Good morning, everyone, and welcome to Ligand's fourth quarter and full year 2024 earnings call. During the call today, we will review the financial results we released earlier today and provide commentary on our partner pipeline and business development activity, followed by a question and answer session. Our earnings release and a link to today's webcast can be found in the investor relations section of our website at Ligand.com. With me on the call today are CEO Todd Davis, Paul Haddon, Senior Vice President of Investments and Business Development, Chief Financial Officer Tavo Espinoza, and Vice President of Strategic Planning and Investment Analytics Lauren Hay. This call is being recorded and the audio portion will be archived in the Investor section of our website. On today's call we will make forward looking statements regarding our financial results and other matters related to the company's business. Please refer to this safe harbor statement related to these forward-looking statements which are subject to risks and uncertainties. We remind you that actual events or results may differ materially from those projected or discussed and that all forward-looking statements are based upon current available information. LIGAN assumes no obligation to update these statements. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that LIGAN files with the Securities and Exchange Commission or SEC that can be found on Ligand's website at ligand.com or on the SEC's website at sec.gov. With that, I will now turn the call over to Todd.

Thank you, Melanie. Good morning, everyone, and thank you for joining our call. I am delighted to report an outstanding quarter and full year results for Ligand. 2024 was a strong year of execution and performance for Ligand. We grew our top line, expanded our portfolio of commercial-stage royalty assets, and added to our pipeline of development-stage royalty opportunities. Over the past two years, we've been able to transform LIGAND into a profitable, economically diversified and infrastructure-lite organization. We remain focused on identifying and investing in highly differentiated royalty assets and operating our royalty generating platform technologies that we believe will generate significant long-term shareholder value. Our portfolio of major commercial programs delivers predictable and growing royalty revenue and is the foundation of our strong financial performance this year. Slide three summarizes our financial and portfolio achievements in 2024. We grew royalty revenue by 28% and year-over-year core adjusted EPS by more than 40% to $5.74 per share. Royalty revenue in the fourth quarter increased 55% over the same period in 2023, which helped generate over $100 million of operating cash flow in 2024. Ligand has over $250 million of cash and investments, no debt, and access to a $125 million revolving credit facility, which we can upsize to $175 million. We believe we are in a strong financial position to capitalize on our robust business development pipeline. Lauren will provide more detail on our portfolio later on the call, but I wanted to touch on a few of our key commercial stage assets. On our third quarter earnings call, we talked about two new commercial launches within our royalty portfolio during 2024. Verona Pharma's O2Vair and Merck's CapVacSeed. We are pleased to report that both products exceeded our expectations in the fourth quarter product sales. Analysts estimate that both O2VARE and CAP Backseed have blockbuster sales potential, and we believe these products will be meaningful contributors to our royalty revenue over the next several years. Another meaningful royalty contributor for us this quarter was Trevere's Filspari, which received full approval from the FDA in September. Filspari sales increased approximately 40% in the fourth quarter and continue to exceed our expectations. Another exciting development this quarter is the regulatory update Trevere provided following the Type C meeting held with the FDA for Filspari in Focal Segmental Glomerulosclerosis or FSGS. It is a rare kidney disease that has a high risk of progression to kidney failure. There are currently no FDA-approved therapies for FSGS. Trevere announced its plans to file an SNDA and FSGS by the end of the first quarter of 2025. Also in the portfolio, we are excited about our latest investment. Ligand led a $75 million financing round with a $50 million commitment to fund the Phase III study in Castle Creek's DeFi. DeFi is a Phase III gene-modified autologist cell therapy for the treatment of rare orphan disease, dystrophic epidermalosis bullosa. Paul will provide an update on the new investment in Castle Creek. Turning to Slide 4, over the last two years, we have restructured our business model into an operationally light strategy focused on delivering profitable and compounding growth and we are now seeing the fruits of those efforts. We have grown our royalty revenue by nearly 50% and have reduced our cash operating expenses by over 50%. Headcount is less than a third of what it was in 2022. This is a significant accomplishment. More importantly, it sets Ligand up for a very bright future. Turning to slide 5, I would like to remind our listeners about Ligand's strategic differentiation. We are a biopharmaceutical company that delivers profitable and compounding growth. Our diversified and growing portfolio of royalty assets generate consistent and predictable revenues. We acquire or generate royalty interests in late-stage development assets and commercial assets where there is superior risk-reward. Our highly qualified team brings decades of investing, clinical, operational, and regulatory experience, as well as a strong origination network throughout the industry. We continue to execute on our strategy of acquiring high-growth, low-op-ex assets, a plan we put in place nearly two years ago. There is a sizable demand and low supply for royalty capital in the life sciences industry, which allows us to invest selectively as we offer a differentiated capital solution than traditional investors provide. Our team works thoroughly to source, diligence, and negotiate investments with customized structures to create proprietary opportunities. Our 2024 acquisition of a Pyron is a prime example of this approach. We can replicate this playbook while maintaining a low level of operating expenses. Royalty capital is a very small percentage of the total capital invested in life sciences today. We believe our model is differentiated, scalable, and offers immense growth potential for years to come. Turning to slide six, I would like to discuss our five-year royalty receipts outlook. As we shared during our most recent analyst and investor day, we believe our long-term royalty revenue growth is on pace to meet or exceed the 20% compound annual growth rate we initially outlined in December of 2023. The existing portfolio alone supports a royalty receipts CAGR of 18%, which is above the previous estimate of 16%. Future investments should add at least 4% to this with potential upside on top of the current outlook. Our business development team is constantly developing attractive new investment opportunities and we anticipate another productive year on the investment front. In conclusion, we are proud of all that we have accomplished since we began executing on our new strategy in the fourth quarter of 2022. We are highly optimistic about our future prospects. I'll now turn it over to Paul Haddon for an update on our recently announced royalty financing transaction with Castle Creek.

