Good morning and welcome once again to TD Cowen's 45th Annual Healthcare Conference. I'm Phil Nadeau, one of the biotech analysts here at Cowen, and it's my pleasure to moderate a fireside chat with XOMA Royalty. We have with us this morning Owen Hughes, the CEO, and Brad, the Chief Investment Officer. Thanks, guys, for coming. We really appreciate it.
Maybe I'll kick it to you initially. Can you give us a brief state of the company? What are the challenges that XOMA is facing? What do you have? What are the strengths? What do you think you need to do over the next year to create shareholder value?
Any more questions? First, I just want to say that thank you very much for inviting us. It's always a pleasure to sit down with you. Second is that my life is now fulfilled because I have been interviewed by the three musketeers in the last 12 months. We certainly appreciate the relationship. As it relates to your question, XOMA is in a pretty good place. Since the pivot in 2017, the portfolio has been germinating now for the better part of the last eight years. We're sitting here with six assets that are generating revenue, 11 assets that are in phase III. Actually, if you take a step back, it's kind of interesting if you look at XOMA. XOMA is the smallest publicly traded royalty company by royalties. Yet, it has the largest portfolio of any royalty company.
By number?
By number of assets. It also has the highest dividend yield of any royalty company, given the preferreds that we have. If you take those three components and you add in accelerating revenue growth and the fact that we've already told folks that we're active participants in our capital structure with respect to buying back our shares, admittedly, it's been low to date, but we're still cognizant that we've made a proclamation that we intend to buy back up to $50 million over the course of time. You add all those components, it's actually a pretty interesting financial dynamic.
Where we are as a company is, one, do no harm, mainly because the portfolio is actually maturing such that we could have up to, call it, six or seven assets, I mean, six or seven additional assets that are actually generating revenue for us just based on the existing portfolio, no additional business development by 2028. If we did that, that would correspond to royalty receipts that are probably, call it, eight to ten times greater than where we are today. It is pretty dynamic growth. Obviously, we need a little bit of luck and a bit of success with the portfolio in terms of our additional business development, but we're in a good position from a cash position.
Obviously, if you take a step back and look at the operating profile of the company, it mimics that of other royalty players where you're looking at operating margins of 80-90%. I love the business, and we're in a pretty good spot. Do no harm, allocate capital correctly, and when there's opportunities to repurchase shares opportunistically, do so.
You guys have been working hard over the last year, been very prolific with the deals. Can you talk about how you structure a royalty portfolio? Kind of what balance do you seek between risk, reward, stage of development, and the other parameters?
Ultimately, we view it as a large math problem, with the size of the portfolio is going to be what powers the return over the long run. I think the one thing we've come to realize is drug development, there are so many unknowns, surprises. You don't know when the science is going to work out, when clinical trials are going to have struggles, when products are going to launch or outperform or underperform. Our view is that to generate incremental value, you keep the size of the portfolio up.
Over the last year, you saw us look actively at portfolio management, which was building out both the later stage end of the portfolio with either commercial or some phase III assets, as well as some really innovative deals like we did with Twist Biosciences, where we added in one transaction 60 preclinical royalties and milestones as a way to increase the number of the portfolio. The portfolio size now, from when we joined a couple of years ago, where it was 70, is now well over 120.
I'd say I'll answer your question. I'm always interested in how people assess probability of success as it relates to this business. You see in people's models, especially on Wall Street, that they assign a 60% probability of success, and that imputes $3 of stock value. In our business, unfortunately, that's not the case. It's either zero or it's 100. When we look at risk, what we're really looking at is how much money are we willing to lose? Because we either make the acquisition or the investment, it works and we start to generate revenues, or it doesn't. It's pretty binary. I'm not quite sure there's such a thing as probability of success in drug development. It either works or it doesn't work.
For us, as I said before, we're looking more at how much money are we willing to lose in this particular investment such that it's not detrimental to the overall enterprise. That's how we look at risk.
Can you talk a bit more about how you diligence the assets? What process do you have to diligence them? What assets are attractive to you? I'm sure you've walked away from a lot of deals. What usually kills a deal? What makes you walk away?
