Yet Another Value Podcast - Chris DeMuth's State of the Markets January 2024

Episode Date: February 1, 2024

It's time to welcome back Chris DeMuth for his monthly state of the markets. For this January 2024 edition, Chris discusses anti-trust, Spirit decision, US Steel - Nippon, banks and $LQDA. For more information about Rangeley Capital, please visit: http://www.rangeleycapital.com/ Chapters: [0:00] Introduction + Episode sponsor: Alphasense [1:53] Anti-trust + Spirit decision [9:00] Judge's decision in Spirit case + how antitrust lawyers reacted before and after the decision [15:45] Future of anti-trust and mergers [21:32] US Steel - Nippon [28:33] Banks [30:32] $LQDA Today's episode is sponsored by: Alphasense This episode is brought to you by AlphaSense, the AI platform behind the world's biggest investment decisions. The right financial intelligence platform can make or break your quarter. AlphaSense is the #1 rated financial research solution by G2. With AI search technology and a library of premium content, you can stay ahead of key macroeconomic trends and accelerate your investment research efforts. AI capabilities, like Smart Synonyms and Sentiment Analysis, provide even deeper industry and company analysis. AlphaSense gives you the tools you need to provide better analysis for you and your clients. As a Yet Another Value Podcast listener, visit alpha-sense.com/fs today to beat FOMO and move faster than the market.

This episode is brought to you by AlphaSense, the AI platform behind the world's biggest investment decisions. The right financial intelligence platform can make or break your quarter. AlphaSense is the number one rated financial research solution by G2. With AI search technology and a library of premium content, you can stay ahead of key macroeconomic trends and accelerate your investment research efforts. AI capabilities like smart synonyms and sentiment analysis provide even deeper industry and company analysis. Alphasense gives you the tools you need, to provide better analysis for you and your clients. As yet another value podcast listener,

visit alpha-sense.com slash FS today to beat FOMO and move faster than the market. That's alpha-dash-sense.com slash FS. All right, hello, and welcome to yet another value podcast. I'm your host, Andrew Walker. If you like this podcast, it would mean a lot if you could rate, subscribe, review wherever you're watching or listening to it.

With me today, I'm happy to have on for his first monthly check-in of 2024. my friend Chris and the founder of Ringgy Capital. Chris, the mute. Chris, how's it going? Well, going okay. Would like better and different news in the antitrust world, for sure. Have some thoughts on that.

I'm busy on a number of litigation opportunities and feeling great about this year. Like, the more you can extend the timeline, the more I'm going to extend the timeline, the more cheerful about what we're doing over the next five years with very high level of confidence over the next year with pretty good level of confidence and day-to-day fairly morose. I hear that. Well, before we start talking all that, I'll just do the same thing I always do. Quick disclaimer to remind everyone, nothing on this podcast investing advice. It's always true, but particularly true today because who knows what Chris and I are going to talk about. We'll probably talk about a lot of things. So keep that in mind. I guess, Chris, we're talking Monday,

January 29th. You said two things that I think we kind of wanted to talk about here. I guess we could start with either antitrust or litigation. I think either of those topics are interesting. What kind of strikes your fancy to start with? Let's do antitrust to start with, in part because it's so bad and kind of comprehensively bad that it makes me prospectively excited on other things that we're working on because it's bad in a way that is directly bad on a spirit, obviously, and other antitrust-sensitive M&A, obviously, but it's even just bad for capitalism and transparency because it's so

arbitrary. I mean, I think that the decision in spirit is kind of the poster child for mandatory retirement Ages, it's self-contradictory written in a garbled form that reminds me of the Supreme Court Chief Justice when he just starts with a conclusion that he wants to get right with the New York Times headline the next day and he'll just kind of mush together whatever he needs to to get it. It kind of just mushed together parts that were self-contradictory in terms of which expert he relied on, which Mark definition he relied on. But it was a Republican in a blue state on a blue court.

