Welcome, everyone, to the MDB Capital Holdings Fourth Quarter and Full Year 2025 Update Conference Call. Thanks very much for joining us today. Operator instructions will follow. Before we begin the formal presentation, I'd like to remind everyone of several important things. Today's conference call is being recorded. A question-and-answer session will follow the formal presentation. Please remember that statements made on this call and webcast may contain forward-looking statements, estimates, or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You're cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Also, please be aware that we are not obligating ourselves to revise or publicly release results or any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we'll attempt to present some important factors relating to our business that may affect our predictions. You should also review our most current Form 10-K for a complete discussion of these factors and other risks, particularly those under the heading of Risk Factors. A press release detailing these results, which crossed the wire this afternoon, is available in the Investor Relations section of our website, mdb.com. A replay of this call will also be provided later on mdb.com. Your host today is Chris Marlett, Chief Executive Officer and Co-Founder of MDB Capital Holdings. He'll be joined later by George Brandon, MDB Capital President and Head of Community Development. Chris will lead an update on the fourth quarter ending December 31, 2025. At this time, I'll turn the call over to Chris Marlett. Chris?
Thanks, Tony. Well, thanks, everyone, for joining today. I'm excited to be here and talk to you about what's been happening. It's been a while since our last call, and the year has gotten off to a really interesting start. I thought I'd first outline our agenda: where our assets are, what we think about our current investments, and what we see for the future. I wanted to take some time to give you the view on how we're building this business and why we're optimistic for the future of MDB. We just published a year-end shareholder letter, which goes into much of what we're discussing today in more detail. It's about nine or ten pages and gives a clear view of where we see the business, where we're headed, and why we're excited about the future. To start, our story: we've taken a proven model of launching companies about once every 18 months, where we help conceive big ideas, bring them to market, position them for being public, and then take them public. We did that before we were public, and it was a very good business. We decided to go public because we believed we could scale to three to five launches a year — maybe not overnight — and build an organization to make public venture an asset class where we could build portfolios for investors instead of individual companies. We've been doing this for 29 years and have just completed our 18th IPO. We've never failed to get an IPO done. Every one of them, except for the most recent very new one, has traded at a significant premium to the IPO price. That reflects our ability to position companies asymmetrically — bring them public at reasonable valuations and the promise has generally caused them to trade higher. Those companies had opportunities to raise follow-on capital, and we created a lot of equity value, not just fees. Scaling is what we've been discussing. I've been in the business for 40 years. My mission has always been to get to the truth quickly — to understand the companies we back or help create, often with inventors, universities, or entrepreneurs. In the old days we relied on 10-Ks and 10-Qs and had to call Washington to get filings. Information was haphazard. As a result of the Internet, we launched PatentVest in 2003, which enabled us to understand deep tech by examining what someone owned and how differentiated it was. That allowed us to see leadership potential and identify companies that could reach $1 billion valuations. As we refined our screening criteria, trained analysts, and deployed PatentVest, we could review thousands of opportunities per year because we could evaluate an idea in an hour or two. But we still had a bottleneck: getting a company positioned to create public-market value is labor- and time-intensive. Deep diligence, market-insertion risk assessment, competitive mapping, business IP strategy, and getting a company prepared to communicate its value is still hard and consumed hundreds or thousands of hours and many months to prepare companies for public markets. That's been our biggest challenge in scaling. Recently, AI has been a game changer for us, and we are committed to using it at every level. The last 90 days have been transformative in solving the information challenge. The Internet catalyzed information but also created overload. Even with patent data, getting through thousands of patents was time-consuming. AI eliminates that inertia and connects dots at unprecedented speed. Coupled with our expert analysts and the SOPs they've developed, agentic AI models allow us to screen and analyze companies very rapidly. Whether analyzing patents or new business opportunities, we're getting to the truth far faster and connecting dots we couldn't before. This will profoundly impact our business. I am skeptical of companies that pitch themselves solely as AI companies, but using off-the-shelf AI tools, like Claude, within our operations and building SOPs and agents for