SWK Holdings Corporation

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. Please note, this conference is being recorded. I will now turn the conference over to your host, Susan Zhu, Investor Relations. You may begin.

Thank you. Good morning, everyone, and thank you for joining SWK Holdings' fourth quarter 2024 financial and corporate results call. Yesterday, SWK Holdings issued a press release detailing its financial results for the three months ended December 31st, 2024. The press release can be found in the investor relations section of swkhold.com under news releases. Before beginning today's call, I would like to make the following statement regarding forward-looking statements. Today, we will make 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 details in the risk and uncertainties 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. Joining me from SWK Holdings on today's call is Jody Staggs, President and CEO, and Adam Rice, CFO, who will provide an update on SWK's fourth quarter 2024 corporate and financial results. Jody, go ahead.

Thank you, Susan. And thanks, everyone, for joining our fourth quarter conference call. We are pleased with SWK's fourth quarter performance and the company enters 2025 on solid footing. Our fourth quarter was highlighted by solid financial performance, including $8.2 million of finance segment net income, improvement in the portfolio's credit quality, and $44 million of capital deployed into yielding financial receivables to life science companies. Our non-GAAP tangible financing book value per share increased 8% year-over-year to $21.15. And with share trading at a discount to book and given our excess capital, we have been active purchasers of our shares, having repurchased approximately 100,000 shares for $1.6 million since September 30, 2024. During the fourth quarter, we closed an up to $8 million senior secured term loan to Triple Ring Technologies, upsized the loan to $30 million, and advanced a cumulative $10.6 million to four performing borrowers. In January, we closed an up to $15 million term loan with ApetaMed with $10 million advanced at close. These are all core SWK financings to commercial stage life science companies. Each is either public and has demonstrated the ability to raise capital or private with a supportive sponsor. Since we last spoke, three SWK financial receivables were repaid at premiums to the GAAP carrying value. In December, VERU made a $4.2 million payment to fully satisfy the FC2 royalty. The FC2 royalty generated a 45% IRR and a 2.7x MOIC. In December, Moleculite made a final payment totaling $12.2 million to repay its term loan to SWK. The Moleculite term loan generated a 20% IRR and a 1.6 MOIC. SWK continues to hold equity in Moleculite, which is carried at zero on our books. In March, ANI-FORMA made a $17.25 million payment to exercise an option to buy out the Alluvian Royalty. The Alluvian Royalty generated a 20% IRR and a 1.8x MOIC. At December 31, 2024, we had $13.8 million of gross finance receivables on non-accrual. The non-accrual receivables have a 15% CISA reserve, thus our net non-accrual totaled $11.7 million. This morning we announced the signing of a transaction to sell our remaining performing royalty portfolio for $34 million. The deal is expected to close in approximately two weeks. In combination with the alluvium buyout, the $51.3 million of proceeds from the two monetization transactions is approximately $1 million more than the carrying value. at December 31, 2024. Upon closing of the transaction, we also expect to close out a Japanese yen hedge, which will free up an additional $4.5 million of cash. Proforma for these changes, as well as a $3 million principal repayment from 4Web in the first quarter of 2025, and using the 12-31-2024 balances, our go-forward gross portfolio consists of approximately $218 million of performing loans $14 million of non-accruals, and approximately $5 million of equities and warrants. Our fourth quarter 2024 portfolio effective yield was 15.5%. The effective yield is the yield assuming all financial receivables pay as modeled. This figure is not adjusted for the post-quarter changes, but should be in the neighborhood of the go-forward portfolio yield, even considering the royalty sale. Finally, as of yesterday, our cash totaled over $30 million, and we have no borrowings under our revolver. Assuming closing of the final royalty transaction and release of the FX hedge, our gross cash will total nearly $70 million. We anticipate the board will declare a dividend on the closing of the final royalty transaction. Turning to our Interest CDMO division, which has been rebranded as Mod3 Forma to signify its transformation into a pure place CDMO business. We are pleased with Mod 3's 2024 results as segment division revenue totaled $3.6 million, tripling from $1.2 million in 2023. We expect continued growth in 2025, and the team is focused on positioning the business for unsubsidized profitability by year end. We are in regular contact with our strategic partner and believe they are pleased with Mod 3's performance. With that, I will turn the call to our CFO, Adam Rice, to review the quarter's financial results.