SWKH - Earnings call transcript Q4 2021 | SWK Holdings Corporation

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Operator

Good day, and welcome to the SWK Holdings Fourth Quarter and Full Year 2021 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] please note today’s event is being recorded. I would now like to turn the conference over to Jason Rando with Tiberend Strategic Advisors. ahead. go Please

Jason Rando

and quarter everyone, call. for SWK joining Good year-end thank XXXX fourth and results financial Holdings’ morning, you and corporate

Before Investor results morning, release the Press Releases. release ended this issued found XXXX. of market press in swkhold.com be a News the December SWK XX, detailing section the for Holdings financial can three Relations months its opened under

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

year-end fourth go and and SWK Winston, Holdings. of quarter Black, XXXX He’ll financial CEO on update me Chairman Joining an on call is SWK’s Winston today’s corporate ahead. provide results. of and

Winston Black

time seek developing are on a fall to commercial our weeks of ending Fourth front of month invested of transactions, in in go return of opportunities have everyone, believe take for XX.X% us increased our products. interest busy call. quarter poised year strength mid-sized to assets generally and life coupled of and life for innovations. need types well ourselves to the financing for placed companies grown substantially offerings the the the We believe positioned has their which in of suite to These this private extended sector, our meet companies commercialization both That to the capital of establish small provider and capital. demand. access ability of platform SWK’s public premium continued ability markets rising model companies. capital to income-producing sell-off fund of equity remains the preferred funding has differentiated advantage and joining company need a last financing as on In the $X how illustrate science financial million, with technology our validate million important fourth upfront. compelling business science loan medical proprietary to due on adjusted $XXX.X small and our to remote with these well as life senior science dynamics, imaging MolecuLight, secured imaging recent for Acer million $X.X medical could we which for Biotricity, ready we platform of as $XX SWK Thank biometric million virtualizing December, and a fluorescent market We mid-sized and secured quarter and $XX privately-owned to to Holdings. its close facility SWK senior thanks, company solutions, believe We you, And Jason, we million debt Therapeutics. provider industry companies in recently, a capitalize non-dilutive to medical closed debt in most drive deployed as monitoring secured technology conference been XXXX March, funding senior

investment $XX origination and our to increase committed opportunities. new SWK’s for improve an to deal targeting shaping availability these excess prudently capital dynamics, historical to quarter return during to And [ph] our year Given increased SWK. Board profile XXXX this effort, Directors we of is current help and Pouring And levels. is fourth cash leverage are pursue of to our the million be liquidity allocation up of exciting is on revolver. financial XXXX flexibility of

stock, $XX partners return XX times of million the XXXX, companies $XX fourth investment realizations and and internal that excess The strength. Misonix a of with Operationally, X.X on cash a million. resulting has realized in support ability partner to for deliver our our XX of paid with and our freely that Upon for of to interest then SWK return generated Bioventus of XX,XXX our is million and returns, the cover Misonix quarter in of cyber as Since its cash stocks approximately XX, IRR partner intended our but of of we of and IRR. transaction fees million Bioventus’ and example systems tradable. $XX share and great recent in shares $XXX identify yield favorable rate million a example enters the is of was team us grew SWK. October with our grow example to transaction Misonix, returns into XXXX facility closing principal in capital for companies at XX% or XX%. As SWK approximately innovative $XX.X successfully also our acquired on $XXX million for $X.X per position The cash initial XXXX one borrowers, are investments. ability a by Because common deployed grow. a to it accrued investments Misonix to Misonix ability successor, which

directors. Enteris programs, Laurie his three to our and special be me. CEO, and Mr. reconstitution feasibility Pennington operational the importantly, company. the related growth new capable Cara we will studies is Peptelligence which to from the of Cara the paid and proposal And this Therapeutics program, intelligence $X team disorders in a With engineered the of KORSUVA, the new a on potentially generating are companies with expanded made developed Marcus investing the health, Capital, his or bringing Cara Oral BioPharma. includes in committees by milestone for Hatcher, have of maximize our six long-term each drug and its for we seek independent Enteris the multiple Khosla SWK. and of of milestone sources bring Enteris progress of providing aggregate business. of of to very for partners a prior licensing critical the oral X.X their agreements In the peptide molecule of facility Carlson for revenue its are strategic join Dotter need and which small [indiscernible], company’s from Robert Mr. Ms. December, concluded million The pleased drug The engineer announce license Dotter in of retains review million. And strategy subsidiary SWK using the on retained direction ProPerma We payments clarity non-binding and into Enteris has Enteris Enteris The $X women’s and paid extensive process In to fees, development development encouraged which financial, In of and oral is small that their therapeutic million. new Hatcher our having Directors, SWK, Board Enteris process during variety therapeutic and growth and demonstrated nervous of and on to advance steady the cancer, product, in Enteris bringing to is of indications talented success. the signed by pro-permit million central experience, for which of Enteris these oral goal to system. drug contract Rajiv payment and potential also molecule peptide $XX company the for manufacturing a and and Enteris delivery. been by XXXX, Peptelligence two-pronged manufacturing year, the technologies a pursuing to team was for indications. review

