Good morning and welcome to Ligand's 2024 Investor Day. For those of you I haven't met, I'm Melanie Herman, Head of Investor Relations at Ligand. On behalf of our entire team, we're so pleased that you could join us both in person and virtually via webcast. Before we begin today's presentation, I'd like to touch on a few logistical points. There will be a Q&A session after the conclusion of the formal presentation. For those of you listening in via webcast, you can submit your questions in the online call manager. Today we'll be using non-GAAP financial measures, and some of the statements will be forward-looking regarding our financial results and other matters related to our business. Please refer to the Safe Harbor statement related in the forward-looking statements, which are subject to risks and uncertainties.
We remind you that actual events or results may differ materially from those projected and discussed, and that all forward-looking statements are based upon current available information. Ligand assumes no obligation to update these statements. And finally, for those of you who are in person with us today, we hope you'll join us for lunch immediately following today's presentation. And with that, I'd like to welcome Todd Davis, CEO, to the podium.
Thank you, Melanie. I appreciate that. As we begin today, I would just like to introduce a few people in the room. We have four of our board members in the front row here: Dr. John LaMattina, Dr. John Kozarich, Dr. Martine Zimmermann, and Dr. Stephen Sabba. We do have a lot of prowess on the board. We're going to begin today with a quiz. Which of these two board members were roommates in college? Yeah, you guessed it. The two gentlemen on the right, my right. But thank you. A little over two years ago, our board convened, did a very significant strategic review, thought very critically about the progress we'd made over the last many years. Our stock had been flat for several years, despite what we thought were some value-building steps in various platforms that we owned, and they decided to make some pretty bold changes.
I came off the board to be the CEO. We spun out the OmniAb business, which was our antibody platform and now, of course, trades as a separate public company. And then subsequently, we spun out our protein expression system into a new private company called Primrose Bio. We went from almost 200 employees down to the mid-30s, and OpEx came down from about $92 million to also mid-$30 millions. And that was while we added in significant members to the deal team with very senior level experience in terms of royalty finance, other forms of finance, debt finance, company formation, et cetera. And so today we have a team that I believe is at scale. Of course, we will continue to tweak it. And in the spirit of continuous improvement, we'll always make adjustments here and there.
But with the team that we have today, I believe we can grow the company to significant multiples of its current size in terms of the financial size. So we're very optimistic about the future and how we've set the company up. And I appreciate really the bold nature of the board in making these changes. That's not always easy to do, and you actually rarely see it done by the people that really created the company as it was, because we've been on the board for a while. So I think bravo zulu, in my view, to the board. The results are starting to show. I think we've had two years of successive growth. Just this year, we've had 27% growth of the royalty revenue and 38% growth on the core adjusted earnings. So this growth we expect to continue for some time.
Of course, it won't be a straight line, but we do think we're diversified enough where we're going to have a very predictable overall growth in the future. Today, Tavo will be covering those financials. I better get my glasses out here. I won't be able to read my notes. He's also going to provide 2025 guidance and update the five-year model, which we have in the presentation as well. Paul Hadden is our Head of Investments and Business Development. He'll be covering recent deal activity, some of which is already public, as well as the activity within the pipeline. I think needless to say, I think Paul, the investment team, really the company's had a banner year on the deal front with eight new deals and multiple new royalty shots on goal, some commercial, some late-stage development, but really is executing, in my view, in stride.
Lauren Hay [leads/oversees] a more proactive portfolio system, of course, of the team are on point for key partnerships. And I think we're already seeing the fruits of that labor in terms of follow-on deals with partners, new opportunities arising, and follow-on investments in key partners as well. And we've also beefed up the commercial presence by adding in licensing executives who's in the audience today, Ben, over here. And then finally, Rich Baxter will give us an update on our efforts with ZELSUVMI. Am I cutting out? Yep, thanks. Rich Baxter will give us an update on our efforts with ZELSUVMI. ZELSUVMI is the first asset out of our NITRICIL platform. You may recall in 2023 we purchased a set of assets out of the Novan bankruptcy in a 363 process. We now have a NITRICIL platform.
Subsequently, just a few months later, we got the first approval with ZELSUVMI. They've been working hard to set that up for a launch, including the manufacturing efforts required to make sure we have launch supplies, and working on a partnership for sales and marketing partnership to actually launch the product. And Rich will give you a robust update on that. So today, Ligand, we've really positioned it well, I think, for accelerating growth. We already have a broad portfolio, but as you know, this year we received multiple product approvals out of the portfolio, including Ohtuvayre, CAPVAXIVE. We've added QARZIBA into the portfolio. In 2025, we expect ZELSUVMI to launch in the first half of 2025 once we consummate our sales and marketing partnership. And we're up now to 12 major commercial stage products that will be driving our growth. So that's a very good position to be in.
This will continue to diversify methodically over time, but right now I think we've really reached critical mass in terms of this growth trajectory and its reliability, which is really what the diversity creates. As I mentioned earlier, I think our team is at scale and we can continue to invest and grow this for some time to come. 2024 has been a great year in terms of growth, company performance, but we really feel like we're just getting started. Just to quickly review, since the main thrust of our strategic efforts are to aggregate, collect, create royalties, et cetera, I wanted to just mention some of the unique characteristics and benefits of royalty investing. One of those is royalties are non-dilutable. Anybody that's been in the biotech universe for years knows there are many twists and turns to product development. It is a risky venture.
Sometimes second trials need to be run. Additional capital needs to be raised. So having a non-dilutable instrument in a product is a real benefit. There are also a percentage of net sales, so not subject to the OpEx fluctuations and risk that come with the efforts to launch these assets. They can have special protection in bankruptcy under our current bankruptcy codes under western law in the U.S. and Europe. And really importantly, pharmaceutical royalties, if you do the analysis, are uncorrelated to the capital markets. So our cash flows, our stock will do whatever it does, but our cash flows and profitabilities should be relatively steady even in the face of volatile capital markets and macro events that can occur. All of this leads really to our business model advantages, which is with a very small infrastructure, we can create a very significant business that's also quite diversified.
One of the keys here is we can dial in our level of allocation on various assets and the amount of risk we take so we can really build a diversified portfolio. We need the traditional biotech companies, of course. Those are our key partners. Palvella's in the room today, by the way. Matt Korenberg is the new CFO. Palvella, we're happy to have kept him in the circle. And we're very optimistic about that company, which we'll be covering today. But the traditional biotech companies, of course, have to make significant concentrated bets in clinical development infrastructure, sales and marketing infrastructure, manufacturing infrastructure, et cetera. And our model, for the most part, can avoid that.
There are many different tactics in terms of how we can aggregate these royalties, which is why your team has to be very facile and have real breadth in terms of their knowledge, their knowledge of our partners' capital structures, and their understanding of the incentives that, for example, can occur or incentive misalignment that can occur in private companies with various stacks of preferred. They need to understand, of course, public equities, debt. They really need to understand royalty finance. And a key distinguishing factor of our royalty aggregation model is that we have an operating component, and that really enables us on the M&A front to go in, acquire entire companies, restructure them, and APEIRON is a good example of that.
