Welcome everybody to our XOMA Royalty Corporation session. It's very much my pleasure to welcome a couple members of the executive leadership team at the company. With me we have the CEO, Owen Hughes, and the Chief Investment Officer, Brad Sitko. It's a nice opportunity to host management. We appreciate you being here. Appreciate the invitation. Owen, if you could kick us off with your vision and strategy for XOMA, and then we'll go from there. Sure. XOMA, if you think about it from a 30,000-foot perspective, is an interesting financial instrument and company for the following reason: we're the smallest of all the publicly traded royalty players today, and yet we have the largest portfolio of any royalty company, public or private. We also pay the highest dividend yield, granted it's off our preferred and not our common stock, of roughly 8.5%. When you think about the gestation period, maturation of a company, you generally don't have those three things together. Generally speaking, you're going to have a smaller portfolio with no dividend and just actually starting at the inflection point. We have the highest dividend yield, largest portfolio, smallest company, which hopefully will portend future growth for the company. Thinking about it from that perspective, it's actually a very interesting dynamic. Where we are at this point in time, we've been, Brad and I have been at the company for two years, is we're just now at the inflection point. In fact, in fiscal 2024, we were actually free cash flow positive when you look at the milestones and the royalty receipts relative to our expenses. Now, we deployed capital, it was an active year for capital deployment, and so on a net cash basis, we were negative. From a purely operating perspective, we were actually positive. We see that being the case for the foreseeable future, meaning year in and year out for the next several years. The reason why that's important is that we're essentially ourselves sustainable, which very few companies in our space, not necessarily the royalty space, but in terms of biotech, can actually say that. I think the other thing that it portends is that the things that now get into the portfolio, the bar to get into our portfolio has been raised very significantly. Because if we just look at the things that actually are generating revenue for us today, and we assume that they can come within 15%-20%-25% of the consensus estimates, we'll be generating roughly $100 million plus of royalty receipts out four or five years from now. That's up from $25 million this year. These companies generally trade around 10-15 times royalty receipts because they have 90% operating margins. In order for us to cover our costs, we need to generate $20 million of some type of cash flow, either milestones or royalty receipts, and everything from there on in is 100% free cash flow and will be for the foreseeable future, given our NOLs and our tax credits. From a company perspective, we're in a pretty good spot. We can actually wait for things to come to us or identify things rather than where we've been in the last several years, which is trying to actively deploy capital so that we can actually get to the royalty receipts. The last thing I'll say, and I'll turn it over to Brad, is that from a high, high-level perspective, I think the one observation that I have about this particular business relative to other royalty businesses is that what we're trying to do here is actually produce or create a terminal value. Most royalty businesses are simply a summation of their existing and future cash flows. There's very little terminal value for any of these businesses because you're only as good as the next deal. Where we are different and what we're trying to, where the place where we're different and where we operate is we're going much earlier, trying to build the terminal value through our pipeline while at the same time generating free cash flow with the existing commercial assets. Our belief is if you can put those two things together, a revenue business that is growing and accelerating from a growth rate perspective and a terminal value, you have what I think will be just an unmatched royalty business. The only way you can do that, though, is you have to go much earlier. You have to actually wait, patience, and you have to build it through scale because, as we all know, most drugs that actually enter the clinic do not actually come to fruition. Does that make sense? That's great. Just to go back to what you had mentioned, could you just talk about the operating expense run rate? You know, I think you're suggesting that that would only grow very modestly in the future. Yeah, absolutely. I mean, we're a big believer in, you know, keeping a low fixed cost infrastructure and variabilizing costs whenever possible, you know, excluding deals. I mean, if you think about the run rate for the business, around $20 million a year between the public company infrastructure, the operating expenses, the salaries, the overhead, et cetera, and then the dividends that are paid out on the preferred stock, that's what gives us that stable base. The company itself ends up being very scalable, right? As royalty receipts come in, it doesn't require, you know, additional headcount or FTEs to maintain that. It's really a function of the resources that we're dedicating to business development, new royalty acquisition, et