Thank you, Todd. As we discussed at Investor Day last December, 2024 was a year of significant progress at YGAM. We remain excited by the opportunity to partner with companies, both public and private, to provide creative, non-dilutive capital solutions as well as working with inventors in early january we closed our final o2 variant inventor royalty acquisition bringing our total royalty on verona's o2 fair to three percent 2025 is shaping up to be an active year for us two days ago ligand announced the closing of a new 50 million dollar royalty investment with castle creek biosciences a private company Our investment will go to fund a pivotal phase three clinical trial for Castle Creek's lead program, DEFI, an injectable, gene-modified autologous cell therapy that is phase three DEFI, which has FDA orphan drug designation, targets a disease called dystrophic epidermalosis bullosa, or DEB for short. DEB is a devastating and debilitating rare inherited skin disease. DEB is caused by mutations in the COL-7A1 gene, leading to extreme skin fragility and blistering from even minor friction. A majority of patients are at significant risk for a deadly form of skin cancer and, as such, have an estimated lifespan of only 30 years. For our investment, Ligand will receive a mid-single-digit royalty on global sales should DeFi receive regulatory approval. In May 2023, the DEB landscape changed with the approval of Crystal Biotech's Vyjuvec, a topical HSV vector-based gene therapy administered weekly by healthcare providers in patients' homes. Vyjuvec's approval marked a major breakthrough for DEB patients. 2024, U.S. sales were nearly $300 million, and peak global sales were projected over $1 billion. While Vyjuvic has delivered a much-needed treatment option, it does have its limitations, including restrictions on treatable body surface area and the need for weekly topical dosing. This leaves the DUB community still eager for additional innovative solutions. The D5 product profile is expected to be meaningfully differentiated and also complementary. Ligand's investment team source-led and structured the $50 million royalty investment, which was joined by an additional $25 million co-investment by Capital Creek insiders and investors, bringing the total financing to $75 million for the combined syndicate. As highlighted in our press release, the $75 million syndicate is eligible for a high single-digit royalty. Ligand represents two-thirds of the syndicate and as such is eligible for a mid-single-digit royalty. This strategic collaboration with Castle Creek is a testament to our commitment to invest in potential breakthrough derech therapies. By partnering on DeFi's development, we not only expand our diversified portfolio of potential revenue-generating assets, but also make a significant stride towards transforming lives of patients suffering from DUB. Ligand is excited to welcome this promising late-stage clinical royalty investment to our portfolio. MyGAN's investment pipeline remains strong as we continue to evaluate multiple proprietary opportunities, like DeFi, that cannot be accessed through the public markets. With that, I'll turn the call over to Thabo.

