Thank you for standing by, and welcome to Ligant's Fourth Quarter 2025 Earnings Call. All lines have been placed on mute, triple pen, and a background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, think you press the star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press the star 1 again. Thank you. I would now like to turn the conference over to Melanie Herrmann, who may begin.

Good morning, everyone, and welcome to LIGAN's fourth quarter and full year 2025 earnings With me on the call today are CEO Todd Davis, Chief Financial Officer Tavo Espinoza, and Vice President of Portfolio Strategy and Investments Lauren Hay. During the call today, we will review the financial results released earlier today and provide commentary on our partnered portfolio and business development activities, followed by a question and answer session. Before we get started, I would like to point out that we will be discussing non-GAAP results, which excludes certain items such as stock-based compensation, amortization of intangible assets, amortization or impairment of financial assets, gains or losses from derivative assets, and gain on the sale of the Palthos business, amongst others. I encourage you to review the reconciliation of these non-GAAP measures to their most directly comparable gap measures which can be found in today's release available on our website we believe these suggested measures provide valuable insight into our core operating performance both historically and moving forward our release today and a link to today's webcast can be found in the investor relations section of our website at ligand.com this call is being recorded and the audio portion will be archived in the investors section of our website on today's call we will we'll make forward-looking statements regarding our financial results and other matters related to the company's business. Please refer to the 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. LIGEN 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 LIGAND 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. And with that, I will now turn the call over to Todd.

Thank you, Melanie, and good morning, everyone. We appreciate you joining us today. 2025 was a defining year for LIGAND. We delivered exceptional financial performance with full-year adjusted EPS exceeding our original 2025 guidance by more than 30%. That growth reflects the strategic changes we began implementing in 2023, the lean operating structure, the talented team, the focused investment strategy, and the strength and depth of our royalty portfolio, which continues to outperform expectations. Full-year royalty revenue grew 48% over the prior year, and full-year adjusted EPS increased 42%, reflecting strong performance across the portfolio. Key drivers contributed to the 48% growth include the continued ramp of Phil Spari, successful launches of Merck's O2Vair and Capvaxi, and the commercial launch of Zelsugmi, and continued growth of RecordRD's Karziba. With substantial cash and investments on hand, we are well positioned to pursue disciplined investments that create new clinically differentiated product royalty streams and enhance long-term shareholder value. I'd like to take a moment to congratulate our partner, Palvella Therapeutics, on their announcement this week of positive top-line data for their Phase III Silva trial of cutorin rapamycin for the treatment of microcystic lymphatic malformations, also known as MLM. Based on strong trial results, we believe cutorin rapamycin is likely to become the first FDA-approved therapy for more than 30,000 diagnosed patients with MLM, a serious, rare, and debilitating disease. We are proud to partner with Palvela and commend them on their hard work and dedication to develop transformative high clinical impact treatments for patients living with this rare disease for which there are currently no approved therapies. Separately in 2025, our deal team executed on a special situations transaction through the strategic merger and financing of Telthos and Channel Therapeutics. Our special situations efforts can require significant effort, but we are rewarded with our efforts with superior risk-adjusted investment returns. Our team was patient and thoughtful, creating a subsidiary, building on a top-notch management team, and spinning Pelkos out into a publicly traded entity and creating significant equity and royalty value for ligand investors. Importantly, we were also able to rescue and shepherds they'll suit me from bankruptcy through to FDA approval and into the hands of a capable team at Peltos Therapeutics that will now serve millions of patients that are impacted by Moleskine Contagiosum. As we look ahead to 2026, we are accelerating our business development efforts. Our team is expanding. Our pipeline is deeper. Our capital base is stronger than ever in our efforts to fuel our growth initiatives. Additionally, in 2025, we launched a systematic portfolio management strategy to drive value in our development stage partnerships. We're now focused on more proactively communicating with our partners and doing what we do best, identifying new opportunities to provide additional investments or expand the partnerships in other ways. I also want to address how we view royalty financing in the current biopharmaceutical funding environment. Importantly, we are seeing growth in the demand for royalty capital as evidenced by the doubling of the royalty funding market over the last five years. Even with improvement in the equity markets, royalty financing has become a strategic capital structure tool companies are choosing regardless of the broader market conditions. Our partners value royalties because they are non-dilutive, complementary to equity capital, and aligned with our partners' long-term development cycles. Additionally, only a small portion of the overall royalty financing market is tied to development stage assets. Ligand is uniquely positioned in this way within the rapidly expanding biopharmaceutical royalty financing sector, where demand for capital is high. since 2022 we've been on a strong upward growth trajectory earnings have more than tripled as our royalty portfolio has scaled and we have aggressively managed our operating margins core revenue has also grown meaningfully from 108 million in 2022 to 240 million this year and we are now expecting 265 million in 2026 that's based upon the midpoint range of our guidance, and more than $430 million is expected by 2030. Adjusted EPS reflects the same momentum, moving from $2.44 a share in 2022 to more than $8 per share this year, with visibility to over $13.50 per share by 2030. Looking ahead to 2030, I would like to highlight our five-year Royalty Receipts Outlook, which we shared in our Investor Day in December of 2025. We now expect a 23% compound annual growth rate in royalty receipts from 2025 through 2030. This growth is driven by contributions across the entire portfolio. The commercial programs form the core of the growth profile and contribute to an expected 15% annual growth. These products are already marketed, supported by strong partners, and in some cases, have the opportunity for additional label or geographic expansion. Additionally, the farm team, which represents significantly risk-adjusted development stage programs currently in LIGAN's portfolio, is expected to contribute an additional 5%, and future investments should add at least another 3%. We believe the strength of our recent results, the continued momentum of our royalty portfolio, and our investment team's disciplined capital deployment approach positions us to deliver sustained long-term growth for years to come. And with that, I'd like to turn it over to Tavo for the financial update.

