LGND - NASDAQ

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 Hadden, 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 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. Ligand 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. 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 light organization. We remained 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 3 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 in 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 Ohtuvayre, and Merck's Capvaxive. We are pleased to report that both products exceeded our expectations in the fourth quarter product sales. Analysts estimate that both Ohtuvayre and Capvaxive 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 Travere’s Filspari, which received full approval from the FDA in September. Filspari’s sales increased approximately 40% in the fourth quarter and continue to exceed our expectations. Another exciting development this quarter is the regulatory update Travere 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. Travere announced its plans to file an SNDA in FSGS by the end of the first quarter of 2025. Also in the portfolio we're excited about our latest investment. Ligand led a $75 million financing round with a $50 million commitment to fund the phase 3 study in Castle Creek's D-Fi. D-Fi is a phase 3 gene modified autologous cell therapy for the treatment of rare orphan disease, dystrophic epidermolysis 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%. Head-count 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 OpEx 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 Apeiron 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 6, I would like to discuss our 5-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 receipt 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 Hadden 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 the year of significant progress of Ligand. 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 Ohtuvayre inventor royalty acquisition, bringing our total royalty on Verona's Ohtuvayre to 3%. 2025 is shaping up to be an active year for us. Two days ago, Ligand announced the closing of a new $50 million royalty investment with Castle Creek Biosciences, a private company. Our investment will go to fund a pivotal phase 3 clinical trial for Castle Creek's lead program D-Fi, an injectable gene modified autologous cell therapy that is phase 3 ready. D-Fi, which has FDA orphan drug designation, targets a disease called dystrophic epidermolysis bullosa or DEB for short. DEB is a devastating and debilitating rare inherited skin disease. DEB is caused by mutations in the COL7A1 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 D-Fi receive regulatory approval. In May 2023, the DEB landscape changed with the approval of Krystal Biotech's Vyjuvek, a topical HSV vector-based gene therapy administered weekly by healthcare providers in patients' homes. Vyjuvek’s approval marked a major breakthrough for DEB patients. 2024 U.S. sales were nearly $300 million and peak global sales are projected over $1 billion. While Vyjuvek 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 DEB community still eager for additional innovative solutions. The D-Fi 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 Castle 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 de-risk therapies. By partnering on D-Fi's development, we not only expand our diversified portfolio of potential revenue generating assets, but also make a significant stride towards transforming the lives of patients suffering from DEB. Ligand is excited to welcome this promising late stage clinical royalty investment to our portfolio. Ligand’s investment pipeline remains strong as we continue to evaluate multiple proprietary opportunities like D-Fi that cannot be accessed through the public markets. With that, I'll turn the call over to Tavo.

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 Pelthos 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% [indiscernible] from $85 million in 2023, primarily driven by Filspari and Qarziba, which we acquired through the recent Apeiron acquisition in July of 2024. Travere ended 2024 on a strong note with total Filspari sales of $132 million generating approximately 12 million in royalty proceeds for Ligand. We expect Filspari to be a key [indiscernible] driver of royalty revenue growth and anticipate that 2025 royalties from Filspari will approximately double compared to 2024 levels. Other key contributors to our 2024 revenue include the Captisol 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 Ohtuvayre. In 2023, contract revenue was 18 million largely from the approval of Travere’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 Pelthos 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 costs to incubate the Pelthos business to cease in 2025 upon the execution of a Pelthos strategic transaction. GAAP net loss in 2024 was 4 million or $0.22 per share versus GAAP net income of 53.8 million or $3.03 per diluted share in 2023. The decline in GAAP 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 Q4 2024 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 Qarziba. Total operating expenses increased compared to the prior year's quarter due to higher headcount related costs, increased stock-based compensation, and continued investment in the Pelthos business. GAAP net loss for Q4 2024 was 31.1 million or $1.64 per share compared to GAAP net income of 18.2 million or $1.03 per diluted share in Q4 2023. 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 Q4 2024 was 25.2 million or $1.27 per share compared to 18.6 million or $1.05 per share in Q4 2023. 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. Captisol 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 31, 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, Tavo. I'm pleased to provide some important updates on Ligand's portfolio. 2024 was a year of significant achievement across our partner programs with the approval of four products, Verona's Ohtuvayre, Merck's Capvaxive, Pelthos’

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, formed the foundation of our growing success. On its own, the commercial portfolio should drive growth in the mid-teens through the early 20s and 30s. When you add our development stage portfolio, including but not limited to Palvella’s Qtorin MLM asset, Travere's FSGS SNDA submission, and our recent investment in D-Fi, 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.

[Operator Instructions] Your first question comes from the line of Matt Hewitt from Craig-Hallum. Your line is open.

Good morning. Congratulations on the strong year and looking forward to another strong year in 2025. 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 does the risk profile change for that type of a program versus maybe a large or small molecule, any color on that, please?

Yeah, so great question. This is Paul Hadden. I think you are correct it is our first cell and gene therapy. We're excited about the program. It's a very focused program. It's de-risked in the sense that the target going after is already established with the approved Krystal Biotech product. 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 Captisol, and this is maybe two parts, but the SQ Innovation, Lasix, with that launch potentially coming later this year, is that a big user of Captisol? I'm trying to think of magnitude what that could mean for your Captisol sales. Obviously, there was a nice step up with your 2025 guidance for that segment to begin with on the Gilead news, but would this create another potential step-up later this year into fiscal 2026?