Thank you, Paul. First, I want to emphasize that I will be discussing non-GAAP results which exclude certain items such as stock-based compensation, amortization of intangible assets, amortization or impairment of financial assets, losses from derivative assets, and expenses incurred to incubate the Peltos business, amongst others. I encourage you to review the GAAP reconciliation of these non-GAAP measures, which can be found in today's release available on our website. I believe these adjusted measures provide valuable insight into our core operating performance, both historically and moving forward. In 2024, we delivered strong financial results, surpassing the high end of our guidance range with total revenue of $167 million and core adjusted EPS of $5.74. We ended the year with $256 million in cash and investments, and when factoring in our credit facility that's expandable up to $175 million, we have more than $400 million in deployable capital. Notably, our continued growth in royalty revenue reinforces our confidence in meeting or exceeding the long-term outlook we shared at our December 2024 Investor Day. Slide 11 provides a more detailed breakdown of our financial results for both the fourth quarter and the full year. Starting with our full-year performance, total 2024 revenue grew 27% to $167.1 million from $131.3 million in 2023. Royalties increased 28% to $108.8 million from $85 million in 2023, primarily driven by Phil Spari and Carzeba, which we acquired through the recent Apiron acquisition in July of 2024. Crevere ended 2024 on a strong note with total Phil Spari sales of $132 million, generating approximately $12 million in royalty proceeds for Ligand. We expect Phil Spari to be a key driver of royalty revenue growth and anticipate that 2025 royalties from Filsfari will approximately double compared to 2024 levels. Other key contributors to our 2024 revenue included the Capasol business, which generated $30.9 million in material sales, up from $28.4 million in 2023. And contract revenue totaled $27.5 million in 2024, primarily driven by milestones earned upon the approval and commercial launch of Verona's O2Vair. In 2023, contract revenue was $18 million, largely from the approval of Trevier's Filspari. Total R&D and G&A operating expenses increased 29% in 2024, due primarily to higher non-cash stock-based compensation expenses as a result of executive departures, as well as an increase in costs incurred to incubate the Peltos business. Combined G&A and R&D expenses were $100.1 million for the full year and $30 million for the fourth quarter of 2024 versus $77.3 million and $21.5 million in 2023, respectively. We expect that cost to incubate the Peltos business to seize in 2025 upon the execution of a Peltos strategic transaction. Gap net loss in 2024 was $4 million or $0.22 per share versus Gap net income of $53.8 million or $3.03 per diluted share in 2023. The decline in gap net income is driven by non-cash items, including a financial royalty asset impairment, fair value adjustments to certain partner programs, and losses from our equity method investment in Primrose Bio. Adjusted net income for 2024 was $156 million or $8.25 per diluted share compared with $107.4 million or $6.09 per diluted share in 2023. To highlight our core earnings, we exclude gains from sales of Viking therapeutic stock, which totaled $47.6 million in 2024 and $35.7 million in 2023 net of tax. Excluding these gains, core adjusted net income was $108.5 million, or $5.74 per diluted share in 2024, versus $71.7 million, or $4.06, per diluted share in 2023. Now, focusing on the quarter, total revenue for Q424 increased 52% to $42.8 million, primarily driven by a 55% increase in royalties to $34.8 million, up from $22.5 million in the prior year quarter. The key drivers of royalty growth were Filspari and Carzeva. total operating expense expenses increased compared to the prior year's quarter due to higher headcount related cost increased stock-based compensation and continued investment in the peltos business gap net loss for q424 was 31.1 million or one dollar and 64 cents per share compared to gap net income of 18.2 million or one dollar and three cents per diluted share in q423 This decline was largely due to volatility in the price of Viking therapeutic stock. As a reminder, we own 1 million shares of Viking stock. Core adjusted net income for Q424 was $25.2 million, or $1.27 per share, compared to $18.6 million, or $1.05 per share in Q423. Moving on to the next slide, and turning to guidance, we are reaffirming our 2025 financial Outlook introduced at our investor day in December. We expect royalty revenue to be between $135 million to $140 million, capital sales to range from $35 million to $40 million, and contract revenue between $10 million and $20 million. These components result in total revenue guidance of $180 million to $200 million, with an adjusted earnings per diluted share forecast of $6 to $6.25. Additionally, we reiterate our long-term outlook projecting royalty receipts to grow at a compound annual growth rate of 22% or greater from 2024 through 2029. Finally, turning to our balance sheet, as of December 31st, 2024, we had $256 million in cash and short-term investments, which includes $40 million in Viking common stock. We believe that our existing cash combined with ongoing cash flow generation is sufficient to fund our anticipated investment activities for the foreseeable future. In closing, I'd like to direct listeners to our fourth quarter earnings press release available on our website for a reconciliation of our adjusted non-GAAP financial results to the GAAP results discussed today. I'll now turn the call over to Lauren for a portfolio update.