Thanks, Todd, and good morning, everyone. I'll start with a brief overview of our full year of 2025 financial performance, followed by the fourth quarter highlights, and then discuss our 2026 outlook. 2025 was a breakout year financially for Ligand, driven by strong execution across our royalty portfolio and disciplined capital deployment. For the full year, total gap revenue was $268 million, up from $167 million in 2024. This includes a gain related to the sale of the Pelto's business. Excluding that gain, core revenue was $240 million, reflecting 43% year-over-year growth. Royalty revenue grew to $161 million, an increase of 48% year-over-year, driven primarily by Filspari, Otuver, Catvaxas, and Karziba. From an earnings perspective, core adjusted diluted earnings per share increased to $8.13, cents, up 42% year-over-year, reflecting strong operating leverage in the model and higher royalty contribution. Importantly, while 2025 benefited from the $25 million sell-zooming-out license fee, the underlying royalty portfolio delivered substantial organic growth independent of that one-time item. Turning to the fourth quarter, total revenue in Q4 was $59.7 million, representing a 39% increase compared to the same period last year. Royalty revenue was $50.5 million, up 45% year over year, and again represented the primary driver of growth. Key royalty contributors during the quarter included continued strength in Fospari with U.S. net sales of $103 million. This represents 108% growth year-over-year and $322 million of net sales for the full fiscal year. As a reminder, we also receive a royalty on net sales of Trebir's partner in Europe, CSL V4. In total, we recorded royalties of $32 million on approximately $355 million in global dospari sales in 2025, including those reported by CSL V4. Merck's Otuver, which reported net sales of $178 million in the partial fourth quarter, on a full quarter basis, accounting for the fact that Verona owned the asset for the first seven days of the quarter, sales were just under $200 million. U.S. net sales of Otuver for the full year 2025 were $506 million. Merck's Capvaxib, which reported net sales of $279 million in the fourth quarter and $755 million for the full year, is rapidly approaching blockbuster status. And Recordatis Karziba reported net sales of 159 million euros for the full year 2025, representing 12% growth. Adjusted net income for the quarter was $42.7 million, or $2.02 per diluted share, compared with $1.27 in the prior year period. The increase was driven almost entirely by higher royalty revenue, reflecting the scalability of our model. On the expense side, R&D expense declined to $3.5 million in the quarter compared to $4.4 million last year, and G&A expense was $25 million, relatively flat year-over-year as we maintained disciplined cost management while supporting portfolio growth. Overall, the fourth quarter capped a year of accelerating earnings and expanding margins. For the full year, R&D expense was $81.2 million, compared to $21.4 million in the prior year. 2025 full-year R&D costs include $62 million related to the accounting treatment of Castle Creek and Orchestra investments. Full-year G&A costs for 2025 were $92.4 million, compared to $78.7 million, driven by stock-based compensation costs, PELTOS transaction costs, and other headcount-related costs, primarily to scale the BD function. We also ended the year with a very strong balance sheet, including $734 million in cash, cash equivalents, and short-term investments. When combined with our equity holdings in Peltos Therapeutics and available capacity under our credit facility, we ended 2025 with over $1 billion in deployable capital. Turning now to 2026, we are reaffirming the financial guidance we introduced at our Investor Day in December. For the full year, we expect adjusted EPS of approximately $8 to $9 per share, royalty revenue of $200 to $225 million, representing 32% growth at the midpoint, CAPTIS Hall revenue of $35 to $40 million, and contract revenue of $10 to $20 million. In total, we expect revenue of $245 to $285 million for 2026. As a reminder, the year-over-year adjusted EPS growth appears modest at the midpoint due to the one-time SELSUVME out-licensed income recognized in 2025. Excluding that item, the underlying earnings power of the business continues to grow meaningfully. Royalty growth in 2026 is expected to be driven primarily by SELSPARI, OTUBEAR, CAPVACTIV, and SELSUVME, all of which remain in relatively early stages of their commercial lifecycle. With that, I'd now like to turn the call over to Lauren for a portfolio update.

