明是基於我們當前的期望，您不應過度依賴這些聲明。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 SWK's second quarter corporate and financial results. And Jody, it's all yours. Go ahead, please.

SWK Holdings 總裁兼執行長 Jody Staggs 與我一起參加今天的電話會議，他將提供有關 SWK 第二季度企業和財務業績的最新資訊。喬迪，這一切都是你的了。請繼續。

Thank you, Ira, and thanks everyone for joining our second quarter conference call. First, I'd like to welcome our new CFO, Adam Rice. Adam joined SWK from a private credit platform and bring valuable loan and mortgage accounting and operational experience to SWK. During his first couple of months, Adam has familiarize himself with our financing structures, assisted our controller, Courtney, and our consultants with the 2Q accounting reporting and started building a relationship with our partner banks. Adam will take a leading role with the financial reporting starting in 3Q, and you'll hear from and then. Welcome, Adam.

謝謝艾拉，也謝謝大家參加我們的第二季電話會議。首先，我要歡迎我們的新任財務長 Adam Rice。Adam 從私人信貸平台加入 SWK，為 SWK 帶來了寶貴的貸款和抵押貸款會計和營運經驗。在上任的頭幾個月裡，Adam 熟悉了我們的融資結構，協助我們的財務長 Courtney 和我們的顧問完成第二季的會計報告，並開始與我們的合作銀行建立關係。Adam 將在第三季開始的財務報告中發揮主導作用，屆時您將會收到訊息。歡迎，亞當。

SWK's core business is financing innovative commercial stage life science product companies to first lien term loans and royalties with a focus on $5 million to $25 million investments.

SWK 的核心業務是為創新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融資，重點投資 500 萬至 2500 萬美元。

During the second quarter, our core finance segment generated $6.5 million of adjusted non-GAAP net income. The net finance receivables portfolio increased 19% year-over-year to $267 million and the portfolio effective yield improved 10 basis points yea-over-year and 40 bps sequentially to 14.6%. Segment revenue increased 15% year-over-year to $10.7 million, as receivables growth was accompanied by a 15.4% realized yield.

第二季度，我們的核心財務部門產生了 650 萬美元的調整後非 GAAP 淨利潤。淨財務應收帳款投資組合年增 19%，達到 2.67 億美元，投資組合有效收益率年增 10 個基點，季增 40 個基點，達到 14.6%。由於應收帳款成長伴隨著 15.4% 的實際收益率，該部門營收年增 15% 至 1,070 萬美元。

Second quarter 2024 financial segment results were negatively impacted by a net $4.1 million of impairments, taken to two non-accrual borrowers and possibly impacted by $2.4 million increase in the carrying value of our Illuvien royalty, as well as a $700,000 gain on the conversion of AOTI private warrants to common stock, which was triggered by the company listing on the London AIM Exchange.

2024 年第二季金融部門業績受到410 萬美元淨減值的負面影響，該減值由兩個非應計借款人承擔，並可能受到Illuvien 特許權使用費賬面價值增加240 萬美元以及轉換收益70萬美元的影響。

As a reminder, SWK carries private warrants at zero on our books. During the second quarter, we had been $7 million into two existing performing borrowers and in August, we closed on an up to $11 million royalty monetization with relief therapeutics. We are pursuing loans and royalties to multiple innovative life science companies and have the capital available to close these opportunities.

提醒一下，SWK 在我們的帳簿上持有的私人認股權證為零。第二季度，我們向兩個現有履約借款人注入了 700 萬美元，8 月份，我們透過救濟療法獲得了高達 1,100 萬美元的特許權使用費貨幣化。我們正在向多家創新生命科學公司尋求貸款和特許權使用費，並擁有可用資金來實現這些機會。

Our enteris division is ramping work with our strategic partner, as evidenced by segment revenue nearly tripling sequentially to $800,000. Under the strategic agreement, enteris is entitled to receive low single digit million minimum guaranteed revenue payments for each of the six month periods.

我們的企業部門正在加強與策略合作夥伴的合作，部門收入連續成長近兩倍至 80 萬美元就證明了這一點。根據該策略協議，Enteris 有權在六個月期間的每個期間獲得低個位數的最低保證收入付款。

For the first six months of the year, we agreed that this requirement could be satisfied by bookings received at the end of the quarter. These bookings were deferred and the revenue will be realized over the next few quarters. Our partner made the full cash payment after quarter close, satisfying the minimum guarantee revenue payment requirement for the period. As a reminder, the minimum guaranteed revenue payment is intended to help fund the operating cost of materials as revenue builds, we are pleased with the progress enteris is making, as evidenced by increased bookings and a growing pipeline of CDMO projects.