Thank you, Tabo. I'm pleased to provide some important updates on Ligand's portfolio. 2024 was a year of significant achievement across our partnered programs with the approval of four products, Verona's O2-Vair, Merck's Capsaxxiv, Peltos's Zilsuzmi, and full FDA approval of Trevere's Filspari. In addition, we added Rekrodotis Carceba to our commercial portfolio through the acquisition of Apiron Biologics. This brings us to 12 major commercial revenue drivers with significant momentum heading into 2025. I will review updates on our major commercial partnered products, followed by key pipeline updates. First, on the commercial portfolio, Carceba demonstrated strong growth in 2024. Recordati reported that sales in its oncology franchise, which comprises Carceba and one other main product, were 227 million euros in 2024, an increase of 13% as compared to 2023. As a result, Recordati has increased its peak sales guidance for the franchise by 50 million euros, an increase of 20%. Our partner, Recordati, has a broad international footprint with extensive geographic reach. Recordati continues to invest in seeking U.S. approval for Carceva. Following an encouraging meeting with FDA in 2024, Recordati plans its next engagement with FDA in mid-2025 to discuss details surrounding a potential BLA filing for Carceba in the U.S. Ligand's royalty rights extend globally and would include sales in the U.S. if approved. In addition, at the J.P. Morgan Conference, Recordati shared plans to work to expand the label to Ewing sarcoma, which would represent a major expansion for the product and an important milestone for patients and their families. Next, Filspari continues to show tremendous progress in treating rare, progressive kidney diseases. In September, Filspari received full SCA approval in a label expansion, which is estimated to expand the total addressable population from 30,000 to 50,000 patients to over 70,000 patients. Our partner, Trevere Therapeutics, reported Q4 2024 Filspari sales of $50 million, a remarkable 40% increase as compared to Q3 2024. This robust performance demonstrates that Filspari is becoming well-established as a foundational kidney-directed treatment in IGAN. Filspari will be a significant driver of revenue growth for ligand in the coming years, contributing meaningfully to our financial performance. Analyst consensus for peak Filspari sales is estimated at $1 billion in IGAN alone, which, if achieved, would translate to $90 million in annual royalty revenue to ligand. Moving on, the June approval of O2-Vair marks the first inhaled COPD treatment with a novel mechanism of action approved in over two decades. This important achievement also delivered a milestone payment of $5.8 million to Ligand. In a short time on the market, O2-Vair has demonstrated impressive commercial success. This underscores the significant unmet need for novel therapeutics in COPD, as well as the value O2-Vair is delivering to patients. In Q4, sales of O2-Veer were $36 million, far as surpassing consensus estimates. Our partner, Verona Pharma, reports that pulmonologists are prescribing O2-Veer to a broad range of patient types, highlighting its expansive real-world utilization. Additionally, Verona reports that to date, over 80% of treated patients have a copay of $10 or less, facilitating extremely strong market access. The maintenance COPD market is enormous, and Verona estimates that every one percentage point in O2 bear market share would translate into over a billion dollars in net sales. Consensus estimates for peak O2 bear sales are in the range of $2 billion, which would result in annual royalty of $60 million payable to ligand. Early prescription trends and patient experience has been overwhelmingly positive, and we are excited about what 2025 has in store. Next, Merck's CapVaxSafe. CapVaxSafe achieved nearly $100 million in just two quarters in 2024 and is off to a very strong early launch trajectory. CapVaxSafe has a compelling competitive value proposition relative to other vaccines in the category. Because of this, Merck is optimistic about CapVaxSafe's potential and expects it to gain majority market share in the adult setting. We expect strong performance from Kepvaxiv in 2025, the first full year of launch for this innovative vaccine. Our fourth approval of 2024 was Zilsuvme, a topical treatment for molluscum contagiosum. Ligand gained rights to Zilsuvme through a special situations investment with Novan in 2023 and achieved FDA approval of Zilsuvme in 2024. Ligand then launched Pelsos Therapeutics, a wholly owned subsidiary, to prepare for launch. Silsudnia is the first and only at-home treatment for molluscum, a highly contagious viral skin disease. Commercial launch is expected by mid-year, and Ligand is in the final stages of executing on a strategic transaction to launch the asset. Next, I'd like to focus on key developments in our pipeline. Building upon Filspari's success in IgA nephropathy, Trevere is planning to submit an SNDA for Filspari for the treatment of FSGS, another serious rare kidney disease by the end of Q1. FSGS is a leading cause of kidney failure, and there are no approved medicines for patients living with this progressive disease. Earlier this month, Trevere shared that the company held an encouraging type C meeting with FDA to align on the contents of a potential submission in FSGS, integrating Filspari's Phase II and Phase III data, as well as feedback from the Paracel working group. If the SNDA is accepted and Filspari is granted priority review, this critically important medication could become available to patients by the end of this year, marking what could be the first FDA-approved treatment in FSGS. Trevere has guided that the commercial opportunity in FSGS is at least as large as in IGAN, and approval would mark an important accomplishment in our commercial portfolio. In terms of additional pipeline updates, Agenis presented compelling data in several colorectal cancer treatment settings at the recent ASCO GI conference. Their efforts to secure a development and commercial partner remain ongoing. Palvelo recently initiated clinical studies of cutorin rapamycin in two serious rare dermatological conditions. First, the company started dosing patients in the Phase III Selva trial in microcystic lymphatic malformations. Additionally, last month, Palvela began dosing patients in the Phase II Toiva trial in cutaneous venous malformations. We look forward to the results of these studies in early 2026. And finally, last month, Takeda announced full discontinuation of the Ceticlostat program. If relicensed, Lydan's royalty economics would remain intact. In closing, the success we achieved in our portfolio in 2024 underscores our commitment to investing in high-value medicines that deliver significant clinical benefits and generate long-term, predictable revenue streams for LIGAN. With that, I will turn the call back over to Todd for closing remarks.