And if he wanted to not get overturned or criticized, this would be the kind of social decision to make. But it was too bad for spirit. It was too bad for antitrust. And it makes it harder, much harder, to think about analyzing contracts and markets in a future where he did. the thing that I thought was at risk in this decision, which was remove the substantial kind of materiality standard from Clayton, it's going to take a while with over years for many good quality, well-written, lucid, sober decisions to undo that arm. I mean, I don't think this will be a permanent part of jurisprudence. I think it'll be unwound over time. But it was a

terrible decision, and on all fronts. And I've been kind of going back over his comments from the bench to understand how predictable it should have been based on kind of the bits and pieces of his verbiage. But it was kind of the tritest and most superficial reading of how he sounded that it could have been. So disappointed on all fronts. And, and, and, And it was the bigger and more famous decision, but Judge Ramos in Southern District of New York had a kind of similar decision that was actually cited in this, redox in this one, but I think was similar in the Propel Media decision, both of which, the combination of which really kind of harkens back to Philadelphia National Bank, which is just this kind of pseudo-scientific kind of pre-economics

innumerate way of thinking about markets, that it's great for bureaucrats, it's great for the administrative state, because they can just say, ha, ha, you have X market share. Even in markets that are just changing just constantly. I mean, it's like saying, it's like having a law based on what the wind is allowed to be at Mount Washington, right? It's just, the world is a wild world. markets are dynamic, changing constantly, and some kind of weenie bureaucrat lawyer in DC says, ha, ha, you have this at this moment. I'm bringing that to court. It's like, okay, you can say that. I mean, those are all words, but it just has almost nothing to do with how markets work. And the combination of the propelled media block and the spirit block

to protect something, it's not even a prediction, to protect something that does not exist, today. This whole kind of weird comment that the judge made about, you know, will some people love spirit, okay, fine, there's not a profitable business model today that exists. So we could have something that goes away almost immediately that doesn't even exist today that he was nominally protecting, at least rhetorically protecting. I've gone back and I don't have a great conclusion. I want to learn all the right lessons, but I don't want to overlearn the lessons just because it's the most immediate precedence and vivid, but interested to go back and trying to better understand what he was saying and how that fit into his decision. And then also trying to go back

and really question why, if this was how things were headed, that the companies didn't make a staunch clear failing firm defense. If you look at JetBlue and Spirit decisions coming out of this case, you could have made a stronger case that this wasn't protecting market shares because the contrafactual was completely different than how the judge set it up. I mean, there was a fantasy ideal world, the world of this deal and a world without this deal. But the companies didn't make a very clear case that the world without this deal is no more competitive than the world with it. And I think that could have made that very clearly, especially with what we're seeing after the deal broke.

I guess on just a few different points. So on the failing firm, you know, I think the companies, look, I thought the trial obviously tons of podcasts talked to some of people there, like read all the stuff. I thought the trials was going really good for the company. And maybe with the benefit of hindsight, they could have harped on it. But like, I don't think the case law for making a failing firm defense case is really great, right? No, it's a very last line of defense. It sort of presupposes failure on almost all other fronts. I imagine tactically lawyers are pretty uncomfortable with it.

Yeah. So, like, I mean, I thought it was going great for him. So I don't even know why you'd broach it. Now, in hindsight, like the judge asked so many questions on, hey, you know, ask about Spirr's viability and everything like, I guess in hindsight, you could have like put yourself in the judge's shoes and been like, maybe he's asking these because he wants exactly what's happening now where, you know, this deal blocks in the next day, Wall Street Journal's reporting Spirits exploring restructuring options and like Spirit might not be an airline anymore, you know,

that's exactly what he didn't want. So maybe put yourself, I don't know, I guess the other thing, the other two things I've really been thinking about are number one, you know, throughout the case, I kept hearing from everyone who was in the courtroom, hey, how much respect they had for this judge. And like, in my, when I was thinking through the case, I was really thinking like everyone talks about how much respect they have for the judge. You know, he's an 80-year-old judge, but I talked to people who've litigated with in front of him five years ago, 10 years ago, you know, how much respect they had for the judge and everything. And then I read the decision. And the two things that jump out to me, the thing that really jumps out to me is the inconsistency of with one of the expert witnesses the government presented, which I always thought was going to be. huge issue. You know, the expert witness, JetBlue tore him apart. They showed his model was