cetera, which, you can do like many, you know, many businesses of this type, like you can scale tremendously through the team. Excellent. It'd be helpful for you to just paint the picture, with respect to some of the biggest, you know, drivers of the royalty revenues over the next three to five years. Within the existing portfolio? Yes. Sure. We have three mainstays today. The first is Vabysmo, and that's the wet AMD drug from Roche. We acquired that royalty stream through the acquisition or licensing of some IP in Switzerland. We paid about $14 million for that asset. Over the life of that asset, just to give you a sense for the scale of this business, it should generate anywhere from $300 million-$350 million of royalty receipts for our company. If you take a step back and think about this business, it actually mirrors what you would normally see in a traditional investment in business, where you have two or three things that power the returns for a period of time. You have a bunch of stuff that's in the middle, plus or minus 25%, and then you essentially have a couple of zeros. What we're trying to do, obviously, is limit the zeros, but it's going to happen in our business. That's why it's so important for us to buy things at the appropriate price and deploy the appropriate amount of capital relative to the opportunity that we're seeing. That was the asset that Brad did a phenomenal deal on in December of 2023, where we actually took an asset-backed loan against that to actually increase the cash balance of the company. When we did the deal, I think we only had about $30 million of cash. We brought in about $130 million of non-dilutive cash to the company. Our cash balance as of the last quarter was like $100 million plus, and we should be in, you know, a fairly nice position for the next, you know, several quarters in that position. The second asset is, Day One. It's Ojemda, which is the pan-RAF for pediatric low-grade glioma. The data at this point is irrefutable that it's extremely beneficial for these kids. Duration's probably out 18-24 months for most of these patients. The consensus sales estimates are anywhere from $800 million to $1 billion. We bought that for about $14 million. If you assume that they can get to the consensus estimates, that asset will generate $500 million-$600 million of cash flows for us off a $14 million investment. Can you do more of those? We're definitely trying. There's no doubt about it. That's the power of this business, right? It's also why you see us go early. Because if we actually tried to buy that, any of those assets in phase III or commercially, we can never compete with our bigger competitors. Their cost of capital is significantly lower than ours. We need to take more risk. The way you take risk in this business is you go earlier. You have to pay the appropriate price. What we can't do is put $20 million, $25 million into three or four things and have all four fail. That's 100% of our cash on our balance sheet. We've done things, I'm getting away from your question, but we've done things in order to increase the cash flow generation of the business. We've actually bought companies where they actually paid us to buy them. We would actually shut them down. Not many people do that. People think it's essentially beneath them. For us, it's actually non-dilutive capital, right? We either do one of two things. We either go out and buy things with it to actually increase the portfolio, or we'll actually buy back our own stock. We'll actually create leverage in our business model. There are a number of things from that perspective that are happening today, a number of opportunities, and, you know, we're trying to play our role in that and try to be helpful to folks. You know, in the Kinaset situation, where we actually bought that company, we essentially took in roughly $10 million to shut that company down. Just recently, we actually outlicensed all five of their assets. We added five assets to our portfolio, all for free. Like, that's not bad. If you can do that two or three times over the course of the next three to five years, that's actually all non-dilutive capital to us. The third key part of our existing commercial stream is a drug called Miplyfa. It's a heat shock protein for Niemann-Pick type C disease. It was the first drug ever approved for NPC 2. I believe they're Zevra's here, and they'll report tomorrow or talk tomorrow. Yeah. We believe that drug could do $300 million-$400 million in sales on a global basis. We have a mid to high-single digit royalty on it. If you take those three assets and you just assume that they can get to somewhere close to consensus, you're looking at anywhere from $80 million to $100 million of royalty receipts on those three assets alone. We have 11 assets in phase III. Our objective at this point is to continue to increase the velocity of the portfolio, add more things to the phase III bucket, and specifically add more things to the phase I and phase II bucket, which is where we differentiate ourselves relative to our competition. That's where you can buy, you know, something for pennies on the dollar. None of us know what those assets are going to do when they get into the clinic, or even if they're in the clinic, if they're in phase I, phase II. I would suggest that most of the data you get is to rule out, i.e., the drug's not going to work. Even