finances. our to Turning

figures that royalties which here credit is prior quarter. December This a executed SWK by XX.X%, quarter per flat versus reported of is as the share approximately value year. XXXX, portfolio non-accrual As an receivables of of book $XXX.X not yield of for weighted portfolio million XX, bought the do finance effective XX includes the per $XX.XX of movements of December partners. million with XX assets At average XXXX. was royalties December XX.X% positions. of $X.XX this projected as including of the fourth strategic review. impact costs and compares XX, across portfolio with include Note XXXX, SWK’s the This year’s year-end compared to decrease end XX, XXXX. XXXX, from the $XXX.X backed income-producing Enteris’ amortization from per structure as last the This $X.XX share associated negative share December $XX.XX intangibles, impact the of negative

assets, As specialty excludes financing deferred tangible assets per share our per payable finance per contingent tax goodwill, relevant its company’s tangible metric share. Management value and hold book a share as the views book $XX consideration well value financing core business. value was

compared and to of payments primarily million interest earned of revenues quarter fourth in of million, the $XX companies, a increase during portfolio well in of total royalty fourth term SWK XXXX. For reported the our XX% loans on quarter. our for by due revenue XXXX, Revenue the finance receivables consisted The Enteris. fees generated fees revenue interest quarter increase by as was of the in generated two milestone and increase early an primarily and to in payoff the Cara as received $XX.X

Cara quarter, in driven of million driven increase increase expenses, in to in finance during our value quarter contingent the The fees revenue year on XXXX, was due portfolio the our during license. less was before of compared consideration. in to for change compared revenue due fair to and XXXX related and decrease to the million $X.X by in full as the XXXX. the plus earned better interest amortization acquisition for increase Income full decreasing For to same expenses, totaled of fourth previous related an year period $XX.X apart of well $XX.X primarily year the a The of milestones the intangible by year. earned the $X.X as taxes million, was revenues million receivables

ended both $XX income For net of a positive of $X.X the a from the ago. XXXX, with diluted income $X.XX income million year December noted before factors million The to in $X.XX quarter XXXX period. the compares $X.X we reported before share moment per taxes prior variance rate million, year the for or taxes per same XX, This full diluted of favorably a $X.X totaled million. GAAP net or fourth share,

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

million the generated as For million to the business $X.X compared year $X.X was finance for the net prior period. non-GAAP income fourth quarter, specialty by

Income-producing with of This XXXX. of $XXX.X assets is as defined as a as million XX, income-producing million debt For XXXX, is and net respectively. $XX to and GAAP the non-GAAP million GAAP the of income of reported of million $X.X year income million, favorably compares net $XX XX, we and compared $XXX.X assets December of non-GAAP income of XXXX. finance and totaled year for corporate $XX.X full securities XXXX. receivables of million decrease This full net December

investment capital be note same the uncertainties. Looking mandate constraints permanent long-term now to With base, XXXX places year fund synergies for SWK. the companies in our your financial foster of of market at advantageous to strategy, small creation that, open I question. for between mid-sized to to science has offers capital lack position. with available roots regulatory potentially value call financing dynamics offerings, momentum of ahead, will flexible earlier SWK, growing to a innovation. SWK to Combination need period combined potential of for a I’d and Enteris given potential very a These raise life with less and presentation visual due ongoing the in fruitful the

Operator

first Diana Today’s ahead. we Instructions] gentlemen, Michael now go Maxim the from Please comes and question-and-answer will Ladies question [Operator at begin Group. session.