terrible. It was unreliable. Bad data. The model was like basically a parabola and you just cut off the ends to show it as a straight line. I thought he was terrible. And the judge said, hey, this was a credible witness despite the, despite the defendants raising very credible objections. And I was kind of like, credible objections. The objections were, it would be like, if you're like, hey, Chris is a great guy, despite the objections, Andrew raises to his character. It's like, yeah, the objections that rate security, you committed genocide. Like the man's committing genocide. That's a pretty big objection. You can't, generally you don't have great genociders. But so I don't know, I was just trying to weigh that against when I see the decision, hey, I thought the judge was really good

before. Like how much do I read into that? You know, that's one. And then there's one other thing I want it's run by it. Well, let me just respond that the quality standard. I mean, it has to be a huge. I mean, I think that this decision was so interesting coming out at what could be, you know, I think we're on the one yard line for ending Chevron down. And so this big possible change in how courts look at the administrative state and how much we're supposed to defer to the administrative state. I think it's going to have a sea change, especially if the Democrats lose the White House, the combination could have a sea change on regulatory affairs.

But this was a big opportunity for this judge to set real serious standards on materiality, what substantive means in the law, and on pushing. back hard on the quality of experts. And he did the opposite. So he did all those things. But he said, government can just say things. It doesn't matter. As long as you can, as long as you're a literate lawyer in D.C.,

you can just put words together. And there's no requirement for substance. And you just need a kind of sane, sober expert. and they can murder charts and logic, and that's fine, too. So he did set the standards, but he just set the standards at nothing. So it's really a terrible thing for the long. I saw, I know you saw a few of them, too, like law firms would send around reviews of the case and the decision, you know, because law firms, they care about this because they're going to have to set it as precedent. They need to know, like, what the law.

And most of them I saw was like, hey, this decision was, and this is what the bears were seeing the whole time, right? this is a buy the books antitrust you have a horizontal merger you have hot docs you have deference to the government and you have prices going up right nobody's arguing those what spirit and jepp blue are you're saying hey really understand the industry understand the history here like here's everything this is a great merger all around for everyone and ignoring that like it's not your job to rule if it's a great merger or not it's your job to rule if it's an antitrust problem and if you look at all of these different things you can see why this is an antitrust problem so what the law the law firms are saying was

this is a paint by the book's antitrust decision, and I think a lot of them were saying what you and I thought were betting on. It's a paint by the book and one that required an antitrust decision that actually understood the industry and showed a little, I don't want to think creativity might not be the word because I don't think you had to be that creative to read the JetBlue thing and say, oh, this great. The other thing that was interesting, and we saw this from multiple law firms was, hey, okay, yes, the government won here, but this is another example of the government coming up with an antitrust case and similar to Spectrum brands and maybe a few others. And the government just getting absolutely slaughtered in court when they went

to argue the case, which might speak to a weak case or might speak to an ineffective. But I thought that was a really interesting comment. And I saw that from, I don't know, probably three different law firms. And obviously, I thought the government was getting slaughtered in the case as we listened to it. I don't know if you want to comment on anything there. Yeah, no, I got updates from all the firms, calls from all the partners. I mean, I hope these people are all trillionaires by now by the by their addition of how confident they were at the time, but their view would minimize my worry about this as a precedent. And maybe I seek too much kind of coherence,

both within an argument and within a system overall. So I kind of see a given data point. I think, okay, well, now this is how the future has to be to take into account. And the reality sometimes is it's just a messy world, and they do, they make decisions all the time that don't fit in with other decisions. So, you know, I think, I think that the, I mean, right after the Propel Media decision, I think that this one was, creates, in a sense it creates more space for future judges to set workable standards because this one really gives the government such huge latitude.