Thanks, Pavo, and good morning, everyone. I'd like to provide more detail on our new portfolio management strategy that Todd touched on earlier. We recently launched a more sophisticated and systematic portfolio management process designed to actively drive value across our partnerships. This approach allows us to track progress and catalyst in a more disciplined manner, to increase the frequency and depth of our partner dialogue, and to proactively identify new investment opportunities. This positions us to take initiative to ensure our partners have what they need to be successful, whether that means adding investment behind programs in which we have high conviction, broadening the scope of existing collaborations, or identifying novel ways to expand the partnership. In short, it's all about being more proactive, more data-driven, and more investment-focused across the portfolio. Moving to the next slide, I'd like to provide an update on one positive development from our recent portfolio management efforts. Lazafoxaphene is a program that has been in our portfolio for quite some time. The product was originally discovered in 1991 through a research collaboration between Ligand and Pfizer, and is currently midway through its Phase III trial for the treatment as ER-positive, HER2-negative metastatic breast cancer in patients with ESR1 mutations. Lasafoxifene has a compelling value proposition. In Phase II studies, lasafoxifene demonstrated a 13-month median PFS in combination with abemacyclob, significantly stronger than the three to six-month median of currently approved monotherapies. Lasafoxaphene also has a unique mechanism of action as a selective estrogen receptor modulator, or CIRM, presenting potential advantages in tolerability as well as bone and neurogenital Additionally, the product has a large safety database of approximately 10,000 patients from prior Pfizer studies. Lasafoxaphene was being developed by Sermonix Pharmaceuticals, who ran into financial challenges midway through the pivotal study. Late last year, we worked collaboratively with Sermonix equity investors to successfully assign the license to Leona Bio, previously Ethera Pharma. In conjunction with the license, Leona completed a $90 million pipe with very strong investor demand led by Perceptive, Commodore, and TCGX, with additional potential financing of $146 million to support the program. Ligand participated in the pipe to signal our support and partnership with Leona, and we are encouraged to see this important late-stage program backed by a strong investor base under the leadership of the talented team at Leona. Top-line data for lasafoxifene is expected to read out in mid-2027 in the ongoing pivotal E-LANE-3 trial, which is currently more than 50% enrolled. Additionally, Henleys has exclusive rights to lasafoxifene in Asia and certain countries in the Middle East, and is currently in Phase III development in China. Ligand earns a tiered 6% to 10% royalty on worldwide net sales of lasafoxifene, and with management peak sales estimates of approximately $1 billion, this could potentially result in annual royalties to ligand of $80 million. Moving to the next slide, I'd like to provide some important updates on other key assets in LIGEN's portfolio. I will go into more details on Palvelo's Ketorin-Rapamycin, Trevere's Filspari, and Merck's Otuvir on the following slides, but first I'd like to briefly touch on two of our pipeline assets. This includes Sanofi's T-Zield and a Genesis BotDow. In October 2025, TZIELD was accepted for expedited review for Stage 3 Type 1 Diabetes, or T1D, through the Commissioner's National Priority Review Voucher Pilot Program, based on its potential to address a large unmet medical need. TZIELD is currently approved in the U.S. for patients with pre-symptomatic Stage 2 disease to delay the onset of Stage 3 in patients who are 8 years of age and older. But if approved, this new indication would expand treatment to patients diagnosed with symptomatic stage 3 disease. This represents a much larger and more accessible patient population. Sanofi expects a regulatory decision in the first half of 2026. Sanofi is also pursuing a lowering of age eligibility from 8 years of age to 1 year of age in the approved stage 2 indication, with a PDUFA date of April 29th. In addition, T-ZILD is expanding geographically after recent approvals in Europe and China. Turning to Agenis' BotVal, Agenis announced the closing of a strategic collaboration with Zydis designed to accelerate global development and commercialization of BotVal. Agenis has initiated a global Phase III trial evaluating BotVal in patients with refractory, unresectable, microsatellite-stable colorectal cancer. The trial will enroll approximately 800 patients across more than 100 sites in Canada, France, Australia, and New Zealand. The Phase 2 data are highly encouraging, demonstrating deep and durable responses as it's difficult-to-treat population, underscoring the meaningful benefit observed in patients who have failed standard therapies. Moving to the next slide, let's look at palveloz-tetorin-rapamycin. The successful Phase III trial results in microcystic lymphatic malformations represent a major positive catalyst for ligand this year. Palvella announced this week that cutorin rapamycin demonstrated a highly statistically significant outcome on the primary endpoint, the key pre-specified secondary endpoint, and all four additional secondary endpoints. For the primary endpoint, utorin-rapamycin demonstrated a plus 2.13 point improvement on the MLM investigator global assessment scale. This is clinically transformative and even more compelling when viewed in the context of a disease where patients currently have no FDA-approved treatment. 