What I can say, and then Brad can complement me, is that every single deal that we walked away from this year or last year, we are unbelievably happy that we walked away from. That is number one. Number two is that given where the portfolio is today and the line of sight that we have, at this point in time, we are kind of playing for 2027, 2028, and 2029. In fact, we were just in a meeting and someone asked us, what does the next six months look for you? I honestly was like, I have no idea. Honestly, I am not that interested in what the next six months, because our job is to actually run this business for the inflection point that is going to come two, three, four years from now. That is actually the investments that we are making today. That is actually when they will hit the P&L.
What I would say as it relates to your question is that I think we're in a pretty good position. I think when we walk away from deals, it's for a variety of reasons. Oftentimes, we can't necessarily get to the actual underlying sales projections that the company is getting to. We like to be very conservative. To be candid, we don't want to overpay for assets. The one thing I've seen in this business as it relates to big pharma companies or medium-sized pharma companies or frankly diagnostic companies is that the moment you start overpaying for assets, it's the moment you actually told Wall Street that you're not a good capital allocator. That's when your multiple starts to go down.
If you are a prudent allocator of capital, meaning you do good deals, you're buying things for pennies on the dollar, and on top of that, you're buying back your stock opportunistically when you believe that the intrinsic value is greater than the actual stated value, you're going to get a higher multiple over time.
Yeah, absolutely. I think the hardest part about our business is actually the people on the other side of the transaction. Because what we buy with the royalties and the milestones, seeing the buyer box, people fall in love with the number that's on paper, not necessarily the situation that they're in. Or they don't think about capital allocation like, if I were to raise $15 million, how much equity am I going to have to sell off? Or if I'm selling off $15 million of equity, that I'm actually selling off that net entitlement to that royalty to that new shareholder.
I mean, our process is very similar to what any buy-side investor would go through in diligencing the asset, looking for areas of high unmet need where there's not a lot of therapeutic options available, where there's strong IP or regulatory protection, where there's a marketer in place who within their respective market can be a potential leader. That is, I think, table stakes. The biggest piece, I think, in our process is the discipline to walk away when we're uncomfortable that it's not the right value.
Yeah, the other thing I would say too is that if you actually look at kind of what we used to discuss 10, 15 years ago, it was almost exclusively on the clinical side. If we were just to pick a therapeutic category in terms of obesity, we'd be arguing about, well, this drug's going to generate 15% actually weight loss, and this compound can generate 18% weight loss. I would suggest today that that's totally irrelevant. What's relevant is actually the commercial marketplace. It's one thing to get a drug approved. It's another thing to launch a product. When you hear of managed care companies and PBMs pushing back on assets that have superiority, head-to-head data, and they cannot get on formulary, you start to ask yourself, OK, how are we going to play in this space?
I think that is the major change today. The therapeutic density in each of these therapeutic categories is such that I don't understand how you actually assign a probability of success to the commercial side, let alone the clinical side. I think we as an industry need to do a much better job of developing drugs in a more efficient manner for less cost. Ultimately, this therapeutic density is going to drive down returns for all of us. We need to be more prudent. Ourselves need to be more prudent in terms of how we allocate the capital. You're seeing us go into therapeutic areas where there's very little to no competition.
Because when we underwrite these things, we can't actually truly determine what the sales potential is if we're going into ulcerative colitis or some type of inflammatory disease where you've had 30 or 40 assets be funded in the last two years. Who wins? You have monotherapy. Now you have bispecifics. They're going into trispecifics. As we're very charlatan or we're simpletons, we don't really understand how you actually get to the answer. We just don't play in those areas. We don't really have an opportunity to play in those areas oftentimes because those companies are so well funded. When we look at allocation of capital, it makes no sense to me to be putting money into a ninth asset in IBD unless it's truly differentiated. Much of what we see is not really that differentiated.
It's hitting an epitope ever so slightly different than another molecule, or it's adding an additional molecule. There are so many of them out there already. We are finding ourselves going to therapeutic areas that, frankly, people do not like. That is fine by us because, you know what? If we can generate a return, all the better.
You're obviously a publicly traded company. There are royalty funds that are private. Can you talk about the strengths and weaknesses of being a publicly traded company when you compete against the not publicly traded royalty funds?
Yeah, absolutely. Within a private royalty vehicle, oftentimes there's end of fund life. They think about making an investment that needs to return capital within a 10-year time period. You're worried about fund duration because it's all about how you return capital to your LPs. By being a public company, we get to act as a permanent capital vehicle, which means that we have one thing that many of the royalty space doesn't have, which is infinite patience. That allows us to look at assets like we talked about with Twist Bioscience, where you can buy an early stage portfolio and be patient while it matures. Stacked on top of that, we also have the scale of the portfolio. You're not limited to fund one, fund two, fund three, each having 10-15 investments each. Our royalty acquisition portfolio is really significant.