And I think where they'll use it is, for kind of social activism and rhetoric where they are able to pick the kind of underdog narrative. And we'll have laws that are just kind of narrative driven and say, you know, this is surely. Shirley wants to do that. It is like we live in a country of over 300 million people. You can find a narrative that says anything. So if we're going to run public policy based on anecdotes, it's just endlessly absurd. But the way the absurdity will be used is just in underdog narratives and beating up companies

that fit the villain narrative in a kind of 1980s Disney style. Mr. Biggs trying to buy the kids, you know, favorite resort or something like that and build a condo. And the DOJ FTC will be able to be kind of the heroes in their minds. And now a quick break to remind you that this episode is brought to exclusively by AlphaSense. the AI platform behind the world's biggest investment decisions. Alpha Sense gives you the tools you need to provide better analysis for you and your clients. As yet another value podcast listener, visit Alpha-Sense.com slash FS today to beat FOMO and move faster than the market. That's alpha-dash-sense.com slash FS.

That actually bleeds into the last point I wanted to. So we're talking January 29th, and just this morning, Amazon and I-Robot dropped their deal to merge. because of opposite from the EU. And I had to spoke to several experts on that. And basically, like, I spoke to two antitrust lawyers, the same antitrust layer on the JetBlue deal and the I Robot deal. And both of them, they had government backgrounds. And they were like, look, you know, I kind of thought they, they basically were 70% in favor of the government's case. If this, if it was a 70, 30.

They were 70%. And I thought they were a little too deferential to the government because, you know, they used to work there. They knew a lot of people there. But that was their case. They're like this, we've got the hot docs, the difference, all that. And both of them were like, hey, if you bring the I robot case in U.S. court, Amazon's going to slaughter the government, right? This is a horizontal deal. You've got Amazon and online retailer buying it.

There's absolutely no interest case. All of them. And I think Amazon dropped because of the EU concerns. And we can talk about like how they strategically, but like what's most interesting to me from the JetBlue deal and the I robot deal is, you know, you now have two different deals where I think consumers are in a market. at minimum would not have been harmed or wouldn't have changed with these. And actually, like, iRobot and Spirit are both breaking into decent amounts of distress. And I just wonder, like, with these, you know, if the government could choose, hey, ULCC's off limits for mergers, I robot can't sell to a strategic marketplace.

Like, hey, I think they, Amazon might have said in their thing, like, this is awful for entrepreneurship. People have to start saying, hey, I might not want to start. If I see an opportunity to start a low cost care or something, maybe I don't do it because there's no exit on the back end. The government's just going to say, hey, too strategic. You're saving people too much money. Even if there's not a business plan here, you can't exit. The only exit is to file and liquidate. So, you know, I worry about those longer term things. I worry like, again, Amazon I robot. I thought that was right down the middle in terms of, yes, it's a giant company,

but being big and buying someone is not an antitrust issue, being big in a market and buying another competitor, causing consumer arm is an antitrust issue. So I don't know. I just worry about that. And I guess people, my libertarian bent is really showing here. But I, wanted to toss that over to you well what does it mean to own something I mean you can't show up at I robot and rearrange the furniture but you do yeah don't that Rumba sometimes rearranges my furniture so I don't know you um I I I do when we had babies at home I did chase them around with the I robot which I thought was pretty fun when you could kind of control but um I you get a return of capital at some point or another you get a

are in the capital, and one of the major ways of doing that is in M&A. So even if on most days you're not benefiting from a deal, the possibility that you do eventually is the exit. It's why you capitalize companies. And the idea that Lena Khan at the FTC and the Department of Justice just are the, they're in charge now. They pick which models are sacred and which ones or not is it is hugely damaging just to the very idea of private property rights. If you don't break the law, it shouldn't be none of their business. I don't have the least bit of curiosity other than having to get through these processes, what they think I should own and who they think I should sell it to. They wouldn't make the top million people I would