在今年的前六個月，我們同意這項要求可以透過季度末收到的預訂來滿足。這些預訂被推遲，收入將在接下來的幾個季度內實現。我們的合作夥伴在季度結束後全額支付現金，滿足該期間的最低保證收入支付要求。提醒一下，最低保證收入付款旨在隨著收入的增加為材料的營運成本提供資金，我們對企業正在取得的進展感到滿意，預訂量的增加和 CDMO 項目的不斷增加就證明了這一點。

Turning to our share repurchase program, we bought back 54,667 shares at a total cost of $1 million during the second quarter. Since quarter close, we have repurchased an additional 155,000 shares for a total cost of $2.6 million. As of June 30, 2024, our GAAP book value per share was $22.75, a 4% increase compared to $21.79 as of June 30, 2023. Non-GAAP tangible financing book value per share totaled $20.17, a 6% increase compared to $18.95 as of June 30, 2023.

談到我們的股票回購計劃，我們在第二季以總成本 100 萬美元回購了 54,667 股股票。自本季結束以來，我們額外回購了 155,000 股股票，總成本為 260 萬美元。截至 2024 年 6 月 30 日，我們的 GAAP 每股帳面價值為 22.75 美元，較截至 2023 年 6 月 30 日的 21.79 美元增長 4%。非 GAAP 有形融資每股帳面價值總計 20.17 美元，較截至 2023 年 6 月 30 日的 18.95 美元成長 6%。

During the quarter, we wrote off the remaining value for potential future milestone and royalty payment associated with the impairs Enteris Peptelligence license to Cara Therapeutics. This was in response to Cara's decision to discontinue the clinical program for the underlying Oral KORSUVA program. Post this write off, the enteris segment has a book value of approximately $5 million, which consist almost entirely of PP&E.

在本季度，我們沖銷了與損害 Enteris Peptelligence 對 Cara Therapeutics 的許可相關的未來潛在里程碑和特許權使用費的剩餘價值。這是對 Cara 決定停止基礎口服 KORSUVA 計畫臨床計畫的回應。此次註銷後，企業部門的帳面價值約為 500 萬美元，其中幾乎全部由財產、廠房和設備組成。

In summary, during 2Q 24, our financial segment had solid results, which were negatively impacted by impairments at two borrowers. We are pursuing multiple financing opportunities and are working to close additional deals by year-end. Our enteris business has seen growth in revenue and bookings with the assistance of a partner and is positioned to be cash flow breakeven or better through the strategic partnership period.

總之，在 2024 年第二季度，我們的金融部門取得了穩健的業績，但受到兩個借款人減損的負面影響。我們正在尋求多種融資機會，並努力在年底前完成更多交易。在合作夥伴的幫助下，我們的企業業務實現了收入和預訂量的成長，並有望在策略合作期間實現現金流收支平衡或更好。

With that, let's open up the line to questions.

接下來，讓我們開始提問。

Thank you.

謝謝。

(Operator Instruction) We have a question from Scott Jensen, who is a private investor. Your line is live.

（操作員說明）我們有一個來自私人投資者 Scott Jensen 的問題。您的線路已上線。

Good morning, Jody. Look, thanks, guys. Nice quarter. I'm happy you took the Cara upfront charge and it's nice to see within the 10-Q, the writing up of the IIluvien. So it's kind of nice to see one go the other direction.

早安，喬迪。看看，謝謝，夥計們。不錯的季度。我很高興你接受了卡拉的預付費用，很高興在 10-Q 中看到 IIluvien 的文字。所以很高興看到一個人走向另一個方向。

I guess my question is kind of twofold. One is what is that market looking like to you out there? And then how do you deal with the comp, the competition that's coming from larger players, bigger institutions, all kind of coming out of different areas that they may be used to stay in their lane. And now they're kind of coming in all over on the lending map like and so what do you see out there for us there?

我想我的問題是雙重的。一是您認為那個市場是什麼樣的？然後你如何應對競爭，來自更大的參與者、更大的機構的競爭，所有來自不同領域的競爭，他們可能習慣於留在自己的車道上。現在他們在貸款地圖上出現了，那麼你對我們有什麼看法呢？

Yes, good question. So if you look at our pipeline this year, we've -- our pipeline is at an all-time high. We've had more inflow at the top of the pipeline. And I think part of that is due to Peter Blumberg, our Head of Business Development, has done a really good job and has started his stride. So in the funnel has been good.

是的，好問題。因此，如果你看看我們今年的管道，我們的管道處於歷史最高水平。我們在管道頂部有更多的資金流入。我認為部分原因是我們的業務開發主管 Peter Blumberg 做得非常出色，並且已經開始大步邁進。所以在漏斗中已經很好了。

Our close rate has been down. It's been, I think, perhaps the lowest it's been in the past few years. And I mean what we're seeing is -- I wouldn't say we're getting necessarily beat out by sort of the traditional players, but a lot of it's been things like equity -- those have fallen through -- there certainly is competition in the royalty space and some others. But I think a lot of it has been sort of discrete one-offs.