Thank you, Lauren. To sum up, we are very pleased with our 2024 financial results, as well as the progress we've made over the last year in improving our investment capabilities and growing our asset portfolio our diversified portfolio including our major commercial royalty generating programs and the late stage pipeline form the foundation of our growing success on its own the commercial portfolio should drive growth in the mid-teens through the early 2030s when you add our development stage portfolio, including but not limited to Palvela's QTORN MLM asset, Trevere's FSGS SNDA submission, and our recent investment in DeFi, we continue to expect EPS growth in excess of 20%. Through investing, we will continue to add to our commercial and late-stage clinical assets as this portfolio provides us with substantial cash flow to reinvest in new high-value enhancing royalty opportunities we are well positioned to execute against our goals in 2025 and deliver attractive growth in shareholder returns over the long term thank you everyone for joining us on today's earnings call we will now pass it back to the operator and open it up for questions you wish to ask a question please press r followed by one on your telephone and wait for your name to be announced your first question comes line of matt hewitt from craig

time. Your line is open.

Good morning. Congratulations on the strong year and, you know, looking forward to another strong year in 25. Maybe first up, this recent acquisition or recent investment into Castle Creek, if I'm not mistaken, that might be your first move into cell and gene therapies. Can you confirm if that was the case? And number two, are you looking at others? How How does the risk profile change for that type of a program versus maybe a larger small molecule? Any color on that, please?

Yeah. So, great question. This is Paul Haddon. I think you are correct. That is our first cell and gene therapy. We're excited about the program. It's a very focused program. It's de-risk in the sense that the targets going after is already established with the approved crystal biotech products. We're seeing cell and gene therapy, but we're not actively pursuing that as a particular sector, but we will be opportunistic where we find good risk-reward opportunities like the Castle Creek investment.

That's great. And then maybe a question on CapTasol, and this is maybe two parts, but the SQ Innovations Lasix. is that with that launch potentially coming later this year is that a big user of captasol I'm trying to think of magnitude what that could mean for your captasol sales obviously there was a nice step up with your 25 guidance for that segment to begin with on the Gilead news but would this create another potential step up later this year into fiscal 26 thank you Go ahead, Tava.