95% of trial participants were rated as improved, and 86% of patients were rated as much improved or very much improved. Additionally, dutron rapamycin was well tolerated with no drug-related serious adverse events. A remarkable 98% of all participants who completed the trial elected to continue to receive treatment through the ongoing extension period. I'd like to encourage our listeners to review Pauvela's presentation on its Phase 3 results located on the Pauvela website. The work The work Palvela has done has the potential to be transformative, providing a high clinical impact treatment for patients living with this rare disease. Palvela plans to submit an NDA in the second half of 2026 and is accelerating U.S. launch readiness for this potentially first FDA-approved treatment for MLM in a first-line, standard-of-care treatment for this serious, lifelong disease, affecting an estimated more than 30,000 diagnosed patients in the U.S. As a reminder, cutorin rapamycin has been granted breakthrough therapy designation, orphan drug designation, and fast-track designation from the FDA for the treatment of MLM. Now turning to Palvella's development of cutorin rapamycin for the treatment of cutaneous venous malformations, or CVM. In December, Palvella announced positive top-line results from its Phase II TOEVA study for the treatment of CVM. Palvella recently completed a very successful CVM breakthrough therapy designation meeting with FDA and plans to submit a breakthrough application shortly. The FDA has also granted fast-track designation to cutarin rapamycin for the treatment of clinically significant angioperatomas. There are currently no FDA-approved therapies for the estimated more than 50,000 U.S. patients diagnosed with angioperatomas. Palvela plans to initiate a Phase II trial evaluating cutorin rapamycin for clinically significant angiokeratomas in the second half of 2026. Across the two lead indications, there are an estimated more than 100,000 patients diagnosed with either MLM or CVM. Based on payer research and orphan analog launches, Palvela projects an annual per-patient price of $100,000 to $200,000 per patient. At peak, this positions the U.S. commercial opportunity for Ketoran rapamycin to reach an estimated $1 to $3 billion in annual sales. This could translate into a potential $100 to $300 million in peak annual royalty revenue to Ligand. We congratulate our partner, Palvella, on their tremendous recent success and their momentum heading into their first potential FDA approval, as well as important development milestones. The upcoming year will be a very catalyst-rich year for our Palvella partnership. Next, Silsfari continues to perform well commercially in IGAN, and it now represents the largest royalty in our portfolio on an annualized go-forward basis. Q4 sales in IGAN reflected initial tailwinds from two important Q3 catalysts, REMS modification, as well as updated Cadego guidelines. Additionally, Rinalis, who was recently acquired by Chugai, announced positive Phase 3 results and plans to submit an NDA in Japan for IAGAN in 2026. We believe there could be significant commercial upside if approved in Japan based on population estimates. While we were disappointed to see that the FDA extended the review timeline for the S-NDA for SILSPARI and FSGS, we continue to believe in the potential of SILSPARI to make a meaningful difference in the lives of patients living with FSGS, and we are encouraged by Trivier's engagement with FDA, their commitment to continue to work with the agency through the extension period, as well as their continued efforts on commercial preparation. Moving to the next slide, O2Bear is tracking well ahead of initial expectations, and it continues to be the strongest launch in COPD history. Q4 sales grew more than 40% sequentially over the prior quarter, and the product generated approximately $500 million in sales in its first full calendar year of launch. Additionally, the National Medical Products Administration of China accepted the NDA for O2VIR for the maintenance treatment of COPD for review. O2VIR is currently only approved in the U.S. and has potential for significant upside from geographic expansion. Beyond the portfolio highlights we reviewed today, we have a wide range of diversified assets with meaningful upcoming catalysts. Collectively, our commercial portfolio is the strongest it has ever been, and it represents a deep pipeline of potential value drivers over the coming years. With that, I will turn the call back over to Todd for his closing remarks.

