SWKH - Earnings call transcript Q2 2021 | SWK Holdings Corporation

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Operator

Good morning and welcome to SWK Holdings Corporation Second Quarter 2021 Financial Results. All participants will be in listen-only mode. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Maureen McEnroe, EVP of IR at Tiberend Strategic Advisors. ahead. go Please

Maureen McEnroe

its morning, can Holdings Good Releases. call. thank for Relations XXXX. swkhold.com release you evening, months of the Thank June section found ended quarter everyone. in XXXX SWK XX, detailing press a second Holdings press results News results financial joining for SWK three release you. The issued And financial be and under Yesterday Investor corporate the

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

will ahead. CEO results. provide corporate and Black, second and go who financial today's an Holdings, quarter Joining call SWK's me on Winston SWK XXXX Chairman is update Winston, on of

Winston Black

second for Maureen. joining call. quarter you, Thank you conference Thank our

strong returns the widespread behind differentiated investment had continued This the highly make close to during focused for of half market. science need the first to quarter the a capital SWK our footing. products. business with benefit in patent-protected and company realized a fund unmet strong bring well-positioned focus asset segment Trio medical quarter credit engine Holdings recently and that, on these as life yield Added well closed with returns market XXXX structured effects. transactions device ended and financing We commercial specialty trends XX, fund for seek innovated to innovation the with the Healthcare These As continue typically led receivable needs, Ideal generated the the in a science source to and quarter robust June recovery SWK XXXB XXXX, XX.X% April, with as companies on other and a dermatology mid-sized compounding The financial our To by months these and unique for royalty royalty Pharmaceuticals, with million our technologies the remains on COVID-XX from focused commercial deals we June focused companies continued with royalty from life completed made growth niche state The keeping developments remains thus to we our include the resulting aesthetic solid mid-sized unique of financings $X by strategy and Sincerus ended in segment million, UK XXXX. loan and through $XX same small recent to effective book to the pharmacy launch of a sector. customers. small March, strategy a second investment model life remain XXXX XX, and its far illustrate in of often $X on given space, healthcare we pandemics to innovations opportunities. and from transactions structured stoma followed development business We are of medical Implant, international addressing to finance $X.X of its numerous for July the strategy finance creation on company's [ph] bag range synthetic million in companies. a to size we premised in continue professional Genii. support debt loan $X ignored in a and by purchases million a monetization, assess stage science structures. purchase million the debt, opportunities More companies and financing These royalty healthcare

And on million of investment balance we and heavily BDCs other cash As support is companies investment some sheet business revolver opportunities. unlike development now $XX companies SWK's not to leveraged. potential capitalize of have and partner and availability our firms,

custom subject Exemplifying the the our the deeper subsidiary, viewed solutions Second capabilities partners allow Enteris, Enteris’ an is relationship an the June, expanded oral Cara additional separate with anticipate company payments believe payment facility from the and a by the including value. SWK’s review success the Enteris containment of relationships of for the strategy with capabilities, technology of development will X development CEO, potency, stockholder expand Committee X our Enteris of anticipated chronic highlighted Directors solid business and Oral These of Board the quarters providing in important next May, subject processing Therapeutics facility kidney expansion licensing of milestone BioPharma, a and an to We period considered the When launch Review to view quarter new high Cara and the API. announced KORSUVA. in disease. segment. alternatives several the this a Enteris of patients formation of Phase third completion with the additional was including X bench trial CDMO XX manufacturing of of four manufacturing of development to stage Rajiv its treatment the enhanced acquiring programs, with for first to marking team achievement seek earned strategic Strategic milestone and milestones. from market, company's its opportunity last pruritus at company's In by maximizing we and million we the KORSUVA and manufacturing business his $XX progress capability going Khosla ongoing facilitate is to In the now component to explore also forward. Dr. of clinical in for months. identify, of

that While there the this and Review transaction work initiative, in to diligently be made this of the result or not being continues upon. has any no any on exploration Strategic enter Committee agreed any announced strategic to time alternatives transaction decision will can assurance at

year-over-year. as million This across SWK’s approximately the credit a period same to compares $XXX.X royalties $XXX XX totaled XXXX, Now million by last turning June portfolio favorably and structured XX, XX.X% partners. our of finances, to representing of backed in year, increase royalties