Hey, Matt. Tava here. Yeah. So, first of all, we're looking forward to the eventual approval later in 2025. And just as a reminder to our audience, we are due a relatively modest milestone and royalties on that product. But then, again, to your question, we will be selling material, capital-solve product, to SQ Innovation. But it's not going to be one of the major contributors to the overall commercial cycle there. But it'll be, I would say, more in the minor contributor.

Got it. All right. Thank you very much.

Your next question comes to line of Joe Pendergist from HC Wainwright. Your line is open.

Hey, everybody. Thanks for taking the question. So very nice with the DeFi deal. And I'm just curious, as you're looking forward with regard to all the kinds of creative deals that you're looking at, how does this deal signal your desire and ability to do even more syndicated deals?

Yeah. So we will syndicate deals when necessary. That's often driven, Joe, by our discipline around size. There are certain size limitations that we want to observe so that we can create a diversified, a risk diversified portfolio. And so opportunistically, we will syndicate these deals. There are a number of other folks that are interested in them. But as you know, our typical deal size, especially on development stage assets, is $20 million to $50 million. And we're selecting things that have significant evidence of safety and efficacy, as was the case with DeFi. And that is kind of the major risk parameter that we observe when we're analyzing these assets. and then on top of that we kind of limit ourselves at 50 million on development stage products that number will increase over time as the size of our portfolio increases on a proportional basis no that's helpful thank you and then I guess two financial related questions can you discuss any potential with your growing cash balance of thoughtful share buybacks that I know could potentially be available.

And then maybe, Tavo, can you just discuss the asset impairment charge? Thanks.

Yeah, Joe. We continue to believe that the best use of our capital is to continue to look for high-value royalty assets. We do have a stock buyback program in place. We'll be opportunistic there, but we don't have any plans to put that in, any real plans to use the capital to buy back stock today. But there's a Ticlistat asset that's with Takeda.

They discontinued that, and so we did have an asset carrying value on the balance sheet that we wrote off. in q4 great thank you your next question comes the line of doug mayhem from rbc capital markets your line is open yeah thank you um the first question just has to do with the d5 deal um i know that you expect this to be used in combination therapy but perhaps you could walk us through um how you see it being used that way uh given that we do already have that uh crystal product on the market today hi doug this is uh paul again great question um first off i think

there's a couple of um important points to note i think the d5 product is is an injectable product chrysalis product is a topical product so you can imagine that from a patient perspective you know you have these um breaks in the skin in different places um and one could envision where an injectable product would be much more advantageous for delivery versus a topical product that's one piece the other piece is obviously the potential frequency of dosing the crystal product is weekly we expect the d5 product to be much less than that and then additionally the surface area that you're allowed to to treat in any given treatment course could also be different so that those coupled together, you can see how these products could be complementary. And so, from that perspective, we envision that it would be a welcome addition if it's approved.

Okay, excellent. Second question does have to do with the potential deals that you're working on. And maybe, Todd, you could speak to, you know, what proportion of the deals would be synthetic versus actual royalties that you're contemplating on buying or even companies like you did last year and then finally maybe you could expand on potential strategic transaction as well in any way that you can I'll leave it there thank you sure yeah so we don't discriminate or favor royalty monetizations or also known as royalty acquisitions project finance or special situations we do observe that quite often in special situations such as our our pelfos setup

that we've been working on this year that the potential returns can be very significant and they need to be significant because they do require more bandwidth from the team and so that is just an observation that we make when we're stepping into these things so we need the technologies that we do this with or the products that we do special situations with to be potentially very highly valuable and in that case just for example as you know we paid just a little bit over 12 million to buy those assets out of bankruptcy we already have an approved product they'll sue me it's not launched yet of course because there's a number of things you have to do to set up for a launch when you're buying something out of a bankruptcy but it's very promising and you know uh on top of that there's an underlying nitro cell platform um that is potentially usable in many many different areas so um the the potential returns on that are significant but you've got to work that long term so that's really the key observation between royalty monetizations and project finance or project finance being synthetic royalties that you create, we're really mostly focused on the asset diligence and how promising the asset is. And, you know, the key criteria around that, in addition to, you know, strong evidence of safety and efficacy is high unmet clinical need. That's your ultimate and best protection against payers and payer pressure, and it's the factor that we think is the most important when you're considering reimbursement risks. And, of course, when you're doing development stage assets, you don't have a label yet, so you really kind of have to forecast the probability of success in that arena by the value that you're adding to patients and clinical treatment. So that's how we view it so far I would say it's kind it's been around 40 40 and 20 if I had to divide it up 40% royalty monetization is 40% project finance and about 20% special situations great thank you your next question comes the line of Trevor or it's Oppenheimer your line is open hey good morning everybody my congrats on the great quarter as well just for some additional color around DeFi, I mean, can you guys tell us a little bit about how large the population is, maybe how readily identifiable the condition is?