execution enables us to scale without laying off people. It allows our teams to be far more productive. We can now feed data from patent databases, grants, conferences, and other sources into our agents with our specific criteria; the agents can do the work of hundreds of analysts and narrow down the opportunity set to a short list for our expert team. If five percent of opportunities pass our screen, the deep diligence that used to take hundreds or thousands of hours can be compressed substantially. We estimate compressing that time by two thirds — this is already evident to our investors, who are asking more insightful questions in a much shorter timeframe. Preparing a company and taking it public could go from six to 18 months to weeks. For example, we began the S-1 for Paulex and our team produced a solid draft quickly. We're still early in implementing all these processes, but financial models, business strategy, and IP positioning are being done much faster. This is a total game changer for scaling. Throughout our business — PatentVest, investor diligence, and other areas — AI will change distribution, deal curation, and how our community reacts to deals. Since going public, we've also been investing in MDB Direct (our clearing operations) and PatentVest to build them as discrete assets. We've invested about $4 million annually since the IPO on these assets to stand them up as independent enterprises. MDB Direct is unique: scaling IPOs, especially public venture IPOs, requires distribution solutions beyond traditional institutional investors. Many of these companies are early-stage and began finding funding through crowdfunding, Reg A+, and similar routes. Distribution is changing rapidly and clearing is a key differentiator. Firms like Robinhood had to self-clear to access these investors. Most broker-dealers in the microcap market are not self-clearing, but clearing offers ways to be profitable through stock loan, margin lending, and other services. Our clearing platform is now operational after five years of work with vendors and developers. It's a valuable asset. We see opportunities for strategic partnerships to monetize the asset and help solve our distribution challenges at scale. This could be spun out or sold and would be a force multiplier for distribution and shareholder value. PatentVest's other big idea was to become a law firm. We built a patent research company previously and sold it. That research business had limits because we were not a law firm and couldn't render legal opinions. With the ABS program, we became one of the first ABS IP law firms. Javier Chamorro runs the operation and we've built core law firm operations — patent prosecution, foreign prosecution management, docketing, maintenance fees — in addition to front-end research to improve patent quality and efficiency for small and large companies. By being an ABS law firm and potentially the first to go public, we can treat patent prosecution as a business process and partner with big law firms that see prosecution as a process business and want to focus their high-level legal talent on strategy and litigation. We're having productive discussions with law firms and see a large market opportunity — U.S. patent prosecution is conservatively $10 billion to $15 billion. We can garner meaningful share by partnering with big law firms and by embracing AI; we see this as a law firm that uses AI, not an AI legal tech company. We plan to spin this out as an independent entity and finance it before year-end. Our portfolio assets include MDB Direct and PatentVest plus two portfolio companies, eXoZymes and Paulex, which can create significant value. eXoZymes is public and Paulex is a company we recently funded and plan to take public later this year. eXoZymes is at a critical development point. The initial strategy was to partner with pharma to help them make things they couldn't make, but the company realized it could make things no one else can make and sell those products directly. The promise of synthetic biology is arriving. Companies like Ginkgo Bioworks were expected to scale manufacturing but did not fully do so. eXoZymes focused on a few big opportunities and demonstrated its technology at contract manufacturers, showing that it scales — something not often demonstrated in synthetic biology. The company has significant headroom relative to its current market value. Paulex is another asset we won't spend a lot of time on now; we'll provide an update for Paulex participants. We're hoping to initiate a clinical trial in September, concurrent with the IPO. Paulex has game-changing potential for both type 1 and type 2 diabetes by helping the body produce insulin again or increase production. We started the company with people who were involved in Prevention and who know diabetes well. We look forward to the IPO later this year and early clinical results that could be groundbreaking. Our four principal assets — eXoZymes, Paulex, MDB Direct, and PatentVest — each have $1 billion potential in our view. At year-end, our eXoZymes position was about $45 million market value and is currently around $30 million. We own 7.1 million shares of Paulex; IPO pricing remains to be determined. MDB Direct could be worth tens of millions or more given the shift in distribution. PatentVest has substantial value after years of investment since 2003 and additional investment since going public. Our cash and marketable securities, less current liabilities at