Project finance is another approach that we use, and that's simply when we'll approach companies that have assets that we've identified that we like that fit our criteria, which Paul will be covering, and instead of them offering debt securities or equity securities to raise the capital they want, we can provide capital, and we will write a royalty contract in lieu of those securities. And then finally, our last methodology here is, of course, execution around our platforms. That's plural now because we have the Captisol platform, which Karen is now overseeing and driving, but also we have the NITRICIL platform. And as I mentioned, we're just getting started there, but we believe that that platform could result in several additional royalties, even though ZELSUVMI on its own will result in a very good return on investment.
This approach requires, as I mentioned, a team with breadth and very complementary skills, and that's what we've tried to build here. If you look at the investment team here, they have billions of dollars of experience in royalty finance, debt transaction, company formation, startups, and you need to do a little bit of all of that. In fact, as you know, we originated and started Viking Therapeutics many years ago. That's the same thing we're doing with Pelthos Therapeutics now as we explore commercialization approaches for that product. And so the deal team brings a lot to the table, but we have an equivalent level of expertise on the operating side where we've had people bring and shepherd multiple products through the development pathways, the regulatory hurdles to approvals, and know how to run broader operations in pharmaceuticals.
So I think this team is unique and that we're well positioned, again, to grow going forward. So how big could this be if we continue to grow? And I don't have a precise number, but it's big. If you look at the total financing markets, tens of billions of dollars a year go into investing in the development of pharmaceutical products. Most of that's equity. A significant portion can be debt, but royalty finance holistically is less than 5% of that. And we are a very small percentage of the royalty finance bucket. And that's because the significant majority of royalty finance is focused on commercial stage royalty monetizations. There are very few people that are doing the types of deals we're doing focused on late-stage development, M&A approaches, et cetera, because we have the operating expertise to do that.
That allows us to really point the origination machine towards what we view as to be the most and the best opportunities in the class. As a result of that, we believe we're making significant progress, and that's demonstrated in results already. As people in this room know, for the most part, we've raised guidance twice this year. We're not sandbagging, but I do think that when we do our forecasts, we try to be reasonably conservative and identify what we think we can count on, essentially. But there is a lot of upside in our portfolios, of course, and positive things can happen. There's still a little bit of chunkiness in our business in terms of milestones and things like that that can occur. That's how we think about it. This year, the growth trajectory has been great.
We also are deriving a lot of opportunities from our active portfolio management, which is good, including follow-ons in Palvella, the ZELSUVMI activity. We've rolled up a significant additional royalty interest in Ohtuvayre with Paul's group as it approached approval. We've added a lot of value through this kind of proactive management that we have implemented. We have a very focused investment approach that has resulted in approximately eight deals this year. Again, I think we're very happy with the results. Numerically, you can kind of see what's happened over the last couple of years. Over the last two years in the timeframe we just discussed this morning, royalty revenues are up 43%. The OpEx is down about 50%. Our EPS is up about 2.25x of where we were in 2022.
But our lens, really, even though those are good short-term results, our lens is really focused on the longer term as we look at these deals and how we're going to impact this growth trajectory curve, which we actually use as an internal planning tool. And we continue to expect through this model that our royalty receipts will grow in excess of 20% or in excess of 22% a year. And that is really a proxy for profitability, which should grow commensurate with that. Tavo will cover this slide in detail, but just the commercial portion of our portfolio will provide 13% of this growth. A subset of our development stage partnerships have been taken. We've applied pretty significant discounts to that, and we believe that that will deliver 5% of this growth. And the new deal activity that lies in front of us, we believe, can contribute 4%.
With that, I'll ask Tavo to please provide a financial update.
Do I need this mic? Do I need to keep the mic? No, I'm good. Here you go . Good morning, everybody. I'm Tavo Espinoza. Good to see so many familiar faces here today. And also thank you for those that are joining us online. So today, I will be providing you with a financial update, including our liquidity and sources of investable capital. I'll also briefly review our 2024 performance, introduce guidance for 2025, and I'll also take a deeper look into our long-term financial outlook through 2029 that Todd just previewed there. Okay, so starting with our 2024 financial performance, as you may have seen earlier today, we are reiterating the financial guidance that we provided at our third quarter earnings release in early November. We expect total revenue of approximately $165 million.
On the bottom line, we expect adjusted core earnings to come in between $5.50 and $5.70 per share. In summary, 2024 has been a year of strong growth, highlighted by a 27% increase in royalty revenue and a 38% rise in adjusted core EPS. Key drivers included strong performance from several contributors, including KYPROLIS, QARZIBA, and FILSPARI. Another contributor to our profitability in 2024 is our lean corporate cost structure, which is reflected in the total cash operating expenses of $35 million. As a reminder, we do like to focus our investors on our core business, and as a result, we exclude certain non-core costs associated with incubating the Pelthos business and gains associated with the sales of Viking Therapeutics stock, among other items that we reconcile in our GAAP to non-GAAP disclosures.
Moving on to the next slide here, we've had several positive developments in 2024 that provide strong momentum as we head into 2025. You'll hear more about these from my colleagues, but let me highlight just some of them here. Starting in 2025, we will continue to supply Gilead with Captisol materials to support the restocking of Veklury, the antiviral treatment for COVID-19. As a reminder, from 2020 to 2022, we generated over $300 million in Captisol sales related to COVID-19. While the pandemic is largely behind us, Veklury remains an important treatment protocol for COVID patients. Gilead's third quarter Veklury sales grew 9% year- over- year, and 2024 annual sales are projected to reach $1.8 billion. We expect sales of Captisol to Gilead to be part of our recurring commercial business going forward. Travere's FILSPARI is another significant growth driver.
It received full FDA approval and label expansion in the third quarter. Sales are expected to double to $230 million in 2025, with Ligand earning a 9% royalty. Additionally, there's potential for longer-term growth through indication expansion into FSGS, which Lauren will cover in more detail. The acquisition of QARZIBA earlier this year is also a strong contributor. It's expected to add a dollar in EPS annually with an incremental $0.50 in 2025, as we held the product for only half of 2024. Finally, Lauren will cover this in more detail, but I do want to highlight that we're very pleased with the approvals of Ohtuvayre and CAPVAXIVE and their contribution to 2025 and also the upside potential in subsequent years. Okay, so now looking ahead, we do project total revenue to grow 17% to $180 million-$200 million in 2025.
We expect royalty revenue to grow by 30% to approximately $140 million, driven in part by an expected increase in sales of FILSPARI. We expect Captisol material sales to be between $35 million and $40 million, and that's driven in part by the demand from Gilead that I mentioned a bit ago. As a side note, we do expect that orders from Gilead will bolster our recurring Captisol material sales beyond 2025. Additionally, we've guided contract revenue to be in the range of $10 million-$20 million, which includes a $10 million milestone tied to the initiation of phase three trials for Viking's NASH program VK2809. As I mentioned, we do expect total revenue to grow to approximately $200 million. On the bottom line, we're forecasting adjusted net income to come in at approximately $120 million, resulting in adjusted EPS for 2025 of $6-$6.25.