我們的成交率已經下降。我認為，這可能是過去幾年來的最低水準。我的意思是，我們所看到的是 - 我不會說我們一定會被傳統玩家擊敗，但很多都是像股權這樣的事情 - 這些已經失敗了 - 肯定有版稅空間和其他一些領域的競爭。但我認為其中很多都是離散的一次性事件。

In terms of -- and just to state another sort of statement of fact. And you can look at the public competitors, the BDCs in our space, their bookings were down, flat to down, kind of to the first six months of the year, many of them, the guys that are our size and they talked about less deal flow and kind of that sponsor-backed and sort of TRA space. So there are a lot of people out there looking to deploy capital, what we have to do, I think it's find unique opportunities. And I think this relief royalty being a good example where it's off the run.JD, who's our Director of underwriting, did a fantastic job of that one, kind of through unique royalties and some pretty heavy structuring different geographies.

就——並且只是陳述另一種事實陳述。你可以看看公共競爭對手，我們領域的 BDC，他們的預訂量下降了，持平到下降，有點下降到今年的前六個月，其中很多人都是我們的規模，他們談論的較少交易流程、贊助商支持的以及TRA 空間。因此，有很多人尋求部署資本，我們要做的就是找到獨特的機會。我認為這種救濟特許權使用費是一個很好的例子，我們的承保總監 JD 在這方面做得非常出色，透過獨特的特許權使用費和一些相當大的不同地區的結構。

So we're going to have to be creative. We're going to have to find unique opportunities. We've got to go hustle. We've got to have excellent customer service. We've got to lean on the people we've worked with.

所以我們必須要有創造力。我們必須尋找獨特的機會。我們得忙起來。我們必須擁有卓越的客戶服務。我們必須依靠與我們共事過的人。

We certainly can't just count on banks to call us and give us a nice $20 million sponsor-backed deals, like we'll never put money to work that way. So is -- it's going to be hustling and finding ways to be helpful to folks.

我們當然不能指望銀行打電話給我們，給我們一筆 2000 萬美元的贊助商支持的交易，就像我們永遠不會那樣投入資金一樣。也是如此——我們會努力尋找對人們有幫助的方法。

Okay, thanks. Another question, as you said in your opening statements about the buyback that you bought another $2.6 million, does that then hit the $10 million?

好的，謝謝。另一個問題，正如您在關於回購的開場陳述中所說，您又購買了 260 萬美元，那麼這是否會達到 1000 萬美元？

Are you -- have no capacity left under the current buyback and then if so, are there any plans to?

您目前的回購是否沒有剩餘產能，如果是，有沒有任何計畫？

Yes.

是的。

No.

不。

So we do because we did renew our program. I believe I want to make sure about this, but the I think it was in May. May 15, 16, 17, we renewed the program. The rate-limiting factor is going to be our credit facility. So we are we are talking and working with them to increase the bucket. But that is going to be I mean, as of today, the $5 million on an LTM period, we're working with them and I prefer not to say anything until we get that finalized, but yet that's going to be the rate limiting factor right now.

我們這樣做是因為我們確實更新了我們的計劃。我相信我想確定這一點，但我認為那是在五月。5月15日、16日、17日，我們更新了該計劃。利率限制因素將是我們的信貸安排。所以我們正在與他們交談並合作增加水桶。但我的意思是，從今天開始，LTM 期間的 500 萬美元，我們正在與他們合作，在我們最終確定之前我不想說什麼，但這將成為速率限制因素現在。

Okay. That's great. That's all I have. If anyone else has questions.

好的。那太棒了。這就是我所擁有的一切。如果還有人有疑問。

Thanks, Scott. Appreciate the support.

謝謝，斯科特。感謝您的支持。

Thank you.

謝謝。

(Operator Instructions)

（操作員說明）

Okay, sir. We currently have no questions on the lines at this time. So I will hand it back to Mr. Staggs for any closing comments.

好的，先生。目前我們沒有任何疑問。因此，我會將其交還給斯塔格斯先生以徵求結束意見。

Great. Thank you, operator, and thanks, everyone, for joining our second quarter call. I hope it has a great pride and great weekend. Bye.

偉大的。謝謝運營商，也謝謝大家參加我們的第二季電話會議。我希望它有一個偉大的驕傲和美好的周末。再見。

Thank you. Ladies and gentlemen, this concludes today's conference and you may disconnect your lines at this time, and we thank you for your participation.

謝謝。女士們、先生們，今天的會議到此結束，此時您可以掛斷電話，我們感謝您的參與。