Todd Johnson Thank you, Lauren. We are pleased with the progress of our late-stage development pipeline, specifically the strong trial results of Palvella's Phase III MLM trial and the recent new partnering of Lasafoxifene with Leona Bio. We've always had strong conviction around these important late-stage programs and are encouraged to see both the clinical development progress of Qutorin rapamycin in MLM and to see lasophosphine now backed by a strong investor base under the leadership of a talented team. When we combine the strong launch momentum we've seen across multiple products in our commercial-stage portfolio and build on that with our late-stage development pipeline, it's easy to see how quickly momentum can build and begin to predictably compound. Our strong origination capabilities, our investment team, and our robust investment process are driving meaningful portfolio growth. Our deal team's ability to identify, access, and create high-quality investments sets like and apart. Thank you, everyone, for joining us for today's earnings call. I will now pass it back to the operator and open it up for questions.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press the star 1 on your telephone keypad to raise your hand and join the queue. If you would like to require your question, simply press the star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. One moment please for your first question. And your first question comes from the line of Thomas Alvarez with Appenheimer.

Good morning, everyone. Congrats on the quarter and the recent Palvella data, I had a question regarding clinical update expectations for your late-stage royalty portfolio. So we all know about the big update for Pilspari and FSCS, but what other clinical updates might we expect for other assets during 2026 that investors might be overlooking?

Thanks, Trevor. I think in terms of our late-stage pipeline, it's quite active. I think if you look at it holistically, just kind of a short list here, But you have Carzeva in a study for U.S. approval, Carzeva and Ewing sarcoma. That's with Record ID. BotBowell, the genus, is in phase three. With Orchestra, you've got both the Avon therapy and Virtue SAB trials in phase three. With our Castle Creek partnership, they're working on another treatment for DEB, similar to Crystal's drug called D5 that is in phase three. And we mentioned, obviously, and significantly discussed the MLM, but quickly coming in behind MLM for cutorin rapamycin at Pelvella is the cutaneous venous malformations, where they read out some new data in December. And then you heard about lasophosphine today, and we have T-Zield with ongoing studies in type 1 diabetes that could expand the use of the drug there. So we should have a number of robust updates on all of those over the coming, you know, several quarters. And I would just point out that a significant majority of these have been added into the portfolio in the last, you know, two, two and a half years. And those efforts are accelerating. So you can expect additional late-stage assets to continue to be added into our pipeline. So that is kind of core to our business model. and will be a key driver for our growth going forward.