Hey Matt, Tavo here. Yeah, so first of all we're looking forward to that eventual approval later in 2025, and just as a reminder to our audience, we are doing relatively modest milestones and royalties on that product, but then again to your question, we will be selling material Captisol 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 more in the minor contributor.

Got it. All right, thank you very much.

Your next question comes from line of Joseph Pantginis from HC Wainwright. Your line is open.

Everybody, good morning. Thanks for taking the question. So very nice with the D-Fi 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's certain size limitations that we want to observe so that we can create 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 D-Fi, 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 got 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?

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 any real plans to use the capital to buy back stock today. The particular asset that's with Takeda, they discontinued that and so we did have an asset balance carrying value on the balance sheet that we wrote off in Q4.

Great, thank you.

Your next question comes from the line of Douglas Miehm from RBC Capital Markets. Your line is open.

Yeah, thank you. The first question just has to do with the D-Fi deal. I know that you expect this to be used in combination therapy, but perhaps you could walk us through how you see it being used that way, given that we do already have that Krystal product on the market today.

Hi Doug. This is Paul again. Great question. First, I think there's a couple of important points to note. I think the D-Fi product is an injectable product. Krystal's product is a topical product. So you can imagine that from a patient perspective, you have these breaks in the skin in different places, 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 Krystal product is weekly. We expect the D-Fi product to be much less than that. And then additionally, the surface area that you're allowed to treat in any given treatment course could also be different. So those coupled together, you can see how these products will be complimentary, and so from that perspective, we envision that it would be a welcome addition if it's approved.

Okay, excellent. Second question is just have to do with the potential deals that you're working on, maybe Todd, you could speak to in 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, and I'll leave it there.

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 Pelthos 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,

Great. Thank you.

Your next question comes from the line of Trevor Allred from Oppenheimer. Your line is open.

Hey, good morning, everybody. My congrats on the great quarter as well. Just looking for some additional color around D-Fi. 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 it's a cell therapy, are you expecting any limitations to scale?

Yeah, Trevor it’s Paul again. Great question. Estimates in the U.S. are 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-degree and third-degree burns on these patients. So, they are readily identifiable, especially in the severe 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 get comfortable around an investment from the multitude of areas where you do M&A level due diligence. So hopefully that answers your questions, but if I missed anything, just please let me know.

Yeah, that's helpful. Can you also give us a sense of how much revenue Vyjuvek is generating, and any potential population differences between the two of those?

Yes, I think Vyjuvek 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 D-Fi could do, and so from that perspective, we're pretty bullish about the opportunity overall.

Okay, great. Thanks for taking the questions.

Your next question comes from the line of Balaji Prasad from Barclays. Your line is open.

Good morning. This is [indiscernible] for Balaji. Thanks for taking our questions. So just a quick one on Ohtuvayre. 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 [indiscernible] growth and your view of the overall maintenance therapy for COPD and what is your view of impact of the overall COPD market in the times of biologic entrance such as Dupixent.

Yeah, this is Lauren Hay. We're really pleased to see the very early success of Ohtuvayre, 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, January 1st, so that should further catalyze, a strong first quarter of sales in our view. As I shared during my prepared remarks, the COPD market 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 for Verona. They've shared that about half of the treated population at this point has been on triple therapy LAMA LABA ICS, so if you look kind of the total addressable population, it's much larger than the eligible population for Dupixent, and they probably kind of target a different type of patient, so we continue to be very optimistic about the launch, Verona is 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 Solow from CJS Securities. Your line is open.

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

Yeah, like we said previously at Investor Day 2024 was a year of investment largely in building up the business development team and extending up our Boston office there, we closed out the year with approximately $38 million in cash operating expenses, and going into 2025, we're, growing that 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.

And it sounds like the final opportunities continues to expand Todd. I know you don't time exactly how much you're going to spend per year. Of course it's more opportunistic, but it doesn't feel like there's any hesitancy there. It sounds like we could have another big year after 2024.

Larry I think that's right. 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 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.

Got you. And just last follow up, just on

Yeah, I can only go into a certain level of detail right now Larry. However, yes, we have, as you know, we've put the brains of a commercial operation in place with the head of marketing, potential CEO, etc. 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 or 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.

Got it, great. Thanks, Todd. I appreciate that color.

The next question comes from the line of John Vandermosten from

Thank you and good morning. Regarding D-Fi and Castle Creek, does the opportunity here assume similar pricing and penetration as Vyjuvek 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 from my earlier comments, there is some opportunity to be complimentary 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 Ligand?

Hey John, I'll take that one. This is Tavo here. So, it's a two-year termination term. We don't expect to have a material impact for 2025. The generic implication 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 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, and on your opportunity set, I seem to remember one of the events that 200 opportunities were mentioned, I guess they're waiting to be acted upon. How much that changed in terms of new additions and then ones that you said will pass out. 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 had given that number.

Go ahead, Paul.

Yeah, it's a great question John. I would say that we've seen an uptick in our pipeline. There is some week-to-week and month-to-month churn to Todd's earlier point, 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 this call is evidence of being off to a good start, if you will, so we're excited.

Okay, thank you.