Michael Diana

Thank you. Winston. Hey,

Winston Black

Michael. Hey,

Michael Diana

In at do that all, business, will business? you how, think rising impact core finance rates your if receivables

Winston Black

Yeah. Good question, thanks. it. Thank you for

ways. could I it of market couple think see in there that it equity prepared volatility – One, a with in before. probably associated the and the commented just remarks on we’ll

to the And of so a new loan floors have cost that obviously the most borrowers cost From terms LIBOR in in generating facilities have to of given agreements our our first that’s them. opportunities. of the potential way our

course, lastly, that I think with impact extent need do in companies, any cost those things as on volatility, equity those the overall initially, be be think factor of the – that main of capital. there’ll interest but is positions. least then facilities companies potentially I portfolio up portfolio increase to at least initially, with equity near-term, which with the ultimately, an new our the opportunities in for the cost associated for to – with increased extent then finance our much beating at then, that raise an driving will income of Yeah, us, that course that to market course, of of of I associated their there our won’t continue, then, think

yeah, we think the the see I it I that point, portfolio. they’ll So think be we impacted ways are impacting potentially. at And primary those

Michael Diana

able a make higher And do new will you them rate to be loans, you on think? Right. as do you command

Winston Black

depends in by on aggressive I have not that, bigger Yeah, said, continues, interesting I natural what been some potentially yeah, volatility before. probably mean But of think the I providers, the circumstances compete the for the that exit, competitive, think does. and most we I question. were It be which, to always as capital segments like them they marginal as as where

high-net the So worth visual but kind bootstrap. have than in I that you we in venture where which companies like see a nontraditional in the see funded segments, other lighting may of areas in primarily the those less founder potentially back receive Yeah, up that opportunities. or capital or impact are like sponsors, segment

cases, to those there’ll of company. on deals in better behalf competition, less be be and negotiate we’ll able think the I

Michael Diana

you’re Thanks. four? the And to sort that licensing on about To to – six one Enteris, to to that, saying great. mean, three any agreements you’re feasibility put your five, could medium-term. two you release six, agreements on talk Okay, of I advance the over bracket

Winston Black

fold. I range timeline. depends wide the to of of one internal for Yeah. and reason development I our the range is course, a is timing that in partners’ the would that on, guess three-year one, say couple

so a for involves extent And robust example, to a could to that take that year the Phase very program, complete. X timeline

license what negotiate there point get one management license. cost Because of to on that. development time tracking the And the second we’re it’s and license. the greater and that there’s optimal more that actually as on is value gets the that could candidate was And greater. that gets potentially – things the more to pharmaceutical so seek I biggest And point derisked think than optimum the with kind of at then working is factor

at because seen such Cara a pharmaceutical little of the optimal The kind then the actually earlier X, in perspective, perhaps X. efficacy, from Phase injectable formulation that way of of program success. there titrating, company their they’re from development by program, In the case had right perspective so say, So, where particularly there’s willing in risk, example, license the that more had agreement clinical of their agreement, the was was present, indications is since derisked somewhere not as be that license. stage, their Phase their may license. to pay much is that not strike And all potential to a bit for of timeframe great

certainly language, it that it a uncertain, more it’s by than so because And little bit before. now but was promising is

Michael Diana

Thank Okay, great. you very much.

Winston Black

Sure.

Operator

[Operator next Please private investor. a today Our comes Scott ahead. question Jenson, from Instructions] go

Unidentified Analyst

Great Good you. morning, Thank Winston. quarter.

the on on side, So the couple of a I financial financing I side. questions have mean, or

be they of that million You for results in SWK is on say recruit the costs X? if What $X higher. expected on said move for a maybe And site, controls to your XXXX cost you the And see Phase to Enteris the that of I would the Phase the year for you’ve for is back X decision X? Phase what were plan Leuprolide started May. alone? trial And your half