as you progress through clinical development, oftentimes it's not a rule in. You don't really know what the commercial appeal of that asset is, honestly, oftentimes until it's actually launched. Every now and then you do. You have a killer app. I can tell you, when we underwrote Vabysmo, we thought the peak sales were probably $1 billion-$2 billion, max. I think Roche has said publicly that they expect $6 billion-$8 billion. We're off. Yeah. I'd rather be off in that direction than the other direction. Yeah. That makes sense. That's very helpful. Brad, just to follow on on Vabysmo, could you just talk about, you know, at a high level, how those financials will play out and then ultimately inflect longer term? Yeah. So ultimately, when we did the royalty-backed loan against Vabysmo, and so just as a reminder, that pulled $130 million of cash forward to the time of close, and it's secured only by the royalty itself. It doesn't have any additional risk to the rest of the company should something happen to Vabysmo. What we were able to do is set it up as, think of it as a self-amortizing loan. Every dollar of royalty receipt that comes in goes to pay off the accrued interest and remaining principal on that loan. Over time, it pays off. Think of it much like, you know, paying down a mortgage on a house. When we structured that transaction, that brought us, you know, high single-digit cost of capital, so 9.875% fixed in what's been a very high-rate environment. The other thing, it provided us with some tax advantages as well, plus the cash on the balance sheet that was earning interest. Very, you know, well financially engineered for us. The way we think about it is at the time that we just loan the asset out to Blue Owl, and then once that pays down, we'll get that back. We expect to have a few years of cash flow at the tail end of the royalty stream where that's fully paid off, and then those remaining cash flows drop straight to the bottom line. Obviously, given its success, that should occur earlier than you thought a year ago, obviously. Yes. Yes. Yeah. It should come back to us in the late 2028, early 2029 time period, assuming that the current trajectory is maintained. When it does come back to us, it should generate, you know, high $30 million, low $40 million numbers to us in annual receipts. We have the asset until 2033. If you add that, plus the Ojemda, you know, Ojemda's peak sales, et cetera, are anywhere from $800 million to $1 billion or so, but let's assume it's on the lower side. Given where our royalty rate is, that should be generating something very similar to Vabysmo in terms of annual receipts. You have Miplyfa, which is, let's assume it's $300 million-$400 million globally. It's a mid-single digit royalty. It's about half of what the other two are doing. So 40, 40, 20. That's how you kind of get to the 100. That's without anything else in the portfolio. We have 11 things in phase III at this point. We're going to assume that some of those hit. There's a few in there that are probably more valuable than others, simply because the royalty rate is significantly higher than what we normally have. Talking, you know, high single digit, low double digit, even mid-teens royalty receipts on some of these things. There are two ways to make money in this business. Very low royalty, very high sales like Vabysmo, or very high royalty, even a small product can be actually very advantageous to us. Our business is just the summation of this, of these cash flows. Then taking that capital to redeploy it either internally, i.e., buying back our own stock, or externally in terms of, you know, future business development. Excellent. That's very helpful, context. Maybe you could also just highlight how your personal incentives are aligned with shareholders. There aren't many biopharma companies that take limited, you know, sort of annual cash compensation and, you know, are explicitly tied to the stock performance. If you could just talk about that a little bit and, you know, what the clock is, those targets are, et cetera. Yeah. Our business is kind of interesting because when you go to the board and you have to get your corporate goals reviewed and approved for the following year, I mean, how do you value this business? Because whatever investment we're making today is probably not going to pay off for three, four, five, six, maybe even ten years. You don't want to actually, your objective to just be capital deployment because, frankly, we could go spend all the money and do it within three weeks, and they may not be good, good investments. I'm always amazed by, you know, people in this industry talking about their capital deployment. I mean, I don't really care. If we do one deal and it's like Vabysmo or Ojemda, I would be happy with that. In fact, I'd probably prefer that. You could spend more time on the beach here. It's a beautiful place. As it relates to how we get compensated, you know, I was a, obviously, I worked with you for many years, and then I went to the buy side. The thing I was always amazed by about biotech is that it's kind of like building a house. It always takes longer, and it always takes more money. The detriment of that is that that generally means significant dilution for equity holders. Because management teams, day in and day out, are generally giving themselves 3-5% of an evergreen in the pool, in the equity