Just a few items to highlight here. We do expect core operating expenses to increase to just under $40 million, due in large part to capturing the full year of investments that we've made to build up the business development and investment team. I also want to point out that we expect other income to decline. That's primarily due to a lower interest rate environment coupled with an expected lower average cash balance as we continue to deploy our cash on high-value royalty assets. And then finally, adjusted EPS will be affected by an increase in outstanding shares, primarily due to the impact of a higher stock price on our diluted share count. A higher stock price means more stock options are in the money, which increases the number of shares included in the fully diluted shares outstanding calculation.
Now I'll move a bit into our longer-term outlook, which builds on the projections that we first introduced last year at Investor Day. This year, we are extending our view out to 2029, maintaining our expectation of a compound annual growth rate exceeding 20% for total royalty receipts. I'd like to just share some of the key assumptions that inform this updated chart. The top layer on the chart labeled Future Investments represents royalty receipts that we expect to generate from new acquisitions over the next few years. These investments will be funded through cash generated from operations and our existing cash and investments. The next layer labeled Farm Team includes programs in development that we've incorporated on a risk-adjusted basis. These programs include the ones listed in the third bullet point, and notably, we've now included FILSPARI for FSGS and Verona's development stage Ohtuvayre programs on a risk-adjusted basis.
The light blue layer reflects the assumptions for FILSPARI‘s contributions, specifically for IgAN. For 2029, we've modeled the lower end of consensus sales estimates at $575 million, which translates to over $50 million in royalty revenue for Ligand in that outer year. And then finally, we've accounted for Amgen's settlement, allowing generic Kyprolis to enter the market in late 2027, with KYPROLIS sales peaking in that year. Finally, before I turn it over to Paul, who will cover our investment activity, I just want to quickly share our sources and uses of cash and available capital. This slide shows that we started the year with $170 million and ended the third quarter with $220 million in cash and investments. Additionally, we have $125 million available through our credit facility, which is expandable to $175 million, giving us approximately $350 million of available capital to invest.
We feel that this strong financial position will allow us to execute on our strategy of acquiring high-value royalty assets over the foreseeable future. With that, I'll turn it over to Paul, who will cover in more detail how we plan to put this capital to work.
Thank you, Tavo. I'm Paul Hadden, Senior Vice President of Investments and Business Development. Welcome. I'm looking forward to spending the next few minutes discussing some of our 2024 activities. At last year's Investor Day, we said we were cautiously optimistic that 2024 would be an exciting year, and it was. We've been building, building our team, building out our office footprint and our royalty portfolio. Our full-time office in Boston came online this past spring, as did our office in Jupiter, Florida. Our investment team now stands at 12 team members, the bulk of which are in Boston full-time.
We deployed nearly $200 million across eight individual transactions, and Lauren's going to touch on some of those in detail. Just taking a step back, we're very proud of the accomplishments of this team and our entire organization. They've been hard at work, and the results show. Origination is one of the key pillars of our investment team. That stems from the deep industry relationships our team has built up over decades, as well as our awareness of where to look for these royalty opportunities and how to create them. We talked last year about looking for royalty opportunities in different pools, and our results this year show that. Today, we have a seasoned team with decades of investing experience across royalties, private equity, and special situations. We also have experience across clinical development and regulatory affairs, licensing, technology transfer, and operating company capabilities.
As Tavo mentioned, we have an operating company in our Captisol business, but we also have individuals who have been in operating companies, both large and small. That allows us to bring a different lens to each transaction or acquisition. It's part of what differentiates us at Ligand. Investment criteria. Lauren talked about this last year, but we are looking for near-term cash-flowing investments. Some of the investments we made this year were still in clinical development, such as Agenus. Others were nearing approval or recently approved, like Ohtuvayre. Additionally, transactions like APEIRON were cash-flowing and immediately accretive. These types of investments represent the spectrum of where you'll see us spending our time. We also look for strong clinical differentiation because we know over time that leads to better market adoption and also market access and reimbursement.
Long exclusivity is also a hallmark as we look to build our EPS into the next decade and certainly structural alignment with counterparties where we want to remain aligned for the duration of our investment. We feel that if we line up all these criteria, that leads to a good risk-adjusted reward profile, both on an asset-by-asset basis, but also on a portfolio basis. Diligence. Our underwriting process is rigorous. As Tavo mentioned, we have team members who have been involved in several billions of dollars of transactions over their careers across different platforms and operating companies. Now under one roof, we're leveraging that combined experience base to build best-in-class underwriting capabilities. We feel we're off to a great start, but we can always improve. When investing in biopharma, where science is continually changing, it's incumbent upon us to build continuous learning into our process.
We have to always challenge ourselves to get better and better. Our team is strong internally, and we have very good advisors surrounding us. 2024 was a very productive year. We reviewed over 200 individual investments. We signed 50 CDAs, or about one a week, and we closed eight individual transactions. But rather than focus on the numbers, let us look at some of the qualitative drivers of the pipeline in terms of the top of the funnel. Over the past two years, we've been building a proprietary database of royalty opportunities, which now allow us to monitor hundreds of opportunities. We've done this through reverse engineering of scientific and patent information, human intelligence and analytics, and we now have a renewable and renewing source of pipeline opportunities. That's one illustration of the way that we're taking origination to a different level. Our 2024 investments.
This past year, we showed activity across all the different avenues that we pursue royalties. APEIRON was an exciting one. It was immediately accretive. It had a global partner and growth into the next decade. The Ohtuvayre transactions were also interesting as they represent near-term growing cash flow. 2024 is likely to see a similar mix of investing style and types of investments. As we close out 2024, our pipeline is robust and diverse. It represents over 30 individual opportunities and over $1 billion of investable capital. We have multiple therapeutic areas represented in that pipeline across both pre-approval and approved assets. Having just returned from a large healthcare conference in London, our team is gearing up for another large healthcare conference in San Francisco in January. We want to thank our investors for their support, and we're looking forward to another great year in 2025.
With that, I'll turn it over to Lauren, who will talk about our portfolio.
Thanks, Paul. Good morning, everyone. My name is Lauren Hay, and I'm the VP of Strategic Planning and Investment Analytics at Ligand. I'm pleased to join you this morning to provide some updates on our portfolio. First, I'm going to go through the new portfolio management system we put into place at Ligand this year, and then next, I'm going to review program updates on five of our key partnered programs. These include QARZIBA, Ohtuvayre, FILSPARI, CAPVAXIVE, and PTX-022, so first, as Tavo alluded to in his remarks, one of our key objectives for 2024 was to put into place a more robust portfolio management system around the more than 90 partnered programs we have at Ligand. We had four key objectives here.
First, we wanted to ensure that we're tracking sales and royalty information on a more systematic basis to ensure that the incoming receipts captured our view of the prospective forecast. Second, we wanted to ensure that we're disseminating information about recent product updates and future upcoming catalysts across our investment team. Third, we wanted to identify opportunities to more proactively communicate with our partners, and we're using major conferences like JP Morgan and BIO to do this. And then finally, we wanted to look for opportunities to expand collaborations with existing partners, and we've had several successful examples of that this year. So I'm pleased to share that the portfolio management system is up and running. We're meeting on a quarterly basis for a half-day session, and it's been a great addition to our systems this year. So next, I'll go into some product updates. First, on QARZIBA.
