Avalo Therapeutics, Inc.

Greetings and welcome to the Horizon Technology Finance Corporation fourth quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Megan Bacon, Director of IR.

Thank you, and welcome to Horizon Technology Finance Corporation's fourth quarter 2023 conference call. Representing the company today are Rob Pomeroy, Chairman and Chief Executive Officer, Jerry Michaud, President, Dan Dvoracic, Chief Operating Officer and Chief Investment Officer, and Dan Trollio, Chief Financial Officer. I would like to point out that the Q4 earnings press release and Form 10-K are available on the company's website at horizontechfinance.com. Before we begin our formal remarks, I need to remind everyone that during this conference call, the company will make certain forward-looking statements, including statements with regard to the future performance of the company. Words such as believe, expect, anticipate, Intense or similar expressions are used to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements. And some of these factors are detailed in the risk factor discussion in the company's filings with the Securities and Exchange Commission including the company's Form 10-K for the year ended December 31, 2023. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. At this time, I would like to turn the call over to Rob Pomeroy.

Welcome, everyone, and thank you for your interest in Horizon. Today, I will update you on our performance and our current overall operating environment. Dan DeBorsitz, our Chief Operating Officer and Chief Investment Officer, will then take us through recent business and portfolio developments. We welcome Dan to the call, and he will now be a regular participant on our future calls. Jerry will then discuss the overall venture lending market, and Dan Trollio will detail our operating performance and financial condition. We will then take some questions. 2023 was a challenging year for participants in the venture debt market, including Horizon. While we were able to finish the quarter and year with our net investment income again exceeding our quarterly and annual distributions, as well as achieving record NII for the year, our net asset value declined due to the underperformance of certain stressed investments in our portfolio. The stress in the venture capital ecosystem, including the collapse of Silicon Valley Bank The tightening of capital availability, the closed IPO markets, and the decline in valuations contributed to the unfavorable performance by some of our portfolio companies, resulting in the reduction of the fair values of our investments in such portfolio companies. You'll hear this theme throughout our call, but we continue to work diligently to maximize the value of all of our investments, including where necessary, from the sale of our portfolio companies or our collateral. Recapping our full year 2023 results, we generated net investment income of $1.98 per share, well in excess of our declared distribution level for the year, due largely to higher interest rates on our floating rate debt investment portfolio and lower incentive fees earned by our advisor. Based on our strong NII performance and the confidence in our outlook, In 2023, we paid regular distributions of $1.32 per share and a $0.05 per share special distribution. Our December special distribution marked the fourth consecutive year we paid such a distribution. We achieved a portfolio yield of more than 16% on our debt investments for the full year, once again at or near the top of the BDC industry. We finished the year with a committed and approved backlog of $218 million. We ended the year with a net asset value of $9.71 per share, primarily the result of fair value markdowns of our investments. We supported our balance sheet during the year, raising equity from an overnight equity offering in June and raising over $26 million of equity at a premium to NAV from our at-the-market program. We also expanded the capacity of our credit facilities with New York Life and KeyBank. And importantly, our advisor, Horizon Technology Finance Management, completed its sale to Monroe Capital, now providing our advisor with access to Monroe's platform and resources, which we expect to benefit Horizon through increasing access and capability to originate quality venture debt investments. We were pleased to complete our first co-investment with Monroe in December, with the origination of a loan to Vero Biotech. Finally, based on our outlook and our undistributed spillover income of $1.25 per share as of year end, last week our board declared monthly distributions of 11 cents per share payable through June of 2024, together with a special distribution of 5 cents per share payable in April. Entering 2024, we continue to actively manage all of our investments while we support our borrowers and seek to maximize capital recovery in a difficult venture market. Looking ahead, we will remain prudent with respect to growing Horizon's portfolio of debt investments while we work to maximize our NAB. With that, I will now turn the call over to Dan DeVorsitz to give you more details and color on our performance. Dan?