pool, each and every year. Let's say you're delayed three or four or five years. That's another 15-35% dilution to the equity holders. We thought it was best when we came in to actually remove all options as a future tool for equity compensation and have 100% of it be variable. It is totally dependent on actually driving value for our shareholders. In fact, the only way to do it in our particular case, because we have not, we are not truly generating, or at least at that point, we are not truly generating cash flow, although I think eventually we will tie it to cash flow as well, is tie it to the stock price. We have PSUs. When we did it, the stock was at $17 or so. The first tranche was actually vesting at $30, $35, $40, and $45. We make absolutely no equity compensation, or we get no equity compensation unless we deliver for our shareholders, which frankly, I think is the right thing to do. It's a ton of risk from our perspective, right? Because we could actually have, you know, a tremendous amount of success operationally, but if it's not recognized by the market, frankly, we're not going to get paid. But you know what? We're all big boys and put our big boy pants on. If we can't convince people to actually buy the stock and drive the price up and actually generate value, then frankly, we shouldn't be paid. I think we've done an analysis. I think we're only one of two companies in like the entire public landscape that has put 100% of their actually compensation on something that's variable in nature. There's no RSUs in our company. There's no options as it relates to the employees. Our company, of which we're like 12, 13 people at this point, you know, took an enormous amount of risk. You know, we're working hard to make sure that we can actually get there. Otherwise, your wives will be quite disappointed. Otherwise, we will have spent many years building something that, you know. With that said, listen, that's why I think buying back stock is so important. You know, if you look at the best performers in the S&P 500 over the last 25 years, and you remove Nvidia, the top two are actually AutoZone and Domino's. These are companies that grow their top line 2-5% a year, max. Yet they're the best performing stocks in the S&P 500 over 25 years. You're like, why is that the case? Because they take 2% or 5% revenue growth, and they actually leverage that down to 20-25% earnings growth because they're taking out 5-7% of their equity base every year. If you do that over five years, you've bought back a quarter to half the company. If you are generating revenue, as long as you actually have future revenue growth, all you're going to do is leverage your future returns. It's very simple. That's our view. Listen, either the market's going to reward us as long as we actually can perform fundamentally, the market's going to reward us, or frankly, we'll just take care of ourselves because we will be generating cash flow. Yeah. Sometimes that's actually why we did the Twist deal. Yeah, maybe just explain Twist in terms of relative to, you know, why it's important to us. Yeah, absolutely. I mean, the way we thought about it when we joined two years ago, there were 70 assets in the portfolio. Ultimately, because of what Owen was talking about, about the duration and the overall cost of the biotech sector to do trials, you needed to scale the portfolio. You never know when a pharma company is going to change their therapeutic areas of focus and deprioritize programs. You never know when things will fall out of the portfolio. Our belief was you've got to scale the portfolio to a size that becomes large enough that probabilistically it doesn't fail. We had the opportunity last year. We did a transaction with Twist Bioscience. Their, you know, $2.5 billion company as part of their antibody discovery business had, along with their contracts, received future royalty streams. We bought from them for $15 million, $60 million, preclinical and some ready for phase I assets where we could build out the engine, the early stage of the portfolio so that as the assets that we had, like when we came on board in early commercial to phase III to phase II, as they all keep continuing along and progressing, that there would be new assets behind them to keep growing and power the growth and provide the surprises. You know, if you think about Vabysmo as an example, you know, that's 50 basis points on one drug. You know, these are certainly above 50 basis points on potentially 60 shots on goal. The view is you've got to keep this engine going so that at the time when investors start to understand the model and the cash flow power and the generation, that they can also see what's behind it and that there's going to be more to come, like that will happen organically in addition to the new business development efforts that we can do. You know, if you look at XOMA's history, you know, we were actually an antibody discovery company for many years. In fact, we were the antibody discovery company through the 1980s and 1990s. When the prior management team, Tom, our CFO, and the prior CEO and BVF came together, there was about 40 assets that kind of started the foundation of the company from a royalty perspective. You know, one thing I learned through college is that you always want to do your homework before your homework, right? You want to look at what other people do and try to