Royalty Pharma (RPRX) 11 Nov 202020 Q3 Earnings call transcript

Company Profile

Participants

George Grofik	SVP, Head, IR and Communications
Pablo Legorreta	Founder and CEO
Jim Reddoch	EVP and Head of Research & Investments
Terry Coyne	EVP and CFO
Chris Hite	Vice Chairman
Marshall Urist	SVP, Research and Investments
Geoff Meacham	Bank of America
Steve Scala	Cowen
David Risinger	Morgan Stanley
Chris Schott	JP Morgan
Greg Gilbert	Truist
Navin Jacob	UBS
Michael DiFiore	Evercore
Terence Flynn	Goldman Sachs

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Royalty Pharma Third Quarter 2020 Earnings Conference Call. I would now like to turn the call over to George Grofik, Senior Vice President, Head of Investor Relations and Communications. Please go ahead, sir.

George Grofik

Thank you, Shannon. good everyone and the morning good afternoon on to call. And review for third joining you Royalty us Thank to Pharma’s quarter results.

You call on website slides to page the our at can of royaltypharma.com. the find Investors this

presented unknown three, slide may statements to that contains would Moving and in known other to call and I this involve cause uncertainties remind like you information risks, that that forward-looking factors these materially. Prospectus for differ to X. I factors. of on a with results to slide S-X, refer that, actual our with SEC file the description to please risk And you advance

financials. then Research key call like the portfolio. Our EVP, we Q&A And I’d hold of to speakers Coyne, Research which a review will after from and on with to call Royalty Founder Q&A remarks turn are; provide the the Head Investments; Urist, Pablo. Terry Jim Hite, & Chairman; today Pablo, the Chief also Officer; Financial Chief over after that, join update quarter Reddoch, of highlights will Investments EVP, on Vice will and will Marshall our the Chris Jim Executive And session. session. Officer. Terry concluding Legorreta, an Pablo the our and and Pablo discuss will SVP,

Pablo Legorreta

for its XXXX Not we we quarter call quarter. I’m Thank will presentation, in well prospects. during safe, also continue families. the and responders, landmark you, for as doctors, continued course and in our this case strong August, the who to who discuss call. reasons Company. momentum like business George, nurses that further third serve appreciation six. second strengthened healthy described the this and in to those earnings and does will welcome the as first the we On of a the believe year country’s remain to keeping have their to we to deep And everyone I have on Slide today express our only our Royalty as are the services Pharma served delighted us

of strong growth quarter flow, adjusted adjusted results, terms and continued our with double-digit and cash deliver cash receipts we lines. our bottom In in financial our third to top performance

the our improved not offering. continue billion. relationships bond our only our the a taking deliver Foundation, total can the terms excited average particularly acquisitions, by balance expansion and on of lowered based royalty weighted we We unique I’m billion to our our maturity, achieved expand our new sheet entire debt, cost longstanding Meanwhile, our recent agreement but for of through the how example of $X.X capabilities. we also as borrowing initial some which our $X industry. biopharma our through announced substantially best This average solutions, debt with great portfolio in the is year-to-date we transactions win-win doubled Fibrosis to of Cystic

a ahead stock. IPO Difficulty] secondary our [Technical share liquidity overall X% This December of offering lockup. approximately our offering improved successful of X. of the of the Slide Lastly, has the expiration of capital,

innovation update We maintained hand it currently our really you performance. will to momentum the receipts pace to within in flow. mentioned ecosystem, unique of I the that, to cash quarter continuing third portfolio. with double-digit in The biopharma industry. adjusted cash growth royalty position on speaks coupled growth place financial to XX% deliver our XX% I we��re with the extraordinary As With adjusted strong our taking over upfront, in growth and Jim

Jim Reddoch

positive. expansion across highlights positive partnership, just driver of data launch the approval and weeks afternoon on important the Evrysdi the Vertex’s X PTC second good and Pablo, franchise our breast A which approval both regulatory within after Roche’s for and balance, FDA European was the Overall, include you, commercial growth negative triple metastatic SMA, few cancer across good Slide fibrosis we everyone. acquired summarizes and progress very for and our quarter. clinical cancer. the the progress our Kaftrio, an of cystic portfolio morning that Thank since the Immunomedics’ Biohaven the for Therapeutics, from and is urothelial in Royalty Trodelvy portfolio

of you’re the elucidated I well to that think However, GALACTIC all trial of Ibrance top-line be and that the was further. aware Pfizer’s PENELOPE-B disappointing need results omecamtiv

and the I provides this little my billion slide. a next expand of on hybrid funding $XX Gilead of Immunomedics strong by a bit want acquisition Finally, in validation our to strategy,

So, this is slide XX.

to acquire to negative a a in $XXX breast Immunomedics. equity $XXX million reminder, and and and to royalty includes Immunomedics million indications. of million development launch the provided As at of other Trodelvy the acquire XXXX, on to in cancer Royalty fund $XX in Trodelvy triple Pharma start capital This metastatic

step future cash in with very As from XXXX the to time receive outcome the today. continue a as royalties transaction of beyond purely over will the X.Xx the $XXX a And on well In strategy parties, cancer to of return $X for already course, we about at the a April Immunomedics. consensus IRR, to we acquisition from proceeds guarantees On hybrid all billion investment royalties. beneficial year, a September million on announced of in our been approval equity billion the of of rising funding clinical think a high the without perpetual basis, has treatment. Trodelvy future our to data expectations this and this, consensus And factoring released it’s sales our our this, and even analyst been equivalent Gilead basis. financial has teens been Trodelvy that year, back following of as investment, a belief this significant in when of FDA increase $X of to the our there’s

broadly, this significantly to have Trodelvy to at raise. further dilutive a Immunomedics scale when capital And time in at time avoid to dilutive. to this maintain capital them rights a allowed critical their global been equity Looking a more equity develop and provide were at to able we development, would highly key

believe enhance bring only this the Trodelvy’s So, ability Gilead more further marketing benefit to its and of we additional the fund R&D capabilities molecule important patients. global potential further can and of to therapy on the