And given that it's a cell therapy area, are you expecting any limitations at scale?

Yeah, so Trevor, it's Paul again. Great questions. Estimates in the U.S. are a few thousand patients. I think if you go globally, it's going to be a multiple of that. In terms of readily identifiable. I think if you look up this condition, DEB on the World Wide Web, you'll see the pictures of these patients, and you'll understand how devastating and debilitating this condition is. I mean, literally, these patients are missing a gene that codes for the collagen that connects the skin tissues. So you really have what looks like second and third degree burns on these patients. So they are readily identifiable, especially in the severe your populations. And then in terms of scale, all I can tell you is because we were dealing directly with Castle Creek, we went very deep from a diligence perspective, which included the CMC. We got very comfortable with their ability to supply the product. And obviously that's one of the benefits of dealing with synthetic royalties. You have the ability to go under confidentiality, do site visits, work with the company directly to see everything that they know and ultimately um you know get comfortable around an investment from the multitude of areas where you do emanate level due diligence so hopefully that answers your questions but if i miss anything just uh please let me know yeah no that's helpful uh and can you also give us a sense of you know how much revenue by juvec is generating and in a popular any potential population differences between the two of those Yes, I think Vyjuvic last year clocked in at just shy of $300 million, and obviously that's about 18 months into the launch, so on a really good ramp rate. And from a more global perspective, that should continue to grow. As I mentioned on the earlier question, there is a complementary factor in terms of what DeFi could do, and so from that perspective, we're pretty bullish about the opportunity overall.

Okay, great. Thanks. Thanks for taking the question.

Your next question comes to line of Balaji. Prasad from Balaji. The line is open.

Good morning. This is Xiao for Balaji. Thanks for taking our question. So just a quick one on our throughware. Seems like the uptake has been nicely in the first two quarters of the product launch, even without the J-code. And the equity market was reacting positively towards the initial traction. So can you discuss some of your expectations you have around inside frame trend growth and your view of the overall maintenance therapy for COPD and what's your view of the impact of the overall COPD market in the times of the biologic entrance such as Dutixen. Thank you so much.

Yeah, so this is Lauren Hey. We're really pleased to see the very early success of O2Bear. you know the the launch trajectory looks to be very strong we haven't even yet seen the impact from the permanent j code which became effective to your point uh january 1st so that should further catalyze a strong first quarter of sales in our view um you know as i shared during my prepared remarks the copd market is um is is quite large there are 8.6 million maintenance treated patients according to verona half of whom remain symptomatic despite treatment and so there's a very large addressable population from for verona they've shared that about half of the treated population at this point has been on triple therapy so llama lava ics um so if you look kind of at the total addressable population um it's much larger than the eligible population for Dupixen, and they probably kind of target a different type of patient. So we continue to be very optimistic about the launch. Verona's doing a fantastic job, and we'll look forward to continued progress later this year.

Great. Thank you so much.

Thank you. Your next question comes from the line of Larry Sulla from CJS Securities. Your line is I could.

Great. Thanks. Good morning. Congrats on an exciting year, lots of business development and things moving forward. I guess the question for Tavo, first question would just be, I know on the guidance you provided the analyst that you spoke about, just some increased investment in the cash expenses and the business development team in 2025, can you just give us a little more color on how 2024 kind of shook out on the expense line and what you're looking for, you know, incorporated into your outlook in 2025?