Thanks, Todd. Appreciate the update.

And your next question comes from the line of Matt Hewitt with Craig Helen. Please go ahead.

Good morning, and congratulations on the strong finish to the year. Maybe first up, and this is a question for Lauren. I know that you've been championed with monetizing some of the older assets in the portfolio. I'm just wondering if you could give us an update on that and whether or not you see some potential for low-hanging fruit, some reinvigoration of that older pipeline?

Yeah, Matt, thanks for joining, and thanks for the question. The answer is yes, definitely. So we have five to ten opportunities across the portfolio where we're, you know, very actively engaged at the moment. Some of those would be new investment opportunities for Ligand. Others are opportunities where, you know, we do have operating capabilities on our senior team in terms of really a lot of depth and breadth of experience scientifically across the regulatory domain and then commercially, where we could offer, you know, advice and support to our partners. And then looking at the balance of the year, there's another 10 opportunities on our list where we plan to engage over the next couple quarters. So I imagine that we'll see, you know, publicly another, you know, announcement or two by the end of the year. But it's, you know, I think as an example with LaserFox, I've seen a strategy that's already yielding quite a bit of value to our portfolio and some of those legacy investments that you referenced.

That's great.

And your next question comes from the line of Annabelle Samimi with Stiphol. Please go ahead.

Hi. Thanks for taking my question, and congratulations on a strong year. I guess in the last few months we've been hearing a lot more about T-Zield. It's a low royalty, but it seems like it could be a decent market. Can you talk a little bit more about the larger opportunity that you see, and do you have any sense of a peak sales size and what that can contribute to LIGAM given the low royalty?

Yeah, thanks, Annabelle, for the question, and thanks for joining. So, you're right, our royalty on T-Zeal is on the lower side relative to some of our other partnerships, but this is a potentially blockbuster opportunity that Sanofi has. The current indication where they're approved is in stage two type one diabetes, which is a little bit complex to sort of digest, and there's a lot of words associated with that indication, but basically what that means is that they're going out and looking for patients who are pre-symptomatic. So if a patient is diagnosed with type 1 diabetes, what they do is they go out and they screen the family members and see if there are any patients who may be pre-symptomatic who would be progressing to symptomatic disease, and then they treat them with teziod. Santa Fe is doing a fantastic job building out that market. However, it's very difficult as you can imagine going out and screening large numbers of these these pre-symptomatic patients so we're continuing to see kind of gradual growth in that indication the one where they have the commissioner's voucher that indication is in stage 3 disease and so those are newly diagnosed symptomatic patients those are much more accessible commercially just because they're already in the healthcare system and and being treated so commercially that that opportunity is probably much larger Sanofi acquired this asset from prevention bio and they have a lot of conviction around it and so we're you know eager to see the the decision on that that stage three indication sometime

the first half of this year thank you I think and your next question comes from the line of Eagle natural moment city group please go ahead all right good Good morning, this is Chuan Kim on for your goal.

Congrats on the quarter and thanks for taking our question. We were wondering if you could help contextualize the reiterated guidance range given the slight delay for FSGS approval and how much, if anything, did the low end of the range assume for FSGS royalties in addition to continued ICANN royalties? Yeah, thanks for the question. You know, we assumed relatively, we have a relatively modest assumption and it is a risk adjusted number on FSGS going into the 2026 royalty guide. We did disclose that number, it's in our investor day slides. It's $4 million in 2026. And obviously, at the time, we had the January 13th to do the date, moving it out, moving it out a quarter, you know, impacts that number minimally, I believe. It is a risk-adjusted number. So if it's a, obviously, if it's a good outcome on the approval, then that is a de-risked input, and it's somewhere north of that 4 million. But it's overall, overall, FSGS is going to be, we think, you know, a minor contributor in 2026. Obviously, that becomes more significant and more meaningful as we get out into the later years. And, yeah, so that's the input on FSGS. All right. Thank you.

