Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | May 07, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-39329 | |
Entity Registrant Name | Royalty Pharma plc | |
Entity Incorporation, State or Country Code | X0 | |
Entity Tax Identification Number | 98-1535773 | |
Entity Address, Address Line One | 110 East 59th Street | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10022 | |
City Area Code | 212 | |
Local Phone Number | 883-0200 | |
Title of 12(b) Security | Class A ordinary shares, par value $0.0001 | |
Trading Symbol | RPRX | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001802768 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 392,857,300 | |
Common Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 214,255,202 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 708,810 | $ 1,008,680 |
Marketable securities | 1,068,913 | 983,279 |
Financial royalty assets | 522,388 | 587,193 |
Accrued royalty receivable | 33,454 | 33,155 |
Available for sale debt securities | 69,261 | 69,984 |
Other royalty income receivable | 6,541 | 6,011 |
Other current assets | 6,657 | 8,596 |
Total current assets | 2,416,024 | 2,696,898 |
Financial royalty assets, net | 12,599,080 | 12,368,084 |
Intangible royalty assets, net | 22,995 | 28,666 |
Equity securities | 244,503 | 298,689 |
Available for sale debt securities | 179,939 | 163,016 |
Derivative financial instruments | 2,884 | 5,439 |
Investments in non-consolidated affiliates | 444,407 | 454,936 |
Other assets | 4,256 | 4,558 |
Total assets | 15,914,088 | 16,020,286 |
Current liabilities | ||
Distribution payable to non-controlling interest | 108,840 | 126,366 |
Accounts payable and accrued expenses | 8,272 | 10,775 |
Interest payable | 10,271 | 42,146 |
Accrued purchase obligation | 110,000 | 110,000 |
Milestone payable | 18,600 | 18,600 |
Total current liabilities | 255,983 | 307,887 |
Long-term debt | 5,821,072 | 5,816,584 |
Total liabilities | 6,077,055 | 6,124,471 |
Commitments and contingencies | ||
Commitments and contingencies | ||
Deferred shares, $0.000001 par value, 321,128 and 316,407 issued and outstanding, respectively | 0 | 0 |
Additional paid-in capital | 2,931,249 | 2,865,964 |
Retained earnings | 1,923,771 | 1,920,635 |
Non-controlling interest | 4,954,818 | 5,077,036 |
Accumulated other comprehensive income | 29,452 | 34,395 |
Treasury interests | (2,359) | (2,317) |
Total shareholders’ equity | 9,837,033 | 9,895,815 |
Total liabilities and shareholders’ equity | 15,914,088 | 16,020,286 |
Common Class A | ||
Commitments and contingencies | ||
Common stock | 39 | 39 |
Common Class B | ||
Commitments and contingencies | ||
Common stock | 0 | 0 |
Class R Redeemable Stock | ||
Commitments and contingencies | ||
Common stock | $ 63 | $ 63 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) shares in Thousands | Mar. 31, 2021$ / sharesshares | Mar. 31, 2021£ / sharesshares | Dec. 31, 2020$ / sharesshares | Dec. 31, 2020£ / sharesshares |
Deferred stock, par value (in dollars per share) | $ / shares | $ 0.000001 | $ 0.000001 | ||
Deferred stock, issued (in shares) | 321,128 | 321,128 | 316,407 | 316,407 |
Deferred stock, outstanding (in shares) | 321,128 | 321,128 | 316,407 | 316,407 |
Common Class A | ||||
Common stock, par value (in dollars/pounds per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||
Common stock, issued (in shares) | 392,857 | 392,857 | 388,135 | 388,135 |
Common stock, outstanding (in shares) | 392,857 | 392,857 | 388,135 | 388,135 |
Common Class B | ||||
Common stock, par value (in dollars/pounds per share) | $ / shares | $ 0.000001 | $ 0.000001 | ||
Common stock, issued (in shares) | 214,255 | 214,255 | 218,976 | 218,976 |
Common stock, outstanding (in shares) | 214,255 | 214,255 | 218,976 | 218,976 |
Class R Redeemable Stock | ||||
Common stock, par value (in dollars/pounds per share) | £ / shares | £ 1 | £ 1 | ||
Common stock, issued (in shares) | 50 | 50 | 50 | 50 |
Common stock, outstanding (in shares) | 50 | 50 | 50 | 50 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | $ 573,027 | $ 500,879 |
Operating expenses | ||
Provision for changes in expected cash flows from financial royalty assets | 292,262 | 88,012 |
Research and development funding expense | 2,641 | 7,639 |
Amortization of intangible assets | 5,671 | 5,733 |
General and administrative expenses | 43,156 | 38,065 |
Total operating expenses, net | 343,730 | 139,449 |
Operating income | 229,297 | 361,430 |
Other expense/(income) | ||
Equity in loss of non-consolidated affiliates | 1,918 | 9,074 |
Interest expense | 37,415 | 53,584 |
Unrealized loss on derivative financial instruments | 2,555 | 33,445 |
Loss on equity securities | 54,186 | 153,166 |
Unrealized gain on available for sale debt securities | (9,115) | 0 |
Interest income | (16,598) | (2,858) |
Other non-operating (income)/expense, net | (43) | 5,923 |
Total other expense, net | 70,318 | 252,334 |
Consolidated net income before tax | 158,979 | 109,096 |
Income tax expense | 0 | 0 |
Consolidated net income | 158,979 | 109,096 |
Less: Net income attributable to non-controlling interest | (89,860) | (37,856) |
Net income attributable to controlling interest | 69,119 | 71,240 |
Other comprehensive income/(loss) | ||
Reclassification of loss on interest rate swaps | 0 | 4,066 |
Unrealized gain on available for sale debt securities | 5,125 | 52,725 |
Reclassification of unrealized gain on available for sale debt securities | (15,491) | 0 |
Other comprehensive (loss)/income | (10,366) | 56,791 |
Comprehensive income | 58,753 | 128,031 |
Less: Other comprehensive loss/(income) attributable to non-controlling interest | 4,881 | (9,672) |
Comprehensive income attributable to controlling interest | $ 63,634 | 118,359 |
Earnings per Class A ordinary share: | ||
Basic (in dollars per share) | $ 0.18 | |
Diluted (in dollars per share) | $ 0.18 | |
Weighted average Class A ordinary shares outstanding: | ||
Basic (in shares) | 389,760 | |
Diluted (in shares) | 607,148 | |
Financial Royalty Assets | ||
Revenues | $ 529,625 | 462,844 |
Intangible Royalty Assets | ||
Revenues | 36,061 | 34,983 |
Royalty Income, Other | ||
Revenues | $ 7,341 | $ 3,052 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Class R Redeemable Stock | Common StockCommon Class A | Common StockCommon Class B | Common StockClass R Redeemable Stock | Deferred Shares | Additional Paid-In Capital | Shareholders’ Contributions | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Income | Non-Controlling Interest | Treasury Interests |
Beginning balance at Dec. 31, 2019 | $ 6,141,438 | $ (192,705) | $ 3,282,516 | $ 2,825,212 | $ (192,705) | $ 2,093 | $ 35,883 | $ (4,266) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Contributions | 1,441,275 | 307,646 | 1,133,629 | |||||||||||
Distributions | (393,202) | (141,776) | (251,426) | |||||||||||
Net income | 109,096 | 71,240 | 37,856 | |||||||||||
Unrealized gain on available for sale debt securities | 52,725 | 43,053 | 9,672 | |||||||||||
Reclassification of unrealized gain on available for sale debt securities | 0 | |||||||||||||
Transfer of interests | 0 | (1,037,161) | 1,037,161 | |||||||||||
Reclassification of loss on interest rate swaps | 4,066 | 4,066 | ||||||||||||
Ending balance at Mar. 31, 2020 | 7,162,693 | $ 2,553,001 | 2,561,971 | 49,212 | 2,002,775 | (4,266) | ||||||||
Beginning balance (in shares) at Dec. 31, 2020 | 388,135,000 | 218,976,000 | 50,000 | 316,407,000 | ||||||||||
Beginning balance at Dec. 31, 2020 | 9,895,815 | $ 39 | $ 0 | $ 63 | $ 0 | $ 2,865,964 | 1,920,635 | 34,395 | 5,077,036 | (2,317) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Contributions | 3,253 | 3,253 | ||||||||||||
Distributions | (145,378) | (145,378) | ||||||||||||
Dividends | (65,983) | (65,983) | ||||||||||||
Other exchanges (in shares) | 4,721,000 | (4,721,000) | 4,721,000 | |||||||||||
Other exchanges | 0 | 64,572 | 542 | (65,072) | (42) | |||||||||
Share based compensation and related issuance of Class A ordinary shares (in shares) | 1,000 | |||||||||||||
Share based compensation and related issuance of Class A ordinary shares | 713 | 713 | ||||||||||||
Net income | 158,979 | 69,119 | 89,860 | |||||||||||
Unrealized gain on available for sale debt securities | 5,125 | 2,712 | 2,413 | |||||||||||
Reclassification of unrealized gain on available for sale debt securities | (15,491) | (8,197) | (7,294) | |||||||||||
Reclassification of loss on interest rate swaps | 0 | |||||||||||||
Ending balance (in shares) at Mar. 31, 2021 | 50,000 | 392,857,000 | 214,255,000 | 50,000 | 321,128,000 | |||||||||
Ending balance at Mar. 31, 2021 | $ 9,837,033 | $ 39 | $ 0 | $ 63 | $ 0 | $ 2,931,249 | $ 1,923,771 | $ 29,452 | $ 4,954,818 | $ (2,359) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Cash collections from financial royalty assets | $ 573,946 | $ 488,028 |
Cash collections from intangible royalty assets | 35,761 | 34,788 |
Other royalty cash collections | 6,821 | 535 |
Distributions from non-consolidated affiliates | 17,325 | 20,293 |
Interest received | 1,548 | 2,236 |
Swap collateral received | 0 | 45,252 |
Swap collateral posted | 0 | (35,448) |
Ongoing development-stage funding payments | (2,641) | (7,639) |
Payments for operating and professional costs | (42,160) | (25,838) |
Interest paid | (64,500) | (51,103) |
Net cash provided by operating activities | 526,100 | 471,104 |
Cash flows from investing activities: | ||
Investments in non-consolidated affiliates | (8,714) | (13,142) |
Purchases of equity securities | 0 | (50,000) |
Purchases of available for sale debt securities | (17,585) | 0 |
Proceeds from available for sale debt securities | 15,625 | 0 |
Purchases of marketable securities | (505,339) | (703,935) |
Proceeds from sales and maturities of marketable securities | 419,783 | 104,613 |
Acquisitions of financial royalty assets | (503,070) | (99,290) |
Net cash used in investing activities | (599,300) | (761,754) |
Cash flows from financing activities: | ||
Distributions to shareholders/unitholders | 0 | (141,776) |
Distributions to non-controlling interest | (125,721) | (161,387) |
Distributions to non-controlling interest- other | (37,183) | 0 |
Dividends to shareholders | (65,983) | 0 |
Contributions from non-controlling interest- R&D | 1,997 | 1,260 |
Contributions from non-controlling interest- other | 220 | 29,764 |
Scheduled repayments of long-term debt | 0 | (47,100) |
Repayments of long-term debt | 0 | (5,170,396) |
Proceeds from issuance of long-term debt | 0 | 6,040,000 |
Debt issuance costs and other | 0 | (7,841) |
Net cash (used in)/provided by financing activities | (226,670) | 542,524 |
Net change in cash and cash equivalents | (299,870) | 251,874 |
Cash and cash equivalents, beginning of period | 1,008,680 | 246,199 |
Cash and cash equivalents, end of period | $ 708,810 | $ 498,073 |
Organization and Purpose
Organization and Purpose | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Purpose | Organization and Purpose Royalty Pharma plc is an English public limited company incorporated under the laws of England and Wales that was created for the purpose of consolidating our predecessor entities and facilitating the initial public offering (the “IPO”) of our Class A ordinary shares that was completed in June 2020. Following our IPO, we control Royalty Pharma Holdings Ltd. (“RP Holdings”), a private limited company incorporated under the laws of England and Wales and U.K. tax resident through our ownership of RP Holdings’ Class A ordinary shares (the “RP Holdings Class A Interests”) and RP Holdings’ Class B ordinary shares (the “RP Holdings Class B Interests”). We conduct our business through RP Holdings and its subsidiaries and include RP Holdings and its subsidiaries in our condensed consolidated financial statements. RP Holdings is the sole owner of Royalty Pharma Investments 2019 ICAV (“RPI 2019 ICAV”), which is an Irish collective asset management entity formed to facilitate our Exchange Offer Transactions (defined below), and is the successor to Royalty Pharma Investments, an Irish unit trust (“Old RPI”), for accounting and financial reporting purposes. RP Holdings is owned directly by RPI US Partners 2019, LP, a Delaware limited partnership, RPI International Holdings 2019, LP, (together, the “Continuing Investors Partnerships”), and Royalty Pharma plc. Old RPI is a unit trust established in August 2011 under the laws of Ireland and authorized by the Central Bank of Ireland pursuant to the Unit Trusts Act, 1990. Prior to the Exchange Offer Transactions, Old RPI was owned by various partnerships (the “Legacy Investors Partnerships”). RP Management, LLC (the “Manager”), a Delaware limited liability company, is an external adviser which is responsible for our management. RP Management (Ireland) Ltd. (“RP Ireland”), is the manager of Old RPI and equivalent to the board of directors of a company or general partner of a partnership and is responsible for the day to day operations of Old RPI. Its functions can be delegated to third parties. RP Ireland delegated responsibility for investment management of Old RPI to its parent company, the Manager, in accordance with the investment objectives and policies of Old RPI. “Royalty Pharma,” the “Company,” “we,” “us” and “our” refer to Royalty Pharma plc and its subsidiaries on a consolidated basis. After the consummation of the Reorganization Transactions (defined below) and before the consummation of the IPO, “Royalty Pharma,” the “Company,” “we,” “us” and “our” refer to RPI 2019 ICAV. Prior to the Reorganization Transactions, “Royalty Pharma,” the “Company,” “we,” “us” and “our” refer to Old RPI. We are the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry. We fund innovation in the biopharmaceutical industry both directly and indirectly—directly when we partner with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, and indirectly when we acquire existing royalties from the original innovators. Reorganization Transactions In connection with our IPO, we consummated an exchange offer on February 11, 2020 (the “Exchange Date”). Through the exchange offer, investors representing 82% of the aggregate limited partnership in the Legacy Investors Partnerships, exchanged their limited partnership interests in the Legacy Investors Partnerships for limited partnership interests in the Continuing Investors Partnerships. The exchange offer transaction together with (i) the concurrent incurrence of indebtedness under our new credit facility and (ii) the issuance of additional interests in Continuing Investors Partnerships to satisfy performance payments payable in respect of assets acquired prior to the date of the IPO are referred to as the “Exchange Offer Transactions.” As a result of the Exchange Offer Transactions, we own, through our subsidiary RPI 2019 Intermediate Finance Trust, a Delaware statutory trust (“RPI Intermediate FT”), an 82% economic interest in Old RPI. Through our 82% indirect ownership of Old RPI, we are legally entitled to 82% of the economics of Old RPI’s wholly-owned subsidiaries, RPI Finance Trust, a Delaware statutory trust (“RPIFT”) and RPI Acquisitions (Ireland), Limited (“RPI Acquisitions”), an Irish private limited company, and 66% of Royalty Pharma Collection Trust, a Delaware statutory trust (“RPCT”). The remaining 34% of RPCT is owned by the Legacy Investors Partnerships and Royalty Pharma Select Finance Trust, a Delaware statutory trust (“RPSFT”), which is wholly owned by Royalty Pharma Select, an Irish unit trust. From the Exchange Date until the expiration of the Legacy Investors Partnerships’ investment period on June 30, 2020 (the “Legacy Date”), the Legacy Investors Partnerships were offered to participate proportionately in any investment made by Old RPI. Following the Legacy Date, Old RPI ceased making new investments and each of Old RPI and the Legacy Investors Partnerships became legacy entities. Following the Legacy Date, we have made and plan to make new investments through our subsidiaries, including RPI Intermediate FT. As part of the Exchange Offer Transactions, the Legacy Investors Partnerships and RPI Intermediate FT entered into new credit facilities in the amount of $1.3 billion and $6.0 billion, respectively, the proceeds of which were used to repay the $6.3 billion outstanding debt of RPIFT and, in the case of RPI Intermediate FT, will also be used to fund future investments. As part of the new credit facilities, RPI Intermediate FT repaid $5.2 billion, its pro rata portion of RPIFT’s outstanding debt and accrued interest. RPIFT also terminated all outstanding interest rate swaps in connection with the debt refinancing. Prior to, and as a condition precedent to the closing of the IPO, various reorganization transactions became effective, including the following: • the Exchange Offer Transactions (as described above); and • the execution of a new management agreement with the Manager (the “Management Agreement”). We refer to these transactions collectively as the “Reorganization Transactions.” As Old RPI is our predecessor for financial reporting purposes, we have recorded Old RPI’s assets and liabilities at the carrying value reflected on Old RPI’s balance sheet as of the Exchange Date. The references in the following notes for the periods prior to the Exchange Date refer to the financial results of Old RPI for the same periods. IPO On June 18, 2020, we completed our IPO on the Nasdaq Global Select Market under the ticker symbol “RPRX”, in which we issued 89,334 thousand shares of Class A ordinary shares at a price to the public of $28.00 per share, of which 71,652 thousand and 17,682 thousand shares were offered by the Company and selling shareholders, respectively. We used the net proceeds from the IPO to acquire the RP Holdings Class A Interests and, as a result, we own 100% of RP Holdings Class A Interests. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of preparation and use of estimates The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, all adjustments considered necessary to present fairly the results of the interim periods have been included and consist only of normal and recurring adjustments. Certain information and footnote disclosures have been condensed or omitted as permitted under U.S. GAAP. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2020, included in our Annual Report on Form 10-K. The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of income, revenues and expenses during the reporting period. Actual results may differ from those estimates. The results for the interim periods are not necessarily indicative of results for the full year. The precise extent to which the COVID-19 pandemic will impact our operational and financial performance will depend on various factors. To date, the pandemic has not materially impacted our financial performance and we do not believe it is reasonably likely to in the future. Due to the nature of our business, the effect of the COVID-19 pandemic may not be fully reflected in certain of our results of operations until future periods. Basis of consolidation The unaudited condensed consolidated financial statements include the accounts of Royalty Pharma and all majority-owned and controlled subsidiaries, as well as variable interest entities, where we are the primary beneficiary. We consolidate based upon evaluation of our power, through voting rights or similar rights, to direct the activities of another entity that most significantly impact the entity’s economic performance. For consolidated entities where we own or are exposed to less than 100% of the economics, we record Net income attributable to non-controlling interest in our unaudited condensed consolidated statements of comprehensive income equal to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties. Following management’s determination that a high degree of common ownership existed in Royalty Pharma both before and after the Exchange Date, Royalty Pharma recognized Old RPI’s assets and liabilities at the carrying value reflected on Old RPI’s balance sheet as of the Exchange Date. Prior to the Exchange Offer Transactions, our only historical non-controlling interest was attributable to a de minimis interest in RPCT held by RPSFT. As a result of the Exchange Offer Transactions in February 2020, a new non-controlling interest was created related to the Legacy Investors Partnerships’ ownership of approximately 18% in Old RPI. Following the consummation of our IPO in June 2020, two new non-controlling interests were created: (1) a non-controlling interest related to the Continuing Investors Partnerships’ ownership in RP Holdings through their ownership of the RP Holdings Class B Interests, which amounted to approximately 35% as of March 31, 2021 and (2) a non-controlling interest attributable to the RP Holdings Class C Special Interest held by EPA Holdings, an affiliate of the Manager. Income will not be allocated to the latter non-controlling interest until certain conditions are met, which we do not expect to occur for several years. All intercompany transactions and balances have been eliminated in consolidation. Adjustment to prior period presentation In connection with the preparation of our condensed consolidated interim financial statements for the three months ended September 30, 2020, we identified an adjustment to the classification of our short-term investments on our consolidated balance sheet, as of December 31, 2019 based on the original maturity dates of the investments. The adjustment resulted in an increase of $88.8 million to Marketable securities and a corresponding decrease to Cash and cash equivalents on the consolidated balance sheet as of March 31, 2020. The adjustments resulted in an increase of $66.7 million and a decrease of $22.1 million in cash activity related to Purchases of marketable securities and Proceeds from sales and maturities of marketable securities , respectively, within Net cash used in investing activities for the three months ended March 31, 2020, with a net impact on net cash flow from investing of $88.8 million. We evaluated the adjustment and determined that, based on our quantitative and qualitative analysis, it was not material to the condensed consolidated financial statements as of and for the three months ended March 31, 2020. Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. Concentrations of credit risk Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, financial royalty assets and receivables. Our cash management and investment policy limits investment instruments to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds are needed for operations. Our cash and cash equivalents and marketable securities balances as of March 31, 2021 and December 31, 2020 were held with State Street and Bank of America. Our primary operating accounts significantly exceed the FDIC limits. The majority of our financial royalty assets and receivables arise from contractual royalty agreements that entitle us to royalties on the sales of underlying biopharmaceutical products in the United States, Europe and the rest of the world, with concentrations of credit risk limited due to the broad range of marketers responsible for paying royalties to us and the variety of geographies from which our royalties on product sales are derived. The products in which we hold royalties are marketed by leading industry participants, including, among others, AbbVie, Amgen, Bristol-Myers Squibb, Gilead, Johnson & Johnson, Lilly, Merck, Pfizer, Novartis, Biogen, Roche/Genentech and Vertex. As of March 31, 2021 and December 31, 2020, Vertex was the marketer and payor making up the largest balance of our current portion of Financial royalty assets, net , accounting for 28% and 27%, respectively, as the marketer and payor of our royalties on the cystic fibrosis franchise. We monitor the financial performance and creditworthiness of the counterparties to our royalty agreements so that we can properly assess and respond to changes in their credit profile. To date, we have not experienced any significant losses with respect to the collection of income or revenue on our royalty assets. Recently adopted and issued accounting standards Upon the January 1, 2020 adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), we recorded a cumulative adjustment to Retained earnings of $192.7 million to recognize an allowance for current expected credit losses on the portion of our portfolio of financial royalty assets that is subject to credit risk. Refer to Note 7––Cumulative Allowance for Changes in Expected Cash Flows from Financial Royalty Assets for additional discussion. Significant Accounting Policies There have been no material changes to our significant accounting policies from our |
Fair Value Measurements and Fin
Fair Value Measurements and Financial Instruments | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Financial Instruments | Fair Value Measurements and Financial Instruments Fair value measurements The summary below presents information about our assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020, and the valuation techniques we utilized to determine such fair value. • Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Our Level 1 assets consist of equity securities with readily determinable fair values and money market funds. • Level 2: Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly. Our Level 2 assets generally include marketable securities, warrants, derivatives and, historically, our interest rate swap contracts. • Level 3: Prices or valuation that require inputs that are both significant to the fair value measurement and unobservable. Our Level 3 assets consist of our investments in the Series A Biohaven Preferred Shares, Series B Biohaven Preferred Shares and the Series B Forwards. See Note 5––Available for Sale Debt Securities for a description of our investments in the Series A Biohaven Preferred Shares, Series B Biohaven Preferred Shares and the Series B Forwards. For financial instruments which are carried at fair value, the level in the fair value hierarchy is based on the lowest level of inputs that is significant to the fair value measurement in its entirety. Fair value hierarchy The following is a summary of the inputs used to value our financial assets and liabilities measured at fair value as of March 31, 2021 and December 31, 2020 (in thousands): As of March 31, 2021 Level 1 Level 2 Level 3 Total Assets: Cash equivalents Money market funds $ 201,439 $ — $ — $ 201,439 Certificates of deposit — 91,660 — 91,660 Marketable securities Commercial paper — 369,037 — 369,037 Certificates of deposit — 699,876 — 699,876 Available for sale debt securities — — 69,261 69,261 Total current assets $ 201,439 $ 1,160,573 $ 69,261 $ 1,431,273 Equity securities $ 244,503 $ — $ — $ 244,503 Available for sale debt securities — — 157,539 157,539 Forwards (1) — — 22,400 22,400 Warrants (2) — 2,884 — 2,884 Total non-current assets $ 244,503 $ 2,884 $ 179,939 $ 427,326 (1) The Series B Forwards, recorded within Available for sale debt securities in the condensed consolidated balance sheet as of March 31, 2021, relate to our obligation to fund the acquisition of the Series B Biohaven Preferred Shares. (2) Related to the Epizyme transaction as described in Note 4––Derivative Instruments and recorded in the non-current asset portion of Derivative financial instruments in the condensed consolidated balance sheet as of March 31, 2021. The net unrealized loss recognized on equity securities still held as of March 31, 2021 was a loss of $54.2 million and $119.6 million for the three months ended March 31, 2021 and 2020, respectively. As of December 31, 2020 Level 1 Level 2 Level 3 Total Assets: Cash equivalents Money market funds $ 24,302 $ — $ — $ 24,302 Commercial paper — 77,176 — 77,176 Certificates of deposit — 74,502 — 74,502 Marketable securities Corporate debt securities — 32,754 — 32,754 Commercial paper — 444,554 — 444,554 Certificates of deposit — 505,971 — 505,971 Available for sale debt securities — — 69,984 69,984 Total current assets $ 24,302 $ 1,134,957 $ 69,984 $ 1,229,243 Equity securities (1) $ 298,689 $ — $ — $ 298,689 Available for sale debt securities — — 144,416 144,416 Forwards (2) — — 18,600 18,600 Warrants (3) — 5,439 — 5,439 Total non-current assets $ 298,689 $ 5,439 $ 163,016 $ 467,144 (1) Upon Gilead’s acquisition of Immunomedics, our investment in Immunomedics common stock was redeemed in full in the three months ended December 31, 2020, resulting in a gain of $292.3 million recognized within (Gain)/loss on equity securities in the year ended December 31, 2020. (2) The Series B Forwards, recorded within Available for sale debt securities in the condensed consolidated balance sheet as of December 31, 2020, relate to our obligation to fund the acquisition of the Series B Biohaven Preferred Shares. (3) Related to the Epizyme transaction as described in Note 4––Derivative Instruments and recorded in the non-current asset portion of Derivative financial instruments in the condensed consolidated balance sheet as of December 31, 2020. The tables presented below summarize the change in the combined carrying value (current and non-current) of Level 3 financial instruments, which relate to our investment in the Series A Biohaven Preferred Shares, Series B Biohaven Preferred Shares and the Series B Forwards (in thousands). For the three months ended March 31, 2021 2020 Series A Biohaven Preferred Shares Balance at the beginning of the period $ 214,400 $ 131,280 Unrealized gains on available for sale debt securities (1) 5,125 52,725 Transfer to Level 2 — (184,005) Redemption (15,625) — Balance at the end of the period $ 203,900 $ — For the three months ended March 31, 2021 2020 Series B Biohaven Preferred Shares Balance at the beginning of the period $ — $ — Purchases 17,585 — Settlement of forwards (2) 5,315 — Balance at the end of the period $ 22,900 $ — For the three months ended March 31, 2021 2020 Series B Forwards Balance at the beginning of the period $ 18,600 $ — Unrealized gains included in earnings (3) 9,115 — Settlement of forwards (2) (5,315) — Balance at the end of the period $ 22,400 $ — (1) Recorded in other comprehensive income within Unrealized gain on available for sale debt securities on the condensed consolidated statements of comprehensive income. (2) Reflects the fair value attributed to the Series B Forwards that were settled in the period, which is included in the fair value of the Series B Biohaven Preferred Shares. See Note 5––Available for Sale Debt Securities. (3) Recorded in earnings within Unrealized gain on available for sale debt securities on the condensed consolidated statements of comprehensive income. Valuation inputs Below is a discussion of the valuation inputs used for financial instruments classified as Level 2 and Level 3 measurements in the fair value hierarchy. Investment in Series A Biohaven Preferred Shares The fair value of the Series A Biohaven Preferred Shares as of March 31, 2021 and December 31, 2020 was based on the cash flows due to us from Biohaven Pharmaceutical Holding Company Ltd. (“Biohaven”) of two times (2x) the original purchase price of the Series A Biohaven Preferred Shares payable in equal quarterly installments of $15.6 million following U.S. Food and Drug Administration (“FDA”) approval and starting one-year after FDA approval, through December 31, 2024. The FDA approved Nurtec ODT (rimegepant) in February 2020, at which point we became entitled to receive a fixed payment amount of $250.0 million payable in equal quarterly payments from March 31, 2021 through December 31, 2024. For additional discussion of our investment in the Series A Biohaven Preferred Shares, see Note 5––Available for Sale Debt Securities. The fair value of the Series A Biohaven Preferred Shares as of March 31, 2021 and December 31, 2020 was calculated using probability-adjusted discounted cash flow calculations incorporating Level 3 fair value measurements and inputs, including estimated risk-adjusted discount rates and the probability of a change of control event occurring during the investment term, which would result in accelerated payments and redemptions. Assessing the probability that there will be a change of control event over a four-year time period and developing a risk-adjusted discount rate requires significant judgement. Our estimate of a risk adjusted discount rate of 7.9% as of March 31, 2021 and 8.3% as of December 31, 2020 could reasonably be different than the discount rate selected by a market participant in the event of a sale of the Series A Biohaven Preferred Shares, which would mean that the estimated fair value could be significantly higher or lower. As of March 31, 2021 and December 31, 2020, we estimated a fair value for the Series A Biohaven Preferred Shares of $203.9 million and $214.4 million, respectively, which we classified as Available for sale debt securities in our condensed consolidated balance sheet. The unrealized movement in the fair value of the Series A Preferred Shares is recorded in other comprehensive income within Unrealized gain on available for sale debt securities on the condensed consolidated statements of comprehensive income. Our investment in the Series A Biohaven Preferred Shares was transferred from a Level 3 asset to a Level 2 asset in February 2020, when Nurtec ODT (rimegepant) received FDA approval, at which time we began using a discounted cash flow analysis that relied on observable inputs. During the three months ended December 31, 2020, information pertaining to Biohaven’s issuance of debt and its effective interest rate became available and we refined our valuation of the Series A Biohaven Preferred shares as of December 31, 2020 to incorporate this significant unobservable input. As a result, we reclassified the investment from a Level 2 to a Level 3 asset during the three months ended December 31, 2020. Investment in Series B Biohaven Preferred Shares We have committed to acquiring 3,992 shares of Series B Biohaven Preferred Shares at a price of $50,100 per preferred share for a total of $200.0 million payable on a quarterly basis between March 31, 2021 and December 31, 2024 (“Series B Forwards”). As of March 31, 2021, we have acquired 351 shares of Series B Biohaven Preferred Shares. In return, Biohaven will be required to redeem the Series B Biohaven Preferred Shares in a series of equal fixed quarterly payments equal to approximately 1.8 times the original issue price per share between March 31, 2025 and December 31, 2030. For additional discussion of our investment in the Series B Biohaven Preferred Shares, see Note 5–Available for Sale Debt Securities. The fair value of the Series B Biohaven Preferred Shares as of March 31, 2021 and the fair value of the Series B Forwards as of March 31, 2021 and December 31, 2020 were based on probability-adjusted discounted cash flow calculations using Level 3 fair value measurements and inputs, including estimated risk-adjusted discount rates and the probability that there will be a change of control event in different periods of time, which would result in accelerated payments and redemptions. Assessing the probability that there will be a change of control event over a 10-year time period and developing a risk-adjusted discount rate requires significant judgement. Our expectation of the probability and timing of the occurrence of a change of control event could reasonably be different than the timing of an actual change of control event, and if so, would mean that the estimated fair value could be significantly higher or lower than the fair value determined by management at any particular date. Our estimate of a risk adjusted discount rate could reasonably be different than the discount rate selected by a market participant in the event of a sale of the Series B Biohaven Preferred Shares or the Series B Forwards, which would mean that the estimated fair value could be significantly higher or lower. We have elected the fair value option to account for our Series B Biohaven Preferred Shares and Series B Forwards as it most accurately reflects the nature of our investment in the Series B Biohaven Preferred Shares. The Series B Biohaven Preferred Shares and the Series B Forwards are recorded within Available for sale debt securities in our condensed consolidated balance sheet. The unrealized movement in fair value of the Series B Preferred Shares and Series B Forwards is recorded in earnings within Unrealized gain on available for sale debt securities on the condensed consolidated statements of comprehensive income. Other financial instruments We use a third party pricing service for Level 2 inputs used to value cash equivalents, marketable securities and borrowings, which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application and corroborative information. Warrants are valued using a Black-Scholes option pricing model which considers observable and unobservable inputs. Financial assets not measured at fair value Financial royalty assets are measured and carried on the condensed consolidated balance sheets at amortized cost using the effective interest method. The current portion of financial royalty assets approximates fair value. The fair value of financial royalty assets is calculated by management using the forecasted royalty payments we expect to receive based on the projected product sales for all royalty bearing products as estimated by sell-side equity research analysts’ consensus forecasts. These projected future royalty payments by asset are then discounted to a present value using appropriate individual discount rates. The fair value of our financial royalty assets is classified as Level 3 within the fair value hierarchy since it is determined based upon inputs that are both significant and unobservable. Estimated fair values based on Level 3 inputs and related carrying values for the non-current portion of our financial royalty assets as of March 31, 2021 and December 31, 2020 are presented below (in thousands). March 31, 2021 December 31, 2020 Fair value Carrying value, net Fair value Carrying value, net Financial royalty assets, net $ 18,464,028 $ 12,599,080 $ 18,718,179 $ 12,368,084 |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments We have historically managed the impact of foreign currency exchange rate and interest rate risk through various financial instruments, including derivative instruments such as interest rate swap contracts and foreign currency forward contracts. Our policy is to use derivatives strategically to hedge existing interest rate exposure and to minimize volatility in cash flow arising from our exposure to interest rate risk and foreign currency risk. We may also acquire other financial instruments that are classified as derivatives. We do not enter into derivative instruments for trading or speculative purposes. Interest rate swaps As of March 31, 2021, we do not hold any interest rate swap contracts. In connection with the Exchange Offer Transactions described in Note 1–Organization and Purpose, RPIFT terminated all outstanding interest rate swaps in February 2020. We paid $35.4 million in the three months ended March 31, 2020 to terminate our swaps and reclaimed $45.3 million of collateral that was held by the respective counterparties. We did not apply hedge accounting and recognized all movement in fair value through earnings. During the three months ended March 31, 2020, we recorded unrealized losses of $10.9 million on interest rate swaps in the condensed consolidated statements of comprehensive income. Epizyme put option and warrant In November 2019, RPIFT made an equity investment in Epizyme Inc. (“Epizyme”) of $100.0 million. Under the terms of its agreement with Epizyme, RPIFT made an upfront payment of $100.0 million for (1) shares of Epizyme common stock, (2) a warrant to purchase an additional 2.5 million shares of Epizyme common stock at $20 per share over a three-year term, and (3) Epizyme’s royalty on sales of Tazemetostat in Japan payable by Eisai Co., Ltd (“Eisai”). In addition, Epizyme had an 18 month put option to sell an additional $50.0 million of its common stock to RPIFT at then prevailing prices, not to exceed $20 per share, which Epizyme exercised in February 2020. The warrant was recognized at fair value of $2.9 million and $5.4 million within the non-current asset portion of Derivative financial instruments on the condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively. We recorded an unrealized loss on derivative contracts of $2.6 million and $16.7 million related to the change in the fair value of the warrants on the condensed consolidated statements of comprehensive income for the three months ended March 31, 2021 and 2020, respectively. Biohaven written put option We determined there was a derivative associated with the Second Tranche (as defined below) of the Series A Biohaven Preferred Shares Agreement that was entered into in April 2019. The derivative related to Biohaven’s option, exercisable within 12 months from when the NDA for Nurtec ODT (rimegepant) was accepted by the FDA for Priority Review, to require Royalty Pharma to purchase up to an additional $75.0 million of Series A Biohaven Preferred Shares (the “Second Tranche”) at the same price and on the same terms as the First Tranche, in one or more transactions of no less than $25.0 million. The Biohaven written put option was not exercised and expired in the year ended December 31, 2020. See Note 5–Available for Sale Debt Securities for a description of our investment in the Series A Biohaven Preferred Shares. Summary of derivatives and reclassifications The table below summarizes the change in fair value of derivatives for the three months ended March 31, 2021 and 2020 and the line items within the condensed consolidated statements of comprehensive income where the (gains)/losses on derivatives are recorded (in thousands). For the three months ended Condensed Consolidated Statement of Comprehensive Income location 2021 2020 Derivatives in hedging relationships (1) Interest Rate Swaps: Amount of loss reclassified from Accumulated Other Comprehensive Income into income $ — $ 4,066 Unrealized loss on derivative financial instruments Change in fair value of interest rate swaps — (73) Unrealized loss on derivative financial instruments Interest expense — 114 Interest expense Derivatives not designated as hedging instruments Interest Rate Swaps: Change in fair value of interest rate swaps — 6,908 Unrealized loss on derivative financial instruments Interest expense — 408 Interest expense Warrant: Change in fair value of warrant 2,555 16,744 Unrealized loss on derivative financial instruments Forward purchase contract: Change in fair value of forward purchase contract — 5,800 Unrealized loss on derivative financial instruments |