mimic that. Don't get caught doing that, of course. You know, I'm amazed at the success of a company like Halozyme, right? Where they had this core technology, they spun off all these different royalties, and it's created an enormous cash flow generating entity. We'd like to do the same thing, but we don't want to actually run the company. We don't want the operational aspects because those are fixed costs. Where we are in our maturation cycles, we can't absorb those fixed costs. Things like Twist essentially give us an engine without actually having to run the company. Probably we're spending at least half our time now actually looking at additional engines that can provide us with a steady stream of potential royalties and milestones. You know, in that Twist deal, if you look at the XOMA portfolio where they developed hundreds of programs, there's about eight to ten multi-billion dollar drugs: Lucentis, Rituxan, Tremfya, Entyvio, a whole host of things. If you take the same probabilities of success from our own portfolio and apply it to what Twist is doing, our assumption is probably a couple of assets that will be multi-billion dollar drugs. To the extent that there's not, in order for us to make our money back on that deal, we need four assets to get to phase II development. Everything beyond that is actually just pure free cash flow to us. It's all upside. People, when we did the deal, were like, you guys are absolutely crazy to underwrite 60 assets. Our view is like, hey, there's no competition. In that respect, it's not crazy because our cost of capital is extremely low in this particular area. If you just apply traditional drug development success metrics to that portfolio, we're going to make more than our fair share of capital back. If we can add additional things to that, such that our portfolio three years, four years from now, when we come back here, is 250-300 drugs, then I would say we have an unmatched portfolio that no one can compete with because that's how you create the terminal value. You have these assets that over time surprise people. In fact, we were in a contract review meeting just several months ago, and the woman who runs this for us mentioned a particular product that we can't disclose publicly. I was like, I didn't even know this was inside of our portfolio. It's like literally the hottest target sitting inside immunology today, and we own a royalty to it. We can't disclose it publicly because of the people that we had to deal with. These are things that you find when you have a portfolio of 200 to 300 things. These things just pop up. It's that element of surprise that I believe will give you the terminal growth, the terminal value. People will subscribe value to the pipeline as long as you actually have success in the existing commercial landscape and then, you know, some of the phase III assets. That makes a lot of sense. Just to wrap up on Twist, could you just add a little bit more on, you know, how that deal came to be, why they needed the $15 million, and then you mentioned that the royalties are above 50 basis points anymore. Color on that? Yeah. So we proactively approached Twist about this with the idea of, you know, as Owen mentioned, we're focused on finding engines or multiple shots on goal. We thought this was a novel way to do it. This is part of, you know, what we focus on for new asset sourcing is finding companies that are in periods where the capital that we can provide can be meaningful towards whatever corporate goal they have at the time. Twist is focused on profitability and not raising additional capital in the equity markets. As you can imagine, within a $2.5 billion company, 60 preclinical royalties do not get valued appropriately. I do not think any research analyst is putting that level of focus on it. This became essentially found money to them to help achieve their corporate goal and a way to show their investors that, you know, what we said that we're going to do, which is not have to go back to the equity markets, is something that we're going to deliver on. That is something that was, you know, relevant where we were able to create a win-win scenario for both companies. In terms of the royalty rates, you can imagine that the royalty rates are similar to what you would expect in a CMO or CDMO type of business, so single digits. Got it. Very helpful. Maybe you could just give us the roadmap for the next couple of years, just in terms of key cards that are turning over in your pipeline that, you know, you know, you'll be focused on this year and in 2026. Yeah. We have a couple of phase III readouts that are coming from the phase III pipeline. The first is an antibody that actually was discovered at XOMA that was licensed to a company called Rezolute. It's for congenital hyperinsulinism. This is important to us for a whole host of reasons. One is that it's probably going to be the first phase III readout that we have this year. Second is that it's among our highest royalty rates. Third, I would say is there's a high degree of likelihood that this drug will work in phase III based on the phase II data and the underlying mechanism. Talking about response rates that were, you know, in the 90% range. And 66% of the patients in the phase II study actually had a delta greater than 30%, which is what they're powering for in the phase III. There's an interim analysis later this year. It's