So, you Foundation patients a most deal, that win-win win hear while multiple XX, talk our I Trodelvy. a CF Cystic often is the royalty stakeholders, transaction in wherein need acquired franchise. to residual slide On the of importantly, interest most this for cancer recent about us want Vertex’s highlight Fibrosis we

were a $XXX and threshold upfront above all of Cystic Company So, Pharma XX-XX the our between and a the million potential franchise milestone these Foundation. in whereas billion, Fibrosis receive payment for sales exchange on $X.X annual will Royalty $XX million royalties shared previously,

in reported geographies, With and billion XX%, has expanded As $X may And growth than at growing you following franchise the results, the fibrosis the the has very groups. seen age XX% and benefit cystic and successful this to $X.X over therapy, further Trikafta. from from may of QX sales have launches billion XXXX. corrector of Vertex sales midpoint around and potentiator proportion then to of $X.X guided increase triple Vertex that treatment Vertex’s is Trikafta, to new in more the billion franchise XXXX, younger from launch is receive patients expected in rapidly,

is examining As facets due of we patent carried out products. perpetual we not our the do franchise diligence, individual royalty transactions, comprehensive expirations of to with all and all our we of the components confirmed And agreement. tied of royalty that

financials, expect will clear confident long-term returns growth that forecast the unlevered the approved based likely better. targeting investment, on compound of investors for we to in are our terms range And the we products, scenarios. digits. single of least on high been low of high range enhance return end adjusted a at double that for that In are this annual digits and with we the rate, cash-flow a transaction We’ve

to So, over I’ll with Terry. that, hand it

Terry Coyne

Thanks, Jim.

Let’s quarter compared slide receipts total another XX. quarter good a on year’s basis. forma move We to to pro X% with third last royalty up had

can adjusted from Kaftrio growth see, Imbruvica, quarter, largest and recently, the our receipts in franchise, the our royalties cystic how XX% driven the quarter. you strong cash all translated flow U.S., the strong in of more XX this Promacta demonstrated in to Slide fibrosis, the digit in strong Xtandi, double grew royalty Trikafta quarter. launch by EU. shows As

year funding a the which arrive the semiannual to quarter quarter, of our in of pro shift This than to given as million bond after related forma R&D basis. cash professional non-GAAP we and payment offering. left million the When a was at we funding of deducting March adjuvant interest. refinancing adjusted XX.X% IPO The this aware, is as lower Net quarter, certain breast amounted growth us, interest Ibrance to year’s cancer impact it key for expenses in third step-up year on expenses, well XX% is next the of bond offering debt equated as a interest interest receipt. with of reflected which of right, you’re on As operating metric the our until a completion not $XXX second payments million, for sharply of move non-controlling due XXXX. of last quarter receipt cash the ago $XX from was $XX over substantially compared reflected the arising XXXX. to lower to adjusted costs

expense in and in were debt expense we a unfunded interests July place have of in been revolving be interest the fourth and paid quarter our to paid close the interest would X the million third Had was refinanced facility As zero. quarter. quarterly, result, will credit $XX as

business paid in the bottom recorded funding non-consolidated QX. have across why or XX that $X.XX in as what been We you related advantage. being occurred space. an we of resulted in affiliates, biopharma context XX.X%, the flow, to greater is cost occur flow an delighted we QX. in with which Avillion margin were alluded Slide billion terms view our This otherwise also This anticipate refinancing, cash cash $XXX achieved investment will included bond best related to We among as million $X some adjusted strong per of in expenses This we extended capital that Pablo for our as earnings QX. to highlighting payment Avillion model. line a no our financial successful payment unsecured our payment in adjusted of share. to would the leverage accelerated the the gives

XXX average is of points can the weighted bond the on than lowest basis X.XX%. see peers below the our median second among and more X.XXX% coupon you our is that Here, of

On years the our to offering, the of the again that you doubled is median. we’ve ahead weighted average industry which over maturity right, can see through XX

the for assist also place paid billion for would We been comparisons, access the also small have new the To have flexibility additional had credit credit in on debt if revolving a which capital year-over-year been department. expense basis, includes XXXX, for a with $XXX a revolving facility. fee interest provides normalized for to $X.X full-year, facility, which million

our Cash at described, mainly of adjusted The September now billion. have of IPO over billion of XX. $X.X of cash on ended investment-grade Looking finished to was acquisitions. the flow I the cash debt. liquidity. outflows just increase on debt a billion. $X.X with enhances outflow cash and quarter proceeds balance billion and together the first the which with billion securities facility, nine $X.X period over royalty revolving we marketable $X $X.X deployed amounted billion. We was refinancings $XXX million We $X.X driven sheet the slide our credit largest from proceeds The the with months by And

will our remain Taken well-positioned and we’re expect XXXX guidance. our now X.X Foundation. EBITDA on EBITDA billion an with in $X.X announced basis net plan. to full-year times XXXX together from X.X our no $X.XX of final Cystic to on recently we the be gross on deal a billion, leverage times On in from billion to We execute be my range contribution slide, raising a $X.X billion basis, business $X.XX adjusted with receipts cash There Fibrosis increase to previously. the of

lag. first contribution of in would from the that first potential are be XXXX paid acquisition on as royalties quarter The a