Available for Sale Debt Securit
Available for Sale Debt Securities | 3 Months Ended |
Mar. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Available for Sale Debt Securities | Available for Sale Debt Securities Series A Biohaven Preferred Shares On April 5, 2019, RPIFT funded the purchase of 2,495 Series A Biohaven Preferred Shares from Biohaven at a price of $50,100.00 per preferred share, for a total of $125.0 million. The approval of Nurtec ODT (rimegepant) by the FDA in February 2020 results in a payment due to us of two times the original purchase price of the Series A Biohaven Preferred Shares payable in equal quarterly installments beginning on March 31, 2021 through December 31, 2024. In the three months ended March 31, 2021, we received our first payment from the quarterly redemption of the Series A Biohaven Preferred Shares. If Biohaven effects any change of control event, then we will have the option to cause Biohaven to redeem any outstanding Series A Biohaven Preferred Shares at a price equal to two times the original purchase price of the Series A Biohaven Preferred Shares. Biohaven may redeem at their election, any outstanding Series A Biohaven Preferred Shares at a price equal to two times the original purchase price. In the event that Biohaven defaults on any obligation to redeem Series A Biohaven Preferred Shares when required, the redemption amount shall accrue interest at the rate of 18% annually until the redemption price for such unredeemed Series A Biohaven Preferred Shares is paid in full, subject to applicable law. If any such default continues for at least one year, we will be entitled to convert all unredeemed Series A Biohaven Preferred Shares into common shares equal to the redemption price, plus accrued interest, divided by the five-day volume-weighted trading price immediately preceding the conversion date. Series B Biohaven Preferred Shares On August 7, 2020 we entered into a Series B Biohaven Preferred Share Purchase Agreement (“Series B Biohaven Preferred Share Agreement”) with Biohaven to purchase up to 3,992 shares of Series B Biohaven Preferred Shares at a price of $50,100 per preferred share (the “Commercial Launch Preferred Equity”), for a total of $200 million payable on a quarterly basis between March 31, 2021 and December 31, 2024. Our commitment to purchase the Series B Biohaven Preferred Shares is recognized as the Series B Forwards, as discussed in Note 3––Fair Value Measurements and Financial Instruments. In return, Biohaven will be required to redeem the Series B Biohaven Preferred Shares in a series of equal fixed quarterly payments between March 31, 2025 and December 31, 2030 at a price equal to approximately 1.8 times the original purchase price of the Series B Biohaven Preferred Shares. If Biohaven effects any change of control event, then we will have the option to cause Biohaven to issue to us all unissued Series B Preferred Shares and to redeem any outstanding Series B Biohaven Preferred Shares at a price equal to approximately 1.8 times the Series B original issue price per share. Biohaven may redeem at their election, any outstanding Series B Biohaven Preferred Shares at a price equal to approximately 1.8 times the Series B original issue price. In the event that Biohaven defaults on any obligation to redeem Series B Biohaven Preferred Shares, the redemption amount shall accrue interest on the applicable original issue price at the rate of 18% annually until the redemption price for such unredeemed Series B Biohaven Preferred Shares is paid in full, subject to applicable law. If any such default continues for at least one year, we will be entitled to convert any or all unredeemed Series B Biohaven Preferred Shares into common shares equal to the redemption price, plus accrued interest, divided by the five-day volume-weighted trading price immediately preceding the conversion date. In the three months ended March 31, 2021, we began purchasing the Series B Biohaven Preferred Shares which are classified as Available for sale debt securities on the condensed consolidated balance sheet. We have elected the fair value option to account for the Series B Forwards and the Series B Biohaven Preferred Shares, which are recorded in aggregate on the condensed consolidated balance sheet as Available for sale debt securities . We believe the fair value option most accurately reflects the nature of the Series B Forwards and the associated Series B Biohaven Preferred Shares. The table below summarizes our available for sale debt securities recorded at fair value as of March 31, 2021 and December 31, 2020 (in thousands): Cost Unrealized gains Fair Value (1) As of March 31, 2021 Series A Biohaven Preferred Shares $ 125,121 $ 78,779 $ 203,900 Series B Biohaven Preferred Shares 17,585 5,315 22,900 Series B Forwards — 22,400 22,400 Total available for sale debt securities $ 142,706 $ 106,494 $ 249,200 As of December 31, 2020 Series A Biohaven Preferred Shares $ 125,121 $ 89,279 $ 214,400 Series B Forwards — 18,600 18,600 Total available for sale debt securities $ 125,121 $ 107,879 $ 233,000 (1) As of March 31, 2021, $69.3 million and $134.6 million related to Series A Biohaven Preferred Shares are recorded in the current and non-current asset portion of Available for sale debt securities , respectively, on the condensed consolidated balance sheet. As of December 31, 2020, $70.0 million and $144.4 million related to the Series A Preferred Shares were recorded as the current and non-current asset portion of Available for sale debt securities , respectively, on the condensed consolidated balance sheet. As of March 31, 2021 and December 31, 2020, balances related to Series B Biohaven Preferred Shares and Series B Forwards are recorded in the non-current portion of Available for sale debt securities on the condensed consolidated balance sheets. |
Financial Royalty Assets, Net
Financial Royalty Assets, Net | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Financial Royalty Assets, Net | Financial Royalty Assets, Net Financial royalty assets, net consist of contractual rights to cash flows relating to royalty payments derived from the expected sales of patent-protected biopharmaceutical products that entitle us and our subsidiaries to receive a portion of income from the sale of those products by unrelated companies. The gross carrying value, cumulative allowance for changes in expected cash flows, exclusive of the allowance for credit losses, and net carrying value for the current and non-current portion of financial royalty assets as of March 31, 2021 and December 31, 2020 are as follows (in thousands): March 31, 2021 Estimated royalty duration (a) Gross carrying value Cumulative allowance for changes in expected cash flows (Note 7) Net carrying value (e) Cystic fibrosis franchise 2037 (b) $ 5,292,904 $ (53,092) $ 5,239,812 Tysabri (c) 1,967,974 (114,354) 1,853,620 Imbruvica 2027-2029 1,416,270 (110,285) 1,305,985 Xtandi 2027-2028 1,136,270 (188,417) 947,853 Evrysdi 2030-2035 (d) 688,189 — 688,189 Promacta 2025-2028 658,287 — 658,287 Other 2020-2039 3,517,660 (730,280) 2,787,380 Total $ 14,677,554 $ (1,196,428) $ 13,481,126 Less: Cumulative allowance for credit losses (Note 7) (359,658) Total financial royalty assets, net $ 13,121,468 a) Dates shown represent management’s estimates of when a royalty will substantially end, which may depend on our estimates of patent expiration dates (which may include estimated patent term extensions) or other factors and may vary by geography. Royalty expiration dates can change due to patent, regulatory, commercial or other developments. There can be no assurances that our royalties will expire when expected. b) Royalty is perpetual; year shown represents Trikafta expected patent expiration and potential sales decline based on generic entry. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term, which is periodically reviewed. d) Key patents on Evrysdi in the United States expire in 2035, but our royalty will cease when aggregate royalties paid to us equal $1.3 billion. e) The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 7—Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets for additional information. December 31, 2020 Estimated royalty duration (a) Gross carrying value Cumulative allowance for changes in expected cash flows (Note 7) Net carrying value (e) Cystic fibrosis franchise 2037 (b) $ 5,274,896 $ — $ 5,274,896 Tysabri (c) 2,003,797 (112,720) 1,891,077 Imbruvica 2027-2029 1,406,291 (46,872) 1,359,419 Xtandi 2027-2028 1,150,335 (145,565) 1,004,770 Promacta 2025-2027 686,129 — 686,129 Evrysdi 2030-2035 (d) 675,440 — 675,440 Other 2020-2039 3,022,213 (634,950) 2,387,263 Total $ 14,219,101 $ (940,107) $ 13,278,994 Less: Cumulative allowance for credit losses (Note 7) (323,717) Total financial royalty assets, net $ 12,955,277 a) Dates shown represent management’s estimates of when a royalty will substantially end, which may depend on our estimates of patent expiration dates (which may include estimated patent term extensions) or other factors and may vary by geography. Royalty expiration dates can change due to patent, regulatory, commercial or other developments. There can be no assurances that our royalties will expire when expected. b) Royalty is perpetual; year shown represents Trikafta expected patent expiration and potential sales decline based on generic entry. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term, which is periodically reviewed by the management. d) Key patents on Evrysdi in the United States expire in 2035, but our royalty will cease when aggregate royalties paid to us equal $1.3 billion. e) The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 7—Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets for additional information. |
Cumulative Allowance and the Pr
Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets | 3 Months Ended |
Mar. 31, 2021 | |
Credit Loss [Abstract] | |
Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets | Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets The cumulative allowance for changes in expected future cash flows from financial royalty assets is presented net within the non-current portion of Financial royalty assets, net on the condensed consolidated balance sheets and includes the following activities: • the movement in the cumulative allowance related to changes in forecasted royalty payments we expect to receive based on projected product sales for royalty bearing products as estimated by sell-side equity research analysts’ consensus forecasts , and • the movement in the cumulative allowance for current expected credit losses. The periodic movement in the cumulative allowance is presented on the condensed consolidated statements of comprehensive income as the Provision for changes in expected future cash flows from financial royalty assets . Upon the January 1, 2020 adoption of ASU 2016-13, we recorded a cumulative adjustment to Retained earnings of $192.7 million to recognize an allowance for current expected credit losses on our portfolio of financial royalty assets. The current period provision for changes in expected cash flows from financial royalty assets reflects the activity for the period that relates to the change in estimates applied to calculate the allowance for credit losses, namely any new financial royalty assets with limited protective rights and changes in the underlying cash flow forecasts used in the effective interest model to measure income from our financial royalty assets. Refer to Note 2 – Summary of Significant Accounting Policies for further information. The following tables set forth the activity in the cumulative allowance for changes in expected cash flows from financial royalty assets, inclusive of the cumulative allowance for credit losses, as of the dates indicated (in thousands): Activity for the period Balance at December 31, 2020 (a) $ (1,263,824) Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets (283,617) Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets 27,296 Current period provision for credit losses (b) (35,941) Balance at March 31, 2021 $ (1,556,086) (a) Includes $323.7 million related to cumulative allowance for credit losses. (b) Primarily related to provision for credit losses resulting from increases to our portfolio of financial royalty assets in the three months ended March 31, 2021, predominantly the $100.0 million increase to our zavegepant financial royalty asset related to the funding payment we made to Biohaven upon the start of the oral zavegepant Phase 3 program and a new royalty interest in the cabozantinib products. |
Intangible Royalty Assets, Net
Intangible Royalty Assets, Net | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Royalty Assets, Net | Intangible Royalty Assets, Net The following schedules of the intangible royalty assets present the cost, accumulated amortization and net carrying value as of March 31, 2021 and December 31, 2020 (in thousands). As of March 31, 2021 Cost Accumulated amortization Net carrying value DPP-IV patents $ 606,216 $ 583,221 $ 22,995 Total intangible royalty assets $ 606,216 $ 583,221 $ 22,995 As of December 31, 2020 Cost Accumulated amortization Net carrying value DPP-IV patents $ 606,216 $ 577,550 $ 28,666 Total intangible royalty assets $ 606,216 $ 577,550 $ 28,666 The DPP-IV patents associated with the intangible royalty assets terminate at various dates up to 2022. The weighted average remaining life of the intangible royalty assets is one year. We project amortization expense will be $17.3 million and $5.7 million in the remainder of 2021 and 2022, respectively. |
Non-Consolidated Affiliates
Non-Consolidated Affiliates | 3 Months Ended |
Mar. 31, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Non-Consolidated Affiliates | Non-Consolidated Affiliates The Legacy SLP Interest In connection with the Exchange Offer Transactions, we acquired a special limited partnership interest in the Legacy Investors Partnerships (the “Legacy SLP Interest”) from the Continuing Investors Partnerships for $303.7 million in exchange for issuing shares in our subsidiary. As a result, we became a special limited partner in the Legacy Investors Partnerships. The Legacy SLP Interest entitles us to the equivalent of performance distribution payments that would have been paid to the general partner of the Legacy Investors Partnerships and an income allocation on a similar basis. Our income allocation is equal to the general partner’s former contractual rights to the income of the Legacy Investors Partnerships. The Legacy SLP Interest is treated as an equity method investment as our Manager is also the Manager of the Legacy Investors Partnerships and has the ability to exercise significant influence. The Legacy Investors Partnerships no longer participate in investment opportunities from June 30, 2020 and, as such, the value of the Legacy SLP Interest is expected to decline over time. The Legacy Investors Partnerships also own a non-controlling interest in Old RPI. The income allocation from the Legacy SLP Interest is based on an estimate, as the Legacy Investors Partnerships are private partnerships that are expected to report on a lag subsequent to the date of this quarterly report. Management’s estimate of equity in earnings from the Legacy SLP Interest for the current period will be updated for historical results in the subsequent period. During the three months ended March 31, 2021, we received cash distributions of $3.9 million from the Legacy Investors Partnerships and recorded an income allocation of $5.2 million within Equity in loss of non-consolidated affiliates . During the three months ended March 31, 2020, we received cash distributions of $6.9 million from the Legacy Investors Partnerships and recorded an income allocation of $3.2 million related to the period subsequent to the Exchange Date, for which the income allocation was recorded within Equity in loss of non-consolidated affiliates . The Avillion Entities We account for our partnership interests in Avillion Financing I, LP (“Avillion I”) and BAv Financing II, LP (“Avillion II”, or, together, the “Avillion Entities”) as equity method investments because RPIFT has the ability to exercise significant influence over the entities. During the three months ended March 31, 2021 and 2020, we recorded a loss allocation of $7.1 million and $12.2 million, respectively, within Equity in loss of non-consolidated affiliates . On December 19, 2017, the Avillion Entities announced that the FDA approved a supplemental New Drug Application for Pfizer’s Bosulif (bosutinib). Avillion I is eligible to receive fixed payments from Pfizer based on this approval. Subsequent to the asset sale, the only operations of Avillion I are the collection of cash and unwinding of discount on the series of fixed annual payments due from Pfizer. We received distributions of $13.4 million from Avillion I during the three months ended March 31, 2021 and 2020, respectively, in connection with Avillion I’s receipt of the fixed annual payments due under its co-development agreement with Pfizer. In March 2017, RPIFT entered into an agreement with Avillion II, amended in 2019, to invest approximately $19.0 million to fund approximately 50% of the costs of a phase 2 clinical trial for the use of Merck KGaA’s anti-IL 17 nanobody M1095 (the “Merck KGaA Asset”) for the treatment of psoriasis in exchange for certain milestone and royalty payments. Development for the Merck KGaA Asset ceased in 2020, for which we received a distribution of $21.3 million from Avillion II during the three months ended June 30, 2020. In May 2018, RPIFT entered into an additional agreement to invest up to $105.0 million in Avillion II over multiple years to fund approximately 44% of the costs of Phase 2 and 3 clinical trials to advance Pearl Therapeutics, Inc.’s product PT-027 (the “AZ Asset”) through a global clinical development program for the treatment of asthma in exchange for a series of deferred payments and success-based milestones. As of March 31, 2021 and December 31, 2020, RPIFT had $19.9 million and $28.6 million, respectively, of unfunded commitments related to the Avillion Entities. Our maximum exposure to loss at any particular reporting date is limited to the current carrying value of the investment plus the unfunded commitments. |
Research & Development ("R&D")
Research & Development ("R&D") Funding Expense | 3 Months Ended |
Mar. 31, 2021 | |
Research and Development [Abstract] | |
Research & Development ("R&D") Funding Expense | Research & Development (“R&D”) Funding Expense During the three months ended March 31, 2021, we did not enter into any new R&D funding arrangements. We recognized $2.6 million and $7.6 million of R&D funding expense for the three months ended March 31, 2021 and 2020, respectively, primarily related to ongoing development-stage funding payments under our co-funding agreement with Sanofi. As of March 31, 2021 we have a remaining commitment of $13.9 million related to our R&D funding agreement with Sanofi. |
Borrowings