have the least bit curiosity to inquire about their views on. They just have these kind of glandular views that are, you know, kind of narrative-based and will have this huge impact on society. I mean, even in the course of the deal, you know, there's been new entrants into this area anchor is sort of new products. The idea that either spirit or a robot is going to dominate or be a monopolist of anything is laughable, they're going to, they would go bank. prep before they would have pricing power and everything. I don't think maybe I'd make too much of

it. It's getting real wonkyer, but like the Amgem, the Amgen horizon deal last year that the SDC sought to block. And they had all these theories. And Amgen was like, okay, we'll agree to them, but like we weren't going to do them. And there's not really a legal standard there and everything. You know, though it just reminds like that was big company, big pharma company buying small rare drug disease company, right? And if you're going to say big is bad, like those were obvious attempts to block and I think they kind of got laughed out of the courtroom so they eventually settled. But it like it does bother me because one of the reasons you found a small like company to take the shot, you know, it's one in a hundred to find a cure to a rare disease. There's very

small patient pools. Like it doesn't make sense for these companies to hit scale and then like build out their own sales force and try to monetize these drugs. Like the exit actually has to be selling to a larger company. And if you're going to come block them because big is bad, like what you're actually doing is shutting off research and development because if people know they can't exit, these businesses can't run profitly on their own. Horizon was a little bit different because they were big enough. They'd done enough to M&A. But, you know, if you and I wanted to go, look, we couldn't go fund a rare drug company if you can't sell out the back end, because if you're going to be one drug company, makes absolutely no sense to go hire a sales force and all this sort of stuff.

So I don't know, yeah, I just look at it and I see it so negatively. And it, it upsets me a little bit. But I don't know if I'm, you know, maybe I'm just sour grapes because of spirit or maybe it's my libertarian bent. But, you know, I was completely against T-Mobile sprint. Like, I thought that was an obvious four to three, and maybe that's been proven wrong, but I think part of the reason it's been proven wrong is because the cable guys came into wireless really aggressively. Like, there have been a few other ones that have gone through, but all of these ones I see and they're not even edge cases, like all of them to me should just be sailing through.

I think it's a disaster that they're not. Agreed. Unrelated. We haven't really talked about U.S. Steel Nipon too much. That's a really popular one just because, look, it's Nipon's a Japanese company. They're buying U.S. steel. And there's all this talk about Sipheus review. And it seems pretty clear to me that the unions aren't happy that Nipon's buying U.S. Steel.

It seems like they wanted CLF to buy United Steel. And it seems like this is going to get a Sipheus review because of jobs, which is really interesting to me. I mean, Japan, last I check has been an ally of ours for going on 80 years. The five years prior to that might not have been great. But this is a really close ally of us. And if you're going to block this on national security concerns because of jobs and it seems because of the union and somebody pointed out something interesting, the United Auto Workers endorsed Biden last week and the steel workers have not, and they think it might be related

to this deal. I don't know. I just think that's an interesting one. I'd be curious for two seconds of your thoughts on that. Well, with legislative parity, I'm kind of taking the under on almost any issue that requires congressional action, but on foreign policy and Sipheus is a very kind of foreign policy kind of oriented statute. The president has a ton of authority. We have a strong presidency when it comes to foreign policy. And so Biden can do whatever he wants, unlikely that he would want to clear this before the election. I would think, I think there's very little political upside. It hurts the case that it's called U.S. Steel, right? It was just the stupidest things one could say are easy to say. You know, you can have

a kind of mildly racist xenophobic case that kind of is easy to paint. So the dumb arguments, like you can be sure in this political environment, somebody's going to kind of take the low road to any possible situation. This is an easy low road to imagine. I can see both sides campaigning on, I'm going to block U.S. deal. And like it almost becomes, who's going to block the U.S. deal merger harder? I can see that coming in its play. There aren't enough merger arms to be this major part of the Electoral College consideration.