We continue receipts. operating expect XX% to our cash approximately of adjusted costs be to

would of his comments. guidance like does to for any acquisitions. closing is call today hand not With take the that, portfolio into Pablo to as based I back on future Importantly, this our and account

Pablo Legorreta

I outlook by the for long-term close Terry. Thanks, in want reiterating our sustainable to growth. confidence our

reinforcing this capital improved of active flow pipeline our positive news And leading been acquisitions a our guidance. remains exciting. to confidence. very bond secondary appreciation through portfolio, be that and of market strong our royalties The the The us offering in third of share quarter to growing, financial we that active royalty the has financing support the only year we our continue and the golden not fueled right successful delivered practice-changing encapsulated royalty transaction outlook. themes remained to industry our you, patients. open far results, call to raise available to the In full shows With which a heart and share sciences innovation age of number offering. very on in is like chart that to We a $X.X would structure announcing at so Recent medicines life this deal-making, growth capture George. by the on continues Back total Q&A. We I provide the our to long-term bring Royalty a billion but non-dilutive highly year, of have growing our value transactions allow of in Pharma funding to to innovation. short, that, of

George Grofik

Operator, your to Thank you, will please first I take Pablo. call the the question. open now questions.

Operator

of question -- George comes first America. from Bank Our Instructions] Geoff with Meacham [Operator

Your open. is line

Geoff Meacham

the a couple. just quarter. for guys, on question, congrats had and I Thanks the

The changed is question, the you CF. with question for deal the well. concentration to the second the first original guess, have scaling a a level, The CF revenues you and Foundation the warrant you guys the is, when to expanded CF with risk biopharma acquisition have how some duration agreement. now from do industry, long at throughout see rationale $XXX is I as do CF pervasive the one cost? signed million what’s risk And you respect But, higher and

of do time strategic diversifying guys that? you guess, CF Thank like plenty is the of priority, address is, I have or a So, to question feel outside major you. you

Pablo Legorreta

Sure. answer on the diversification. Thank I’ll to rationale the part question for And related the then first to the and of for question. the turn it you transaction the to answer CF question Terry over

having space So, that for XX made one antibiotics close one CF recall been royalty in for of acquired first years. investments for was I now a the us to where cystic has fibrosis. the we’ve reformulated actually

the Kalydeco really in And at the at by foundation that the And we to the view portion -- time, of the landmark approved. was portion, the TOBI. we a smaller that very we population. important asset, of in about did was the when ran and upside, patient into royalties for foundation, from only formidable having XXXX, foundation doubles that a sold XX% the that time capture has established Bob billion $X.X retained the sales sales when was while triples on that deal, were it leading think, advocacy And a foundation, the we with forecast acquired relationship Vertex sales In I the really still the a funding billion research is which deal that it been was of man it approved, not $X.X XXXX, the CF produced Beall above franchise billion. $X.X essentially Beall billion. was other royalties And the materialized. acquisition, that retained sharing $X foundation. Bob And if time or XXXX with XXXX, also patient at the it, the that foundation built did

cystic not fibrosis entity But, to very the happened been value has upside. what’s And much And has that in now being The very an for that foundation it grown patients. position obviously, launched, is did since in an out advocate unusual have then, the institution turns ascribe nicely. they residual doubles that the triples. value. So, a the is franchise

product past, economics the So, on Bob felt but the I fibrosis are very telling in times And payments, sold actually products example, they community. funded at being me uncomfortable which earning recall for have always cystic they having some that in reimburse had the cases to state to advocate you’re to and were foundation, trying stories the for going said get course, the them well, of add in of governments they how senators to to the that. formularies, to -- when

a was very You in he royalty. own uncomfortable And position. that

interest have this be CF residual a just to to that they the thing the are it that residual, now any So, very an to foundation having wouldn’t economic patients for of they so economic was that accused being interest. value, where seek sold has drugs monetize could on natural

with our perspective, were XX-plus-year position happened an foundation, dialogue acquire we about And -- expectations happy excited a investment so, Terry, recently. provide knowing strong that return to very are it And a what the constant with relationship to and in we’re growth from had about having intimately, to about extremely them them, having diversification. this asset. And rationale. that’s And that’s and obviously, that’s the Pharma. the going now to the Royal economic that pass talk I’ll you to on extremely

Terry Coyne

Sure. Thanks, Pablo.

very with current happy diversification. we’re So, our

over of this XX% think, a were I CF. our from royalty receipts little quarter,

that you’ll to what time as the think, even I over that sort over to just continue ramp. see see other as think, continue diversify is continues you’ll within we portfolio products of grow, and time, will make as franchise what we I investments, to naturally

feel and sort So, naturally of we it, over diversify we’ll I think, time. very good about continue to

Operator

you. Thank

Steve with Our next question comes Cowen. from Scala

Your open. line is

Steve Scala

Thank and well questions. a congratulations terrific you, Two quarter. on as

to generally it Royalty not situation, be Pharma’s quarter beat-and-raise a it nonetheless, business Given considered this model, is but was.