QARZIBA was approved in 2017 ex-U.S. for the treatment of high-risk pediatric neuroblastoma. This is a rare childhood cancer and is absolutely devastating for the young patients and their families. We earn a mid-teen tiered royalty on the sales of QARZIBA as a result of the acquisition that we did earlier this year of APEIRON Biologics, a private Austrian biotech company for $100 million. Our partner here is Recordati, and while they do not publicly disclose the sales of QARZIBA, they have shared publicly that for the first nine months of this year, sales in their oncology franchise, which predominantly comprised QARZIBA and one other product, were EUR 176 million, up 17% year -over -year. This shows the consistent growth in QARZIBA moving forward. QARZIBA, I think, is a great example of an investment at Ligand that meets all of our investment criteria.
First, because the product is already approved, the royalty receipts are immediately accretive to Ligand's EPS at the rate of approximately $1 per share beginning in 2025, the first year we will have a full calendar year of royalty receipts. Second, because the product has been on the market for a couple of years, it's very well entrenched in clinical practice and supported by treatment guidelines around the globe. Third, we have a really strong marketing partner here in Recordati Rare Diseases. They have the drug now approved in over 35 countries, having acquired it from EUSA Pharma a couple of years ago. They're also continuing to expand the geographic footprint for QARZIBA, as evidenced by the recent approval that they achieved in South Korea, a key pharma market earlier this year, and we congratulate Recordati on this success. Additionally, Recordati is continuing to invest in seeking U.S.
approval for QARZIBA. This would be in the relapse refractory setting, and Recordati has guided to this being a potential $30 million incremental opportunity for QARZIBA. They've shared that they will provide an update on next steps after ongoing interaction with FDA sometime towards the middle of next year, and we look forward to this. Next, moving to Ohtuvayre. Ohtuvayre was approved in June of this year for the treatment of maintenance of COPD. We earn approximately a 3% royalty on the sales of Ohtuvayre, which we acquired through two different avenues. First was the 2018 acquisition of Vernalis, and then over the past year, we've acquired royalties from several different Ohtuvayre inventors implementing our portfolio management system more proactively. Verona Pharma, our partner on this asset, is off to a great start and had a very strong first quarter of launch.
They reported that just for seven weeks of Q3, the sales of Ohtuvayre were $5.6 million, and for October, the sales surpassed the entirety of Q3 combined. So Verona's off to a great start. We're excited to see what 2025 holds in store, and we congratulate them on this landmark approval. Ohtuvayre has a really compelling value proposition. It's the first novel inhaled treatment for COPD in over 20 years. The COPD market is enormous. Verona estimates there are approximately 8.6 million treated maintenance patients in the U.S. today, over half of whom remain symptomatic despite treatment. They've also guided to the fact that for every one percentage point market share that Ohtuvayre attains, they believe this will translate into over $1 billion in sales. So clearly, this is a blockbuster opportunity.
Additionally, if Ohtuvayre gains just 3% share, it will become our largest royalty contributor in our portfolio, likely surpassing FILSPARI in several years' time. Verona also has several tailwinds propelling them into 2025. First, they were recently added to the gold treatment guidelines. Second, they're expecting a permanent J code in January of next year. Third, they've guided to a potential ex-U.S. partnership sometime during the next year. And then finally, there are several indications in mid-stage development which could further expand the opportunity for Ohtuvayre. So this has been a really exciting year for us and obviously our partner Verona Pharma, and we're really excited about what the future launch holds in store. Next, moving on to Travere's FILSPARI. FILSPARI is approved to treat IgA Nephropathy, and Travere, our partner here, is also working on gaining approval in FSGS.
Both IgAN and FSGS are rare progressive serious kidney diseases with few, if any, approved treatment options. We earn a 9% royalty on sales of FILSPARI as a result of the Pharmacopoeia acquisition. Travere's done a tremendous job launching this drug, as we've seen in the recent quarterly sales. There have been major catalysts this year in terms of both IgAN and FSGS. On the IgAN side, Travere received accelerated approval early last year, and this was converted into a full approval in September. With this full approval came an important indication expansion for FILSPARI. Travere estimates that this indication expansion grew the total eligible population from 30,000 to 50,000 to over 70,000 patients just in the U.S. They are expecting a potential sNDA approval for modification to the REMS protocol sometime next year and will be monitoring that.
They were incorporated into the draft KDIGO guidelines earlier this year and in conjunction with partner CSL Vifor for a secured conditional marketing authorization in the EU. On the FSGS side, there's been a really dramatic shift in momentum around the potential approval for FILSPARI. Importantly, there was a PARASOL working group meeting this fall, which we attended in person, where there was discussion around redefining the endpoint used for FILSPARI to proteinuria. We were really encouraged by this change in view. As you'll recall, the PARASOL Group is comprised of stakeholder organizations like NephCure, FDA, KOLs, and other patient clinical and scientific organizations. Travere has guided to the next step being a communication with FDA and then plan to share that publicly early next year, and that'll be an important catalyst for us in 2025. Next, moving on to Merck's CAPVAXIVE.
CAPVAXIVE is a 21-valent pneumococcal vaccine that's been designed specifically for adults. It was approved in this year in June, and we receive a low single-digit royalty based on our Pfenex or Pelican acquisition. CAPVAXIVE has a pretty unique value proposition as well. Because it was designed specifically for adults, it covers serotypes responsible for 84% of invasive pneumococcal disease versus other vaccines available, which cover serotypes responsible for just 52% of invasive disease. Merck is really optimistic about the trajectory for CAPVAXIVE, and they've stated that they expect majority market share in the adult setting. As I mentioned, the vaccine was approved in June of this year and recommended for use in all adults aged 65 and over. Then just four months later, CDC expanded its age-based guidelines to all adults aged 50 and over.
Some analysts estimate that this could potentially double the size of the adult pneumococcal vaccine population. So we're excited to see how the sales transpire in the launch in the coming quarters, and then finally, we wanted to highlight one of our key pipeline programs. This is Palvella’s PTX-022, or QTORIN rapamycin. This product is in phase III development for the treatment of microcystic lymphatic malformations and in phase III for venous malformations. Both of these are rare dermatological conditions for which there are no FDA-approved treatments. We earn an 8%-9.8% tiered royalty on the potential sales of PTX-022 as a result of a total of $17 million invested over several investments the last few years, including project finance and other investments. Palvella also has really strong momentum heading into 2025. They received breakthrough therapy designation for the MLM program.
They have a planned merger with Pieris Pharmaceuticals with an $80 million oversubscribed pipe led by BVF and Frazier, and they recently dosed the first patient in the phase III pivotal MLM trial, so we're excited about this program. It's one of our key portfolio assets, and we look forward to the data, which we're expecting currently in early 2026, so as you can see, we've had a big year at Ligand across our portfolio. We believe that we're really optimistic about what the next year holds for these assets, and with that, I will turn it over to Dr. Karen Reeves and Rich Baxter to provide some technology updates.