Yeah, no, we, uh, like, like we said, uh, previously at an investor day, 2024 was a year of investment in largely in building up the investment, uh, uh, business development team and, uh, and, and, and, and standing up our Boston office there. Uh, we closed out the year with, uh, approximately $38 million in cash operating expenses. And going into 2025, we're growing at about 4%. And we expect that to be kind of the steady state going forward is what we've kind of signaled to investors roughly at the rate of inflation.

Okay. So, it's like a $40 million plus or minus number in 2025.

That's correct.

That's correct. and and it sounds like the the final opportunities continues to expand todd it doesn't feel like you you know i know you don't time exactly how much you're going to spend you know per year of course not it's more opportunistic but it doesn't feel like um there's any hesitancy there like we could sound like we could have another big year after 2024. all right i think that's right uh i mean I mean, the number of opportunities that are out there far exceed what we can execute on.

So kind of the supply-demand relationship, if you will, between, you know, capital and the types of things we're looking for is very favorable. The key issue, therefore, is what we spend our time on, and, you know, we've really never been busier, so we really have to triage to what we think are the highest clinical value products, and that's really what we're focused on seeking out.

Gotcha. And in fact, just last follow up, just on Zell, excuse me, and tell those. So it sounds like you guys are doing a lot of strategic planning and stuff ahead of actually announcing a partner. So it feels like you'll be able to hit the ground running at some point once that partner comes in. I'm just trying to figure out, this partner, is it just going to be an investment partner? Is it someone who's going to be the marketer? Just trying to, you know, how that shakes out in the launch plans.

Yeah, I mean, I can only go into a certain level of detail right now, Larry. However, yes, we have, as you know, we've put kind of the brains of a commercial operation in place with a head of marketing, potential CEO, et cetera. They've been making significant launch preparations so that we will be ready to go. There was a significant amount to do in terms of things like running validation batches and preparing the manufacturing, which they've been executing on. And so all of that is on schedule. It is still our intent to launch the product in the first half of the year. There are some risks there. These things are not easy, and you want to do them right, not fast. But we think the bones of a deal in sight here, and the key is that we finance this. We're not going to forward integrate and become a sales and marketing company. We need partners to do that. That's why we created PELTHOS, and we need to get PELTHOS financed through a strategic transaction, and that's what we're focused on right now. Thanks, Todd. I appreciate that call.

You bet.

The next question comes to line of John Vandermersen from Zapp. The line is open.

Thank you, and good morning. Regarding DeFi and Castle Creek, does the opportunity here assume similar pricing and penetration as Vajavec does?

Yeah, John. Great question, this is Paul. I think it's fair to use that as an analog, given that it's out there. Obviously, per my earlier comments, there is some opportunity to be complementary in terms of being used in the same patient. So from a penetration perspective, there can be some overlap, but we feel comfortable with the analogs that are out there and also with the opportunity that we invested in. So it's a fair assumption.

Okay. And what's the expected financial impact of that termination letter to CASI on ligands?

Hey, John, I'll take that one. Tavo here. So it's a two-year termination term. We don't expect it to have a material impact for 2025. The generic implications to the China market do not change. That's been in place. We've talked about that in the past. But Acrotech, who we have the direct license agreement with, our understanding is that they intend to have a marketing partner in China, and our license agreement with them will continue. So, no, short answer is no short-term impact in 2025, but longer-term, we expect to still benefit from the China market, be our direct licensing arrangement with Acrotech.

Okay. Okay. And on your opportunity set, I seem to remember at one of the events that 200 opportunities were mentioned. I guess they're waiting to be acted upon. How has that changed in terms of new additions and then ones that you said will pass out? I guess I'm wondering about kind of the flow rate there. And has it increased since that last update?

I think that was possibly at the investor day when you when you had given that number go ahead Paul yes a great question John I would say that we've seen an uptick in our pipeline there is some some week-to-week and month-to-month churn and to Todd's earlier point you know we're constantly trying to assess where we want to apply our team's time and resources but his comment spot-on earlier about how we've never been busier. So we're excited about the opportunity set. Obviously, we have to maintain a very disciplined approach and be judicious about where we spend our time. But we're excited about what we're seeing. And I think, you know, this call is evidence of being off to a good start, if you will. So we're excited. Okay, thank you.

As there are no further questions, I would like to thank our speakers for today's presentation. And thank you all for joining us. This now concludes today's conference. You may now disconnect.

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