has areas, over because such this risk SMA. you. Thank there neuroscience? Alzheimer’s, made like lower what that neuroscience frontier, management? be delay one a the of appears things aspects failure, are is and as some surprised but reporting? can concern DMD, Huntington’s, surprising be your in picture, technical not or in autism you’re more of The forth. a neuroscience, quarters, opportunities of to Royalty business So, just And Is big that next and in so aspect there second migraine but are at investments question of in Pharma Royalty even quarter in Pharma’s many when business looking future the risk

Pablo Legorreta

surprises And take want Jim question do maybe address you the the Marshall and can question -- quarter? to on first neuroscience? Terry, take on during the

Terry Coyne

Sure.

bit tends the a there you uncertainty be But, I strength in is? are create reported little know, of the basis. for -- royalties there across think what reason royalty-bearing on sort as sort for a So some quarterly sort us yes actual So, really that sales of of the question of percentage lag. can quarter the be does of But, this is beat-and-raise to our that terms what on a -- Steve, portfolio.

been are using strong. gave companies we and across the using of we guidance the that some really think, guidance, sales give. I And estimates generally consensus this when also portfolio, have quarter, quite the So, of sort

well, really well. HIV performed really CF performed So, well, Tysabri really Xtandi well, performed really performed

of a business of well within function that so products I it sort us was led just So, guidance. increase the that think the performing the to

Jim Reddoch

It’s to Hey, Yes. past on Steve. second Jim in back maybe little And terms start on diseases your that it’s kind bit and and for is say autoimmune-focused goes very a just indications the industry degree of up or about focuses Reddoch. I’ll very it that to I’ll based pipeline question our a And been so. world the neuroscience. where a world areas decade of therapeutic and cancer-focused on. a the

So, a both opportunities, that But, Those our to represent bit. important. that a with terms huge completely would reflect you unmet I in recent some is very commercially. neuroscience and disease need do agree degree, also acquisitions of

mean, terms fiduciary you’re don’t in what’s important you we probably agree much area need very -- we we some would and diseases portfolio. that sure we’re with do lend you about talking we’re anything -- be have detail themselves nice make that covering. sufficient it, to time, the there’s to an diversify on wouldn’t evidence too the we shouldn’t But, pipeline. with for Marshall, the go But, to our interested making be royalties a continue into. products in to think I careful in in is that that and and really and add? that of that do do the I sure good portfolio the will So, that that into go to just of fits I really we

Marshall Urist

But, spent things and as in, do Jim looked that going said, opportunities we not new lot I our bar area pipeline, at we standards add think have and I covers so. to looked think, is apply And No, for same and of time will looking those a I continue this an approach as is multiple would the -- I what think, think, to continue we’re at and look just to well. I as part will that have at we’ve change, in it, of neuroscience as forward. going our have Steve.

Pablo Legorreta

has speaks ‘XX you ‘XX, we deliver low products the portfolio pointed of I pleasant the And that very expectation that been strong going of on the maybe grow that year. their resilience. the Steve, grow expected. add crisis And products that our -- Pharma to financial continued that’s the financial our that we the the pandemic. deep the product time, response revenues, to things are see I the the to profitability. diversification business the And Terry And very in was Royalty At are one of was and as nicely comprise think, given was focus and financial about The therapeutic many products the is generally the a out, of expenses, leverage, that to companies these portfolio about performed growth on followed things when that not to that continued a Terry’s is model a and into going qualities. well crisis. thought of great in it And business I to bit period different of were products very predicted have. very premier two maybe year I’ll really interesting perform interesting with think, that in it been or we has this -- resilience ‘XX-’XX very thing one again areas our the or the the it’s of situation sort performance. and year talked in attributes to than really because times, of And of than very as strong portfolio. And surprise as it better economic also for very even current see the crisis,

benefit we obviously. from that, So,

Operator

with David Our next Stanley. Risinger from Morgan comes question

open. is line Your

David Risinger

let add me Thanks as well. much, my and congrats Great. very

on-market one that Terry. fibrosis blended So, question should for of anticipate Pharma payment, royalty rates then, going one for think mix versus recent the Terry, respect to? forward the and transaction, we $XX in what recent Pablo drugs? plans future have could the you discuss your with drugs including And you development-stage that how I Pablo, to cystic investments, for investments And, has to of in very Royalty years? million XX% what recording about is much. been Thanks tied and relative the roughly potential the the milestone timing that is

Pablo Legorreta

Thank you, David.

to of So, our has about hospital during first your for foundations it’s we’ve are to and predict us what many potential highlighted biotech and And show in pharma. closing. earnings response difficult to other question road where end and talking deals mix a obviously investments, up element at before partners business going academia, opportunistic as universities, then in we’re calls, to an

it’s their is I in a up and what ever trends universities, more with larger, you capital which And more, current huge in pipeline is because larger been is would hospitals, the develop very biotech that’s underlying there tell royalties. And as Now that innovation know, drugs of among we that need occurring and are we and than have. all at to where diverse, academia, pharma end great pipelines. the diverse. It’s excited that we’re industry the about the of

where relatively is approved, in are yet of mix that approved the billion, we’ve recently, investments approved for transaction. of low. billion billions $X.X dollars, cystic XXXX the not of It’s currently, of terms Tecfidera, and investments In become said Cystic and And less products in than the when like the past, of investments repeatedly really we us, unapproved billion others, many unapproved, and product $X in like our as attractive past, have Immunomedics. had been it between in obviously, fibrosis after Imbruvica, Foundation lot obviously, Fibrosis those $X a got did portfolio