We can look at it as a blended single portfolio. The other part of it is with our model, because we're not compensated on an assets under management basis, we can stay out of the fray. If you've seen, our check sizes are generally smaller. $25 million or below tends to be a sweet spot. Being able to incorporate the clinical development risk in our underwriting allows us to be differentiated. Instead of a really crowded market, when I was an investment banker and doing royalty transactions, it always surprised me how much competition there was and how people would squeeze their returns out to win the deal, as if deploying capital was the ultimate end game versus the reality, which is the return on the invested dollar is the important part.
How do you balance returning money to shareholders versus deploying more of it to invest? Can you talk about your thought process?
Yeah. If you actually look at the top performing assets companies in the S&P 500 over the last 20 years, you come up with some names that you wouldn't really think of: AutoZone, Domino's, and then you have the traditional tech giants. You ask yourself, what is it about those first two companies? Because you can't necessarily say that they're huge top-line growers. They take out about 5%-7% of their equity base every single year. They do it consistently. They are leveraging 2%-5% revenue growth into 20% earnings growth, given leverage in the P&L and the fact that they're taking out 5%-7% of their equity base every year. Our view is that ultimately, when we start generating cash flow, we do want to redeploy some of that back in the business so we actually have a terminal value.
Because I think the one key thing in this business is that, generally speaking, you're only as good as the last deal you've done in the royalty space. I think that's a limitation of the business model. Where we're trying to actually change that is give people insight into our portfolio and actually look somewhat similar to a traditional biotech company where we have 5, 10, 15, 20 assets in the various stages of development such that we have the element of surprise, which is always a good thing for your multiple. The second thing is you have visibility to our future revenues, which should generate a terminal value for our company, maybe relative to a traditional royalty player that only buys commercial assets.
To answer your question more succinctly as it relates to the buyback, it's just a balance between our deployment of capital, where we are in our gestation period, maturation cycle. I'd say we're out of the crib. We're crawling. We hope to be walking in the next, call it, two years or so. I think we can actually start running in the 2028, 2029, 2030 time period, which, as I said before, is kind of what we're looking at. It's how we're running the business today. We're not focusing on whether OJEMDA does $30 million one year, one quarter, or $27 million next quarter. Don't get me wrong. It's important. In reality, what's really important is can they actually hit the peak sales estimate that people have. If they can, then everything else is just the gyration.
Can you discuss the market for royalty assets today versus a few years ago? Is it more competitive, less competitive? Are more companies looking to access capital through you since the funding environment in the public markets is pretty harsh?
I think royalty monetization as a tool in capital raising is becoming more prevalent than it ever has been. We've seen that with increased deal counts over the years. I mean, using the amount of capital deployed can be a bit of a misnomer because it depends on the quality of the asset or the potential of the asset. I tend to look at the royalty deals. That's crept up year by year. I think the other part is since we're coming off of the sugar high of capital raising in the 2020 time period, companies are being more disciplined or forced to be more disciplined. As we're having a separation of the haves and the have-nots within the market, people are thinking about alternative sources of capital.
What that means is there's a lot more voices and a lot more awareness at the management teams, the board levels, just general investors. I think the amplitude of the conversation is higher than ever. For XOMA in particular, our style of financing at the stage we do is still somewhat unique. We have done a lot of market education. Over the last 24 months, we have certainly seen a lot more inbounds coming to us about asking how to apply royalty monetization to their specific situation. Overall, the market trends are good. The fact that we have had these last three years of feeling like the biotech markets have gone sideways has increased our opportunities.
How do you think IRR is going to trend? Is there a recent trend in IRR for royalty transactions? Where do you think it could go in the future?
I think the expectation that capital is more expensive in general has happened. Looking at IRR trends, I mean, when you look at royalty deals, it's an implied IRR based off of a fictitious forecast of what it could do and then working backwards. It's not unlike a debt deal where there's a fixed rate and you can calculate an IRR. We're all just guessing. I think what we've seen, though, is the cost of royalty deals has risen just like it has with the debt markets as a bit of a proxy. I think that's probably your best similarity. I think the reality, when we were talking about what makes deals not executable, it's folks that are still living in the time where it was a zero rate environment and thinking that still exists in 2025.