You know, I would like Hedgeman managers to be given a place in this kind of populist era, but we don't really have one. And maybe even hurting us helps. But so I can't think of any kind of political reason to be for it. Eventually, Japan is, I mean, the serious issues here, I should say are nonsense, right? antitrust issues are nonsense, the foreign, the steel, it's like if you block it, I could maybe understand why, like, when China, when a Chinese company wanted to buy pork processing facilities, I could understand why that might be an issue because you could poison the pork or that sort of stuff. But here, it's like US steel getting bought by an ally. And it's not like

the steel plants go anywhere, right? Like, what's Japan going to do secretly weakened the steel that the plant's producing? Like, hey, you catch that pretty quick. But the steel, if, if something turn, like the plants are still there. You just seize the plant. Seize the means of production. Sure. Also, um, an ally fairly well renowned. Again, this isn't a good. I don't have to get votes, but fairly well renowned for better, more exhausting, more exacting production standards than we have, right? So they're good at doing things like this. So it almost certainly, uh, the reality is that improves our national security issues because US Steel will be better with the Japanese running it. Um, they're also incredibly key allies for.

kind of the next half decade, if we're at war over Taiwan in some fashion in the next few years, we kind of need Japan. They're incredibly important. You know, Japan, it's interesting because they still have kind of constitutional limitations coming out of World War II, but they have a very proficient self-defense force that could be scaled up really quickly. And I think it's in America's interest to kind of liberate them from all these constraints as fast and comprehensively as possible. So they're not just an ally, but an increasingly important ally where in a kind of more multipolar world, their geography is even more important. So, you know, we get through the election and I think things could pivot quite a bit. But all of the, all the dumb things you

could say and all the kind of first level thinking in this argues against it. So it was something I liked a lot as a pre-arb. It's something I've not liked a lot as an ARB, but would happily reassess later or lower. A few people asked me on Twitter, you were by yourself with three kids this weekend. A few people asked me, do you still have three children? Are there still, you know, kind of 30 fingers and toes and everything in the household? I do. I might have committed a felony. I'm not sure about this, but I kind of was reading and totally thinking about something else and I needed something. So I just reached over my shoulder and said, handed a credit card and said, hey, we go in town and get me something I needed? And he said, sure, and left. But I have

three kids and it was the youngest one. I was just saying it was Christopher, the oldest, not the youngest, right? It was the 10 year old. It was the 10 year old. So 15 year old, totally fine. 10 year old, I'm not exactly. I haven't looked. Somebody could check this for me. But he went into town on his own with money. He spent it. He got what I needed, came back. And so it was totally successful. So yeah, so no, they were alive and well. And my wife actually made money on her ski trip to Utah. She got $2,700 in bumps. And apparently it's the best bump out of New York first flight out Thursday morning. So for three-weekend skiing in Park City, $2,700 of bumps. So that was a good trip.

How much was you delayed for the bump? I think it was quite a few hours. I think it was, I think it cost her like half a day, something like that. That's still not. I mean, $2,700 for a half a day.

I've always, bumps always make me left because like one time I was going on like a nine hour flight or something, you know, I guess six hours. I think it was to California. So, and the next flight was the next morning. They're like, hey,

we'll give $100, $150, it's like, who's going to be like, go home, by the time you go home from the airport. Right. sleep come back like you're out money ignoring the time to hassle everything and then sometimes i'll have like you know new orleans to new york to new Orleans they'll be like hey there's another flight 45 minutes from now we're going to upgrade you to first class whoever takes this

we're going to give 500 dollars you've just got to wait 45 minutes to take off or something who is coming up with these numbers what are these systems this is why spirit can't make any money like come on guys uh let's see i guess what anything else you need Always really interesting, like banks have been on my mind a lot recently. There have been some of those credit union deals. I've been really interested in those just because they come at big premiums. And I wonder if the credit unions are capitalizing or seeing value that maybe public market investors aren't in terms of for the credit unions themselves, getting bigger, getting access

to the demutualized company. I don't know that those have been really interesting to me. Yeah, I think I have a. cynical view, which is they don't have a publicly traded stock so that they don't have to justify near-term recretion or dilution or the value of impact. The managers tend to have huge change of control provisions but need to get big enough to be relevant as deal targets themselves. And when they're buying, especially when they're buying MHC structure and mutual holdcos, you don't really have to pay anything for the majority of the equity, as long as you can