reported is XXXX financing close. negative as share positions, was the This Healthcare, million $X.XX June per $X.XX of XXXX, million the mark of with impact of average closed During changes intangibles, after share effective $XX.XX of the deferred the securities value XX.X% tangible per approximately On totaled impact we from the previously as $X XX% financing increase. book XX funded Management and includes weeks, equity in positive discussed, million quarter relevant in and XX.X% finance projected transaction previous closed a on the a was SWK Trio which year Tangible of end to quarter as on the book from asset, to $X.X as $XX.XX a of share, the close. XXXX. business. $XX.XX, advanced including XX.X% XX, per June second a share included year-over-year consideration contingent which tax $X from a SWK market of amortization $X.X close per which to warrant the million SWK quarter the and compared book goodwill at a the At assets, value versus which end receivables synthetic XX, of per views to value the with specialty June core, value quarter second of metric of share, year. last intangible the Also, recent company's Ideal our Implant period with accrual per yield increased royalty $XX.XX. weighted portfolio same financed share payable financing the

XXXX decrease $X.XX The partially million decrease offset increase for the our Income and $XX.X before acquisition. increase second the share was diluted on and compared $XXX,XXX million finance taxes $X.XX million $XX was or $XX.X in Cara, totaled $X.X was The $XX.X in related of approximately a the in to million increase quarter intangible revenue net at $X.X owner. quarter amortization in in of the SWK with per revenue, XXXX total license by assets of the a of earned general was reported or change expense. XX, in compared for $X.X million $X.X the of for Enteris, year-over-year, period GAAP same revenues June a increase by primarily This value share, and quarter to manufacturing to primarily net The million, agreement year. second to million quarter per related million receivables, for million $X.X which XXXX a to for $X.X million $XX.X the pharmaceutical Enteris income $XXX,XXX due administrative second Enteris’ compared XXXX. consideration $XX.X loss fees increase previous to former the the primarily the to totaled of million of ended second fair contingent million XXXX. and quarter paid Enteris’ included the that is million driven a second diluted $XX For increase and revenue interest in

$XX.X second net XXXX. million the For the million adjusted quarter to was second quarter $X income for XXXX, compared

net million period. as specialty prior non-GAAP the quarter $X.X compared generated business second $XX.X -- The the year period prior to totaled income by million for finance

positive continues results, science to expertise new to areas capital well-positioned for value for And deploy business finance well evidenced to to our investment harness for should returns by mid-life we our to among doing to shareholders. transactions our we're yield specialty fund As opportunistically to small remains hard our and that so adding these SWK favorable benefits remain to identify dynamics the expertise leverage Entry the SWK and working growing strategy, believe business future borrower need of and access growth. opportunities. by capital compelling companies perform to

company's team the will I for Peptelligence efforts dual period arm stakeholders growth business potential support and hard call once work been strategy Enteris, and thank of Rajiv discussed, and agreements. to fiscal execute by In so open ProPerma our towards and CDMO his With their again conclusion, the as to continued continues diligent has our XXXX a that to and model the now of manufacturing year partnership Holdings maximize like our All dedication and continued to regard, has for is new substantial its employees grow development for far technologies. SWK this of Enteris your our In questions. As continue the what Holdings. we the we for loyalty that, made SWK SWK. to the the team. possible I'd and as evolve

Operator

the will with question-and-answer We comes session. [Operator begin Colliers first Instructions] Bauser now Securities. Kyle question Our from today

Kyle Bauser

quarter for great today Hey, Winston. and congrats the here. Thanks a Good on morning. updates all

Winston Black

Thank you.

Kyle Bauser

the just some support momentum operations and things, Enteris new for following of partnerships Maybe now and early build and of has trials commercialization starting on side manufacturing you're of up running? collaborations provided the new kind to of assets, clinical that out of this

Winston Black

believe it definitely I And has. Sure.