Borrowings | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings Our borrowings as of March 31, 2021 and December 31, 2020 consisted of the following (in thousands): Type of Borrowing Maturity Interest rate March 31, 2021 December 31, 2020 Senior Unsecured Notes: Senior unsecured notes (issued at 99.322% of par) 9/2023 0.75% $ 1,000,000 $ 1,000,000 Senior unsecured notes (issued at 98.875% of par) 9/2025 1.20% 1,000,000 1,000,000 Senior unsecured notes (issued at 98.284% of par) 9/2027 1.75% 1,000,000 1,000,000 Senior unsecured notes (issued at 97.760% of par) 9/2030 2.20% 1,000,000 1,000,000 Senior unsecured notes (issued at 95.556% of par) 9/2040 3.30% 1,000,000 1,000,000 Senior unsecured notes (issued at 95.306% of par) 9/2050 3.55% 1,000,000 1,000,000 Senior Unsecured Revolving Credit Facility — — Unamortized debt discount and issuance costs (178,928) (183,416) Total debt carrying value 5,821,072 5,816,584 Less: Current portion of long-term debt — — Total long-term debt $ 5,821,072 $ 5,816,584 Senior Unsecured Notes On September 2, 2020, we issued $6.0 billion of senior unsecured notes (the “Notes”). Our obligations under the Notes are fully and unconditionally guaranteed by RP Holdings, a non-wholly owned subsidiary. Interest on each series of the Notes accrues at the respective rate per annum and is payable semi-annually in arrears on March 2 and September 2 of each year, commenced on March 2, 2021. The Notes were issued at a total discount of $149.0 million. We capitalized approximately $40.4 million in debt issuance costs primarily composed of underwriting fees. The discount and the capitalized debt issuance costs are recorded as a direct deduction from the carrying amount of the Notes on our condensed consolidated balance sheets and are being amortized as additional interest expense using the effective interest rate method over the period from issuance through maturity. The Notes have a weighted average coupon rate and a weighted average effective interest rate of 2.125% and 2.50% as of March 31, 2021 , respectively. Our Notes may be redeemed at our option at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semiannual basis at the Treasury Rate, plus a make-whole premium as defined in the indenture. Our Notes maturing after 2023 also have a call feature, exercisable at our option, to redeem the Notes at par in whole or in part one to six months immediately preceding maturity. In each case, accrued and unpaid interest is also required to be redeemed to the date of redemption. Upon the occurrence of a change of control triggering event and downgrade in the rating of our Notes by two of three credit agencies, the holders may require us to repurchase all or part of their Notes at a price equal to 101% of the aggregate principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to the date of repurchase. We are required to comply with certain covenants under our Notes and as of March 31, 2021, we were in compliance with all applicable covenants. We used the net proceeds from the Notes offering, together with available cash on hand, to repay in full the senior secured credit facilities. Senior Unsecured Revolving Credit Facility On September 18, 2020, our subsidiary RP Holdings, as borrower, entered into a five-year unsecured revolving credit facility (the “Revolving Credit Facility”) which provides for borrowing capacity of up to $1.5 billion for general corporate purposes. We capitalized approximately $6.1 million in debt issuance costs related to the revolving credit facility which is recorded within Other current assets for the current portion and Other assets for the non-current portion. As of March 31, 2021 and December 31, 2020 , there were no outstanding borrowings under the Revolving Credit Facility. The Revolving Credit Facility is subject to an interest rate, at our option, of either (a) a base rate determined by reference to the highest of (1) the administrative agent’s prime rate, (2) the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the one month adjusted LIBOR, plus 1% per annum (“ABR”) or (b) adjusted LIBOR, plus in each case, the applicable margin. The applicable margin for the Revolving Credit Facility varies based on our consolidated leverage ratio. Accordingly, the interest rates for the Revolving Credit Facility fluctuates during the term of the facility based on changes in the ABR, LIBOR and future changes in our consolidated leverage ratio. The revolving credit agreement (the “Credit Agreement”) that governs the Revolving Credit Facility contains certain customary covenants, that among other things, require us to maintain (i) a consolidated leverage ratio at or below 4.00 to 1.00 (or at or below 4.50 to 1.00 following a qualifying material acquisition) of consolidated funded debt to consolidated EBITDA, each as defined and calculated with the ratio level calculated with further adjustments as set forth in the Credit Agreement and (ii) a consolidated coverage ratio at or above 2.50 to 1.00 of consolidated EBITDA to consolidated charges, each as defined and calculated with further adjustments as set forth in the Credit Agreement. All obligations under the Revolving Credit Facility are unconditionally guaranteed by us. As of March 31, 2021 , RP Holdings was in compliance with these covenants. Senior Secured Credit Facilities On February 11, 2020, in connection with the Exchange Offer Transactions (as discussed in Note 1–Organization and Purpose) and using funds contributed by RPI Intermediate FT and the Legacy Investors Partnerships, RPIFT repaid its outstanding debt and accrued interest, and terminated all outstanding interest rate swaps. RPI Intermediate FT, as borrower, entered into a term loan credit agreement (the “Senior Secured Credit Agreement”) with Bank of America, N.A., as administrative agent, the lenders party thereto from time to time and the other parties thereto. The senior secured credit facilities contained in the Senior Secured Credit Agreement consisted of a term loan A (“Tranche A-1”) and term loan B (“Tranche B-1”) in the amounts of $3.20 billion and $2.84 billion, respectively. In September 2020, we repaid in whole the outstanding principal amounts of term loans under the senior secured credit facilities governed by the Senior Secured Credit Agreement with net proceeds from the Notes and available cash on hand. RPIFT Senior Secured Credit Facilities The RPIFT Senior Secured Credit Facilities were repaid in full in February 2020 in connection with the Exchange Offer Transactions. We recorded a loss on debt extinguishment of $5.4 million as part of Other non-operating (income)/expense, net, during the three months ended March 31, 2020. Principal Payments on the Notes The future principal payments for our borrowings as of March 31, 2021 over the next five years and thereafter are as follows (in thousands): Year Principal Payments Remainder of 2021 $ — 2022 — 2023 1,000,000 2024 — 2025 1,000,000 Thereafter 4,000,000 Total (1) $ 6,000,000 (1) Excludes unamortized discount and loan issuance costs on long-term debt of $178.9 million as of March 31, 2021, which are amortized through interest expense over the remaining life of the underlying debt obligations. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Capital structure Following the completion of our IPO as discussed in Note 1–Organization and Purpose, we have two classes of voting shares: Class A ordinary shares and Class B ordinary shares, each of which has one vote per ordinary share. The Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of shareholders, except as otherwise required by applicable law. Our Class B ordinary shares are not publicly traded and holders of Class B ordinary shares only have limited rights to receive a distribution equal to their nominal value upon a liquidation, dissolution or winding up of the Company. The holders of Class A ordinary shares are entitled to receive dividends subject to approval by the Board of Directors. The holders of Class B shares do not have any rights to receive dividends; however, the RP Holdings Class B Interests are entitled to dividends and distributions from RP Holdings. As of March 31, 2021, we have outstanding 392,857 thousand Class A ordinary shares and 214,255 thousand Class B ordinary shares. The RP Holdings Class B Interests are exchangeable on a one-for-one basis for our Class A ordinary shares pursuant to an exchange agreement entered into by us, RP Holdings, the Continuing Investors Partnerships, RPI International Partners 2019, LP and EPA Holdings (the “Exchange Agreement”) that governs the exchange of RP Holdings Class B Interests held by the Continuing Investors Partnerships for Class A ordinary shares. Pursuant to the Exchange Agreement, the Continuing Investors Partnerships have the ability to exchange their RP Holdings Class B interests for Class A ordinary shares on a quarterly basis. Each such exchange also results in the re-designation of the same number of our Class B ordinary shares as deferred shares. As of March 31, 2021, we have outstanding deferred shares of 321,128 thousand. In addition, we have in issue 50 thousand Class R redeemable shares, which do not entitle the holder to voting or dividend rights. The purpose of the Class R redeemable shares was to ensure Royalty Pharma Limited had sufficient sterling denominated share capital at the time it was re-registered as a public limited company to Royalty Pharma plc, as required by the U.K. Companies Act. The Class R redeemable shares may be redeemed at our option in the future. Any such redemption would be at the nominal value of £1 each. Non-controlling interests Prior to the Exchange Offer Transactions in February 2020, the only non-controlling interest related to RPSFT, for which the related movements are presented in the historical statements of shareholders’ equity. The net change in the balance of our four non-controlling interests for the three months ended March 31, 2021 and 2020 are as follows (in thousands): RPSFT Legacy Investors Partnerships Continuing Investors Partnerships (1) EPA Holdings Total December 31, 2020 $ 12,436 $ 1,939,509 $ 3,125,091 $ — $ 5,077,036 Contributions — 3,253 — — 3,253 Distributions (13,653) (94,542) (37,183) — (145,378) Net income 15,058 36,257 38,545 — 89,860 Other exchanges — — (65,072) — (65,072) Other comprehensive income: Unrealized gain on available for sale debt securities — 901 1,512 — 2,413 Reclassification of unrealized gain on available for sale debt securities — (2,723) (4,571) — (7,294) March 31, 2021 $ 13,841 $ 1,882,655 $ 3,058,322 $ — $ 4,954,818 (1) Related to the Continuing Investors Partnerships’ ownership as of March 31, 2021 of approximately 35% in RP Holdings through their ownership of the RP Holdings Class B Interests. Royalty Pharma plc owns the remaining 65% of RP Holdings through its ownership of RP Holdings Class A Interests and Class B Interests as of March 31, 2021. RPSFT Legacy Investors Partnerships Total December 31, 2019 $ 35,883 $ — $ 35,883 Contributions — 1,133,629 1,133,629 Transfer of interests — 1,037,161 1,037,161 Distributions (29,246) (222,180) (251,426) Net income 24,926 12,930 37,856 Other comprehensive income: Unrealized gain on available for sale debt securities — 9,672 9,672 March 31, 2020 $ 31,563 $ 1,971,212 $ 2,002,775 RP Holdings Class C Special Interest held by EPA Holdings EPA Holdings is entitled to Equity Performance Awards (as defined below) through its RP Holdings Class C Special Interest based on our performance, as determined on a portfolio-by-portfolio basis. Investments made during each two-year period will be grouped together as separate portfolios (each, a “Portfolio”). Subject to certain conditions, at the end of each fiscal quarter, EPA Holdings is entitled to a distribution from RP Holdings in respect of each Portfolio equal to 20% of the Net Economic Profit (defined as the aggregate cash receipts for all new portfolio investments in such Portfolio less Total Expenses (defined as interest expense, operating expense and recovery of acquisition cost in respect of such Portfolio)) for such Portfolio for the applicable measuring period (the “Equity Performance Awards”). The Equity Performance Awards will be allocated and paid by RP Holdings to EPA Holdings as the holder of the RP Holdings Class C Special Interest. The Equity Performance Awards will be payable in RP Holdings Class B Interests for which we will issue the same number of Class B ordinary shares, which may be subsequently exchanged for our Class A ordinary shares. We do not currently expect any material Equity Performance Awards to be payable until the mid to late 2020s. Dividends We declared and paid one quarterly cash dividend for an aggregate amount of $66.0 million, or $0.17 per share during the three months ended March 31, 2021 to holders of our Class A ordinary shares. We did not have any Class A ordinary shares outstanding in the three months ended March 31, 2020. Future dividends are subject to declaration by the board of directors. 2020 Independent Directors Equity Incentive Plan On June 15, 2020, our 2020 Independent Director Equity Incentive Plan was approved and became effective, whereby 800 thousand Class A ordinary shares have been reserved for future issuance to our independent directors. RSU activity and share-based compensation We grant RSUs to independent directors under the 2020 Independent Director Equity Incentive Plan. Share-based compensation expense is recognized based on estimated fair value of the award on the grant date and amortized on a straight-line basis over the requisite service period of generally one year. We recognized share-based compensation of approximately $0.9 million for the three months ended March 31, 2021, which is recorded as part of General and administrative expenses in the condensed consolidated statement of comprehensive income. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings per Share Basic earnings per share (“EPS”) is computed by dividing net income attributable to us by the weighted average number of Class A ordinary shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to us, including the impact of potentially dilutive securities, by the weighted average number of Class A ordinary shares outstanding during the period, including the number of Class A ordinary shares that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include the outstanding Class B ordinary shares, Class B ordinary shares contingently issuable to EPA Holdings related to Equity Performance Awards, and unvested RSUs issued under our Equity Incentive Plan. We use the “if-converted” method to determine the potentially dilutive effect of our outstanding Class B ordinary shares, and the treasury stock method to determine the potentially dilutive effect of the unvested RSUs. Prior to the IPO, our capital structure included predominantly unitholder interests. We analyzed the calculation of earnings per interest for periods prior to the IPO and determined that the resultant values would not be meaningful to the users of these unaudited condensed consolidated financial statements. Therefore, earnings per share information has not been presented for the three months ended March 31, 2020. Our Class B ordinary shares, Class R redeemable shares, and deferred shares do not share in the earnings or losses attributable to us and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share for Class B ordinary shares, Class R redeemable shares, and deferred shares under the two-class method has not been presented. Our Class B ordinary shares are, however, considered potentially dilutive shares of Class A ordinary shares because shares of Class B ordinary shares, together with the related RP Holdings Class B Interests, are exchangeable into Class A ordinary shares on a one-for-one basis. Class B ordinary shares contingently issuable to EPA Holdings were evaluated and were determined not to have any dilutive impact for the three months ended March 31, 2021. The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A ordinary share for the three months ended March 31, 2021 (in thousands, except per share amounts). Three Months Ended March 31, 2021 Numerator: Consolidated Net Income $ 158,979 Less: Net income attributable to Continuing Investor Partnerships 38,545 Less: Net income attributable to non-controlling interest - Legacy Investors Partners and RPSFT 51,315 Net income attributable to Royalty Pharma plc - basic 69,119 Add: Reallocation of net income attributable to non-controlling interest from the assumed conversion of Class B ordinary shares 38,545 Net income attributable to Royalty Pharma plc - diluted $ 107,664 Denominator Weighted average Class A ordinary shares outstanding - basic 389,760 Add: Dilutive effects as shown separately below Class B ordinary shares exchangeable for Class A ordinary shares 217,350 Unvested RSUs 38 Weighted average Class A ordinary shares outstanding - diluted 607,148 Earnings per Class A ordinary share - basic $ 0.18 Earnings per Class A ordinary share - diluted $ 0.18 |
Indirect Cash Flow
Indirect Cash Flow | 3 Months Ended |
Mar. 31, 2021 | |
Supplemental Cash Flow Elements [Abstract] | |
Indirect Cash Flow | Indirect Cash Flow Adjustments to reconcile consolidated net income to net cash provided by operating activities are summarized below (in thousands). For the Three Months Ended March 31, 2021 2020 Cash flow from operating activities: Consolidated net income $ 158,979 $ 109,096 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Income from financial royalty assets (529,625) (462,844) Provision for changes in expected cash flows from financial royalty assets 292,262 88,012 Amortization of intangible assets 5,671 5,733 Amortization of debt discount and issuance costs 4,790 2,478 Unrealized loss on derivative contracts 2,555 33,445 Loss on equity securities 54,186 153,166 Equity in loss of non-consolidated affiliates 1,918 9,074 Distributions from non-consolidated affiliates 17,325 20,293 Loss on extinguishment of debt — 5,406 Share-based compensation 713 — Interest income accretion (15,491) — Unrealized gain on available for sale debt securities (9,115) — Loss on derivative financial instruments — (34,952) Other 958 3,469 Decrease/(increase) in operating assets: Cash collected on financial royalty assets 573,946 488,028 Accrued royalty receivable (299) (196) Other royalty income receivable (530) (2,619) Other current assets 1,939 40 Other assets — 45,007 (Decrease)/increase in operating liabilities: Accounts payable and accrued expenses (2,207) 8,468 Interest payable (31,875) — Net cash provided by operating activities $ 526,100 $ 471,104 Non-cash investing and financing activities are summarized below (in thousands). For the Three Months Ended March 31, 2021 2020 Supplemental schedule of non-cash investing / financing activities: Receipt of contribution of investment in Legacy Investors Partnerships (Note 9) $ — $ 303,679 Settlement of Epizyme forward purchase contract (Note 4) — 5,700 Accrued purchase obligation - Tazverik (Note 17) — 110,000 Repayments of long-term debt by contributions from non-controlling interest (1) — 1,103,774 (1) Related to the pro rata portion of RPIFT’s outstanding debt repaid by the Legacy Investors Partnerships |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive IncomeComprehensive income is comprised of net income and other comprehensive income/(loss). We include unrealized gains and losses on available for sale debt securities related to Series A Biohaven Preferred Shares, which is the only component of accumulated other comprehensive income as of March 31, 2021 and December 31, 2020. As a result of the termination of interest rate swaps in February 2020, all amounts associated with interest rate swaps previously designated as cash flow hedges and recorded in accumulated other comprehensive income were released into earnings during the three months ended March 31, 2020. Changes in accumulated other comprehensive income are as follows (in thousands): Unrealized gain/(loss) on available for sale debt securities Balance at December 31, 2020 $ 34,395 Reclassifications to net income (8,197) Activity for the period 2,712 Reclassifications from non-controlling interest 542 Balance at March 31, 2021 $ 29,452 The total reclassification of unrealized gains on available for sale debt securities of $15.5 million for the three months ended March 31, 2021 is presented in earnings within Interest income on the condensed consolidated statements of comprehensive income, including $8.2 million attributable to controlling interest as noted in the table above and $7.3 million attributable to the non-controlling interest. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Manager The Manager is the investment manager of Royalty Pharma and its subsidiaries. The Manager is an affiliate of RP Ireland, the administrator of RPIFT and RPI Intermediate FT. The sole member of the Manager, Pablo Legorreta, holds an interest in us and serves as our Chief Executive Officer and Chairman of the board of directors, and as a director on the board of directors of RP Holdings. In connection with the Exchange Offer Transactions (discussed in Note 1–Organization and Purpose), the Manager entered into Management Agreements with us and our subsidiaries, the Continuing Investors Partnerships, and with the Legacy Investors Partnerships. Pursuant to the Management Agreements, we pay quarterly operating and personnel expenses to the Manager or its affiliates (“Operating and Personnel Payments”) equal to 6.5% of the Adjusted Cash Receipts (both, as defined in the Management Agreement) for such quarter and 0.25% of the GAAP value of our security investments as of the end of such quarter. The operating and personnel payments for Old RPI, an obligation of the Legacy Investors Partnerships as a non-controlling interest in Old RPI and for which the expense is reflected in our income statement, is calculated as the greater of $1 million per quarter and 0.3125% of Royalty Investments (as defined in the limited partnership agreements of the Legacy Investor Partnerships) during the previous twelve calendar months. During the three months ended March 31, 2021, Operating and Personnel Payments incurred were $35.7 million, including the amount attributable to Old RPI, and were recognized within General and administrative expenses on the condensed consolidated statements of comprehensive income. Prior to the Exchange Date, the Manager received operating and personnel payments payable in equal quarterly installments that increased by 5% annually on a compounded basis under the terms of its management agreement with Old RPI and the Legacy Investors Partnerships. RP Ireland receives an annual management fee payable in advance by Old RPI in equal quarterly installments under terms of the limited partnership agreements of the Legacy Investors Partnerships. After the Exchange Date, operating and personnel payments were calculated in accordance with the methodology discussed in the paragraph above. During the three months ended March 31, 2020, total operating and personnel payments incurred were $19.7 million and were recognized within General and administrative expenses on the condensed consolidated statements of comprehensive income. Distribution Payable to Non-Controlling Interest The Distribution payable to non-controlling interest represents the contractual cash flows required to be distributed based on the Legacy Investors Partnerships’ non-controlling interest in Old RPI and RPSFT’s non-controlling interest in RPCT. The Distribution payable to non-controlling interest of $108.8 million as of March 31, 2021 includes the following: (1) $91.7 million due to the Legacy Investors Partnerships from Old RPI in connection with the Legacy Investors Partnerships’ non-controlling interest in Old RPI that arose in the Reorganization Transactions and (2) $17.1 million due to RPSFT from RPCT in connection with RPSFT's non-controlling interest in RPCT. The Distribution payable to non-controlling interest of $126.4 million at December 31, 2020 includes the following: (1) $100.0 million due to the Legacy Investors Partnerships from Old RPI in connection with the Legacy Investors Partnerships’ non-controlling interest in Old RPI that arose in the Reorganization Transactions and (2) $26.3 million due to RPSFT from RPCT in connection with RPSFT's non-controlling interest in RPCT. Acquisition from Epizyme In November 2019, in connection with an equity investment in Epizyme of $100.0 million made by RPIFT, Pablo Legorreta, our Chief Executive Officer, was appointed as a director of Epizyme, for which he received, and continues to receive, compensation in cash and shares of Epizyme, all of which will be contributed to the Manager and used to reduce costs and expenses, which would otherwise be billed to us or our affiliates. Acquisition from Bristol-Myers Squibb In November 2017, RPI Acquisitions entered into a purchase agreement with Bristol-Myers Squibb (“BMS”) to acquire from BMS a percentage of its future royalties on worldwide sales of Onglyza, Farxiga, and related diabetes products marketed by AstraZeneca (the “Purchase Agreement”). We agreed to make payments to BMS based on sales of the products over eight quarters beginning with the first quarter of 2018 in exchange for a high single-digit royalty on worldwide sales of the products from 2020 through 2025. On December 8, 2017, RPI Acquisitions entered into a purchase, sale and assignment agreement (“Assignment Agreement”) with a wholly owned subsidiary of BioPharma Credit PLC (“BPCR”), an affiliate of us. BPCR is a related entity due to the sole member of the investment manager having significant influence over both entities. Under the terms of the Assignment Agreement, RPI Acquisitions assigned the benefit of 50% of the payment stream acquired from BMS to BPCR in consideration for BPCR meeting 50% of the funding obligations owed to BMS under the Purchase Agreement. We began making installment payments to BMS during the second quarter of 2018 and completed our funding in the first quarter of 2020. As of March 31, 2020, we funded a cumulative amount of $162.4 million, net of the assigned funding obligations. During the three months ended March 31, 2020, installment payments made to BMS totaled $24.3 million, of which RPI Acquisitions funded $12.1 million. Upon transfer of funds from BPCR to RPI Acquisitions to meet the quarterly funding obligation to BMS, RPI Acquisitions derecognized 50% of the financial royalty asset. Cash received from BPCR in respect of each funding obligation equaled the carrying amount of the assigned transfer of interest, therefore no gain or loss was recognized upon the transfer. We began to measure this financial royalty asset using the effective interest method once our installment funding obligation was completed and we received our first royalty payment on the asset in the second quarter of 2020. As of March 31, 2021 and December 31, 2020, the financial royalty asset of $146.1 million and $150.6 million, respectively, included in Financial royalty assets, net on the condensed consolidated balance sheets represents only our right to the future payment streams acquired from BMS. Other transactions In connection with the Exchange Offer Transactions, we acquired the Legacy SLP Interest from the Continuing Investors Partnerships in exchange for issuing shares in our subsidiary. As a result, we became a special limited partner in the Legacy Investors Partnerships. The Legacy Investors Partnerships own a non-controlling interest in Old RPI. Refer to Note 9–Non-Consolidated Affiliates for additional discussion. RPIFT owns 27,210 limited partnership interests in the Continuing Investors Partnership whose only substantive operations are their investment in our subsidiaries. The total investment of $4.3 million is recorded as treasury interests, of which $1.9 million and $1.9 million are held by non-controlling interest as of March 31, 2021 and December 31, 2020, respectively. Based on its ownership percentage of RP Holdings relative to the Company, each Continuing Investor Partnership pays a pro rata portion of any costs and expenses in connection with the contemplation of, formation of, listing and ongoing operation of us and any of our subsidiaries, including any third-party expenses of managing us and any of our subsidiaries, such as accounting, audit, legal, reporting, compliance, administration (including directors’ fees), financial advisory, consulting, investor relations and insurance expenses relating to our affairs and those of any subsidiary. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In the ordinary course of its business, we may enter into contracts or agreements that contain customary indemnifications relating to such things as confidentiality agreements and representations as to corporate existence and authority to enter into contracts. The maximum exposure under such agreements is indeterminable until a claim, if any, is made. However, no such claims have been made against us to date and we believe that the likelihood of such proceedings taking place in the future is remote. On August 7, 2020, we entered into a funding agreement with Biohaven, including the Series B Biohaven Preferred Share Agreement, for up to $450.0 million to fund the development of zavegepant and the commercialization of Nurtec ODT in exchange for royalties and success-based milestones. Biohaven received $150.0 million at closing and received an additional $100.0 million in the three months ended March 31, 2021, upon the start of the oral zavegepant Phase 3 program. Pursuant to the Series B Biohaven Preferred Share Agreement, we agreed to provide further support for the ongoing launch of Nurtec ODT with the purchase of committed, non-contingent Commercial Launch Preferred Equity for a total of $200.0 million payable on a quarterly basis between March 31, 2021 and December 31, 2024. In return, Biohaven will be required to redeem the Series B Biohaven Preferred Shares in a series of equal fixed quarterly payments between March 31, 2025 and December 31, 2030. During the three months ended March 31, 2021, we began purchasing the Series B Biohaven Preferred Shares. We have a remaining commitment of $182.4 million under our Commercial Launch Preferred Equity as of March 31, 2021. In November 2019, RPIFT agreed to pay $330.0 million to purchase Eisai’s royalties on future worldwide sales of Tazverik (tazemetostat), a novel targeted therapy in late-stage clinical development that was approved by the FDA in January 2020 for epithelioid sarcoma, and with the potential to be approved in several cancer indications. Under the terms of its agreement with Eisai, RPIFT acquired Eisai’s future worldwide royalties on net sales by Epizyme of Tazverik outside of Japan, for an upfront payment of $110.0 million plus up to an additional $220.0 million for the remainder of the royalty upon FDA approval of Tazverik for certain indications. The FDA approval of Tazverik in January 2020 triggered our obligation to fund the second $110.0 million tranche in November 2020. In June 2020, the FDA approval of additional indications of Tazverik triggered our obligation to fund the final $110.0 million tranche in November 2021, which is recorded within the current liabilities on the condensed consolidated balance sheet as of March 31, 2021. We have commitments to advance funds to counterparties through our investment in the Avillion Entities and R&D arrangements. Please refer to Notes 9–Non-Consolidated Affiliates and 10–Research & Development (“R&D”) Funding Expense, respectively, for details of these arrangements. We also have requirements to make Operating and Personnel Payments over the life of the management agreement as described in Note 16–Related Party Transactions, which are variable and based on cash receipts. Legal Proceedings We are a party to legal actions with respect to a variety of matters in the ordinary course of business. Some of these proceedings may be based on complex claims involving substantial uncertainties and unascertainable damages. Unless otherwise noted, it is not possible to determine the probability of loss or estimate damages, and therefore we have not established accruals for any of these proceedings in our consolidated balance sheets as of March 31, 2021 and December 31, 2020. When we determine that a loss is both probable and reasonably estimable, we record a liability, and, if the liability is material, we disclose the amount of the liability reserved. We do not believe the outcome of any existing legal proceedings to which we are a party, either individually or in the aggregate, will adversely affect our business, financial condition or results of operations. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsIn April 2021, we acquired a royalty interest in Oxlumo (lumasiran) from Dicerna Pharmaceuticals, Inc. for an upfront cash payment of $180 million and up to $60 million in contingent sales-based milestone payments. Oxlumo, which has been approved by the FDA and European Medicines Agency for the treatment of primary hyperoxaluria (PH) type 1, is marketed by Alnylam Pharmaceuticals, Inc. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of preparation | The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, all adjustments considered necessary to present fairly the results of the interim periods have been included and consist only of normal and recurring adjustments. Certain information and footnote disclosures have been condensed or omitted as permitted under U.S. GAAP. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2020, included in our Annual Report on Form 10-K. |
Use of estimates | The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of income, revenues and expenses during the reporting period. Actual results may differ from those estimates. The results for the interim periods are not necessarily indicative of results for the full year. The precise extent to which the COVID-19 pandemic will impact our operational and financial performance will depend on various factors. To date, the pandemic has not materially impacted our financial performance and we do not believe it is reasonably likely to in the future. Due to the nature of our business, the effect of the COVID-19 pandemic may not be fully reflected in certain of our results of operations until future periods. |
Basis of consolidation | The unaudited condensed consolidated financial statements include the accounts of Royalty Pharma and all majority-owned and controlled subsidiaries, as well as variable interest entities, where we are the primary beneficiary. We consolidate based upon evaluation of our power, through voting rights or similar rights, to direct the activities of another entity that most significantly impact the entity’s economic performance. For consolidated entities where we own or are exposed to less than 100% of the economics, we record Net income attributable to non-controlling interest in our unaudited condensed consolidated statements of comprehensive income equal to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties. Following management’s determination that a high degree of common ownership existed in Royalty Pharma both before and after the Exchange Date, Royalty Pharma recognized Old RPI’s assets and liabilities at the carrying value reflected on Old RPI’s balance sheet as of the Exchange Date. |
Adjustment to prior period presentation and Reclassification | Adjustment to prior period presentation In connection with the preparation of our condensed consolidated interim financial statements for the three months ended September 30, 2020, we identified an adjustment to the classification of our short-term investments on our consolidated balance sheet, as of December 31, 2019 based on the original maturity dates of the investments. The adjustment resulted in an increase of $88.8 million to Marketable securities and a corresponding decrease to Cash and cash equivalents on the consolidated balance sheet as of March 31, 2020. The adjustments resulted in an increase of $66.7 million and a decrease of $22.1 million in cash activity related to Purchases of marketable securities and Proceeds from sales and maturities of marketable securities , respectively, within Net cash used in investing activities for the three months ended March 31, 2020, with a net impact on net cash flow from investing of $88.8 million. We evaluated the adjustment and determined that, based on our quantitative and qualitative analysis, it was not material to the condensed consolidated financial statements as of and for the three months ended March 31, 2020. Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. |
Concentrations of credit risk | Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, financial royalty assets and receivables. Our cash management and investment policy limits investment instruments to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds are needed for operations. Our cash and cash equivalents and marketable securities balances as of March 31, 2021 and December 31, 2020 were held with State Street and Bank of America. Our primary operating accounts significantly exceed the FDIC limits.The majority of our financial royalty assets and receivables arise from contractual royalty agreements that entitle us to royalties on the sales of underlying biopharmaceutical products in the United States, Europe and the rest of the world, with concentrations of credit risk limited due to the broad range of marketers responsible for paying royalties to us and the variety of geographies from which our royalties on product sales are derived. The products in which we hold royalties are marketed by leading industry participants, including, among others, AbbVie, Amgen, Bristol-Myers Squibb, Gilead, Johnson & Johnson, Lilly, Merck, Pfizer, Novartis, Biogen, Roche/Genentech and Vertex. |
Recently adopted and issued accounting standards | Upon the January 1, 2020 adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), we recorded a cumulative adjustment to Retained earnings of $192.7 million to recognize an allowance for current expected credit losses on the portion of our portfolio of financial royalty assets that is subject to credit risk. Refer to Note 7––Cumulative Allowance for Changes in Expected Cash Flows from Financial Royalty Assets for additional discussion. |
Fair value measurements | The summary below presents information about our assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020, and the valuation techniques we utilized to determine such fair value. • Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Our Level 1 assets consist of equity securities with readily determinable fair values and money market funds. • Level 2: Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly. Our Level 2 assets generally include marketable securities, warrants, derivatives and, historically, our interest rate swap contracts. • Level 3: Prices or valuation that require inputs that are both significant to the fair value measurement and unobservable. Our Level 3 assets consist of our investments in the Series A Biohaven Preferred Shares, Series B Biohaven Preferred Shares and the Series B Forwards. See Note 5––Available for Sale Debt Securities for a description of our investments in the Series A Biohaven Preferred Shares, Series B Biohaven Preferred Shares and the Series B Forwards. For financial instruments which are carried at fair value, the level in the fair value hierarchy is based on the lowest level of inputs that is significant to the fair value measurement in its entirety. |
Fair Value Measurements and F_2