I think the key thing there, Phil, is if you're going to participate in the royalty space, specifically where we are, you're essentially taking equity-like risk. You need to actually have an equity-like return. The worst thing we could ever do is actually take the equity risk and try to get a credit-like return. Not only does it kill the portfolio, but since we are going so early, we're going to have significant failures. We probably would be out of business within three to five years. I understand IRRs. I know how to use it in Excel. I do. I know how to do it. It's not something that we actually pay that much attention to. Because at the end of the day, all I really care about is how much cash are we generating.
Because ultimately, it's the cash that's going to be able to allow us to do, A, more deals, B, be an active participant in our own capital structure. Frankly, I think that's actually what Wall Street will eventually award us on is the top-line growth that actually goes to the bottom line. When you have a business that has an operating margin of probably 80%-90%, it's a fairly nice business, which translates into a fairly nice multiple on the top line.
Maybe we can talk through some of the more recent deals. Last month, you announced a deal for D-Fi. Can you talk about what that product is and the rationale behind the deal?
Sure. It's a cell therapy that's delivering collagen to DEB patients. There are two programs that are, have you all approved yet?
No.
Soon, right?
Yep.
Yeah.
It's about to come in.
Yeah. It's a terrible, debilitating disease, primarily for children. You have open wounds across the body. Interesting enough is that, like everything in life, when you start to dig into it, you realize that it's partitioned by wound and essentially by stage. Specifically by wound, I would call out that the hands and the feet are a lot different than the torso, which is a lot different than shoulders and face. These particular programs, one versus another, I believe, based on our conversations with physicians, will find their home actually depending on what type of wound they're treating. I would say the hands and the feet are probably the most problematic for these folks, these kids. There's one program that is more like a graft, and you need to be immobilized. There's a second program that's launched very well, and they've done a phenomenal job.
That's actually a topical gel. There are limitations. When we looked at the opportunity, we were thinking about that partition in the actual marketplace. There are other considerations in terms of delivery, as well as some economic considerations. From a clinical perspective, I think that this drug can compete effectively and, frankly, may even be used in combination with the other molecules or other compounds that are already in development or, frankly, on the marketplace. It is a very finite market. One area that we actually focused on pretty specifically was actually on the payer side. What type of pushback are you going to have when you actually ultimately combine these products?
As is often the case, because the patient population numbers are so small, it kind of reminds me of the nephrology market and dialysis, which is that most payers, since most of them are actually on Medicare, when they go out of network, you're like, why is United paying like $1,000 per treatment when Medicare is paying $120? It doesn't matter to them, so to speak. That's not to say that this doesn't matter to the payers. I think they are cognizant that the price point at where it is and then the use is not going to have a detrimental effect on the MLR. That is how we get comfortable that it's likely that these things are actually going to be used in combination.
Because I can tell you that every physician that we spoke with talked about combination use, which has got us more comfortable that it's a different actually delivery method. There are some economics that are different to it. The combination of these products in terms of hitting the different parts of the body, I think, is going to actually play a role.
Maybe moving on to December when you bought Pulmokine for its economic interest in seralutinib. What was the rationale for that deal? How confident are you that it'll succeed in PAH? Where could it fit into the treatment paradigm?
Yeah. This is an interesting one. As is often the case, again, when you look at the surface details, frankly, I was quite nervous after reading some reports from Cowen as well. When you start peeling back the onion, so to speak, first is that you understand why was this drug developed. You realize that the drug was actually first developed at Gilead to buttress what was their burgeoning PAH efforts back when we were investing. The mechanism, while it's not totally validated, there's a rationale for it, rational drug design. You look at the imatinib situation where the Novartis trial actually proved to be successful from an efficacy perspective and, unfortunately, not so successful from an AE perspective, which is what this drug was designed to do in terms of hitting the various receptors and actually lowering it for others.
One is just look at it from a mechanistic rationale, totally validated as to why they actually went after these targets. The second is you actually look at the phase II data, which was a little bit bumpy given that this was done during COVID. When you actually look at the acuity of the various patients and the responses and then the open label data, I think there's a reason to believe that this drug is, in fact, doing something for these patients. I think it's very difficult to actually cheat on PVR. I think the six-minute walk test is a little bit more variable, which ultimately is the phase III endpoint. In the PVR, it's quite clear that this drug was efficacious in certain patients.