future clinical there’s area strategy will we that’s Royalty companies for And area area fund role for a biotech getting investment need late-stage are an think, demand and will where excited hybrid I’m where And capital. capital, Pharma. growing through that very to where biotechs an development of an transactions. we that’s the continue hybrid So, I play, believe where about our into that’s huge prospects

past future deals at where value approved in approved, it’s wouldn’t to -- that period, over But, because XX-year bit approved be in in the $X XXXX strength but a do the so XX to little billion the the That from from billion growing, portfolio because things that XX% you will in products that the could is maybe that if time produces unusual. year, about investments a billion of portfolio revenue unapproved done predictable, to than and we’ve the by two, you have couple in the us look close the XX% in $X the three-year XXXX, $XX products, those it’s over and products. diversified, large, billion But, gives So, a unapproved cash the I much I eight of duration. things more it’s of last is were XX% look we think long, mix. were approved $X think and year, of that one like or generated are very it be products the average of were mix flow, years weighted a balanced very being and so -- out have over time, and nice portfolio realize that approved case is

a really be us position of little able risk. puts take bit in unique So, a to that to

couple years, more Now, upside $X maybe next unapproved three over it’s billion invest in and going for and or with risk diversified huge the investors. of potential we be billion our two, years $X risk, to where Pharma calculated Royalty

excited where about and we’re area believe that there’s significant an we So, potential. it’s very very

Terry Coyne

so, rates, question sort royalty specific I can royalty we the rates, about the your not speak but on Dave, have generally. of given

they’re in really two buckets. So,

elexacaftor, And and compounds teens. and has is bucket on royalty. have rates the mid-single-digits is a and royalty You sub that lumacaftor ivacaftor, the then, single-digits to tezacaftor, those other

-- So, really would the the first bucket one, Orkambi Symdeko. that and include Kalydeco,

And the generally because higher a component. sort of royalty elexacaftor it doesn’t that rate to going so, bucket’s have have

disclosed mid-single-digit structure royalty milestone. the haven’t a or not the trend whenever milestone totally we With milestone rate, we’re rates those are confidentiality I what the we pay actual reasons, a timing the regard been lower sort is But, shifts specific milestone we on which little of payments. over milestone As at to payment, the payments, what of But, what being the there can where haven’t the for the payment. very happy details we But are to the haven’t -- deals one-third mix -- royalty to will haven’t trigger triple, that say time. described we royalty the -- are. of has we

Operator

Our Schott next JP Chris question comes from Morgan. with

open. line Your is

Chris Schott

guess, guess, much. Great. to deals. of structure, think of hybrid an royalty topic is I you returns the it some guess, just equity a deals? partner Thanks deal small you deals, consider versus I all equal, you actively you when on else how then, just the question take -- is or structure I as pure you pure and to deals on for development-stage royalty? had a about equity stake, seek so do stake development-stage second coming back my out in important two would I an questions. prefer And these

rate get more equity that haven’t pursued royalty? get so the missed it kind in? from what’s guess. of was Thanks the rationale Trying an it working wise to on, I it of deals it or just some hurdle happened, that complexity deal, the Is primary of much. of not or to pushback getting sense return the you with you’ve partner that you’ve competitor deals what’s is a the the For that is stepped to of favorable raise, the

Pablo Legorreta

part answer don’t an diligence with ask we maybe It first. of don’t just decide say holders things partner of trying regards question because at be problems holder could address have is structure no and partner we and Jim them. to to wants the really And often, company, what regarding end, product, if very of do But, be to because open-minded to IP-related I’ll that. their of also it are that buying a I’ll it In because aspects. or how happen, or And day a royalties, because would in if at very them hybrid we they happy those position. a to through, royalty deals, the make about couldn’t Sure. incredibly issues and companies the and that I’ll royalty, purely other for to a that other is to in that certain we’re investment comfortable and deals second the important. may But, And the could get holder of it’s really the the see result finance the solve the for answer flexible concerns, our validation to end stages for product wants acquire capital them want their really to late things. in we problem with essentially And reality also be the choice we’re finance the best to equity being of they and with we flexible, the happy a more equity equity, do also is needs be getting could the very us capital we needs, that cases, need. of value to

sort performance -- that drive do very generally that of of going making we’re way, when the equity. long-term the investment companies the in in the where is meaningful we to a are Now, product in --

equity and the of pharma, one So, towards to product product be going they no would the It’s with products, equity say Phase much the buying continue a company. things we’re us that in are success maybe geared that if I deal is X creative. we’re for performance. to do there of drive of we have couple a the finance will a but large And funding that that or a in single there’s pharma more companies large point

capital different with more four launch Biohaven structure, we’re is in to over Biohaven that going we saw the do invest to to million launch You And, where we return, provide very, There’s that will earn a deal, based risk. next years that million, that or very to years us this it addition over something with which receives sure to $XXX no the -- payments they unlevered make providing XX% product very of it’s like in Epizyme capital XX Immunomedics attractive decided from deal $XXX and fixed as on Nurtec preferred in did the little the to equity -- is the in make XX% very return so, going that recent deal another really going in needed we Biohaven successful probably get But to the we’re -- that a deal, saw to launch. payment. equity. the

in the -- royalty. we case, we already again, So, own that particular

company very was us of and a everything a for attractive for lot made investment sense, win-win. the very, So, for attractive make that making us, to additional

for transaction And approaching we always think -- paper. have a rule we’re piece this really, tell mind of been when to open-minded. has no the a is open an are with and I what blank to the there’s investment, I with an So, team we come decades,