Winston Black

good question, Scott. That’s a

guess So with yeah, being have full – associated – it ownership and is. respect we’re this the, expenses program, timing the up – the we have X. ends with of do in control that of last But But Phase the exactly will that the year midst I increased hopefully of we are program. what recruiting o we program

sort having in also Phase advancing into depends with of and timing X this of largely terms meeting the the thing. up course, But So is us. of FDA to of on having

yet, Phase on itself, want but don’t the in X announced what of here. we haven’t that comment I to terms is costs, In

out contemplating our to license the want opportunities internally? And seek comes think, think do of I partner of optimal we development. a internal time to developing fans assets, an of way generally, what program those? finished course, those what we’re we as about currently externally, are best to management to do have then the have the We the there to of finance another question extent

we’re timing I all point. the to we’re that, what And for make that are license waiting is But still X any on we as to expect, to that at make X data promises are all again, we opportunity as it and X. the may come there be Phase at want considering look understand that key think results things because in robust. comment Phase and don’t extent I our we – here, To to Phase the the So those before sure costs. path be

Michael Diana

is questions Dental all was Is hop one will a there. B&D the Excellent. your the of sheets next happy That after all through sure flow number flow I going off loan, I’m to first it on the…? to How through that the ask quarter? The answers which you’re years.

Winston Black

carrying – the come since was the increase excess that in Yeah, will it’ll income quarter? basis, payment our of through the his in that

Michael Diana

a Excellent. on round it yourself $XX saw And had so know, because next, non-accrual that went status, I raise to into million Farallon little then money the by interesting, which going is flow and I you led Capital. between much

So Or is their going choice there on anything on just that company side? a is there?

Winston Black

lender, when fishing with of is we’re Yeah, I difficult confidentiality of mean, public [indiscernible]. being come up sense dealing this the a specially in part matters going the on. always certainly

Michael Diana

That’s why I asked it.

Winston Black

things all as of going indication an not it’s Yeah, exactly planned.

figure with we’re I say what can that are going exactly Farallon and the to So to company we there. actively out working do

terms company position the have And that be. been working to good actual what of used they that things six be outside for in disappointed out pretty we’ll been. direction we’re in have weak, idea will maybe the as probably as We’re weeks the neck, a for have definitely challenging of optimistic, the five,

them with I on couple stay future. not We’re literally days, to of put them every distant talking so to actively

Michael Diana

then said, about, And from the year, first thinking a it. the going as last hit will both drop quarter? is $X.X last this about million $X.XX year show And the that committee Are helping. there committee. special for Appreciate from further amortization year just costs there’s in any course, special up you to of

Winston Black

better Yeah, beginning being with as that that there still committee. then will though there because the costs it the will special be offer that on And even Carlson the very was a January considered so by some of associated mainly was last some be it. result,

they will and than will things various expenses this anticipating the certainly, some were quarter and year. robust in at much less we point pursuing think, It fairly of the the out sort I be was have either last after. first

Michael Diana

Okay. And last morning they just they Phase X reported on are the versus of got one the is Kara’s good on X, Phase good that oral then announcement news a that from the placebo. ones another this just anti-age in

go Are with it right So trial direction, potential a is They in as well option? any as better talk all looks management, Enteris it’s under about the they Or in right for a that? has their like often a the in in Or of it on such, those? they direction – any seen exclusive having addictive, direction. they’ve great the KORSUVA? went because non if of it’s that’s If Do response. both presentations any have like it they pain KORSUVA such heading those oral an such a

Winston Black

No, Great no, no good. question.

they to oral an the guess kind of is it that of one has it. that freedom license to to about want take of operate is Cara kind version way So basically with think wherever taken I KORSUVA

indications aren’t carries just carved on like the because up, molecule. So it

of and that it, however, else we any yeah, sort so it. the when a portions whether what with royalty may it. the use of from they want related sales do or physicians they’re own so of to indication paratus they older they the get sort agreement, But – And can

We will on average. be rolling

Michael Diana

let That’s you. Thank else great. Okay, ask. somebody cool. it. Appreciate I’ll

Winston Black

I appreciate it.

Operator

question-and-answer ladies I’d any gentlemen, and team like conference the to And remarks. management session. this final the back turn to concludes your over for

Winston Black

attention I to extend to continue we Bye-bye. and updates In like wishes look of to forward operator. Holdings. future appreciate I’d all. as good time my everyone’s you, and to Thank SWK advance sincere closing, health

Operator

We conference today’s for you. call. all presentation. This concludes attending you thank Thank today’s

disconnect lines, your have wonderful a day. now You and may

Jason Rando	Executive Vice President & Chief Operating Officer, Tiberend Strategic Advisors, Inc.
Winston Black	Chairman and Chief Executive Officer

SWK (SWKH) 30 Mar 222021 Q4 Earnings call transcript