The question is, can they design a phase III trial to enhance the overall acuity such that you're treating the patients that actually did well in the phase II study? I think that the Gossamer folks have said publicly that the trial is enrolling, it's enrolling appropriately, and that given the inclusion-exclusion criteria that they've set for this trial and the way that they've enhanced this relative to the phase II trial in terms of trying to bump up the acuity, you have a good chance of actually creating the separation necessary on the six-minute walk test. I think that's kind of one answer to your question.
The second answer to the question is that when we were doing diligence with the folks that had licensed the molecule from Gilead that had licensed it to Gossamer, they had mentioned to us that there was an opportunity to actually combine this drug with other drugs, which is obviously the case in PAH in terms of the polypharmacy. The interesting thing was that just a few months ago, they showed the first in vitro data in combination with sotatercept, which is clearly a killer app inside the PAH base. What kind of resounded with us in terms of speaking with some of the commercial folks, going back to what I said before about understanding the commercial side of things, is that other than sotatercept, there hasn't been a drug approved in PAH in 12 years, which is kind of crazy.
In fact, I heard it last night from the gentleman who had developed sotatercept . Everything is going to be generic by the time seralutinib launches except for sotatercept . You start going back to what I said before about D-Fi and having conversations with managed care companies and PBMs. The price point on the generic side is going to drive the combination use of cetataccept and seralutinib as long as it actually works from a clinical perspective. There is clear mechanistic rationale as to why you'd want to use these two drugs together. We got very comfortable on the commercial side that as long as this thing works from a clinical perspective and it's clinically meaningful on the six-minute walk test, the opportunity for this drug to be much greater than Wall Street's currently assuming, I think, is actually fairly significant.
Now, clearly, it has to actually prove itself in the trial. The last thing I would just say is that I would say the secondary course of diligence was done on any life cycle extension. We were pleasantly surprised that Chiesi , when they came on board with Gossamer, kind of re-upped Gossamer's initial assertion that they could actually use this in ILD, which is a far greater market with much less competition. If you actually look at United Therapeutics in terms of reacceleration, I think my understanding is that the far majority of that reacceleration to Tyvaso is a function of the ILD indication. Now you have it's the same drug, but now you have two shots on goal, which is all about our business model, which is trying to underwrite risk and diversify it across a number of different products.
If you're going to do it in one product, which we did here, we're willing to lose at $20 million because we think it's a pretty good shot on bet. To the extent that we're right, we're probably going to generate much greater returns than we initially anticipated because it should work in ILD if it works in PAH.
Has Gossamer guided to when the PAH data will be released?
I believe it's the second half of this year.
Second half of this year.
Yeah. Check me on that. I believe that's the case.
Brad, you referenced the Twist deal when you were talking before. Can you talk a bit more about that deal? You got 60 early phase assets. I don't think you've ever specifically disclosed what those assets are or what areas they're in. Can you give us some understanding of what comprises those 60 assets and why they were attractive?
I think there were a couple of things that we saw attractive. One, finding a path for a company to realize some value to something that was otherwise lost within their overall enterprise. Being able to bring some capital to them upfront that they could deploy across other lines of their business that they're working on growing. The other part was in the diligence process, while we haven't disclosed any of the targets, it was looking at there was a wealth of partners, so over 30 partners, and then some validated targets that could have potential. As you can imagine, doing the diligence on 60 assets, it was, do we believe that they could have some potential in the future? That was the key thesis of the underwriting.
Ultimately, at the end of the day, we got comfortable because if any one of the 60 would make it to market, we would recover our initial acquisition price. Even if you looked probabilistically at if a few of the programs made it to phase II, we had a very low risk of losing that initial acquisition price. At the end of the day, it was playing for the long game, realizing that as with anything in drug development and hot targets today versus hot targets tomorrow, there is a wealth of things in there that hopefully we can disclose at some point.
I'd just say two things on that. We obviously own a royalty on Vabysmo, which, interestingly enough, was some technology that we had licensed in 2003, I believe, to a Swiss company. That Swiss company used our technology to actually create Vabysmo, which we eventually sold off to Roche. When we were speaking with Twist and other companies in this space, we suggested to them, you do realize that this is a 20-year endeavor to essentially recover your costs. That, I think, was one thing that resonated with folks when we started talking to them about buying early stage assets. The second thing I would just say is that the composition of the portfolio looks not too dissimilar to what we actually have, where it's slightly over-indexed on oncology, but then it's spread throughout a number of different targets across immunology, virology.