Let’s a a multiple years develop environment when different study, different you the product product, size, is sciences, in different. model, a that case last different take approved. time. The think Everything in two, different. deal did the or not one studies. of is of gets program royalty duration framework life It as because be reality, every different. The we three as year, The product is is when and will might take is to a The different. clinical use the development in competitive

do best So, and you very what them, open approach for we take question? then carefully how want situation And driving are, us up been is understand that’s to other things. come Jim, listen our cannot needs actually each -- you approach a what solutions. their mind, to has to the try to with with partner, the approach

Jim Reddoch

Chris. Hey, Sure.

diligence. that would that did in is? a I saying happen degree check So, don’t by didn’t say, it in and out terms Pablo to answer deals why something with of

can that’s the and our on a company’s selling So, another you don’t takes runs But, the stock transaction we’ve are not say have the there But, I versus close the have of it’s possibility. of the where would find happen attractive. that’s happens runs stock all. is and because conversation. I a royalty agreement product to and world, world that we’re buy out. up stock a previously kind I a the have of we’re better a if to capital. then to being the if is the guess, think better company company that I stock if you that few to product, in ends say, -- somebody royalty had conviction if the we get them most cost time, stock, of was that ends possible the always almost the then also the pretty it stock. different and keep than the move can we that and beauty that you us of like a a have is structure time that’s impasse that up, a acquired, kind maybe structure of always show We we talking becomes forecast a not to getting an in, something an can that world still talking we up capital. and is But, would cost times the can of world, a in price the issuance ways where win-win and company equity after

a the usually we a that constructive and world. fascinating very the to works show for we that really something it’s it’s So, royalty reason And aspect in. companies believe product really can is them that if it’s

Operator

from Truist. Next question Gilbert comes Greg with

Your line is open.

Greg Gilbert

Chris, would out or given then, out It if diligence vision of have of see existing And or lot targets, to what among the house, sort borrowable add Thank and the look what the external potential expertise acquisition Thanks. would five-plus purchased structure capital bring Pablo company. what seem also maybe your for advantages? to curious that that Good you accumulated over experts degree or team can all various capabilities do as otherwise and opportunities as the and bolster next of you efficient are additional. set And morning, you’d everyone. Pablo, for things years. rentable royalty capabilities assess you anything your a to -- cost other need super like But there? you. curious in possible of streams that companies your of on you as to to like exist

Pablo Legorreta

the for you Thank questions. Sure.

really last And of expertise. So, the XX keep Pharma markets everybody but example, regarding last about the first last gradually if a years even three the team, experienced members in six network time George expertise added think the that’s over maybe thoughtful, an sort addition or very with added people, and levels, has Matt added part months capital or and in we we’ve legal over the smaller, of for I added two, in legal, cautious over look a additional life to six ago, your of in maybe Jason, experience track research and the junior two, additions or people. then, was Chris, obviously, the and of it’s sort working On one two And grown addition year also. way. very to more team the it’s the lawyers team with at and With transactional sciences. difficult of great Royalty individual that now grown. remotely, team been year question COVID because team over the -- about with the five, We’ve you to added is deep closely who incredibly has an Lyons. four him, working it’s to more Chris, And

over that time, add XX we’ve over So, to will done and we to next carefully months. XX continue the

oncology. there’s will to One an you -- to really happens dozen one of those I therapeutic the think, I before a two And the medical see addition is investment. there’s a which say. work area, things in a about. conferences. significant. we cases, dozen following a of might XX% that say a And pointed you out we’re the we work, or think And half maybe added follow work another some lot I of And a the is, regularly come we people not where it’s actually that team. could a opportunities decade team, It’s to TNFs follow when lot over then, areas asset. I go a to happen that And like make and sort

asset the model. our have in We

of legal be to on proposal And asset, XXX clinical can that trials could the diligence decades. then, making be where we’ve oncology, It team are company and that what Pharma we we’ve happens a a in and it, consultants working particular team run excited all side. that on a a then, expertise transaction those going addition known could people maybe might that the very we or that a attractive a discussion also point are research following are and XX, matter Pharma, internal specific legal a to dozen actually on of with constant about that’s often And the about of minutes team we and that potential, days to sciences jump But, Royalty will And, the three also that commercial opinion that which about. ecosystem the is, asset specific its in be possible, to But, the where about four anticipate transaction may the on people, we Royalty view what it for doctors with which being a But about to research future. with in -- lead talking the at key CNS, a be have live, half terms always to the all negotiations. so future. ago and reach lever them. when because becomes areas been of -- sclerosis outside and couple We dialogue five the we for time. long few we team we’re is And we for a the out research leaders following time. neuroscience asset. can a a that multiple in we’ve or are And the for team trying -- that does the had been then, for becomes have follow to what actually have years. We react broadly areas been the asset, we life for

regulatory this current that out and it IP. be reach can regulatory, is that they it’s the that have the try bring field. Because specific key stay And opinion to addition the relevant, Royalty the realized exactly any that leaders actually the at way regulatory they a we is sense so then, date we So, be even to want up experts real them, with that specifics it going experts, and impossible Pharma, could the know new in won’t understand that when each to of state exactly so is where But go internally detriment. I it of to that experts, When affairs unique that out are experts so so manufacturing of reach we we’re and whole Pharma, to -- of reimbursement experts a world, business It could companies, started reimbursement, could opportunity, other we we should in the Royalty have them, specifics all be to there about investment all the to also asset. to it consultants. I make of be also discussion that what consult, would have in a working run. doctors, out the host to of