Fair Value Measurements and Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Hierarchy | The following is a summary of the inputs used to value our financial assets and liabilities measured at fair value as of March 31, 2021 and December 31, 2020 (in thousands): As of March 31, 2021 Level 1 Level 2 Level 3 Total Assets: Cash equivalents Money market funds $ 201,439 $ — $ — $ 201,439 Certificates of deposit — 91,660 — 91,660 Marketable securities Commercial paper — 369,037 — 369,037 Certificates of deposit — 699,876 — 699,876 Available for sale debt securities — — 69,261 69,261 Total current assets $ 201,439 $ 1,160,573 $ 69,261 $ 1,431,273 Equity securities $ 244,503 $ — $ — $ 244,503 Available for sale debt securities — — 157,539 157,539 Forwards (1) — — 22,400 22,400 Warrants (2) — 2,884 — 2,884 Total non-current assets $ 244,503 $ 2,884 $ 179,939 $ 427,326 (1) The Series B Forwards, recorded within Available for sale debt securities in the condensed consolidated balance sheet as of March 31, 2021, relate to our obligation to fund the acquisition of the Series B Biohaven Preferred Shares. (2) Related to the Epizyme transaction as described in Note 4––Derivative Instruments and recorded in the non-current asset portion of Derivative financial instruments in the condensed consolidated balance sheet as of March 31, 2021. The net unrealized loss recognized on equity securities still held as of March 31, 2021 was a loss of $54.2 million and $119.6 million for the three months ended March 31, 2021 and 2020, respectively. As of December 31, 2020 Level 1 Level 2 Level 3 Total Assets: Cash equivalents Money market funds $ 24,302 $ — $ — $ 24,302 Commercial paper — 77,176 — 77,176 Certificates of deposit — 74,502 — 74,502 Marketable securities Corporate debt securities — 32,754 — 32,754 Commercial paper — 444,554 — 444,554 Certificates of deposit — 505,971 — 505,971 Available for sale debt securities — — 69,984 69,984 Total current assets $ 24,302 $ 1,134,957 $ 69,984 $ 1,229,243 Equity securities (1) $ 298,689 $ — $ — $ 298,689 Available for sale debt securities — — 144,416 144,416 Forwards (2) — — 18,600 18,600 Warrants (3) — 5,439 — 5,439 Total non-current assets $ 298,689 $ 5,439 $ 163,016 $ 467,144 (1) Upon Gilead’s acquisition of Immunomedics, our investment in Immunomedics common stock was redeemed in full in the three months ended December 31, 2020, resulting in a gain of $292.3 million recognized within (Gain)/loss on equity securities in the year ended December 31, 2020. (2) The Series B Forwards, recorded within Available for sale debt securities in the condensed consolidated balance sheet as of December 31, 2020, relate to our obligation to fund the acquisition of the Series B Biohaven Preferred Shares. (3) Related to the Epizyme transaction as described in Note 4––Derivative Instruments and recorded in the non-current asset portion of Derivative financial instruments in the condensed consolidated balance sheet as of December 31, 2020. |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The tables presented below summarize the change in the combined carrying value (current and non-current) of Level 3 financial instruments, which relate to our investment in the Series A Biohaven Preferred Shares, Series B Biohaven Preferred Shares and the Series B Forwards (in thousands). For the three months ended March 31, 2021 2020 Series A Biohaven Preferred Shares Balance at the beginning of the period $ 214,400 $ 131,280 Unrealized gains on available for sale debt securities (1) 5,125 52,725 Transfer to Level 2 — (184,005) Redemption (15,625) — Balance at the end of the period $ 203,900 $ — For the three months ended March 31, 2021 2020 Series B Biohaven Preferred Shares Balance at the beginning of the period $ — $ — Purchases 17,585 — Settlement of forwards (2) 5,315 — Balance at the end of the period $ 22,900 $ — For the three months ended March 31, 2021 2020 Series B Forwards Balance at the beginning of the period $ 18,600 $ — Unrealized gains included in earnings (3) 9,115 — Settlement of forwards (2) (5,315) — Balance at the end of the period $ 22,400 $ — (1) Recorded in other comprehensive income within Unrealized gain on available for sale debt securities on the condensed consolidated statements of comprehensive income. (2) Reflects the fair value attributed to the Series B Forwards that were settled in the period, which is included in the fair value of the Series B Biohaven Preferred Shares. See Note 5––Available for Sale Debt Securities. (3) Recorded in earnings within Unrealized gain on available for sale debt securities on the condensed consolidated statements of comprehensive income. |
Fair Value Disclosure of Asset and Liability Not Measured at Fair Value | Estimated fair values based on Level 3 inputs and related carrying values for the non-current portion of our financial royalty assets as of March 31, 2021 and December 31, 2020 are presented below (in thousands). March 31, 2021 December 31, 2020 Fair value Carrying value, net Fair value Carrying value, net Financial royalty assets, net $ 18,464,028 $ 12,599,080 $ 18,718,179 $ 12,368,084 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Derivatives and Reclassifications | The table below summarizes the change in fair value of derivatives for the three months ended March 31, 2021 and 2020 and the line items within the condensed consolidated statements of comprehensive income where the (gains)/losses on derivatives are recorded (in thousands). For the three months ended Condensed Consolidated Statement of Comprehensive Income location 2021 2020 Derivatives in hedging relationships (1) Interest Rate Swaps: Amount of loss reclassified from Accumulated Other Comprehensive Income into income $ — $ 4,066 Unrealized loss on derivative financial instruments Change in fair value of interest rate swaps — (73) Unrealized loss on derivative financial instruments Interest expense — 114 Interest expense Derivatives not designated as hedging instruments Interest Rate Swaps: Change in fair value of interest rate swaps — 6,908 Unrealized loss on derivative financial instruments Interest expense — 408 Interest expense Warrant: Change in fair value of warrant 2,555 16,744 Unrealized loss on derivative financial instruments Forward purchase contract: Change in fair value of forward purchase contract — 5,800 Unrealized loss on derivative financial instruments |
Available for Sale Debt Secur_2
Available for Sale Debt Securities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Available for Sale Debt Securities | The table below summarizes our available for sale debt securities recorded at fair value as of March 31, 2021 and December 31, 2020 (in thousands): Cost Unrealized gains Fair Value (1) As of March 31, 2021 Series A Biohaven Preferred Shares $ 125,121 $ 78,779 $ 203,900 Series B Biohaven Preferred Shares 17,585 5,315 22,900 Series B Forwards — 22,400 22,400 Total available for sale debt securities $ 142,706 $ 106,494 $ 249,200 As of December 31, 2020 Series A Biohaven Preferred Shares $ 125,121 $ 89,279 $ 214,400 Series B Forwards — 18,600 18,600 Total available for sale debt securities $ 125,121 $ 107,879 $ 233,000 (1) As of March 31, 2021, $69.3 million and $134.6 million related to Series A Biohaven Preferred Shares are recorded in the current and non-current asset portion of Available for sale debt securities , respectively, on the condensed consolidated balance sheet. As of December 31, 2020, $70.0 million and $144.4 million related to the Series A Preferred Shares were recorded as the current and non-current asset portion of Available for sale debt securities , respectively, on the condensed consolidated balance sheet. As of March 31, 2021 and December 31, 2020, balances related to Series B Biohaven Preferred Shares and Series B Forwards are recorded in the non-current portion of Available for sale debt securities on the condensed consolidated balance sheets. |
Financial Royalty Assets, Net (
Financial Royalty Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Summary of Financial Royalty Assets, Net | The gross carrying value, cumulative allowance for changes in expected cash flows, exclusive of the allowance for credit losses, and net carrying value for the current and non-current portion of financial royalty assets as of March 31, 2021 and December 31, 2020 are as follows (in thousands): March 31, 2021 Estimated royalty duration (a) Gross carrying value Cumulative allowance for changes in expected cash flows (Note 7) Net carrying value (e) Cystic fibrosis franchise 2037 (b) $ 5,292,904 $ (53,092) $ 5,239,812 Tysabri (c) 1,967,974 (114,354) 1,853,620 Imbruvica 2027-2029 1,416,270 (110,285) 1,305,985 Xtandi 2027-2028 1,136,270 (188,417) 947,853 Evrysdi 2030-2035 (d) 688,189 — 688,189 Promacta 2025-2028 658,287 — 658,287 Other 2020-2039 3,517,660 (730,280) 2,787,380 Total $ 14,677,554 $ (1,196,428) $ 13,481,126 Less: Cumulative allowance for credit losses (Note 7) (359,658) Total financial royalty assets, net $ 13,121,468 a) Dates shown represent management’s estimates of when a royalty will substantially end, which may depend on our estimates of patent expiration dates (which may include estimated patent term extensions) or other factors and may vary by geography. Royalty expiration dates can change due to patent, regulatory, commercial or other developments. There can be no assurances that our royalties will expire when expected. b) Royalty is perpetual; year shown represents Trikafta expected patent expiration and potential sales decline based on generic entry. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term, which is periodically reviewed. d) Key patents on Evrysdi in the United States expire in 2035, but our royalty will cease when aggregate royalties paid to us equal $1.3 billion. e) The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 7—Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets for additional information. December 31, 2020 Estimated royalty duration (a) Gross carrying value Cumulative allowance for changes in expected cash flows (Note 7) Net carrying value (e) Cystic fibrosis franchise 2037 (b) $ 5,274,896 $ — $ 5,274,896 Tysabri (c) 2,003,797 (112,720) 1,891,077 Imbruvica 2027-2029 1,406,291 (46,872) 1,359,419 Xtandi 2027-2028 1,150,335 (145,565) 1,004,770 Promacta 2025-2027 686,129 — 686,129 Evrysdi 2030-2035 (d) 675,440 — 675,440 Other 2020-2039 3,022,213 (634,950) 2,387,263 Total $ 14,219,101 $ (940,107) $ 13,278,994 Less: Cumulative allowance for credit losses (Note 7) (323,717) Total financial royalty assets, net $ 12,955,277 a) Dates shown represent management’s estimates of when a royalty will substantially end, which may depend on our estimates of patent expiration dates (which may include estimated patent term extensions) or other factors and may vary by geography. Royalty expiration dates can change due to patent, regulatory, commercial or other developments. There can be no assurances that our royalties will expire when expected. b) Royalty is perpetual; year shown represents Trikafta expected patent expiration and potential sales decline based on generic entry. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term, which is periodically reviewed by the management. d) Key patents on Evrysdi in the United States expire in 2035, but our royalty will cease when aggregate royalties paid to us equal $1.3 billion. e) The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 7—Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets for additional information. |
Cumulative Allowance and the _2
Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Credit Loss [Abstract] | |
Schedule of Cumulative Allowance for Changes in Expected Cash Flows | The following tables set forth the activity in the cumulative allowance for changes in expected cash flows from financial royalty assets, inclusive of the cumulative allowance for credit losses, as of the dates indicated (in thousands): Activity for the period Balance at December 31, 2020 (a) $ (1,263,824) Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets (283,617) Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets 27,296 Current period provision for credit losses (b) (35,941) Balance at March 31, 2021 $ (1,556,086) (a) Includes $323.7 million related to cumulative allowance for credit losses. (b) Primarily related to provision for credit losses resulting from increases to our portfolio of financial royalty assets in the three months ended March 31, 2021, predominantly the $100.0 million increase to our zavegepant financial royalty asset related to the funding payment we made to Biohaven upon the start of the oral zavegepant Phase 3 program and a new royalty interest in the cabozantinib products. |
Intangible Royalty Assets, Net
Intangible Royalty Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Royalty Interests | The following schedules of the intangible royalty assets present the cost, accumulated amortization and net carrying value as of March 31, 2021 and December 31, 2020 (in thousands). As of March 31, 2021 Cost Accumulated amortization Net carrying value DPP-IV patents $ 606,216 $ 583,221 $ 22,995 Total intangible royalty assets $ 606,216 $ 583,221 $ 22,995 As of December 31, 2020 Cost Accumulated amortization Net carrying value DPP-IV patents $ 606,216 $ 577,550 $ 28,666 Total intangible royalty assets $ 606,216 $ 577,550 $ 28,666 |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Borrowings | Our borrowings as of March 31, 2021 and December 31, 2020 consisted of the following (in thousands): Type of Borrowing Maturity Interest rate March 31, 2021 December 31, 2020 Senior Unsecured Notes: Senior unsecured notes (issued at 99.322% of par) 9/2023 0.75% $ 1,000,000 $ 1,000,000 Senior unsecured notes (issued at 98.875% of par) 9/2025 1.20% 1,000,000 1,000,000 Senior unsecured notes (issued at 98.284% of par) 9/2027 1.75% 1,000,000 1,000,000 Senior unsecured notes (issued at 97.760% of par) 9/2030 2.20% 1,000,000 1,000,000 Senior unsecured notes (issued at 95.556% of par) 9/2040 3.30% 1,000,000 1,000,000 Senior unsecured notes (issued at 95.306% of par) 9/2050 3.55% 1,000,000 1,000,000 Senior Unsecured Revolving Credit Facility — — Unamortized debt discount and issuance costs (178,928) (183,416) Total debt carrying value 5,821,072 5,816,584 Less: Current portion of long-term debt — — Total long-term debt $ 5,821,072 $ 5,816,584 |
Schedule of Repayments of Debt by Year | The future principal payments for our borrowings as of March 31, 2021 over the next five years and thereafter are as follows (in thousands): Year Principal Payments Remainder of 2021 $ — 2022 — 2023 1,000,000 2024 — 2025 1,000,000 Thereafter 4,000,000 Total (1) $ 6,000,000 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Schedule of Balance Of Non-controlling Interests | The net change in the balance of our four non-controlling interests for the three months ended March 31, 2021 and 2020 are as follows (in thousands): RPSFT Legacy Investors Partnerships Continuing Investors Partnerships (1) EPA Holdings Total December 31, 2020 $ 12,436 $ 1,939,509 $ 3,125,091 $ — $ 5,077,036 Contributions — 3,253 — — 3,253 Distributions (13,653) (94,542) (37,183) — (145,378) Net income 15,058 36,257 38,545 — 89,860 Other exchanges — — (65,072) — (65,072) Other comprehensive income: Unrealized gain on available for sale debt securities — 901 1,512 — 2,413 Reclassification of unrealized gain on available for sale debt securities — (2,723) (4,571) — (7,294) March 31, 2021 $ 13,841 $ 1,882,655 $ 3,058,322 $ — $ 4,954,818 (1) Related to the Continuing Investors Partnerships’ ownership as of March 31, 2021 of approximately 35% in RP Holdings through their ownership of the RP Holdings Class B Interests. Royalty Pharma plc owns the remaining 65% of RP Holdings through its ownership of RP Holdings Class A Interests and Class B Interests as of March 31, 2021. RPSFT Legacy Investors Partnerships Total December 31, 2019 $ 35,883 $ — $ 35,883 Contributions — 1,133,629 1,133,629 Transfer of interests — 1,037,161 1,037,161 Distributions (29,246) (222,180) (251,426) Net income 24,926 12,930 37,856 Other comprehensive income: Unrealized gain on available for sale debt securities — 9,672 9,672 March 31, 2020 $ 31,563 $ 1,971,212 $ 2,002,775 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A ordinary share for the three months ended March 31, 2021 (in thousands, except per share amounts). Three Months Ended March 31, 2021 Numerator: Consolidated Net Income $ 158,979 Less: Net income attributable to Continuing Investor Partnerships 38,545 Less: Net income attributable to non-controlling interest - Legacy Investors Partners and RPSFT 51,315 Net income attributable to Royalty Pharma plc - basic 69,119 Add: Reallocation of net income attributable to non-controlling interest from the assumed conversion of Class B ordinary shares 38,545 Net income attributable to Royalty Pharma plc - diluted $ 107,664 Denominator Weighted average Class A ordinary shares outstanding - basic 389,760 Add: Dilutive effects as shown separately below Class B ordinary shares exchangeable for Class A ordinary shares 217,350 Unvested RSUs 38 Weighted average Class A ordinary shares outstanding - diluted 607,148 Earnings per Class A ordinary share - basic $ 0.18 Earnings per Class A ordinary share - diluted $ 0.18 |
Indirect Cash Flow (Tables)
Indirect Cash Flow (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | Adjustments to reconcile consolidated net income to net cash provided by operating activities are summarized below (in thousands). For the Three Months Ended March 31, 2021 2020 Cash flow from operating activities: Consolidated net income $ 158,979 $ 109,096 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Income from financial royalty assets (529,625) (462,844) Provision for changes in expected cash flows from financial royalty assets 292,262 88,012 Amortization of intangible assets 5,671 5,733 Amortization of debt discount and issuance costs 4,790 2,478 Unrealized loss on derivative contracts 2,555 33,445 Loss on equity securities 54,186 153,166 Equity in loss of non-consolidated affiliates 1,918 9,074 Distributions from non-consolidated affiliates 17,325 20,293 Loss on extinguishment of debt — 5,406 Share-based compensation 713 — Interest income accretion (15,491) — Unrealized gain on available for sale debt securities (9,115) — Loss on derivative financial instruments — (34,952) Other 958 3,469 Decrease/(increase) in operating assets: Cash collected on financial royalty assets 573,946 488,028 Accrued royalty receivable (299) (196) Other royalty income receivable (530) (2,619) Other current assets 1,939 40 Other assets — 45,007 (Decrease)/increase in operating liabilities: Accounts payable and accrued expenses (2,207) 8,468 Interest payable (31,875) — Net cash provided by operating activities $ 526,100 $ 471,104 Non-cash investing and financing activities are summarized below (in thousands). For the Three Months Ended March 31, 2021 2020 Supplemental schedule of non-cash investing / financing activities: Receipt of contribution of investment in Legacy Investors Partnerships (Note 9) $ — $ 303,679 Settlement of Epizyme forward purchase contract (Note 4) — 5,700 Accrued purchase obligation - Tazverik (Note 17) — 110,000 Repayments of long-term debt by contributions from non-controlling interest (1) — 1,103,774 (1) Related to the pro rata portion of RPIFT’s outstanding debt repaid by the Legacy Investors Partnerships |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in accumulated other comprehensive income are as follows (in thousands): Unrealized gain/(loss) on available for sale debt securities Balance at December 31, 2020 $ 34,395 Reclassifications to net income (8,197) Activity for the period 2,712 Reclassifications from non-controlling interest 542 Balance at March 31, 2021 $ 29,452 |
Organization and Purpose (Detai
Organization and Purpose (Details) - USD ($) | Jun. 18, 2020 | Feb. 11, 2020 | Jun. 30, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Sep. 02, 2020 | Feb. 29, 2020 |
Subsidiary, Sale of Stock [Line Items] | |||||||
Repayments of outstanding debt | $ 0 | $ 5,170,396,000 | |||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche A-1 | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Debt issued, amount | $ 3,200,000,000 | ||||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Debt issued, amount | 2,840,000,000 | ||||||
Senior Secured Debt | Old Credit Facility | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Repayments of outstanding debt | $ 6,300,000,000 | ||||||
RPCT | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Ownership percentage (as a percent) | 66.00% | ||||||
Legacy Investors Partnerships | Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche A-1 | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Debt issued, amount | $ 1,300,000,000 | ||||||
Legacy Investors Partnerships | Old RPI | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Noncontrolling interest (percentage) | 18.00% | ||||||
RPSFT | RPCT | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Noncontrolling interest (percentage) | 34.00% | ||||||
RPI Intermediate FT | Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Debt issued, amount | $ 6,000,000,000 | $ 149,000,000 | |||||
RPI Intermediate FT | Senior Secured Debt | Senior Unsecured Revolving Credit Facility | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Repayments of outstanding debt | $ 5,200,000,000 | ||||||
Common Class A | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Ownership percentage following IPO | 100.00% | ||||||
Exchange Offer Transaction | Old RPI | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Ownership percentage (as a percent) | 82.00% | ||||||
Exchange Offer Transaction | Legacy Investors Partnerships | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Exchange offering, ownership percentage | 82.00% | ||||||
IPO | Common Class A | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Number of shares issued (in shares) | 89,334,000 | ||||||
Sale of stock, price per share (in dollars per share) | $ 28 | ||||||
IPO - Shares From Company | Common Class A | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Number of shares issued (in shares) | 71,652,000 | ||||||
IPO - Shares From Selling Shareholders | Common Class A | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Number of shares issued (in shares) | 17,682,000 | ||||||
Public Stock Offering - Continuing Investors Partnerships Interests | Common Class B | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Number of shares available to convert (in shares) | 294,176,000 | ||||||
