Swk Holdings Corporation
SWK Holdings Corporation incorporated in July 1996 in California and reincorporated
in Delaware in September 1999. In July 2012, we commenced our corporate strategy
of building a specialty finance and asset management business. Our strategy
is to be a leading healthcare capital provider by offering sophisticated, customized
financing solutions to a broad range of life science companies, institutions
and inventors. Our focus is on monetizing cash flow streams derived from commercial-stage
products and related intellectual property through royalty purchases and financings,
as well as through the creation of synthetic revenue interests in commercialized
products. We are deploying our assets to earn interest, fees, and other income
pursuant to this strategy, and we continue to identify and review financing
and similar opportunities on an ongoing basis. In addition, through our wholly-owned
subsidiary, SWK Advisors LLC, we provide non-discretionary investment advisory
services to institutional clients in separately managed accounts to similarly
invest in life science finance. SWK Advisors LLC is registered as an investment
advisor with the Texas State Securities Board. We intend to fund transactions
through our own working capital, as well as by building our asset management
business by raising additional third party capital to be invested alongside
our capital.
We fill a niche that we believe is underserved in the sub-$50 million transaction
size. Since many of our competitors that provide longer term, royalty-related
financing options have much greater financial resources than us, they tend not
to focus on transaction sizes below $50 million as it is generally inefficient
for them to do so. In addition, we do not believe that a sufficient number of
other companies offer similar types of long-term financing options to fill the
demand of the sub-$50 million market.
We evaluate and invest in a broad range of healthcare related companies and
products with innovative intellectual property, including the biotechnology,
medical device, medical diagnostics and related tools, animal health and pharmaceutical
industries (together “life science”) and to tailor our financial
solutions to the needs of our business partners. Our business partners are primarily
engaged in selling products that directly or indirectly cure diseases and/or
improve people’s or animals’ wellness, or they receive royalties
paid on the sales of such products. For example, our biotechnology and pharmaceutical
business partners manufacture medication that directly treat disease states,
whereas our life science tools partners sell a wide variety of research instrumentation
to help other companies conduct research into disease states.
The majority of our transactions are structured similarly to factoring transactions
whereby we provide capital in exchange for an interest in an existing revenue
stream. We do not anticipate providing capital in situations prior to the commercialization
of a product. The existing revenue stream can take several forms, but is most
commonly either a royalty derived from the sales of a life science product (1)
from the marketing efforts of a third party, such as a royalty paid to an inventor
on the sales of a medicine, or (2) from the marketing efforts of a partner company,
such as a medical device company that directly sells its own products. Our structured
debt investments may include warrants or other features, giving us the potential
to realize enhanced returns on a portion of our portfolio. Capital that we provide
directly to our partners is generally used for growth and general working capital
purposes, as well as for acquisitions or recapitalizations in select cases.
We generally fund the full amount of transactions up to $20 million through
our working capital.
Our investment advisory agreements are currently non-discretionary and each
client determines individually if it wants to participate in a transaction.
Each account receives its pro rata allocation for a transaction based on which
clients opt into a transaction, and each account receives its pro rata allocation
of income produced by a transaction in which it participates. Clients pay us
management and incentive fees according to a written investment advisory agreement,
and we negotiate fees based on each client’s needs and the complexity
of the client’s requirements. Fees paid by clients may differ depending
upon the terms negotiated with each client and are paid directly by the client
upon receipt of an invoice from us. We may seek to raise discretionary capital
from similar investors in the future.