could always other that of technologies, And those the it be be it that to in internally firms we expertise. people updating antibodies, are therapies. are themselves. people could -- find gene a team we to want go want of want all property IP, on newer are very out You is what out things. with there that narrow current law to the in It intellectual go TMFs, but to also have be expert fields. that’s And in constantly that will people excellent, that is there we could legal have There’s you level that now experts

strength. that’s efficient, companies So, other team, aspects the very our of and is and and that’s beauty have marketing we that’s have, don’t it we works. out And the business that how approach this the -- of sales incredibly way the And we and the entrepreneurial an have business. all it’s there because that lean,

Greg Gilbert

The royalty question?

Pablo Legorreta

Yes.

Sorry, question? can repeat you that

Greg Gilbert

that streams accumulated other see super purchased your or targets, acquisition you given Sure. Do as royalty various possible have otherwise companies efficient structure…

Pablo Legorreta

companies is you And of own want because would partners that that. to you a add be probably companies to got royalties that answer maybe I Chris, is Pharma. royalties portfolios platform had to Sure. Chris those more could Royalty do interesting that? technology. say than accumulated -- asked What And anything they have to

Chris Hite

the let I know mean, of that the R&D about or invest and be maybe say, acquire you their that we only efficient is out way whatever, of, in think royalties on to would me which maybe the I Yes. and to I in the to a new M&A reposition you the biopharma or own to and us do sense somebody company company there’s themselves to like of there’s like coming would them capital costs, -- in acquiring anyway may sort of thing Greg, something helping acquiring have outright, see inefficiencies more there’s premiums don’t something. want opposed M&A resources mid-cap sometimes breakage, have in pay, but shutdown accomplish companies could M&A, company there’s potentially that as cash a something do or tax outright.

help of actually would M&A company we those to royalties of acquire sort a partner So, and much companies. accomplish rather out

Operator

Jacob with Navin from comes question next UBS. Our

Your line is open.

Navin Jacob

Hi. for question. taking the Thanks

receipt. X fibrosis cystic think then, Your you by better question. look fibrosis, correct, $XX consensus or my was as XX next It deal, to And are is rest cystic that the the something $XX leads are which what guidance cash please? math to but for due Is XXX% the And that about is which what just million, is, royalty else, by products million, at it do perhaps driving years, the probably Xtandi, the million a for question, you underappreciated my economics, Street? Trodelvy of the of next $XX longer-term to estimates math products on performance? the bumped if

that You stated expect so you has and of XX% that Where to share you the much. Thank XXXX. market over see of next biopharma by maintain market? the years, five do your you the growth XXXX royalty do from XX% grown to

Pablo Legorreta

performance? question Terry, do on you want to take the the

Terry Coyne

Yes.

clarify, was mean, in So, our of I CF. just guidance by to none increase the driven

will it impact going the in XXXX acquisition, recent by CF the by driven whatsoever. or of that not any to -- was not not We’re have sorry, -- have any none

residual we time that we would XXXX. that the would royalties or we those quarter royalties residual first get foundation have bought first be The in would from the of

CF And sort diabetes Januvia think, and a Tysabri, I HIV, franchise, so, portfolio, little driving the as the strength and it’s performance? across strong really then performance also from particularly bit well from but of from came what’s Janumet.

those we’re and underlying I -- of were very with the But, particularly the happy strong. think performance So, business. that

or view, right is about about where launching to You potential -- asked might -- a long-term have that the a products about products have not those. very, we talking consensus modeling I very the sort view I probably we’re think, that correctly now. where refraining our of think in we more a be of it of or We we’re lot really portfolio. mean, excited take optimistic from

others. beat the how always we products approach But think which into So, yes, get that’s think we’ll world. don’t I we could versus

Jim Reddoch

Okay. question. I can royalty take industry the

last synthetic even XX% growth great in the will convert industry, and then new more result the the further over royalties we there modality essentially several a to top believe fuel which the when you And royalty there years. out growth. that assets point product, ability raises that’s as several the good a royalty layered to I in royalties, make incredible years, create companies equity you on we’ve any of by had traditional to So, And synthetic in growth are a that do that capital that addition a route. of to going to exponential view royalty on add that to new next in growth as just lot continue think raise in the

with there of So, a royalties this can’t players. our there. And there or growth or other will the the are up think growing enough And kind share with there interest industry. encouraged will other up-swelling continue than number of market doing always promise even have But, And in that. a out to are players, are is if XX% in dominant really we we show very there that’s if overall the that that and in with acquisitions more I sensing I be am position be to market the the I new potential slippage of or able synthetic will rate, because industry. out make think players growth share grow us a just acquisitions nice -- we that

will there of of new fact, expand are industry as out In besides a more selling talking probably about way actually there the companies players research. more new royalties because even us, people the and capitalizing advantage

Operator

Evercore. comes next question from with Our DiFiore Michael

line is open. Your

Michael DiFiore

Hi, thanks guys. Congrats questions. on for the my so taking quarter. much And

Just a of quick for me. couple

Royalty Just tax Pharma’s given next affected, all who gets follow-up. might how year? drug general evolving just current pricing pressure do get control on And the of And political a you how depending the more structure uncertainty, Senate? see then,

portfolio If point months, you just important readouts the Thank XX helpful. to you. be would very for next that XX could the in to most your clinical