Number of shares converted (in shares) | 241,207,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) | Jun. 30, 2020partnership | Feb. 29, 2020 | Dec. 31, 2019USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Number of noncontrolling interests created | partnership | 2 | |||||
Marketable securities | $ 1,068,913 | $ 983,279 | ||||
Cash and cash equivalents | (708,810) | (1,008,680) | ||||
Purchases of available for sale debt securities | 505,339 | $ 703,935 | ||||
Proceeds from sales and maturities of marketable securities | 419,783 | 104,613 | ||||
Net cash flow from investing | (599,300) | (761,754) | ||||
Cumulative adjustment to retained earnings | $ (9,837,033) | (7,162,693) | (9,895,815) | $ (6,141,438) | ||
Revision of Prior Period, Reclassification, Adjustment | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Marketable securities | 88,800 | |||||
Cash and cash equivalents | 88,800 | |||||
Purchases of available for sale debt securities | 66,700 | |||||
Proceeds from sales and maturities of marketable securities | 22,100 | |||||
Net cash flow from investing | 88,800 | |||||
RP Holdings | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Noncontrolling interest (percentage) | 65.00% | |||||
Cumulative Effect, Period of Adoption, Adjustment | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Cumulative adjustment to retained earnings | 192,705 | |||||
Retained Earnings | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Cumulative adjustment to retained earnings | $ (1,923,771) | $ (2,561,971) | $ (1,920,635) | (2,825,212) | ||
Retained Earnings | Cumulative Effect, Period of Adoption, Adjustment | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Cumulative adjustment to retained earnings | $ 192,705 | |||||
Customer Concentration Risk | Current portion of Financial royalty assets | Vertex | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Concentration risk (as a percent) | 28.00% | 27.00% | ||||
Legacy Investors Partnerships | Old RPI | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Noncontrolling interest (percentage) | 18.00% | |||||
Continuing Investors Partnerships | RP Holdings | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Noncontrolling interest (percentage) | 35.00% |
Fair Value Measurements and F_3
Fair Value Measurements and Financial Instruments - Schedule of Fair Value Hierarchy (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Mar. 31, 2021 | |
Assets: | ||
Marketable securities | $ 983,279 | $ 1,068,913 |
Available for sale debt securities | 69,984 | 69,261 |
Equity securities | 298,689 | 244,503 |
Available for sale debt securities | 163,016 | 179,939 |
Immunomedics | ||
Assets: | ||
Gain (loss) on equity securities | 292,300 | |
Fair Value, Recurring | ||
Assets: | ||
Available for sale debt securities | 69,984 | 69,261 |
Total current assets | 1,229,243 | 1,431,273 |
Equity securities | 298,689 | 244,503 |
Available for sale debt securities | 144,416 | 157,539 |
Total non-current assets | 467,144 | 427,326 |
Fair Value, Recurring | Commercial Paper | ||
Assets: | ||
Marketable securities | 444,554 | 369,037 |
Fair Value, Recurring | Corporate Debt Securities | ||
Assets: | ||
Marketable securities | 32,754 | |
Fair Value, Recurring | Certificates of Deposit | ||
Assets: | ||
Marketable securities | 505,971 | 699,876 |
Fair Value, Recurring | Forwards | ||
Assets: | ||
Derivatives | 18,600 | 22,400 |
Fair Value, Recurring | Warrant | ||
Assets: | ||
Derivatives | 5,439 | 2,884 |
Level 1 | Fair Value, Recurring | ||
Assets: | ||
Available for sale debt securities | 0 | 0 |
Total current assets | 24,302 | 201,439 |
Equity securities | 298,689 | 244,503 |
Available for sale debt securities | 0 | 0 |
Total non-current assets | 298,689 | 244,503 |
Level 1 | Fair Value, Recurring | Commercial Paper | ||
Assets: | ||
Marketable securities | 0 | 0 |
Level 1 | Fair Value, Recurring | Corporate Debt Securities | ||
Assets: | ||
Marketable securities | 0 | |
Level 1 | Fair Value, Recurring | Certificates of Deposit | ||
Assets: | ||
Marketable securities | 0 | 0 |
Level 1 | Fair Value, Recurring | Forwards | ||
Assets: | ||
Derivatives | 0 | 0 |
Level 1 | Fair Value, Recurring | Warrant | ||
Assets: | ||
Derivatives | 0 | 0 |
Level 2 | Fair Value, Recurring | ||
Assets: | ||
Available for sale debt securities | 0 | 0 |
Total current assets | 1,134,957 | 1,160,573 |
Equity securities | 0 | 0 |
Available for sale debt securities | 0 | 0 |
Total non-current assets | 5,439 | 2,884 |
Level 2 | Fair Value, Recurring | Commercial Paper | ||
Assets: | ||
Marketable securities | 444,554 | 369,037 |
Level 2 | Fair Value, Recurring | Corporate Debt Securities | ||
Assets: | ||
Marketable securities | 32,754 | |
Level 2 | Fair Value, Recurring | Certificates of Deposit | ||
Assets: | ||
Marketable securities | 505,971 | 699,876 |
Level 2 | Fair Value, Recurring | Forwards | ||
Assets: | ||
Derivatives | 0 | 0 |
Level 2 | Fair Value, Recurring | Warrant | ||
Assets: | ||
Derivatives | 5,439 | 2,884 |
Level 3 | Fair Value, Recurring | ||
Assets: | ||
Available for sale debt securities | 69,984 | 69,261 |
Total current assets | 69,984 | 69,261 |
Equity securities | 0 | 0 |
Available for sale debt securities | 144,416 | 157,539 |
Total non-current assets | 163,016 | 179,939 |
Level 3 | Fair Value, Recurring | Commercial Paper | ||
Assets: | ||
Marketable securities | 0 | 0 |
Level 3 | Fair Value, Recurring | Corporate Debt Securities | ||
Assets: | ||
Marketable securities | 0 | |
Level 3 | Fair Value, Recurring | Certificates of Deposit | ||
Assets: | ||
Marketable securities | 0 | 0 |
Level 3 | Fair Value, Recurring | Forwards | ||
Assets: | ||
Derivatives | 18,600 | 22,400 |
Level 3 | Fair Value, Recurring | Warrant | ||
Assets: | ||
Derivatives | 0 | 0 |
Money Market Funds | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | 24,302 | 201,439 |
Money Market Funds | Level 1 | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | 24,302 | 201,439 |
Money Market Funds | Level 2 | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Money Market Funds | Level 3 | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Commercial Paper | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | 77,176 | |
Commercial Paper | Level 1 | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | 0 | |
Commercial Paper | Level 2 | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | 77,176 | |
Commercial Paper | Level 3 | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | 0 | |
Certificates of Deposit | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | 74,502 | 91,660 |
Certificates of Deposit | Level 1 | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Certificates of Deposit | Level 2 | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | 74,502 | 91,660 |
Certificates of Deposit | Level 3 | Fair Value, Recurring | ||
Assets: | ||
Cash equivalents | $ 0 | $ 0 |
Fair Value Measurements and F_4
Fair Value Measurements and Financial Instruments - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 07, 2020 | Apr. 05, 2019 | Feb. 29, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Gain (loss) on equity securities still held | $ 54,200 | $ 119,600 | ||||
Available for sale debt securities | 249,200 | $ 233,000 | ||||
Purchases of equity securities | 17,585 | $ 0 | ||||
Series A Biohaven Preferred Shares | ||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Purchases of equity securities | $ 125,000 | |||||
Series B Biohaven Preferred Shares | ||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Purchases of equity securities | $ 200,000 | 200,000 | ||||
Preferred Shares | Series A Biohaven Preferred Shares | ||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Preferred shares, quarterly payments | $ 15,600 | |||||
Preferred shares, fixed payment amount | $ 250,000 | |||||
Preferred shares, weighted average cost of capital | 7.90% | 8.30% | ||||
Available for sale debt securities | $ 203,900 | $ 214,400 | ||||
Price per share (in USD per share) | $ 50,100 | |||||
Number of shares purchased (in shares) | 2,495 | |||||
Preferred Shares | Series B Biohaven Preferred Shares | ||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Number of shares committed to be acquired (in shares) | 3,992 | |||||
Price per share (in USD per share) | $ 50,100 | $ 50,100 | ||||
Number of shares purchased (in shares) | 3,992 | 351 | ||||
Preferred Shares | Redemption, Period One | Series B Biohaven Preferred Shares | ||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Redemption price, percentage | 180.00% | |||||
Preferred Shares | Maximum | Redemption, Period One | ||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Redemption price, percentage | 200.00% | |||||
Preferred Shares | Maximum | Redemption, Period One | Series A Biohaven Preferred Shares | ||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Redemption price, percentage | 200.00% |
Fair Value Measurements and F_5
Fair Value Measurements and Financial Instruments - Summary of Change in Carrying Value of Level 3 Financial Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Series A Biohaven Preferred Shares | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at the beginning of the period | $ 214,400 | $ 131,280 |
Unrealized gains on available for sale debt securities (1) | 5,125 | 52,725 |
Transfer to Level 2 | 0 | (184,005) |
Redemption | (15,625) | 0 |
Balance at the end of the period | 203,900 | 0 |
Series B Biohaven Preferred Shares | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at the beginning of the period | 0 | 0 |
Purchases | 17,585 | 0 |
Settlement of forwards | 5,315 | 0 |
Balance at the end of the period | 22,900 | 0 |
Series B Forwards | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at the beginning of the period | 18,600 | 0 |
Unrealized gains on available for sale debt securities (1) | 9,115 | 0 |
Settlement of forwards | (5,315) | 0 |
Balance at the end of the period | $ 22,400 | $ 0 |
Fair Value Measurements and F_6
Fair Value Measurements and Financial Instruments - Schedule of Estimated Fair Values Based on Level 3 Inputs (Details) - Level 3 - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Fair value | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Financial royalty assets, net | $ 18,464,028 | $ 18,718,179 |
Carrying value, net | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Financial royalty assets, net | $ 12,599,080 | $ 12,368,084 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) - USD ($) | Apr. 30, 2019 | Nov. 30, 2019 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Swap termination payments | $ 0 | $ 35,448,000 | |||
Interest received | 45,300,000 | ||||
Unrealized loss on derivatives | 2,555,000 | 33,445,000 | |||
Derivative financial instruments | 2,884,000 | $ 5,439,000 | |||
Preferred Shares | Series A Biohaven Preferred Shares | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative instrument, exercise period (in months) | 12 months | ||||
Additional issuance, purchase price, maximum | $ 75,000,000 | ||||
Additional issuance, purchase price, minimum | $ 25,000,000 | ||||
Epizyme Common Stock Warrant | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Warrants to purchase additional shares (in shares) | 2,500,000 | ||||
Equity Investment In Epizyme Inc. | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Equity securities | $ 100,000,000 | ||||
Upfront payment for equity investment | $ 100,000,000 | ||||
Equity Investment In Epizyme Inc. | Epizyme Common Stock Warrant | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Exercise price of warrant (in dollars per share) | $ 20 | ||||
Term of warrant (in years) | 3 years | ||||
Equity Investment In Epizyme Inc. | Put Option | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Put option, term (in months) | 18 months | ||||
Put option to sell additional common stock | $ 50,000,000 | ||||
Put option, selling price, maximum (in dollars per share) | $ 20 | ||||
Interest Rate Swap | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Unrealized loss on derivatives | 10,900,000 | ||||
Warrant | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Unrealized loss on derivatives | 2,600,000 | $ 16,700,000 | |||
Derivative financial instruments | $ 2,900,000 | $ 5,400,000 |
Derivative Instruments - Summar
Derivative Instruments - Summary of Derivatives and Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Interest Rate Swap | Unrealized loss on derivative financial instruments | Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Amount of loss reclassified from AOCI into income | $ 0 | $ 4,066 |
Interest rate swaps | 0 | (73) |
Interest Rate Swap | Unrealized loss on derivative financial instruments | Not Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivatives not designated as hedging instruments | 0 | 6,908 |
Interest Rate Swap | Interest expense | Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Interest rate swaps | 0 | 114 |
Interest Rate Swap | Interest expense | Not Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivatives not designated as hedging instruments | 0 | 408 |
Warrant | Unrealized loss on derivative financial instruments | Not Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivatives not designated as hedging instruments | 2,555 | 16,744 |
Forwards | Unrealized loss on derivative financial instruments | Not Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Change in fair value of derivative contracts | $ 0 | $ 5,800 |
Available for Sale Debt Secur_3
Available for Sale Debt Securities - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 07, 2020 | Apr. 05, 2019 | Mar. 31, 2021 | Mar. 31, 2020 |
Debt and Equity Securities, FV-NI [Line Items] | ||||
Purchase of available for sale debt securities | $ 17,585 | $ 0 | ||
Series A Biohaven Preferred Shares | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Purchase of available for sale debt securities | $ 125,000 | |||
Series B Biohaven Preferred Shares | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Purchase of available for sale debt securities | $ 200,000 | $ 200,000 | ||
Preferred Shares | Series A Biohaven Preferred Shares | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Number of shares purchased (in shares) | 2,495 | |||
Price per share (in USD per share) | $ 50,100 | |||
Redemption default, threshold period | 1 year | |||
Preferred Shares | Series B Biohaven Preferred Shares | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Number of shares purchased (in shares) | 3,992 | 351 | ||
Price per share (in USD per share) | $ 50,100 | $ 50,100 | ||
Redemption default, interest rate | 18.00% | 18.00% | ||
Redemption default, threshold period | 1 year | |||
Preferred Shares | Redemption, Period One | Series B Biohaven Preferred Shares | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Redemption price, percentage | 180.00% | |||
Preferred Shares | Redemption, Period One | Maximum | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Redemption price, percentage | 200.00% | |||
Preferred Shares | Redemption, Period One | Maximum | Series A Biohaven Preferred Shares | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Redemption price, percentage | 200.00% | |||
Preferred Shares | Redemption, Period Two | Series A Biohaven Preferred Shares | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Redemption price, percentage | 200.00% | |||
Preferred Shares | Redemption, Period Two | Series B Biohaven Preferred Shares | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Redemption price, percentage | 180.00% |
Available for Sale Debt Secur_4
Available for Sale Debt Securities - Summary of Available for Sale Debt Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Cost | $ 142,706 | $ 125,121 |
Unrealized gains | 106,494 | 107,879 |
Fair Value | 249,200 | 233,000 |
Available for sale debt securities, current | 69,261 | 69,984 |
Available for sale debt securities, noncurrent | 179,939 | 163,016 |
Series A Biohaven Preferred Shares | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Cost | 125,121 | 125,121 |
Unrealized gains | 78,779 | 89,279 |
Fair Value | 203,900 | 214,400 |
Available for sale debt securities, current | 69,300 | 70,000 |
Available for sale debt securities, noncurrent | 134,600 | 144,400 |
Series B Biohaven Preferred Shares | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Cost | 17,585 | |
Unrealized gains | 5,315 | |
Fair Value | 22,900 | |
Series B Forwards | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Cost | 0 | 0 |
Unrealized gains | 22,400 | 18,600 |
Fair Value | $ 22,400 | $ 18,600 |
Financial Royalty Assets, Net -
Financial Royalty Assets, Net - Summary of Financial Royalty Assets, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross carrying value | $ 14,677,554 | $ 14,219,101 |
Cumulative allowance for changes in expected cash flows | (1,196,428) | (940,107) |
Net carrying value, before cumulative allowance for credit losses | 13,481,126 | 13,278,994 |
Cumulative allowance for credit losses | (359,658) | (323,717) |
Net carrying value | 13,121,468 | 12,955,277 |
Cystic fibrosis franchise | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross carrying value | 5,292,904 | 5,274,896 |
Cumulative allowance for changes in expected cash flows | (53,092) | 0 |
Net carrying value, before cumulative allowance for credit losses | 5,239,812 | 5,274,896 |
Tysabri | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross carrying value | 1,967,974 | 2,003,797 |
Cumulative allowance for changes in expected cash flows | (114,354) | (112,720) |
Net carrying value, before cumulative allowance for credit losses | 1,853,620 | 1,891,077 |
Imbruvica | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross carrying value | 1,416,270 | 1,406,291 |
Cumulative allowance for changes in expected cash flows | (110,285) | (46,872) |
Net carrying value, before cumulative allowance for credit losses | 1,305,985 | 1,359,419 |
Xtandi | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross carrying value | 1,136,270 | 1,150,335 |
Cumulative allowance for changes in expected cash flows | (188,417) | (145,565) |
Net carrying value, before cumulative allowance for credit losses | 947,853 | 1,004,770 |
Evrysdi | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross carrying value | 688,189 | 675,440 |
Cumulative allowance for changes in expected cash flows | 0 | 0 |
Net carrying value, before cumulative allowance for credit losses | 688,189 | 675,440 |
Aggregate royalty amount when patents cease | 1,300,000 | 1,300,000 |
Promacta | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross carrying value | 658,287 | 686,129 |
Cumulative allowance for changes in expected cash flows | 0 | 0 |
Net carrying value, before cumulative allowance for credit losses | 658,287 | 686,129 |
Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross carrying value | 3,517,660 | 3,022,213 |
Cumulative allowance for changes in expected cash flows | (730,280) | (634,950) |
Net carrying value, before cumulative allowance for credit losses | $ 2,787,380 | $ 2,387,263 |
Cumulative Allowance and the _3
Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Cumulative adjustment to retained earnings | $ (9,837,033) | $ (9,895,815) | $ (7,162,693) | $ (6,141,438) |
Retained Earnings | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Cumulative adjustment to retained earnings | $ (1,923,771) | $ (1,920,635) | $ (2,561,971) | (2,825,212) |
Cumulative Effect, Period of Adoption, Adjustment | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Cumulative adjustment to retained earnings | 192,705 | |||
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Cumulative adjustment to retained earnings | $ 192,705 |
Cumulative Allowance and the _4
Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets - Schedule of Cumulative Allowance for Changes in Expected Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning balance | $ (1,263,824) | |
Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets | (283,617) | |
Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets | 27,296 | |
Current period provision for credit losses | (35,941) | |
Ending balance | (1,556,086) | |
Cumulative allowance for credit losses | 359,658 | $ 323,717 |
Funding Agreement With Biohaven Pharmaceuticals | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Purchase commitment, additional payments | $ 100,000 |
Intangible Royalty Assets, Ne_2
Intangible Royalty Assets, Net - Schedule of Intangible Royalty Interests (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 606,216 | $ 606,216 |
Accumulated amortization | 583,221 | 577,550 |