Thank you. And your next question comes from the line of Joe Pankinus with HC Wainwright. Please go ahead.

Hey, everybody. Thanks for all the details as usual. So first, maybe for Todd or anyone else that wants to chime in, off of your recent analyst day and combined with your very strong deployable capital, do you have any thoughts or does it stay the same with regard to any changes or updates toward your selection criteria for potential partnerships? for example, you know, the sizes or anything else?

Hey, Joe, thanks for the question. This is Todd. Well, I think that in general, as the value of our portfolio grows, and it is growing rapidly, the average value per deal that we'll want to capture will go up proportionately. And so just as a matter of kind of functional strategy, you can increase proportionately your deal size, or you can do more deals. We really like the range that we're in because we're very focused on these high clinical value assets. A lot of times you can create really significant value. We face three studies that are, you know, in the $30 to $80 million cost range in total. And that's a very good investment target for us where there's a high demand for capital and there's relatively few solutions in terms of structured finance or royalty financing. So we'd like to stay in that space. But on average, we are going to be looking for, you know, greater value generation and having to accelerate over time through a combination of maybe slightly larger deals and more deals.

No, that's really helpful. Thanks a lot. And then maybe a question for Lauren, if you don't mind. So maybe you can remind us or provide some detail, and I know, obviously, you'll get more information for the company. But with regard to the Castle Creek technology, we had a lot of familiarity with that. But I think maybe it's important to remind us or talk about any potential differentiations with regard to Vyjuvec, because obviously, you know, for example, any differences in potential surface area addressed or any other sort of differentiation you might want to discuss.

Yeah, great. Thanks Joe for the question and so we have a lot of conviction in D5 which is the Castle Creek treatment that as you mentioned is the same indication as crystals vijubec the the investment thesis here is that we think it's a validated target so we're looking at a FEA 3 gene modified autologous cell therapy with Castle Creek the differentiation here is that it's injectable so it could expand the body surface area whereas vijubec has a live of HSV vector and is applied topically. So they're pretty limited in terms of the accessible body surface area for any individual patient. We also think that Vyjuvec has really validated the market here. So they did just under 400 million in 2025 sales. So we think D5 could come in and be a nice complimentary treatment for patients with CEB. They have the vast majority of their body surface areas affected by these really debilitating wounds. And so if you offer patients, you know, a range of treatments where Vyjuvec, as an example, needs to be dosed on open wounds, whereas these patients have, they develop over time a lot of these chronic wounds that get kind of crested over, and so they're not accessible with a topical treatment like Vyjuvec. But when you introduce an injectable into the marketplace, then it really expands the treatment options for patients. Longer term, there could be a potential to also use this treatment in the hands and feet, whereas patients with DED, they get almost sort of a webbing in between their fingers and toes. It really limits their ability to, you know, perform activities of daily living. So, you know, longer term, that could be on the horizon as well. You know, they're a really strong team in place at Castle Creek, and so we think that, you know, with the differentiation and a validated target, we're pretty optimistic about the trajectory for this one.

Great. Much appreciated answers. Thank you.

And your next question comes from the line of Larry Zolo with CJS Securities.

Hi. Good morning. It's Pete Lucas for Larry. Just a couple questions on Phil Spari. Does delay in approval in FSGS have any impact on your 2026 outlook, or can we assume negligible or no expectations in guidance?

Yeah, it's going to be – thanks for the question. It's going to be negligible. It's a relatively small assumption from FSGS in 2026. We did disclose at our investor day that we are assuming $4 million contribution from FSGS in 2026, so relatively minor.

Great, thanks. And can you remind us of the potential market size opportunity in the U.S. for Filspari FSGS versus IGAN? And outside of the U.S., it's been approved in Europe and trials underway in Japan. Can you give us an idea there also of the market opportunities outside of the U.S.?

Go ahead, Laurel.