Pablo Legorreta

question the question Marshall, Terry, and readouts? and maybe, can on you take clinical prices the taxes, of

Terry Coyne

Sure.

misunderstanding. I regularly, that’s of So, up this bit fairly come think a a that there is something little and is

to think point U.S. discussion out corporations. individuals the So I on and that tax it’s reform to important relates really U.S.

a are corporation. UK U.S. We plc, not we’re a

UK to the been taxes our or corporate withholding with really changes We’ve tax code much would or Irish a the in So way this change any not discussion Pharma. aware of no applicable not is that XXXX. we’re to status. same potential And since pass-through Royalty structured as really tax

I’ll changes be there. don’t Marshall. to anticipate over to any it we that So, pass there’s going

Marshall Urist

Mike. the Good Thanks Yes. for question. Hi, morning.

landscape. how So, is the and in of where portfolio pricing evolves first our years good moving policy all, and and about of just pricing forward, on feel policy the the current both, landscape come. no sort We approach the to matter

before, we’ve important doctors fundamentally needs talked current of highly diseases. of - to -- the as have patients to the meet add portfolio really unmet that about products that and portfolio, medical a on products treatment unmet real meet So, those we diversified and

best think landscape -- tactical be new evolve, I products how as and really forward, touched we flexibility how And complete strategically, portfolio the move to portfolio going think, at we modalities earlier, have front position areas, of how policy regardless is like -- have the positioned. Pablo respond on look to that therapeutic and and into forward. information into how incorporate that across we So, a we we going as we new look be might evolve we on and

think, I think, front we’re I the industry. and our feel It’s good. really evolve the strategy, sets closely. on we with obviously happenings portfolio policy our the up something But, So, to it following well really

forward. just on your the question So, part readouts key second looking I was think, of

But, which have the prostate big mention, Pharma, And looking a always or defined then, think, also on think, significantly for more to Xtandi a handful -- Biohaven readouts. name few cancer breast into Trodelvy that will to to finally, from as next I we point, in will be then, and in an see of in with diversity being vazegepant, keep next that or and I intranasal in well. I’d HR-positive well. well. the So, the given asthma that we’ll a addressable certainly, think single data PTXXX, X increasing of next are I important is make And as I’d forward year that’s Royalty the that market we I as year as said, the XXXX things, first important MX to in look EMBARK think, product. product that And cancer a Phase couple in one with a recent mind. the dependent for readout AstraZeneca deal the isn’t name data readout trial, metastatic year

story. -- think, But – I define no don’t those to all we’re the So, -- not think, again, forward those. looking so, I way in again,

Operator

Thank you.

with Terence from comes Sachs. Flynn question next Our Goldman

Your line open. is

Terence Flynn

expenses puts if And me. there or probably to initial more generally this takes similar week. if think a then, you apply for Thank you. later Hi. can wondering perspective two And have year if just there’s we’re learnings percentage pre-commercial to to that on on deals? on learn this we high-level wondering Marshall, broadly, be taking on questions. future to any should for comment should about how you of was that basis, for any to might the those Terry, data. consider? going or you XXXX, we if key I I expect the Thanks know, for omecamtiv, Maybe any just kind

Terry Coyne

specific will of going going a sort think the of it there’s but related sort that’s and guidance, sort insurance, offering. on to range. right But, I more in variable agencies the of we’re -- X% speak and fixed to the all cash So, other of a receipts bond a certainly component rating and the -- lot legal there’s of Terence, those the be were and expenses, of a of And, and give then, way think this -- to in And, variable there We’re I costs. costs not year, can also sort component variable audit sort the is not now to adjusted D&O going to include the to fixed generally component that and IPO fixed variable component. is of related

parameters they about it So, to the do are rough going add think up. how sort of forward. of But, those

Marshall Urist

Hey Terence. morning. omecamtiv. on question for the Thanks Good

really else, of and on seeing think, top is details terms and into presented I the everyone looking data forward further like both in get any we as dig Cytokinetics what to So, line Amgen data. the Friday, we’re

in look forward And more evolves. lot how a seeing couple of a days. that know we’ll to we’ll think I So,

mentioned, pre-commercial the in this it’s and years the we back development-stage I to very go as any think, that I or always about -- would Pablo year or But go in we well past big then investments, products brought always our say the been look both general, terms Royalty that with on as disciplined I process. learnings for in portfolio don’t we’re Nurtec. into Pharma Trodelvy and well, from when even really of learnings, hugely think, incorporating and in picture, positive things great

process. think, we So, good about feel our I

will disciplined industry, when pre-commercial going things That’s won’t are discipline of course. this work, But, the some part work. evaluating Some we to that things of and part of to stick stay opportunities.

Operator

Legorreta further for questions the like back showing to I’m currently call you over turn Thank And time. I’d remarks. to at Pablo this no closing

Pablo Legorreta

interest we sharing Sure. in with Thank I call the unique innovation. and funding you our thank Thank life build progress to you. My you your look forward and Pharma. role our you, leadership Royalty in continuing everyone to operator, on as team sciences for

questions, have the to that, any follow-up conclude Thank out George. you please With we’ll If free feel call. reach you. to

Operator

concludes you and gentlemen, today’s this participating. Ladies Thank for conference call.

disconnect. now may You

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