As I think momentum which all of, that result studies, there. has a release, feasibility signed, they have think we I press of noted new is the the recently think in I direct Enteris three

see last [ph] feasibility the past year on board the new time right about agreements And starting to and COVID, year pipeline, a are, a think we and the in which on But we're difficult started was begin we facilities ramp May feasibility of you're Rajiv in program. and -- to open. go to to that. as midst starting now that here roughly turn think and I

bit. come little So we're that to I momentum starting think see together a

Kyle Bauser

ratio at now every your Appreciate And debt? $XX but remarks, ratio take about I to quarter, more are mentioned some peers. thinking going your how you’ve you Question it appetite forward? got relatively compared in and in out Any million ask cash the prepared that. and to of availability a over Great. we revolver, leverage leverage low

Winston Black

credit Sure. facilities. yeah, And much the think Great definitely more yes. We do support larger answer capacity question. I is have to

value that Board I the steps what make want question facility we as capital there. as think what Strategic and And create terms sure Review recommend being goes do play through in shareholders. That of structure the to process. -- our or appropriate the will we're its to determines patient come -- next into to they Committee credit for

definitely as comes deploy they and But updates And yeah. the the together. we'll looks like I agree capacity how And so on see to I do we'll think we it have what all their have book. more grow leverage work. that more much

Kyle Bauser

six to just staying as it as business, is you've has Make many -- specialty of it. environment side more, very ago, in finance right mean there compared landscapes active Just maybe months there kind sense. investments are post-QX I this obviously opportunity Got wondering the And of on what are the been? are more less, How there like competitive? remained the well. now?

Winston Black

Good The Sure. and flows. question, ebbs Kyle. definitely landscape

I that in you pretty From had that quarter. some think terms fairly then respects things attention. of of kind in paying others a see I the close that a that perspective, kind unique scratch your as back of quarter, in I competitive. and to out look continued of toward and think be But the that it additional first we have to other just really get we'll market how be economy opportunities haven't opportunity our volume continues to kind felt very aren't the quarter, have as course, And of the we we fourth the of and things was that and lot similar segment we're But we'll competition activity sometimes we, on pleased into only folks head an at and rolling times more expect saw in generally came to of year-end. we COVID definitely like capital. come pipeline going there with are second activities trends speaking. the was of the were think deploy lots of able And

Kyle Bauser

And then Great, great. just one more.

partnership an said separate several eye come the next press Thank disclose are you. could lastly, nice they then there many we you we Cara, quarters. milestone. should the I the milestones the milestones, don't but on you with in left? think Regarding with another saw keeping Remind how me, And actual are other know, over release, And I be partnerships?

Winston Black

I agreement, perfect milestones. of the -- in clarity I actually, the are I majority are know, could give the economics think There filed Cara But the in the agreement. Sure. wish all the titles of milestones those you is, that that remaining you into as also redacted redacted. are and of

what in And ones similar milestones, FDA are think the So terms all think see remain there's handful advancement would you have those sort think I those And what we be, definitely say you'd milestones I the can that as clinical of programs. is likely that outstanding. a of I things. industry about to milestones have of other in they an sales approval of and ones

Our see biopharma. all other that than differently ones what is not in generally structured you agreement

think the license, the the of and taking naturally, getting to studies when new first say from program of team as really So course working potential of feasibility potential I progression kind of can know the depends development formulation right to all your to is I partner that. actually that's technology point get the partner with and and logical whole do licenses, probably forward, your I about step course, of you the is of meeting determine forth. think their timelines on partner's so it and partners, the which, using through then think in about terms the kind But technology And a Enteris. a business that at development you future

are successful, good say yearend And starting we'll I momentum licensing process a that develop. license. we does the those in said, want then now. see sets feasibility And to that take we're And towards now rebuilding how think while. first of studies they it's natural of our that But we the that's how program. that getting can So two there's to But progress see progress are ongoing. assuming feasibility those programs,

Kyle Bauser

That's updates. for I'll all back Well, thanks the jump great. queue. in

Winston Black

it. Appreciate Kyle. Thanks,

Operator

question next with Maxim group. Our from Michael comes Diana

Michael Diana

thank Okay, Winston. you. Hi,

Winston Black

how you? Hey, are

Michael Diana

Good.

the on finance side. First,

ones? you of You million mentioned those commitments. Are or have new borrowers existing $X.X two unfunded