year-end, totaled about $22.3 million. A footnote: we expected Buda Juice to close before year-end, but it trickled into January and will give us benefit in the first quarter. Financially, we have about $10 million in fixed operating expenses and we used about $5.7 million of cash during the year. The $4 million invested in clearing operations and PatentVest is part of that $10 million; if you remove that $4 million from the $5.7 million cash burn, our operating cash burn would be about $1.7 million. Post-spinout of clearing and PatentVest, our OpEx should drop to about $6 million a year. On that base, and with the number of companies we can launch and the equity we earn by co-founding and launching these companies, we have significant financial leverage. The equity position from co-founding Paulex, for example, is worth much more in our view than the cash we burned in 2025. We generated significant equity value not yet apparent in fiscal 2025, and going forward the leverage looks compelling. If we can launch three to five companies a year on a roughly $6 million OpEx base, we could create meaningful shareholder value. Risks: public venture is not guaranteed. There's macro and micro risk. Microcap market conditions have been difficult, and many small public companies have faced severe dilution historically. Execution risk exists for our portfolio companies, and distribution is the biggest worry. We are not too worried about AI execution risk; we are already seeing tools work for us. Clinical and regulatory risk exist for life sciences. Path forward: we're positioned to launch three to five high-quality companies a year, but this depends on distribution. We're working on partnerships and spinning out the clearing platform and PatentVest and monetizing them. Cost and scale efficiencies are improving as our processes stabilize. As always, shareholders retain preferred access to MDB deals. Thank you for your faith in MDB. It's been a tough couple of years watching our stock decline since going public. I'll be candid: this has been harder than expected. We had high expectations based on recent history where multiple prior companies reached $1 billion valuations. If that had occurred after IPO, our situation would be different. Some investors thought we were lucky with Prevention, but we were deeply involved in starting and developing those assets. POS Biosciences, for example, achieved a substantial valuation that created multiple opportunities for investors relative to our IPO price. Cue Biopharma achieved a $1 billion valuation based on the promise; the technology worked but the company has had execution challenges. We haven't given up on that technology. For the current batch of companies, I believe each of our four principal assets has $1 billion capability. If one hits $1 billion again, it will reward shareholders meaningfully. That is not a promise, but it's our perspective. With that, I'm going to open it up to questions. I think, George, why don't you come back...
Let's just jump into it. I'm going to start right off. Chris, I know you hit the positions we have the biggest stake in, but I just have a question: can you talk a little bit about Cue, ClearSign, and HeartBeam, and also give a view on Buda? That was an unusual move for us to do Buda. Can you give a little perspective on those positions that many of our shareholders still hold?
Yes. ClearSign has been on a long commercialization journey. It's a small position for us, but their unique burner technology remains relevant as natural gas continues to be burned and regulations evolve. I think the prospects for that company are good. HeartBeam achieved what many thought was impossible: an FDA approval for a pocket 12-lead ECG. What's not always noted is that their ECG can be better than a traditional 12-lead in many ways. As they've signaled, it could be the first device to detect a heart attack outside a hospital setting — that would be a game-changer and could save millions of lives. Commercialization is not easy for small companies, but HeartBeam's technology is the most sensitive ambulatory ECG in the market, and we remain hopeful they will secure partnerships that drive scale. Regarding Buda, I addressed it in the shareholder letter. Some asked why we were moving away from deep tech. The decision was somewhat serendipitous: a friend who was CEO visited me and described what he was building, and I realized they were creating a new category. Buda has the potential to lead in fresh juice and fresh foods distribution where many markets, even large retailers, struggle to offer truly fresh options at scale. Fresh food demand is growing worldwide; trends in Europe show consumers favor fresh shopping multiple times a week. Buda is a unique company that could be a leader in this space and it happens to be profitable. We're excited about that opportunity.
And Cue Bio?
Cue has struggled with assembling cohesive management and board compositions and getting its technology fully commercialized. That said, they have partnered with Boehringer Ingelheim and with ImmunoScape on a Phase 1 study, and they're gearing up for a Phase 1b/2a or later-stage study. Those programs — collectively three shots on goal — are valuable. The stock doesn't reflect this activity, and you wouldn't know it by looking at the market price, but we still believe in the underlying technology. It's had execution challenges, but we're as bullish on the technology's potential as we've ever been.