Net carrying value | 22,995 | 28,666 |
DPP-IV Inhibitors | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 606,216 | 606,216 |
Accumulated amortization | 583,221 | 577,550 |
Net carrying value | $ 22,995 | $ 28,666 |
Intangible Royalty Assets, Ne_3
Intangible Royalty Assets, Net - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue Benchmark | Individual Licensees Concentration List | ||
Finite-Lived Intangible Assets [Line Items] | ||
Individual licensees exceeding 10% or more of revenue (as a percent) | 99.00% | 94.00% |
DPP-IV Inhibitors | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible assets, useful life | 1 year | |
Projected amortization expense, 2021 | $ 17.3 | |
Projected amortization expense, 2022 | $ 5.7 |
Non-Consolidated Affiliates (De
Non-Consolidated Affiliates (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||||
Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2020 | Feb. 11, 2020 | May 31, 2018 | Mar. 31, 2017 | |
Schedule of Equity Method Investments [Line Items] | |||||||
Investments in non-consolidated affiliates | $ 444,407 | $ 454,936 | |||||
Equity in income (loss) of non-consolidated affiliates | (1,918) | $ (9,074) | |||||
Distributions from non-consolidated affiliates | 17,325 | 20,293 | |||||
Avillion II | Merck Asset - Phase II Clinical Trial | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Other commitment | $ 19,000 | ||||||
Other commitments, percentage of costs (as a percent) | 50.00% | ||||||
Avillion II | AZ Asset - Phase II and Phase III Clinical Trial | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Other commitment | $ 105,000 | ||||||
Other commitments, percentage of costs (as a percent) | 44.00% | ||||||
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Legacy Investors Partnerships | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Investments in non-consolidated affiliates | $ 303,700 | ||||||
Distributions from non-consolidated affiliates | 3,900 | 6,900 | |||||
Equity in income (loss) of non-consolidated affiliates | 5,200 | 3,200 | |||||
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Avillion Entities | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Equity in income (loss) of non-consolidated affiliates | (7,100) | (12,200) | |||||
Equity method investment, unfunded commitments | 19,900 | $ 28,600 | |||||
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Avillion I | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Distributions from non-consolidated affiliates | $ 13,400 | $ 13,400 | |||||
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Avillion II | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Distributions from non-consolidated affiliates | $ 21,300 |
Research & Development ("R&D"_2
Research & Development ("R&D") Funding Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Research and development funding expense | $ 2,641 | $ 7,639 |
Remaining commitment for R&D funding agreement | 13,900 | |
Funding Agreements With Sanofi | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Research and development funding expense | $ 2,600 | $ 7,600 |
Borrowings - Schedule of Borrow
Borrowings - Schedule of Borrowings (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | ||
Unamortized debt discount and issuance costs | $ (178,928,000) | $ (183,416,000) |
Total debt carrying value | 5,821,072,000 | 5,816,584,000 |
Less: Current portion of long-term debt | 0 | 0 |
Total long-term debt | $ 5,821,072,000 | 5,816,584,000 |
Unsecured Debt | Point Seven Five Percent Senior Notes Due 2023 | ||
Debt Instrument [Line Items] | ||
Debt issued as a percent of par value (as a percent) | 99.322% | |
Debt instrument, stated rate (as a percent) | 0.75% | |
Debt issued, amount | $ 1,000,000,000 | 1,000,000,000 |
Unsecured Debt | One Point Two Zero Percent Senior Notes Due 2025 | ||
Debt Instrument [Line Items] | ||
Debt issued as a percent of par value (as a percent) | 98.875% | |
Debt instrument, stated rate (as a percent) | 1.20% | |
Debt issued, amount | $ 1,000,000,000 | 1,000,000,000 |
Unsecured Debt | One Point Seven Five Percent Senior Notes Due 2027 | ||
Debt Instrument [Line Items] | ||
Debt issued as a percent of par value (as a percent) | 98.284% | |
Debt instrument, stated rate (as a percent) | 1.75% | |
Debt issued, amount | $ 1,000,000,000 | 1,000,000,000 |
Unsecured Debt | Two Point Two Zero Percent Senior Notes Due 2030 | ||
Debt Instrument [Line Items] | ||
Debt issued as a percent of par value (as a percent) | 97.76% | |
Debt instrument, stated rate (as a percent) | 2.20% | |
Debt issued, amount | $ 1,000,000,000 | 1,000,000,000 |
Unsecured Debt | Three Point Three Zero Percent Senior Notes Due 2040 | ||
Debt Instrument [Line Items] | ||
Debt issued as a percent of par value (as a percent) | 95.556% | |
Debt instrument, stated rate (as a percent) | 3.30% | |
Debt issued, amount | $ 1,000,000,000 | 1,000,000,000 |
Unsecured Debt | Three Point Five Five Percent Senior Notes Due 2050 | ||
Debt Instrument [Line Items] | ||
Debt issued as a percent of par value (as a percent) | 95.306% | |
Debt instrument, stated rate (as a percent) | 3.55% | |
Debt issued, amount | $ 1,000,000,000 | 1,000,000,000 |
Unsecured Debt | Senior Unsecured Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt issued, amount | $ 0 | $ 0 |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) | Sep. 18, 2020USD ($) | Sep. 02, 2020USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) | Feb. 11, 2020USD ($) |
Debt Instrument [Line Items] | ||||||
Loss on extinguishment of debt | $ 0 | $ 5,406,000 | ||||
Unsecured Debt | The Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt issued, amount | $ 6,000,000,000 | |||||
Debt issuance costs | $ 40,400,000 | |||||
Weighted average coupon rate (as a percent) | 2.125% | |||||
Weighted average effective interest rate (as a percent) | 2.50% | |||||
Unsecured Debt | The Notes | Level 2 | ||||||
Debt Instrument [Line Items] | ||||||
Fair value of outstanding Notes | $ 5,800,000,000 | |||||
Unsecured Debt | The Notes | Prior to the applicable par call date | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price (as a percent) | 100.00% | |||||
Unsecured Debt | The Notes | Upon occurrence of a change of control triggering event | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price (as a percent) | 101.00% | |||||
Unsecured Debt | Senior Unsecured Revolving Credit Facility | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, term | 5 years | |||||
Line of credit, maximum borrowing capacity | $ 1,500,000,000 | |||||
Outstanding borrowings | 0 | $ 0 | ||||
Debt issuance costs related to revolving credit facility | $ 6,100,000 | |||||
Maximum consolidated leverage ratio | 4 | |||||
Maximum consolidated leverage ratio following qualifying material acquisition | 4.50 | |||||
Minimum consolidated coverage ratio | 2.50 | |||||
Unsecured Debt | Senior Unsecured Revolving Credit Facility | Federal Funds Rate | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (percentage) | 0.50% | |||||
Unsecured Debt | Senior Unsecured Revolving Credit Facility | Overnight Bank Funding Rate | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (percentage) | 0.50% | |||||
Unsecured Debt | Senior Unsecured Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (percentage) | 1.00% | |||||
Unsecured Debt | Senior Unsecured Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt issued, amount | $ 0 | $ 0 | ||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | ||||||
Debt Instrument [Line Items] | ||||||
Debt issued, amount | $ 2,840,000,000 | |||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | RPI Intermediate FT | ||||||
Debt Instrument [Line Items] | ||||||
Debt issued, amount | $ 149,000,000 | 6,000,000,000 | ||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche A-1 | ||||||
Debt Instrument [Line Items] | ||||||
Debt issued, amount | $ 3,200,000,000 | |||||
Senior Secured Debt | Senior Unsecured Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Loss on extinguishment of debt | $ 5,400,000 |
Borrowings - Schedule of Repaym
Borrowings - Schedule of Repayments of Debt by Year (Details) - Unsecured Debt - The Notes $ in Thousands | Mar. 31, 2021USD ($) |
Debt Instrument [Line Items] | |
Remainder of 2021 | $ 0 |
2022 | 0 |
2023 | 1,000,000 |
2024 | 0 |
2025 | 1,000,000 |
Thereafter | 4,000,000 |
Total | 6,000,000 |
Unamortized discount and loan issuance costs on long-term debt | $ (178,900) |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2021£ / sharesshares | Mar. 31, 2021USD ($)$ / sharesshares | Jun. 17, 2020USD ($) | Dec. 31, 2020shares | Jun. 15, 2020shares | |
Class of Stock [Line Items] | |||||
Dividends declared and paid | $ | $ 66,000,000 | ||||
Dividends declared and paid (in dollars per share) | $ / shares | $ 0.17 | ||||
Requisite service period | 1 year | ||||
Share based compensation | $ | $ 900,000 | $ 0 | |||
Deferred Shares | |||||
Class of Stock [Line Items] | |||||
Shares, outstanding (in shares) | 321,128,000 | 321,128,000 | 316,407,000 | ||
Common Class A | |||||
Class of Stock [Line Items] | |||||
Common shares outstanding | 392,857,000 | 392,857,000 | 388,135,000 | ||
Common Class A | 2020 Equity Incentive Plan | |||||
Class of Stock [Line Items] | |||||
Shares reserved for future issuance (in shares) | 800,000 | ||||
Common Class B | |||||
Class of Stock [Line Items] | |||||
Common shares outstanding | 214,255,000 | 214,255,000 | 218,976,000 | ||
Class R Redeemable Stock | |||||
Class of Stock [Line Items] | |||||
Common shares outstanding | 50,000 | 50,000 | 50,000 | ||
Shares, outstanding (in shares) | 50,000 | 50,000 | |||
Redeemable stock, redemption price (in euros per share) | £ / shares | £ 1 |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of Noncontrolling Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Beginning balance | $ 9,895,815 | $ 6,141,438 |
Contributions | 3,253 | 1,441,275 |
Transfer of interests | 0 | |
Distributions | (145,378) | (393,202) |
Net income | 158,979 | 109,096 |
Other exchanges | 0 | |
Unrealized gain on available for sale debt securities | 5,125 | 52,725 |
Reclassification of unrealized gain on available for sale debt securities | (15,491) | 0 |
Ending balance | $ 9,837,033 | 7,162,693 |
RP Holdings | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Noncontrolling interest (percentage) | 65.00% | |
RP Holdings | Continuing Investors Partnerships | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Noncontrolling interest (percentage) | 35.00% | |
Non-Controlling Interest | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Beginning balance | $ 5,077,036 | 35,883 |
Contributions | 3,253 | 1,133,629 |
Transfer of interests | 1,037,161 | |
Distributions | (145,378) | (251,426) |
Net income | 89,860 | 37,856 |
Other exchanges | (65,072) | |
Unrealized gain on available for sale debt securities | 2,413 | 9,672 |
Reclassification of unrealized gain on available for sale debt securities | (7,294) | |
Ending balance | 4,954,818 | 2,002,775 |
Non-Controlling Interest | RPSFT | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Beginning balance | 12,436 | 35,883 |
Distributions | (13,653) | (29,246) |
Net income | 15,058 | 24,926 |
Ending balance | 13,841 | 31,563 |
Non-Controlling Interest | Legacy Investors Partnerships | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Beginning balance | 1,939,509 | 0 |
Contributions | 3,253 | 1,133,629 |
Transfer of interests | 1,037,161 | |
Distributions | (94,542) | (222,180) |
Net income | 36,257 | 12,930 |
Unrealized gain on available for sale debt securities | 901 | 9,672 |
Reclassification of unrealized gain on available for sale debt securities | (2,723) | |
Ending balance | 1,882,655 | $ 1,971,212 |
Non-Controlling Interest | Continuing Investors Partnerships | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Beginning balance | 3,125,091 | |
Contributions | 0 | |
Distributions | (37,183) | |
Net income | 38,545 | |
Other exchanges | (65,072) | |
Unrealized gain on available for sale debt securities | 1,512 | |
Reclassification of unrealized gain on available for sale debt securities | (4,571) | |
Ending balance | 3,058,322 | |
Non-Controlling Interest | EPA Holdings | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Beginning balance | 0 | |
Ending balance | $ 0 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Numerator | ||
Net income | $ 158,979 | $ 109,096 |
Less: net income attributable to non-controlling interest | 89,860 | $ 37,856 |
Net income attributable to Royalty Pharma plc - basic | 69,119 | |
Add: Reallocation of net income attributable to non-controlling interest from the assumed conversion of Class B ordinary shares | 38,545 | |
Net income attributable to Royalty Pharma plc - diluted | $ 107,664 | |
Denominator | ||
Weighted average Class A ordinary shares outstanding - basic (in shares) | 389,760 | |
Class B ordinary shares exchangeable for Class A ordinary shares (in shares) | 217,350 | |
Unvested RSUs (in shares) | 38 | |
Weighted average Class A ordinary shares outstanding - diluted (in shares) | 607,148 | |
Earnings per Class A ordinary share - basic (in dollars per share) | $ 0.18 | |
Earnings per Class A ordinary share - diluted (in dollars per share) | $ 0.18 | |
Class B Holders | ||
Numerator | ||
Less: net income attributable to non-controlling interest | $ 38,545 | |
Legacy Investors Partnerships and RPSFT | ||
Numerator | ||
Less: net income attributable to non-controlling interest | $ 51,315 |
Indirect Cash Flow (Details)
Indirect Cash Flow (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | ||
Supplemental Cash Flow Elements [Abstract] | |||
Net income | $ 158,979 | $ 109,096 | |
Adjustments to reconcile consolidated net income to net cash provided by operating activities: | |||
Income from financial royalty assets | (529,625) | (462,844) | |
Provision for changes in expected cash flows from financial royalty assets | 292,262 | 88,012 | |
Amortization of intangible assets | 5,671 | 5,733 | |
Amortization of debt discount and issuance costs | 4,790 | 2,478 | |
Unrealized loss on derivative contracts | 2,555 | 33,445 | |
Loss on equity securities | 54,186 | 153,166 | |
Equity in loss of non-consolidated affiliates | 1,918 | 9,074 | |
Distributions from non-consolidated affiliates | 17,325 | 20,293 | |
Loss on extinguishment of debt | 0 | 5,406 | |
Share-based compensation | 713 | 0 | |
Interest income accretion | (15,491) | 0 | |
Unrealized gain on available for sale debt securities | (9,115) | 0 | |
Loss on derivative financial instruments | 0 | (34,952) | |
Other | 958 | 3,469 | |
Decrease/(increase) in operating assets: | |||
Cash collected on financial royalty assets | 573,946 | 488,028 | |
Accrued royalty receivable | (299) | (196) | |
Other royalty income receivable | (530) | (2,619) | |
Other current assets | 1,939 | 40 | |
Other assets | 0 | 45,007 | |
(Decrease)/increase in operating liabilities: | |||
Accounts payable and accrued expenses | (2,207) | 8,468 | |
Interest payable | (31,875) | 0 | |
Net cash provided by operating activities | 526,100 | 471,104 | |
Supplemental schedule of non-cash investing / financing activities: | |||
Contribution of investment in Legacy Investors Partnerships | [1] | 0 | 303,679 |
Settlement of Epizyme forward purchase contract | 0 | 5,700 | |
Accrued purchase obligation - Tazverik | 0 | 110,000 | |
Repayments of long-term debt by contributions from non-controlling interest | [2] | $ 0 | $ 1,103,774 |
[1] | Related to the achievement of a sales-based milestone that was no paid as of March 31, 2021 | ||
[2] | Related to the pro rata portion of RPIFT's outstanding debt repaid by the Legacy Investors Partnerships |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Reclassification of unrealized gain on available for sale debt securities | $ 15,491 | $ 0 |
Interest Income | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Reclassification of unrealized gain on available for sale debt securities | 15,500 | |
Unrealized gain/(loss) on available for sale debt securities | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 34,395 | |
Reclassifications to net income | (8,197) | |
Activity for the period | 2,712 | |
Reclassifications from non-controlling interest | 542 | |
Ending balance | 29,452 | |
AOCI Attributable to Parent | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Reclassification of unrealized gain on available for sale debt securities | $ (8,200) |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | Dec. 08, 2017 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Nov. 30, 2019 |
Related Party Transaction [Line Items] | |||||
Distribution payable to non-controlling interest | $ 108,840 | $ 126,366 | |||
Investments in non-consolidated affiliates | 444,407 | 454,936 | |||
Total financial royalty assets, net | $ 13,121,468 | 12,955,277 | |||
Equity Investment In Epizyme Inc. | |||||
Related Party Transaction [Line Items] | |||||
Investments in non-consolidated affiliates | $ 100,000 | ||||
Bristol-Myers Squibb | |||||
Related Party Transaction [Line Items] | |||||
Installment payments made during period | $ 24,300 | ||||
Payments To Related Party Funded By Acquisitions | Bristol-Myers Squibb | |||||
Related Party Transaction [Line Items] | |||||
Installment payments made during period | 12,100 | ||||
The Manager | Operating and Personnel Payments | |||||
Related Party Transaction [Line Items] | |||||
Quarterly payments to affiliates, percent of adjusted cash receipts (as a percent) | 6.50% | ||||
Quarterly payments to affiliates, percent of security investment (as a percent) | 0.25% | ||||
Amount calculated for operating and personal payment | $ 1,000 | ||||
Percent calculated for operating and personal payment | 0.3125% | ||||
Operating and personnel payments incurred | $ 35,700 | ||||
The Manager | Former Operating and Personnel Payments | |||||
Related Party Transaction [Line Items] | |||||
Operating and personnel payments incurred | $ 19,700 | ||||
Increase in quarterly installment payments (as a percent) | 5.00% | ||||
Affiliated Entity | Royalty Distribution Payable to Legacy Investors Partnerships | |||||
Related Party Transaction [Line Items] | |||||
Distribution payable to non-controlling interest | $ 91,700 | 100,000 | |||
Affiliated Entity | Royalty Distribution Payable to RP Select Finance Trust | |||||
Related Party Transaction [Line Items] | |||||
Distribution payable to non-controlling interest | 17,100 | 26,300 | |||
Affiliated Entity | Assignment Agreement - Benefit of Payment Stream | Bristol-Myers Squibb | |||||
Related Party Transaction [Line Items] | |||||
Related party, rate (as a percent) | 50.00% | ||||
Affiliated Entity | Assignment Agreement - Funding Obligations | Bristol-Myers Squibb | |||||
Related Party Transaction [Line Items] | |||||
Related party, rate (as a percent) | 50.00% | ||||
Total financial royalty assets, net | 146,100 | 150,600 | |||
Cumulative funding amount | $ 162,400 | ||||
Affiliated Entity | Acquisition Of Limited Partnership Interests In Affiliate | |||||
Related Party Transaction [Line Items] | |||||
Number of limited partnership interest acquired (in shares) | 27,210 | ||||
Treasury interests | $ 4,300 | ||||
Affiliated Entity | Acquisition Of Limited Partnership Interests In Affiliate | Non-Controlling Interest | |||||
Related Party Transaction [Line Items] | |||||
Treasury interests | $ 1,900 | $ 1,900 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Aug. 07, 2020 | Nov. 30, 2021 | Nov. 30, 2020 | Jan. 31, 2020 | Nov. 30, 2019 | Mar. 31, 2021 |
Funding Agreement With Biohaven Pharmaceuticals | ||||||
Long-term Purchase Commitment [Line Items] | ||||||
Payment for purchase of royalties | $ 450 | $ 182.4 | ||||
Purchase commitment, upfront payment | 150 | |||||
Purchase commitment, additional payments | $ 100 | |||||
Purchase commitment, purchase of committed, non-contingent Commercial Launch Preferred Equity payable | $ 200 | |||||
Purchase Of Eisai Royalties | ||||||
Long-term Purchase Commitment [Line Items] | ||||||
Payment for purchase of royalties | $ 330 | |||||
Purchase commitment, upfront payment | $ 110 | |||||
Purchase commitment, additional payments | $ 110 | $ 220 | ||||
Forecast | Purchase Of Eisai Royalties | ||||||
Long-term Purchase Commitment [Line Items] | ||||||
Purchase commitment, additional payments | $ 110 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event $ in Millions | 1 Months Ended |
Apr. 30, 2021USD ($) | |
Subsequent Event [Line Items] | |
Upfront cash payment | $ 180 |
Additional milestone payments | $ 60 |
Uncategorized Items - rprx-2021
Label | Element | Value |
Accounting Standards Update [Extensible List] | us-gaap_AccountingStandardsUpdateExtensibleList | us-gaap:AccountingStandardsUpdate201613Member |