Thank you, Lauren. Hello. Welcome, everyone, to Investor Day. I'm Karen Reeves, Senior Vice President Investments and Head Clinical Strategy and Captisol GM. At the foundation of Ligand's Captisol IP enabling platform technology is Captisol, a solvent-free, patent-protected cyclodextrin. Captisol is designed to improve solubility, stability, and bioavailability, all important and enduring challenges of drug formulation development. Today, I'm excited to present a strategic focus update. Building on the Captisol success, Ligand is expanding the team. I've recently been appointed to head the organization, and we have hired Ben Perrone, an experienced BD scientist and finance professional. Captisol has well-protected IP, broad applicability, and is infrastructure light, meaning we outsource the manufacturing and have a backup facility. Our strategic focus is to leverage and expand our partnerships and licenses, advance marketing and outreach, pursue science, and explore opportunities.
Captisol is infrastructure light with six FTEs and approximately $5 million of annual operational spend. For applicability, more than 40% of small molecules have low solubility. Captisol has a recurring customer base generating material revenue as well as royalty interest in partnered programs from single-digit to low double-digit. There are 16 Captisol-enabled product approvals. The clinical and regulatory success and extensive safety database position Captisol for further growth. Both Captisol and the NITRICIL technology align with Ligand's business objective of generating profitable growth with light infrastructure. Here you can see on the left Captisol material sales for 2024 estimated at $28 million and projected to grow to an estimated $37.5 million in 2025. In 2024, we had 150 new research agreements that provide a funnel for potential future clinical programs. In 2024, we had seven license and supply agreements.
Turning now to the last slide, on the right, you can see the 16 approved Captisol products. Ligand continuously focuses on quality, reliability, customer service, and pursuit of opportunities. With that, I'd like to introduce Rich Baxter, who will speak about ZELSUVMI and the NITRICIL technology.
Hello, everyone. I'm Rich Baxter. I'm delighted to be here today to talk to you about our exciting progress with Pelthos. Now I got to advance the slide here about Pelthos, ZELSUVMI, and NITRICIL. We acquired Novan in a 363 restructuring. We acquired the substantial assets of Novan. We had a royalty at Novan. The company went bankrupt. We had to protect that asset. We executed a DIP financing, a 363 sale, restructured the company, and didn't just get the royalty, but we got the product, the company, the platform, and everything with it. ZELSUVMI is the first asset and right now the most important asset resulting from that acquisition. This is Nobel Prize-derived science. It's the first time that any company has achieved a topical application of nitric oxide for infectious skin diseases, and we got the product approved.
We're now making the product, and we're very excited about the progress that is before us with this asset. Most importantly, I think about this is it represents our philosophy of aggressive asset management, so we ran into a roadblock with Novan when we made a royalty into that company. The company went bankrupt. We stepped in and did a lot of work, very creative, very aggressive asset management, which is very important for our company to take care of our investors and our investors' capital and to get the money back and to get a return, and that's really what this investment and what this is all about, so turning to the lead product, ZELSUVMI. ZELSUVMI is an amazing product. It's a topical application of nitric oxide. It's for molluscum contagiosum, which is a pox virus. It afflicts 16.7 million people in the United States. That's the prevalence.
There are 6,000,000 infections every year as the incidence. It's primarily children, and I got to tell you, for anybody that's seen a pox virus on a child, it's a nasty, ugly lesion that can also provide lifetime pock marks and scars for that kid. This product was a novel product designated by the FDA, and it is truly, you talk to a dermatologist or a pediatrician or somebody that's had a child with this condition, they'll tell you it is a serious problem. Most people have this for 11 months, and it can go out to five years, so it's not a simple, easy fix. Ask any infectious disease doctor, and they'll tell you it's not good to leave a pox virus on a child for 24 months to five years, so commercially, what does this represent?
It's a $200 million product, is what we believe this product should be in the marketplace in terms of net sales. As I said, there are 17 million people with this infection in the United States. It's an evergreen. This infection will never go away. It's 6,000,000 people per year. We need to get 100,000 of these patients on this product to realize our $200 million forecast for this product. That's a 0.625% penetration of the people that have this infection. So it's not a lot of patients to achieve great results on a product that if we hadn't have gone through this 363 sale, this bankruptcy acquisition, we definitely would have taken a zero on that royalty. And as I said, that's not something that we want to do with our shareholders' money. So what have we done? Oops.
So what have we done since we got this product? Well, we bought it prior to FDA approval. So we got the product approved. In Q2, we established the company infrastructure. We got some very experienced, very good specialty pharma commercial people on board. We got a board of directors of luminaries, CEOs of very successful specialty pharma companies. Peter Greenleaf and Matt of Savara are two of the noteworthy examples. They saw this product and recognized immediately what its potential was. So we got the infrastructure and the company together. In Q3, we did all of the key things necessary to launch the product. We did the market research. We did extensive pricing, reimbursement, making sure we had a handle on how to price this and what the contracting strategy is going to be. We've reached out to the managed care plans. They know this is coming.
We did a very extensive brand plan for this product, which is critical. We did a forecast based on ICD-10 codes, very conservative forecast, and the real upside of this product is how do you go from the ICD-10 forecast and get into that 16.7 million people with the infection. Last but not least, actually probably most important, this company has a purpose-built, bespoke API manufacturing facility, unlike most specialty pharma companies because of the unique nature of this product. The company has to make it themselves. So we've got this manufacturing facility working. We got the supply chain, which is complex, operating. We've generated commercial quantities of product that's being delivered actually this month to get this company and to get this product to patients, and so very busy year, and we're very proud of what we've done with this company, and we're very excited about this product.
As Todd mentioned, we have a nitric oxide technology platform that we got as part of our efforts to restructure and acquire the assets of this company. Again, nobody in the pharmaceutical industry has taken nitric oxide and put it together with a vehicle for safe and efficacious application to the skin. That came out of this platform, validated that platform, and it fits all the criteria, very similar to what Karen mentioned for the Captisol technology, for what we're looking for in a platform. We got the product. We got a pipeline. This technology can basically be applied to any skin disease that has an infectious component. There's phase III data for things like genital warts, for acne, athlete's foot, anything where there's an infectious component, and the company did extensive work.
We're now turning our focus to commercializing that pipeline, and we're expecting there to be great things to come out of that pipeline, analogous and similar to the Captisol program that Karen alluded to. There's obviously broad applicability. The technology enables a lot of different products, and it's commercially validated. So with that, I'm going to turn it back over to Todd for closing remarks and questions and answers. Todd?
Thank you, Rich.
No, you can go. You're good though. Good job.
I'm happy.
Thank you.
Any questions?
No, I'm good, actually. I got a rough idea of what's going on there. Rich and I, Matt, we were frenemies. He had started the structured finance group for Fortress in healthcare, and I was a founding partner in Healthcare Royalty Partners, and we kind of competed against each other on a couple of deals, so.
It wasn't friendly.
Very good. Well, this work is not easy. There definitely will be some things that don't fit into the straight line, but we are highly optimistic. And for many reasons, we are optimistic. One, we are operating in a very large market, of which we are a very small piece. Two, that market is very inefficient. Three, the power of compounding. This business model in general should have a very good compounding effect. Also, four, we can approach this in a very diversified manner, which not every business model lends itself to. So those are big contributors as to why we are so optimistic about this model. And I think over time, methodically, we believe that we can create the growth in the five-year projections that we've laid out and well beyond that, in fact.