Winston Black

Yeah.

that the we deals are facility. loan closed, Implant X Ideal those the So the Trio recently and

that milestones meet deals. they and course, are those existing want are typically to drawings. with then performance fund of those. the them those now, associated And So our the we'll are Those that partners extent

Michael Diana

Okay, of you pipeline Enteris Do your And have side, yet? CDMO on the sort great. there Thanks. business. any

Winston Black

The similar time take that I licensing kind the building. pipeline move of pipeline, bit a a is And think to that's process Peptelligence to little of will through.

work customer adequately can the see As you that facility potential It's capabilities. running, they those so can of to whole they working lot think about really any on. hard of a for the it's RFPs a to may capabilities up potential really and do be lot they market or until work in whole do and

with on, to conversations been that are So interest the definitely And those think beginning there's being build. it. turned now facility I in

a the partners seeking adverse capacity. I that had potential from actually has couple are think company who of inquiries,

we'll that So well. licensing also the of how that how then develops. see And course, helps facilitate business as

Michael Diana

your ongoing. idea go And on and it? I this might probably quote, understand of thanks. or any even when Okay, process Or on Do any though have just the date? review expected completion you strategic but it's committee, iteration forever, it

Winston Black

Sure.

them that's definitely so the question. value Yeah looking we're I Now and shareholders, maximizing very guess doing I -- think always third in be to end approaching through Yeah, of obvious Board May at fair state a the been. should their the to has ours and for work. month boards. of

committee accomplished business. I advisors I some don't their yeah, think definitely have have things progress and interesting timeline are for So, making But the that any to the and announce.

interested on the for us. very And rewarded see are and think provide their and say I hard I to in that trust making to that, timeline material a everyone's So a to wish provide. that shareholders update suffice But unfolds. ultimately, working is we'll sure how had I

Michael Diana

much. Thank Okay, you great. very

Winston Black

you. Thank

Operator

N.A.S. Capital. Stewart Our next with comes question from Nat

Nat Stewart

taking questions. Hi, my for Winston. Thanks

Winston Black

how are Hey, you? Sure. Nat,

Nat Stewart

of a for of the ask in very half progress lot to is again there's are My some case last able good. first but They more process closely figured question, better you're I year. of hit quarter the these this that tremendous on agreements, can details. Congratulations the I'd ones some and the related to valuable. Because question Good. I'm studies. first feasibility trying licensing be to if Obviously, understand tremendously new Kyle's

with understand if I studies, to but like And timeline. of already process you the of touched this, there. on way said, those in kind the also of the there. better is if I opportunities like in revenue also meantime kind feasibility And So the there's much what

Winston Black

Sure.

generally So a and pharma perhaps quick and discussion. a have meeting to there's partner oral you take months, the be sign first know their to surprising. quarters, everything to development terms could the an That That your protect -- actual of you and small then of will our formulation the to in group about -- that about how or like biotech a large quickly business is CDA think parties that of of weeks, between CDA progress couple And CDA which timeline move which other the a all to want that aggressively. that And more looking wanting pharma. technology the be couple our molecule protect may meetings can and would may process their just of more they're then would develop course, a and process to CDA be make and weeks.

will where preclinical dog working are use the type one the then generally first have and typically a that feasibility of for like be once So point to And models you kind the one get is the study, of we example. with that that parties timeframe. studies you another,

do. iterations as that, kind are there pharma are. a better of And taking when in goes licensed want with way results it the puts of of can is the will and to to that before to achieve. then actually which $XXX,XXX, all be economic the on of has license. lead lead terms an of that Or clinical from the $XXX,XXX to are is so you're can takes get right the process to kind all on, less scope away. work see in of depending from And may that the see additional clinical revenue a partners on there of the development, valuable dissimilar be partner clinical the a And And meaning that license, the that. work and doing pharma you on that to team looking what that development, course to further potential course and a couple number And the not some dire you is kind economics industry earlier, like course opportunity

work actual or the years. can the and overall And going terms But from be on an there along so, so It a the depends the opportunities the to couple in support of on it feasibility way, can on on forth. partner your process. is couple manufacturing be to that learn license, to quarters of studies the economics just formulation

as have So we'll and that really what the build and the licenses of on XX technology. eventually royalties periods goal a hoped get to goal into a months, of portfolio we increase turn that building the pipeline we can is that as will of over viable of very out and be a milestones to as months, of and building that keep as build into so big whole and that kind next funnels shots of licensing building number we XX