Sure. Thanks for the question. So consensus estimates for Filspari in IGAN and in FSGS are around a billion dollars per indication. Just as a reminder, our royalty is 9% here. So that would be a potential of around a $90 million royalty revenue to LIGAN for each indication stand-alone. So, you know, FSGS they're expecting will launch more quickly than IGAN because there are no treatment options, it's a more rapidly progressing disease, the patients are younger. And, you know, Trevere has really built out all of the commercial or the vast majority of the commercial infrastructure that they need. They've shared that they'll be adding some sales reps to help cover the pediatric nephrologist, but they already have a lot of the infrastructure in place, so they've guided to the fact that the launch, you know, if approved, would probably ramp more quickly than an IGAN. I think that on the Japan side of things, you know, IGAN is quite prevalent in Japan, so there could be a pretty sizable commercial opportunity there. You know, Trevere and then Chudai have not shared anything externally in terms of their expectations there. We'll have to see, you know, if the drug is approved, how the pricing comes in. But we're optimistic that there could be some real value to unlock there.

Very helpful.

Thank you. And your next question comes from the line of John Van der Mosen with ZACS SCR. Please go ahead.

Thank you. Jazz's Ryleys beat estimates in fourth quarter, and I'm wondering if that was enough to push it into your category of key royalty drivers. And then also, what are your thoughts on this asset as we look ahead towards the rest of the year?

Yeah, great. So thanks for the question. Rylees is one of the more mature products in our portfolio, so we don't talk about it as much as we do some of the products that we have that are newer to the portfolio in terms of launching and ramping and a lot of growth. But what we continue to see is real strength in the performance of Rylees. And as you've evidenced by the recent strong quarter that they shared, we don't have a lot of catalysts in terms of inflection points that could drive the sales of that drug up It is one of our key royalty revenue drivers, and we expect that it will continue to be over the coming quarters and years. But probably nothing on the near-term horizon that we see that would materially drive the the sales to grow substantially from here.

Okay, thank you. And looking at Peltos and your equity holding in that asset, do you see that as a source of cash, or is that just a good place to stay as they roll out their portfolio and add new assets?

Yeah, I think, you know, with obviously with a strategic transaction like that, where you end up with a real significant percentage in a company, we're going to have a very long-term view on that as holders. We're not looking for liquidity right away, and we think there's a lot of upside there as well. So overall, in terms of our equity strategy, I mean, between warrants and legacy investments and things like that, we still have a million shares in Viking, for example. We have had a general philosophy that once these things are mature and at the appropriate time, And, of course, we do look for liquidity, and we do see them as a source of cash in some cases.

Got it. And the last question is just a broader one on the markets and all. So M&A was kind of up in the second half of 25, and then kind of it's maybe slowed a bit this year. And the IPO market has been fairly weak for our space. What, you know, how is that affecting the opportunities that you see?

I think that, I mean, it's generally, I would say an okay market right now and better than it was two years ago, for example. But for us, John, in good markets and in bad, I think royalty financing is growing rapidly regardless. It's doubled in the last five years. People are seeing it as much more a mainstream part of their capital structure, for lack of a better term. There's debt, there's equity, and there's royalty financing available for companies. It used to be, you know, 10 years ago when you would approach a company and offer royalty financing. It was typically, not always, but typically an education process required. Now most of the CFOs and CEOs out there immediately know what you're talking about conceptually and understand how it fits into their capital structure. And they also realize that there's many advantages. I mean, it's not better, but it's different than other forms of financing. So, for example, you know, our investments are extremely long-term, and they're tied much better to the life cycle of assets within kind of our biopharmaceutical development timelines, because we're attached to the assets over time, even when they trade hands. And so there's a lot of advantages to doing this. And obviously, at some points, if people think their equity is significantly undervalued, on a relative basis, it can look attractive for that reason. So in good markets and in bad, we have just found our pipelines to be quite robust. Paul Haddon and the investment team simply have more deals to do than they can possibly do. So we're really culling our pipeline of opportunities pretty aggressively to make sure that we're spending our time on things with a high probability of closing that offer, you know, our good assets, meet all of our asset criteria that we look at, and we'll offer appropriate returns as well.

Great.

Thank you, Todd.

Thank you. And that concludes our question and answer session. I would like to thank our speakers for today's presentation, and thank you all for joining us. This now concludes today's conference call. You may now disconnect.