A question on eXoZymes — we're going to transition from this call into eXoZymes's year-end call in 15 minutes, so we'll wrap up here. What are you looking at in terms of financing? They will have to raise money. How do you see dilution working, particularly given asymmetrical upside?
The key attribute of eXoZymes is capital efficiency. Much like MDB at a roughly $10 million OpEx level to create big opportunities, eXoZymes operates with a relatively small OpEx but can create large outcomes. They have roughly a $10 million OpEx to pursue huge opportunities and have developed at least two very large platforms — NCT and cannabinoids — which will be discussed on their call. Those opportunities are now at the doorstep of commercialization and are no longer science projects. We expect dilution to be relatively minimal because manufacturing can be outsourced and the company is capital efficient compared to typical drug development. They have secured government grants and are likely to continue receiving grants given the strategic importance of domestic manufacturing. Their technology appears to scale, and these are potentially enormous total addressable markets. In short, dilution should be manageable because the business model and the platforms are capital efficient, and we expect further grant support and strategic partnerships.
A question on PatentVest: how do you see that spinout structurally? If I'm an MDB shareholder, how will this impact me? Do you have an idea of the path, timing, and potential valuation? I know you said you're not sure on valuation, but what should shareholders expect?
The good news is we own 100% of both MDB Direct and PatentVest. Our plan is to do a round of financing for each to bring in partners — whether law firms, strategic corporates, or other strategics; we are in active discussions. Our objective is to fund them as independent entities and then look to take them public in 2027. The exact method will be dictated by near-term partnership and financing outcomes. For shareholders, the path will likely involve external investment into those businesses and a separation from MDB, followed by independent growth and potentially public offerings in the 2027 timeframe. We will communicate more specifics as partnership and financing arrangements are finalized.
Can you talk about what your deal pipeline looks like for the next 12 to 24 months?
Our deal pipeline is strong and improving. The constraint is not the number of companies we see, it's distribution — packaging and selling the deals to investors. Once we solve distribution, volume could increase materially. Adding distribution partners and broadening our investor base are priorities. Currently, while we have a couple thousand shareholders, only 675 are active accounts, so our active community is relatively small. We want to broaden distribution so that deals aren't dependent on a couple large investors. If we expand distribution successfully, the number of companies we can bring to market per year should increase substantially. So I'm optimistic about pipeline quality; the main focus is building distribution to match it.
I have a question here I'll read directly from a shareholder: have you considered a SaaS model for PatentVest where, in exchange for its analysis, users contribute IP data to build the platform? This would both generate revenue and expand IP content to uncover combinations of IP and unexplored opportunities.
I think SaaS is going to be heavily disrupted by AI. To illustrate, take patentability or prior art search. Historically, a serious patentability search might require subscribing to multiple patent databases and paying a vendor like PatSnap several thousand dollars per year, then having an expert combine results across databases. We had expert analysts in Latin America with advanced degrees doing a patentability analysis in about 45 hours. Even with lower labor cost, 45 hours was a lot. We took those same SOPs and trained an AI agent, supervised by the same expert analyst, and we can now do a better patentability analysis in about 1.5 hours. We built the agent with off-the-shelf AI tools and our expert knowledge without hiring software developers to build a new platform. That speed and quality improvement will compress the value proposition of many SaaS offerings. Our curated data and experience are valuable, but they need to be handled behind secure walls given confidentiality concerns; you shouldn't be putting inventions into public chat tools. I believe the future is human-in-the-loop IP development — law firm-backed services plus AI agents — rather than conventional SaaS. Our ABS structure, attorney-client privilege, and integrated process position us well to lead in that model.
Well, we're at the end here, and I'm going to go ahead and turn it back to you and let you go ahead and close it out.
All I can say is thanks. It's been a very tough road the last couple of years since we've been public, but I hope that by listening to where we see things going you have more enthusiasm and will keep the faith. We're excited about the future for the firm. The team is working extremely hard to make things happen. It's been rough: we haven't given raises, we've taken back RSUs, and we've had to revise expectations. But you never give up. I appreciate everybody at the firm who's persisted. When I look at what's bubbling up from our pipeline, I'm super excited. Thank you.
All right. Thank you, everybody, for coming. Appreciate it.
Thank you very much for attending today's presentation. This will conclude our conference call. Goodbye.