Nat Stewart

very Okay, yeah, great. helpful. That's that's

of the more will In as true, certainly but findings, related you more little strategic a probably review, to lot is more terms licensing my and value. this and sign Enteris the this agreements, has be a

worthwhile to bought of or kind a options But reveal? know already feasibility level, anything or that the like not. developments is you would you thing at do the study, the that like thing the being there Or don't that or Is that? Enteris with considered it is anything something can if I be a I might when not? be some think milestone in money even had any payments. raising you've including

Winston Black

committee And I conversation the And, is in everything. would and forth. definitely your That's then that. suggestion Nat. again, considering, much be that's exactly what definitely the to considered is considering terms all see that been And determined Yeah. think it strategic we everyone a and had I they're can we'll will tell great like to past. of very Sure. a that's and move in review anything forward. what I think being it's But SRC suggestion, leave exactly how so apprised all of

Nat Stewart

Okay, great.

at but Just thing, and equity was portfolio. warrant looking I one less kind the of minor

a You things a positions? have or those? It return long curious I have that them things quarter-to-quarter? are few quarter-to-quarter? up and them you of there. buy had assess being managing decent you Are can Are hold you're end you potentially how kind kind consider these term reviewing just pretty was looks like just of some homeruns

Winston Black

cases, those. little result have It's remain actually bit monetize positions limited the of somewhat And Sure. a to warrant And a to Nat. know challenges that and able a think with monetizing that most the we of we our that being of partner lender those that position. both, is perspective in I information material a we're one as non-public we from

when we a that historically, And and typically But kind noticed think you of so partner about when control there's monetize our probably where company. those period then alone, to so speak completes. you've been of get I refinanced, cleansing change we've to able think other

determine at wait. we're think de able going whether point, we're to that monetize to I or

what limited we're terms until something positions in we a look do quarterly of that So these it's But can also NPI. of with some on we're basis. cleared from we an at

Nat Stewart

the the work. up Really good Keep progress. enjoying Okay. all Well, seeing great. that's

Winston Black

Thank Nat. you support. Appreciate for

Operator

Jensen, private investor. comes question a Scott next from Our

Unidentified Analyst

Winston. morning, good Hey,

Thank Another you. great quarter.

Narcan, Narcan it bit at Narcan little were minutia. at get or paid? I But of Is that a over -- delayed we're work? a is you and I again, quarter of and looked question provision my the quarter you revenue can does how off fantastic, sales because So like sales the underlying the how when looked go

Winston Black

question. Great good. Yeah,

I how think it's make good work. to to everyone these clarify sure understands for everyone that

we rears, to we sales see get to wait we royalties. revenue. product on to and do on our very our have We to we're we what which be revenue have of that able information on paid to So recognize don't good since really get royalties recognize actual

second the received royalties. in Narcan, payment all from the And So quarter. off we for of pretty that's quarter that the dragged have would case first sales of is the typical during

due speaking, royalties industry royalty So, are of payments Just announced Emergent that are those be blockbuster it. you're royalty if quarter for the paid that's generally And and so post-quarter when XX a norms the that days be kind second -- from yeah absolutely anywhere right. days third then paid associated in for we you will during quarter. revenue. quarter with will our payment And XX is recognize

Unidentified Analyst

go for All And back Great. thanks in queue. that. I'll

Operator

[Operator I'm showing further questions. time, Instructions] At this no

remarks. over any like to I'd turn to call back Winston the for So Black closing

Winston Black

sincerest Thank you, operator. Thank as In my your I closing, to like I Holdings. wishes of continue advance attention updates forward to appreciate to we good extend health future time and and also look SWK to all. you.

Operator

today's presentation. The conference for has now concluded. attending you Thank

may You now disconnect.

SWK (SWKH) 17 Aug 212021 Q2 Earnings call transcript