essentially, do they need some additional, do they hit the fiscal plan in the interim analysis or do they have to just add some additional folks, at which point it will be in 2026. Like I said, that asset's important to us because that could be, even on relatively low sales numbers, could actually be the most important asset inside the company from a dollar perspective out in time as that asset scales. The second asset that will have phase III data is Gossamer Seralutinib. Gossamer partnered with Janssen for pulmonary arterial hypertension. This is an asset that initially was developed at Gilead, was licensed to a group called Pulmokine. We actually acquired Pulmokine, and Pulmokine had licensed it to Gossamer. The phase II data, I would say it was a bit confusing for folks. It was actually happened during COVID. If you peel back the onion, there is a clear mechanistic rationale as to why the drug will work. In fact, the predicate drug is imatinib, Gleevec, which Novartis had run a study in PAH and it actually provided a survival benefit. Unfortunately, in Novartis's case, the side effect profile was such that there were actually more deaths in the Gleevec arm than there were in the control arm. From a six-minute walk test and from a PVR test perspective, the drug actually worked very, very well. This is, I would say, a similar drug, but it is a kinase inhibitor and they have dialed in various kinases and dialed out various kinases in terms to alleviate the AE profile. That bear proof in the phase II data. I think they've mentioned publicly that they expect the phase III data to be in the second half of this year. Interesting enough is that when you look at the PAH space, sotatercept actually was the first drug that was approved in PAH in 12 years. What does that mean? It means that almost every drug by the time Gossamer launches will actually be generic. From a managed care perspective, the reason why that's important is that what was, call it $100 of spend, is literally going to be $50-$20. You have sotatercept coming up, which is the Acceleron and Merck drug, which is a phenomenal drug. It's about, I don't really know the percentage, but there's a decent percentage, mid-teens, high 20s, that don't tolerate the drug very well. It has some bleeding risks and some other things, but it's a great drug. Our view, what we underwrote to was essentially sotatercept failures. Gossamer just showed data at the lung meeting in December, the first in vitro data combining serolutinib with sotatercept. Actually, there was great synergy between those two agents. Now that the price point in PAH has come down so dramatically because everything is going generic, you actually can take two branded drugs. I think managed care companies will be receptive, especially if they're disease modifying, as we believe that certainly sotatercept is, and we believe that certainly has the capacity to be. In combination, I believe it will be. Those are two very important ones that we will read out this year. There are nine additional drugs that are in phase III. We have a royalty on AstraZeneca's TIGIT, which I understand is very controversial. Frankly, the data and the TIGIT land has not been all that great to date. With that said, the AZ compound, which comes from Compugen, is a different structure relative to the Fc region. AZ is in five phase III trials with this compound. These are the type of things where we like to have optionality. We have no idea if it's going to work, but if it's worked, it's probably not in our stock because it's probably not in anyone else's view from a TIGIT perspective. We just did a recent deal for a drug in EB, which is a chronic wound disease generally for children, but it can be in adults. We actually partnered with Ligand to get that deal done with Castle Creek. That data will be reading out not this year, but most likely next year in 2026. We have a whole host of assets that Ovaprene, which is a non-hormonal vaginal ring that we did with Daref=. That deal was done early this year. That asset has an option deal with Bayer. That space is interesting because the share of hormonal agents is decreasing and the share of non-hormonal agents is actually increasing. While the overall contraceptive space is not really growing that dramatically, the non-hormonal component is actually growing fairly significantly. This would be a participant in that. I say we have a whole host of other things that are currently in the portfolio, but those are the major ones. Phenomenal. In terms of external deal activities, so other, you know, options that you're going to create for the company, does the current, you know, equity market environment mean more opportunity for you all just because companies are more desperate or is it, you know, are you typically looking even earlier stage for royalties than your average, let's say, small cap public biotech company? I think we have a more active environment than ever, in part because as equity has become more scarce to so many companies, as with the macro environment, as some of the generalists have rotated out of the sector, certainly as we've seen in recent weeks, but as we've been feeling over the last four years, there hasn't been enough capital to fund the number of public companies and yet on private companies that we have. I think you're seeing a couple of things. One, folks are becoming more comfortable