I think there's even a couple of cardiovascular targets that are sitting inside. We like the diversity. Eventually, it's just a Monte Carlo simulation, is that if you can get one back, you're fine. You look at the XOMA portfolio, which we had developed hundreds of assets over the course of time. We started with 40 as a company. When you actually look at the entire landscape that was developed by XOMA, there's actually, I think it's eight multibillion-dollar drugs that came from our technology: RITUXAN, LUCENTIS, TREMFYA, ENTYVIO, and a bunch of other ones. If you apply those odds relative to what we just bought, there should be one or two multibillion-dollar drugs sitting inside. Obviously, we know all the targets. There are both known and validated targets as well as unknown targets, novel targets sitting inside that portfolio.
Our view was that's a pretty good bet at this point in time. It's also the element of surprise, right? You're likely to find a gem and not actually understand or know it at the time of purchase, either of us, either Twist or ourselves. We both came to the conclusion, that's fine. That's the nature of the business, right? We'd love to replicate that time and time again. Because if you can build a portfolio, it goes back to what I said before, that portfolio, as it matures, should actually start to impute on your terminal value of the company as long as you're actually generating cash flows.
One last question. We're just about out of time. We asked you about some of the recent transactions, but you highlighted that there's 120 molecules now in your portfolio. Which ones did we not ask you about that you would want to highlight? Which ones are most interesting or, in your opinion, have the biggest potential to drive value?
Yeah, I would say there's probably two or three that are sitting inside the portfolio today that can actually be extremely helpful to us as a company and hopefully helpful to patients, most importantly. I would call out the Resolvetin program for congenital hyperinsulinism, which actually is a program that actually was started at XOMA. In fact, we did the far majority of the preclinical work. In fact, I would say we just almost did almost all the preclinical work up until recently on that compound. I would say, and I don't really, I'm pretty confident the drug will work. I can't tell you whether it's going to work in this interim analysis or not, this interim analysis. I leave that to the company. From a mechanistic perspective and based on the data that we've seen to date, this drug works.
It is very important to us just because we have a fairly significant royalty relative to some of the other ones that we've had. There should be data, the interim analysis should be at the end of this year, sometime in the second half of this year. Interesting enough is that if you look at, actually, I'll quiz you. How many PNH patients are there in the United States?
PNH, there's, I think, about 2,000?
A little bit more than that, actually, like probably 5,000, both diagnosed and undiagnosed. How many patients are actually on, generally speaking, Soliris or ULTOMIRIS prior to the competition coming in?
Today. I think it was the vast majority, right? If there's 5,000, it was like 4,000.
Actually, it was only 1,200.
Is that right?
Twelve hundred drove almost a billion dollars in revenue.
That's interesting.
You take PNH and you actually parlay that into CHI. It's important to understand there's actually another indication that they're going after in phase III, which is tumor or hyperinsulin as a function of a tumor cancer as a side effect of the chemotherapy. When you add those two together, actually, they look pretty similar to the actual PNH patient population, may even actually be a little bit bigger. Reasonably, what's important for us is that it's a huge advancement for these folks. It's a fairly sizable patient population in the rare disease. I assume it'll be priced similar to other rare disease programs. Given our royalty rate, it could actually be the largest royalty that we receive at any time in the near future. That's one that I would point out.
The second one I would just point to is the CD38 program, mezagitamab, at Takeda, where they've said publicly that they believe it's a $1 billion-$3 billion drug. It's going after ITP and IgAN, at least initially, with additional indications to follow thereafter, hopefully. We have a nice royalty on that program, kind of the mid-single-digit royalty range. It's always nice to have a big pharma company as your partner, where this is one of their top five assets based on their R&D day just a few months ago. With that said, that's only two of the 11 that are actually in phase III that we have. We have a couple that are undisclosed because we can't disclose them based on the relationship, the contract that we have.
What I can say is that we have one or two that are in the inflammatory space that are validated targets at this point that could be multibillion-dollar drugs.
Great. With that, I think we're out of time. Thanks so much for an interesting discussion, guys.
Thanks.