So with that, we're going to transition briefly to the question and answer period, and we're going to bring some chairs out here and take us about one minute to transition, and we'll open it up for Q&A. Thank you very much.
New shortage chair.
Yeah, we've got one over here.
It's like musical chairs. Shortage chair.
Thank you, everybody, for the details. Joe Pantginis, H.C. Wainwright. So first, a broader question for Todd and the team. While volatile, the equity markets for healthcare have been stabilizing a bit and somewhat improving, again, though volatile, how has that impacted your potential deal flow and creativity? And then I have a follow-up.
Yeah, I'll take that.
Yeah, great question. I think it hasn't really changed where we're focused. I think if you look at some of the acquisitions we've done this past year, the selling shareholders of Pyron don't care about the equity markets because they're a private company. Same with the investor base. So most of what we're doing going forward will be helped by the equity markets in terms of we need equity flowing into the markets eventually when you think about how much capital is required in the biopharma space. But in terms of where we're focused, it doesn't really change our strategy or our thinking. We're really focused on the long term and really focused on individual assets.
Got it. Thank you. And then maybe just a quick follow-up for Karen with regard to Captisol. You mentioned a backup facility. Is that an internal facility? I don't think so, but it's more of your external. And do you have any potential projections for you or the company about when you might need that facility to come online and what kind of capacity does it give to you?
Thank you for the question. Let me clarify. So the manufacturing is done in two separate facilities by the same organization. All of it outsourced. We're not building a manufacturing facility. So if something happened to one, they would be literally physically in another location, a manufacturing facility.
Yeah. Be able to compete, that is just as a backup.
Oh, I think the mother company may sometimes use one or both of them. It's not just as a backup.
All right. Matt Hewitt from Craig-Hallam. Maybe first up, I think you mentioned that you have 12 members of your investment committee that's meeting. At what point do you need to add to that team because the number of partnered programs becomes so great that monitoring all of them becomes a challenge?
To be clear, we do have an internal investment committee that makes all the final thumbs up, thumbs down decisions on an investment. They provide feedback along the way to the deal leads, but that's a three-member committee. I'm not sure where you picked up the 12, but there are three people on the investment committee. It is Rich, myself, and Paul Hadden, who have all sat on investment committees before and had that experience.
Got it. And then maybe separately, so obviously, 2024 has been a very successful year for you on multiple fronts. As you have success, do you anticipate that you'll start to see competition enter the market? And how do you maintain your edge and leadership even in the face of potential competition? Thank you.
Yeah, that's a great question, Matt. Yes, always. You expect competition. There's not zero competition now. There's a few other folks, roughly our size, that are out there and doing this. And the only way you can really manage that is to be the very best at what you do. We have to set a high bar. We have to hold ourselves to very high standards. This isn't easy to do. And there are, I think I can say, several people that have entered the royalty space and failed and later wound down or shut down. It takes a lot of expertise. That said, that doesn't mean there's some very smart people out there that could figure some of this out and do it. And it's just such a big market. The way I look at it is we have to be really good at what we do.
I just count on the fact that there will be other entrants. But it's like we're the third and they might be the fourth mid-market buyout fund in 1984. It's such a huge market that I think there'll be lots of opportunities, especially when you think about the different approaches that we use. At Pyron, people have looked at acquiring that royalty before. So why did we get the deal? It's because we were able to employ multiple tools in the toolkit and direct them in a way that served their company needs. One, those investors had been in a private company for 17 years and were looking for an exit. Had they sold the royalty, there would have been a corporate tax and then a distribution or dividend tax when they received their cash. So very tax inefficient. We bought all the shares of the company.
But we also served a subset of the investors and the management who were very interested in moving their three earlier stage oncology programs along. So Paul worked with them to make what for us was a relatively small commitment that we embedded in our overall investment calculations to a small spinout that's now moving those three compounds forward, and we have royalties in those three compounds. Those are riskier. We'll see how it unfolds. It's not in our forecasts, but neither was sparsentan or FILSPARI when we did that deal. So you just try to collect as many shots on goal as you can on these deals and create as much value as possible.
Hi. Annabel Samimy from Stifel. So I'm curious about the expectation for the types of deals that you're going to be doing going forward between the royalty, the M&A, and the structured deals. What does your capital structure allow? And how do you prioritize it when you think about either risk profile or operating expense going forward, for example, with structured deals?
Right. Yeah, that's a great question. The simplest deals conceptually to do and to manage from an infrastructure commitment perspective are probably the royalty monetizations because you're buying a passive royalty that an inventor, a company, or maybe a university has. And they're not that involved. There's de minimis contractual rights to influence the outcome. You're simply placing your bets on the future of that product. And there's less to do from a management perspective. Stepping up the food chain project finance, that's a contract you create. So the advantage of the project finance, sometimes called synthetic royalties, sometimes called royalty revenues, the advantage of the project finance approach is that you draft the contracts.
So the contracts are basically perfected, but they're highly negotiated, and you can have various aspects, diligence requirements, or even sometimes, although we look to back really good teams, so we don't need this, but on some issues that come up in contracts, you may want control provisions on certain things. So those take a little bit more proactive management. And then way up the scale are things where you step in and take control over operations. So that is the Novan situation around the NITRICIL platform. We look at those long and hard because they do absorb a significant portion of our resources and organization. You have to manage those resources on a transitionary basis, so you do have some OpEx exposure there. We're very aware of that, though, and we're managing these things as effectively as we possibly can to the right outcome and towards partnerships.
That one, just as an example, we felt was really worth it because we bought those assets out of the bankruptcy. We didn't actually buy the whole company, just to correct one thing we said, but we bought a subset of the assets out of that bankruptcy specifically because we got to review the PMA that the company had submitted to the FDA. It was already in front of the FDA. And so that's about the best information you can have when you're looking to monetize an unapproved product. And it looked very good to us. So despite the fact that from a corporate perspective, the company had gotten itself in trouble, the team that had developed that product and put the PMA together, we thought, did a great job. So ZELSUVMI alone will pay back that investment, we believe, with a nice return.
Plus, we have multiple other shots on goal. There's clinical data on four products. So we're setting up now to attempt to monetize additional products out of that platform. That makes the extra work, I think, worthwhile. Rich might tell you otherwise now after about a year of being focused on this. But I think that that could be just a phenomenal platform for us going forward.
Actually, Todd, in all honesty, I'm more excited about this product and the platform today than when we started it. So the more we've learned, the more we've liked.
I guess do you have a balanced idea of the balance in terms of structures, or is it more opportunistic?
It is opportunistic, and we haven't really done a lot of M&A. I think we probably get more active there in the future. We want to pay attention to our allocation size, so that keeps your M&A interest down. Some of them are too big. We don't need to do a transformational deal. We can do incremental deals, so we probably will have a bias towards smaller M&A when we go that route, but that is typically more work. There's some organizational restructuring that has to be done, so I would say less of that. Between royalty monetizations and project finance, I'd say it's going to be pretty balanced, Annabel.