with the idea of royalty financing in general because of folks like Royalty Pharma and Healthcare Royalty and DRI, etc., educating the market. Now having a more novel application of it earlier in their life cycle, like we do, has become interesting as companies and boards are being forced to become more creative. We're seeing a lot more out there, a lot more knowledge, a lot more folks actively seeking us because of what we've built and the environment. Yeah, the other thing I would just say is that the royalty financing business is kind of interesting from a company perspective. If you're a company and you're developing four drugs and you do a royalty deal on one drug, everything is dilutive, but a royalty deal is only dilutive to that one particular drug. If you do an equity offering, you're diluting the entire platform, all four drugs. It's difficult to educate folks on this, although it's relatively simplistic in nature. I would say just recently in some of our conversations, management teams and the boards are like, we understand what you're talking about now. This doesn't make sense because we always say it's non-dilutive. In reality, there's always dilution. It's either dilution on the P&L or dilution from an equity perspective. If you believe, if you're a platform company and you've got a couple of drugs, and generally speaking, your first drug is not the most successful drug, right? It's drugs three, four, or five. If you're doing a royalty deal on drugs one, two, or three, we tend to underwrite. And you don't have anything on drugs four, five, or six. I think people are starting to understand is like, this is a very valid way to actually raise capital. In fact, I would do it all day long relative to equity. I'm so protective of equity. Why would I sell equity if I can sell a 2% royalty on drugs three, four, or five that are going to go out? You know, won't hit the market for seven or eight years. It makes no sense to me, frankly. Because if you, okay, you have a 90% gross margin instead of 88%, a big pharma company is not going to care about that because they're going to have all the leverage down in the G&A line. The contribution margin of a product, if it's going into an existing sales force at a pharma company, will still be like 70%. You are not really destroying any value. At the end of the day, you know, these equity deals can be so unbelievably dilutive if you're in a death spiral, right? You have companies that are 40, 50, even 100-200 million dollars, and they have to raise 100 million dollars of capital. You know, with the warrants, you're probably looking at 100% dilution. Yeah. You know, at the end of the day, if a company's only worth the summation of its cash flows divided by the number of shares outstanding, if your shares outstanding go from 50 to 100 million, you need that much more net income to actually drive the same dollar amount, right? It's very simple. It's just math. Like I said, I think people are starting to understand like, okay, maybe this royalty stuff isn't a four-letter word anymore. Maybe you should actually take a look at it. That's a great perspective. Brad, could you just talk about, you know, the potential for profitability? Obviously, you know, there's different ways to cut it, whether you include milestones or not, Halozyme books milestones and revenue. When you look out to how, you know, the royalty should be ramping based upon consensus sales the next couple of years, could you just talk about the prospects for profitability excluding milestones? Yeah, we have line of sight into free cash flow positivity based on our milestones alone. That would be excluding the future deployments. Or, sorry, based on royalties alone. Not that I'm asking for guidance here, but what would consensus sales suggest for the, you know, the potential year for that? That's basically in the 2027, 2028 timeframe or? No, anything over $20 million. If we have royalty receipts greater than $20 million, we're essentially free cash flow positive. Because we're not paying taxes anytime soon. Yeah. Lo and behold, if you include the royalties plus the milestones in year 2024, we were actually free cash flow positive. We then use that cash flow to deploy it. On a pure operating basis, I would suggest that for the foreseeable future, we, as long as we have a little bit of luck with the trajectory of the assets that are ramping, for all intents and purposes, we should be free cash flow positive. It may not be significant, but it's positive. If it's not positive, it's probably negative just to the tune of a couple million dollars here and there. You know, there should be a ramp, 2026, 2027, 2028, it's ramping such that, you know, our goal is to have a company that can generate about $150 million plus or minus in royalty receipts in four or five years. If we do that relative to where we are today, which is around $400 million plus, and these companies are valued around 10-15 times, that's a $2.5 billion company. Now. As long as we continue to fill. The market cap today is about $250 million. A little bit more than that because you have to include the BVF preferred. Okay. Okay. It's about 400 or so. So including the preferred, about 400. Got it. Okay. Yeah. That's just the equity cap. Yep. Excellent. This has been great. We are out of time. Thanks so much for joining us here and enjoy the rest of your time. Thank you, David.