convince the managers, you're really only paying a premium to the minority. So it's a little bit like the dynamics of settling a appraisal case where you only have maybe five or 10 percent. You can give these big premiums because it just doesn't add up that much. So I think the MHCs, where if you don't have growth prospects and the market hasn't really given you a big premium, the market's telling you it doesn't love you in your current form. You can't really use that currency as a buyer in deals. left to do a kind of so-so second step or remutualized to a credit union willing to pay a big premium. So they have the money, they can do what they want, what they normally want is to get bigger. And we've been seen one almost every day.

And some of these are 100% premium deals. So I think they're going to, you know, we'll have dozens of them this year, big premiums. And it's really interesting to see. I guess last thing, just because we haven't had Lionel went on a while, but I got a few questions on just, you know, Liquidia, for those who haven't followed, like, Lionel did some great pods, especially right after the, right after the core case, but Liquidia won last year. And then there's lots of questions on there was a pedophidate with the FDA last year. A lot of people are just curious for what current thinking on Liquidia is.

I love Liquidia. I'm not that worried about the FDA, famous last words. I think the FDA is being a little bit pedantic about wanting more closer on the court issues, which we'll know a ton more in February. So my sense is that they won't need to set a new date. My sense is that the current application is approvable and will be approved and is complete. and that, so they did not get a CRL. Like it was initially, within moments of it, it was unclear.

They would have, they would have 8K to CRL. They did not get that. Didn't get a new pedophidate, unlikely to do so. Nothing was said to be inaccurate or incomplete with the application. So it's consistent with that being approvable. And I think it's still consistent with being in the market with full. label on both indications in the second quarter probably April. And so I think, you know, say we get a kind of court sign off in February, and that's the issue of the kind of complete

closure on the pattern front, then the FDA could come back and approve. If a few days later they still don't, then it's like, okay, maybe I'm missing something here. But yeah, and I think the company doesn't need to raise more equity if they can get to market in April, and they think they're going to be profitable within a few quarters of that. And so I don't think this looks like the kind of dreaded 30-month-stay possibility, which would then require raising more capital and would really change the situation quite a lot. So I guess the other thing I just always thought, and I almost felt like I was being dumb for asking, but the Perufa for last week was on the ILD label exemption, right?

So, like, the worst case scenario to me would be if the FDA was really coming at this, can we're just like, all right, we're going to drop the ILD application and just go back to the original label just for, and I think you could get approved under that and like launch on the normal timeline. It seemed like that was the worst case scenario to me, but I don't know if I was being crazy or not. No, no, that's reasonable. And I'll note that the companies have no plan on for better or for worse.

they do not appear to have any tactical plan as a kind of backup plan B that they're working on at all, just split the label or anything. So either they're naive in taking on a risk that's going to fail horribly, or they are right to feel confident that they are going to have this label ready to go soon. So they rightly or wrongly seem to be very confident that that backup plan is unnecessary. But no, logically, that clearly would be a way to go if necessary. Well, you know, I always like not having a heartache or stress or anything. So I prefer just, hey, FDA approved, done, don't even have to worry about it.

But, you know, there are worst things in the world. And we probably won't know next month. But I guess at the end of March when we're doing it, we'll almost certainly know because I think they're planning on an April launch. And you're going to have to know by the end of March if you're approved before you can do an April launch. But we will know soon. All right.

Well, hey, let's wrap it up there, Chris. End of January. Looking forward. We've got a short month. We'll be talking soon because it's a short February month. Oh, that's right. Go ahead. Oh, that's right.

Yeah. And well, I think, I think, I think we will hear back on liquidity F from the FDA. I think we'll hear from the FDA by the next time we're talking. You are probably right. I'm probably being a little too conservative, but it might be in March or something. Cool. All right. Well, we'll look forward to that.

Chris, have a good one. Thanks, bud. Bye. A quick disclaimer. Nothing on this podcast should be considered an investment. advice. Guests or the host may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.