Hey, Trevor Allred from Oppenheimer. That actually leads in well to my questions, which I wanted to see if you could go into some detail on the operational team execution and discuss your approach when setting up incubations for success. And also, could you kind of detail expectations for capturing that platform value? Is that going to be driven by outlicensing, or is that going to be internal development?
That is a really great question. There's not a precise answer. I think there's some nuances in these considerations. So because it's current, I will use the NITRICIL platform. But we've done this with Viking Therapeutics before. Essentially, we've spun out the invIOs platform from a APEIRON coincident with the closing. That's ideal if you can spin out or out-license things coincident with the closing on a transaction. But you have to look at the maintenance burn rate on an asset if you're going to incubate it for a while. And we do have an API manufacturing. It's a very efficient, well-managed plant, fewer than 10 people in manufacturing that came with the Novan platform. And that was a consideration. Usually, if something's coming with a manufacturing plant, they're typically much larger, and that would be viewed by us as pretty unfavorable.
We'd probably be trying to make a deal in parallel with a CDMO of some sort to take that on for us and have some sort of supply contract set up with them. So there's lots of considerations like that. But we're basically balancing our profitability objectives over what we can absorb on any transitionary costs on a deal like that. And that's the overriding factor because we are very focused on hitting our numbers.
Hi, Kemp Dolliver with Brookline Capital Markets. A couple of questions about Pelthos and related aspects of it. Verrica has struggled with their launch of YCANTH. And so when you look at what they're going through, how would you distinguish what your opportunity is, what they may have done wrong, etc.? Because a lot of pediatricians were trained over decades to not worry about treating molluscum. And maybe that's part of the issue here.
Yeah. Rich is a former sales and marketing executive at GSK and two different orphan companies. And he has done such a deep dive here with the rest of the team on this. I would like you to draw the contrast there, which I think is quite significant.
First of all, Verrica, the product, if you just look at it, I highly recommend that you read their product label. It starts with, "What does a family have to do to use it?" You get the pox virus on your kid's skin. To use the Verrica product, you have to call. You go to your pediatrician. The pediatrician looks at it and says, "There's nothing we can do." That pox virus incubates, expands, gets more lesions on your face, on your hands. The family says, "I can't just leave this. My kid's high school career will go away. Middle school is a nightmare." Then what they do, they go to the pediatrician, "You got to do something." Time is marching on. The pediatrician says, "There's nothing we can do.
Do apple cider vinegar baths and all this stuff." And they keep going, and it gets worse and worse. And so finally, they go to a pediatric derm. The pediatric derm gets that kid. And by the time they get the kid, let's just say in our clinical trial, they had on average 20 or 22 lesions. The pediatric derm says, "Oh, no, I can't use cryotherapy because that burns the kid's skin, and it's not pleasant. It hurts." Our pediatric derms that we talk with in our advisory board said, "If you cryo a child's skin and you do more than five lesions, you'll never do it again because it's awful and it's painful." They don't want these patients in their office because they're highly infectious. So their lead therapy cryo, they can't really do. Then you got to go to Verrica. And Verrica is a build-and-buy technology.
You've got to get pre-authorized, pre-approved. So that's another potential visit. The patient comes in there. It's got to be applied by a caregiver in a medical setting. That caregiver, again, read the label, has to have eyewear, gloves. They have to cover their clothes. The substance, which is a vesicant product, can burn your skin if not used properly. It causes pain. And here's the real kicker about what Verrica has to do. If you look at it, because the FDA was concerned about systemic toxicity with that product, you can't use it. You've got to have a three-week space between the time that you administer it and the next time you come in.
So a lot of people, and particularly the finance people, think, "Oh, you walk in, you're one and done with this blistering agent, and you're done." Well, the reality is you go in, it works on a couple of the lesions. You go home, a few more pop up. And it's a cycle of you've got to wear down that cycle. And you can't get into a derm every three weeks for 12 weeks. So their product, you've got to go back to that derm 4x over 12 weeks. Where I live in Philadelphia, we go to the University of Pennsylvania Health System. You can't get into a derm.
Pediatric derm.
Or any derm for 4x in 12 weeks. Very difficult to do. Ours, you take the product, you put it on, and it starts working around the clock and reducing those lesions at home. And the pediatrician can prescribe that rather than refer to the kid. And this is the other thing we can talk about. We can do this offline. But the fact of the matter is what the pediatric derm is saying, we don't want these referrals. We could be overwhelmed by that 16.7 million number of people, and there's not a lot we can do. We will proselytize for you with the pediatricians, get the pediatricians using it, reduce the number of lesions to a manageable number, and then we can be the hero. Does that answer your question?
Yeah. Yeah, that's good. If I can ask another question related to Pelthos. So where's the NITRICIL technology residing legally? Is it going to be in Pelthos, or does it stay with Ligand?
Yeah. So Pelthos has licensed the rights to the technology specifically for the product ZELSUVMI. And Ligand will own the broader intellectual property platform and license it out for different uses. We currently have clinical data in acne, I think atopic dermatitis, onychomycosis, and several others. And we believe there are other applications that Novan just never had the budget, frankly, to exploit. And just to add on to Rich's answer previously, I think the reality is there have been in-office procedures for decades, including cantharidin oil, which is what Verrica uses, as well as cryo for children or adults affected with this infection, this viral infection. And those are effective. They do have some logistical challenges, as Rich pointed out. But the reality is, whether Verrica survives or not, those in-office procedures will still be there. We just believe ZELSUVMI is very complementary. It fits pediatric practice.
They can simply write a prescription. The patient gets a tube. It's applied. And that treatment is very effective as well. And at a minimum, should really reduce significantly the number of lesions that a patient has. And then when they go into the office, or they choose to do an in-office procedure, there may just be a couple of lesions left remaining to treat. So it's complementary.
Do we have some questions for the web?
Hi. I'm going to read some questions that came in from online. With the exception of Captisol, does Ligand have any internal research and development?
Oh, yeah, that's really part of the question. I didn't answer it before. We will do very focused, precise investment in research and development in a very limited way that usually hit proof of concept. If we acquire an entire company and there's an ongoing trial, we may finish the trial and essentially put a bow on it, for lack of a better term, for outlicensing, put an outlicensing package together. So there are levels of research and development that we will do. And we're exploring life cycle extension around the platform for Captisol as well. So there is some real research and development going on. But it's relatively de minimis compared to the other biotech models.
Okay. We have another one from Balaji Prasad at Barclays. You mentioned plans to find a partner who can launch ZELSUVMI by first half 2025. What gives you confidence in a commercial launch by then, and how have partnership discussions been evolving?
Yeah. So we're pretty confident that that's achievable because, one, we've hired a team that can launch this. Now, they haven't hired sales and marketing people yet because we plan to either finance it with outside money or just directly partner it through a license before the launch. We will not forward integrate into sales and marketing ourselves, just as we're not going to forward integrate into significant clinical development, etc. So that's just consistent with our strategy. So why do we set up a management team? One, I think it's one of the best commercial teams around. So we have optionality similar to what we did at Viking. When we did Viking, we didn't just flip licenses on the products that we didn't license from Metabasis. We set up a company and ended up spinning that out and then moving that forward with other people's money.
That's the same strategy with Pelthos. So that's an option. We can do that. But we're also, in parallel, having licensing discussions that are well-advanced with very capable marketing partners. So it's a judgment for sure and not guaranteed. But we believe we'll get a deal done in the coming months and that they'll be launching it shortly thereafter. Why will they be able to launch it shortly thereafter? Because we have not been standing still, in particular on the manufacturing front. We did buy this out of a distressed situation. So there was a lot of restarting that needed to be done. And we're currently manufacturing the actual launch supplies. So that's in process. So all of those things had to be done anyway from a timeline perspective. Some of it took longer than planned. But we believe we're set up for that launch.
And now what we need to do is strike a partnership. And the sales and marketing force in that partnership needs to launch the product.
Great. And then our last question comes from John Vandermosten at Zacks. In listening to your discussion about APEIRON, you mentioned some things besides more money to make your acquisition more attractive. What are some of the things you can offer besides a higher price to make working with you attractive?
Yeah, that's a great question, John. I think the two things we offered, both the investors in that situation as well as the management and a subset of the investors, is one, significant tax advantages in the structure because we bought the whole company rather than, again, the double tax. And then separately, there's a lot of faith and belief in these earlier stage oncology products, typically earlier than we would invest. But we enabled a spin-out with a seed investment there, which was very attractive to the management and the subset of investors that are backing that with other outside money. So with our approach, we don't have structural restrictions in, for example, a limited partner agreement. We have the flexibility as a public company to apply real creativity to the deal-making, which is not always the case with other providers of capital.
That was the case in the case of the APEIRON deal.
We have another live question in the room here.
Yeah. Hi. Doug Miehm from RBC Capital Markets. Looks like Tavo is a bit lonely up there.
Ask him a question.
When we talk about financial work and the change that we're going to see at the company over time, you do add back and adjust on the EPS basis. But for the cash received, you don't necessarily do that on the revenue side. We know others do in the space. So I guess my question is, are you contemplating doing that? And if you were to do it, how would it impact the 22% that you're looking to see between 2024 and 2029 in terms of growth?
Yeah. No, thanks, Doug, for the question. Good question. So to be clear, the long-term outlook is based on royalty receipts, right? So those are the cash receipts that we will receive from all of our royalty assets, regardless of whether we get to account it for as revenue or not, right? There's very strict rules around what qualifies as revenue. So that long-term outlook is based on receipts. The first part of your question, are we contemplating introducing a new non-GAAP top-line measure? Yes, we are thinking about that. We think it's maybe premature to do that at this point. But given the types of acquisitions and types of assets that we're looking at, we could very well be looking to introduce a non-GAAP top-line measure similar to how others in the space manage this.
Okay. And then my other question just has to do with the database that you're putting in place with respect to royalties around the world. And it looks like we've had some success on the Ohtuvayre side. Can you put this in the context as it relates to barriers to entry versus other groups that may be doing this? And then how it may change and help the compounding that you described as well, Todd, going forward. And I'll leave it there. Thank you.
You want to take that, Lauren?
Yeah, sure. So I think we've invested a lot of time over the last year in sort of building out a proprietary database, as Paul alluded to. And I think what that enables us to do is to kind of expand the total universe that feeds into the top of that funnel there. And we do think it creates some barriers to entry that we're able to invest a lot of time and internal talent that we've achieved on our team. We brought in Dr. Ruben Flores, who has helped us on some of the academic side of things. And I think we're optimistic about seeing some of the results of that effort already transpiring, as you mentioned, with the Ohtuvayre investment.
I think that's good. You got another question over here.
Yeah. I'm not sure we answered the compounding effect of that. I think that that really comes into play in general in terms of royalty aggregation, Doug, and that through 2028, we're going to be reinvesting all of our capital. There was last year. We're probably well below this now. But the estimate last year was about a $300 million gap between our pace of investment, which we predicted to be about $200 million a year, which, amazingly, we ended up at $198 million this year. And it won't always be like that. It'll be $250 million or $150 million or something. So there's a little bit of a gap, which is a financing gap really for us to execute on our strategy. But after 2028, we should be generating cash in excess of our investment pace. And I think that's when it really starts to compound.
And we may even, we're certainly not committing to this now. But at that point, or shortly thereafter, we may be able to put a dividend strategy in place as well. But just the reinvesting of our cash flows. And as we grow larger and larger in terms of profitability, our deal size and our allocation limits will go up proportionately with that. So all of that just mathematically compounds.
I had a couple of questions for Paul and maybe one for Lauren. For Paul, maybe can you talk a bit about the mix of inbound and outbound investment valuations? And has this shifted over time? And can you also just kind of give us some expectations for what deal-making might look like in 2025?
Yeah. Both great questions. I think when we first got started, there was probably more inbound than outbound. I think over time, we've managed to shift that more skewed towards outbound. We certainly, from a resource and time allocation perspective, strive to be really more on the outbound because we think that's where we find proprietary opportunities. We think that that's where we can find really good risk-adjusted returns. So that's where our team's focusing their time today. I think in terms of the deal activity going forward, I think a couple of questions were asked already about kind of the mix. We're going to be opportunistic. So we're going to look at both royalties, cash flowing and pre-approval royalties, as well as project finance opportunities and then some M&A opportunities.
So how that pans out over the next four quarters, I think it'll remain to be seen in terms of where we find the opportunities. But we're certainly focused across that broad spectrum, which allows us to pivot and see where we can allocate capital in any given quarter.
Okay. Great. Thanks. And then for Lauren, maybe can you discuss some of the expectations around CAPVAXIVE growth and if you guys see this being a quick switch market?
Yeah. So I think the estimates on CAPVAXIVE, I think we're pretty optimistic. As I alluded to, they're pretty well differentiated in the adult setting. They cover the sterotypes responsible for 84% of disease, invasive disease versus 52%. So they have a really strong profile of the vaccine. But complementary to that is that they have a very robust vaccine portfolio. And the drivers of utilization in the vaccine space are a little bit different than what you see in a traditional pharma market. Your customers, when you're a vaccine marketer, are large pharmacy chains like CVS and Walgreens, large IDN providers. And so it's less about a physician choosing a specific brand of a vaccine for one patient versus another. But the contracting piece becomes an important element of that as well. So Merck has a very strong vaccine portfolio that they can leverage for contracting purposes.
So I think the complementary value proposition of the vaccine itself with Merck's expertise in the space, I think, gives us a lot of optimism. And we'll see with the introduction of the revised ACIP guidelines down to 50. You can look at what that has done for other analog vaccines in the past. And it has pretty dramatically expanded the marketplace. So CAPVAXIVE is even kind of launching into a point of inflection in that. So we're pretty optimistic to see what that does in terms of sales in the next few quarters when Merck releases those.
I think that's it.
Okay. That's great. Thank you very much for your attendance and to all the investors and analysts today. Of course, your support, which is greatly appreciated, and the board members I introduced, Andrew Reardon, our General Counsel, is in the back. By the way, all of us will be going to lunch. Hopefully, you can stay, and we can talk some more. Thank you very much.