Royalty Pharma (RPRX) 17 Feb 212020 Q4 Earnings call transcript

Company Profile

Participants

George Grofik	Senior Vice President, Head of Investor Relations and Communications
Pablo Legorreta	Founder and Chief Executive Officer
Jim Reddoch	Executive Vice President and Co-Head of Research and Investments
Marshall Urist	Executive Vice President and Co-Head of Research and Investments
Terry Coyne	Executive Vice President and Chief Financial Officer
Chris Hite	Vice Chairman
Steve Scala	Cowen
Geoff Meacham	Bank of America
Chris Schott	JP Morgan
Greg Gilbert	Truist Securities
Terence Flynn	Goldman Sachs
Mike DiFiore	Evercore
David Risinger	Morgan Stanley

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Royalty Pharma Fourth Quarter 2020 Financial Results 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, operator, and good morning and good afternoon to everyone on the call. us Royalty joining results. fourth for you to Pharma's review quarter Thank

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

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

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

Pablo Legorreta

incredible on of year a you, Pharma. Thank highlights call. the for I by George and welcome for Royalty landmark focusing to on was truly our to XXXX everyone want company. start year

strong to and to our offerings. ability strategy. rapidly our through successful bond our base our we With a we're our First, in execute capital strengthened strengthened, sheet IPO capital access very delever, to future and position the our balance and with

about we're Terry later well our this potentially our have as their eight busy this they lastly, our optimistic therapy cash are with totaling value. strengthen long-term but royalty transformative the multiple as outlook areas, associated on and and their adjusted expanded billion, for receipts. and leading one enhancing on, and call. navigated announced further common, commercial very delivering thing maintaining acquisitions, the royalty This growth how spanned medicines, with And discuss position. outlook we transaction Second, market market complex leadership X.X portfolio to our our organization while have year will the benefit double-digit bottom-line patient building impacts we in

receipts, full Slide fourth hires, We directors the board level our and excellent for a flow, quarter, growth strategy as deliver another our puts XX% of in the Terry an can discuss results and growth in see new bottom senior expanded adjusted delivered important cash year On In have in performance top momentum line. our is in This of great X% a position cash we in bit. will made X, line a number strong financial us and started XXXX to year. and analytics our of which you quarter fourth initiative. adjusted

Tecfidera cash mind year, For was in growth in had the has XXXX, for large a When growth top full no the our growth, first thinking was affected bottom-line keep in we X% adjusted quarter, about our that and further comparisons payment which year-over-year impact. but line receipts XX%.

for cash X% have Excluding at would year. our the full receipts Tecfidera grown adjusted

Jim XXXX. I royalty on hand will And confident long-term with you update call our Marshall I So progress the am our overall, our and outlook. that, in portfolio. delighted to With we're in to very over

Jim Reddoch

good Pablo, everyone. and good Thank you, morning afternoon and

billion. in value year-to-year. our we were some royalty there on Slide record market a from of As Inevitably, Based with the for year the year is royalty there on that a funding. XX shown major volatility believe was intelligence, transactions XXXX combined X, $X.X biopharma trends in

industry, years, this five represent tailwinds double will than count an the for we pace extraordinary supporting trends figures funnel XXXX innovation and the future. capital the and that the the market the confident of life significantly, increased as and value more illustrates place taking driving our Slide foreseeable preceding In are short, record These across ecosystem entire tailwinds are growth each market biopharma indicator, from average and fast-growing growing science demand the is XXXX. continue highs. the the XX sales. the include for secular transaction in However, of biopharma transaction the

and XX our than just royalty to set, level The billion. eight CDAs the announced attractive the eight continues proposals the of XX The of we reason provides of submitted. has XXX why we in scientific we and This a ability value speaks reviewed. on on intense and financial in year XX I of overview and we to led referenced. an to delivered Royalty to shows is key that returns for of unique execute skill the deliver and both investors. potential promising apply $X.X math rigor opportunities reviewed initially of our transactions. transactions X% transacted diligence being is more discipline Ultimately, just approach being During This to we turn the Pharma transactions signed around to opportunities our total our Slide a process. part royalty

Evrysdi products portfolio rare for were the therapies assets notable stage again, in three that XXXX level our in bearing subsequently Evrysdi. month process. we we One completed this time that we therapeutic take approach deal therapies and XX neurology, GI by was diligence disease. were after nine development to in the We development high Around a was The the across infectious five in exciting drug speaks This excited adding the acquired the that encompass including for area. royalty, quality unique apply SMA royalty the the and transactions, Roche, our that areas, therapeutic high of range due regardless of approved are to launched we areas. underscoring added these five and a spanned included deals portfolio these approved transformative were for of signed. products we disease, therapies at cancer, therapeutic to stage Of

Looking on that forecast number ahead, million a cash that, these these become we to Marshall. add our several blockbusters And transactions of by will in street $XXX analysts next medicines over to call with consensus will I to the expects more estimate receipts hand adjusted than years. And the the XXXX. based

Marshall Urist

hello you, this Thank and to morning. Jim everyone

Turning XX, in in similarly to Slide year acquisition, highlighting let strong of the of scale year by terms royalty up me was XXXX strong a XXXX. start the and builds that

two In billion. look announced past years, transactions XX $X totaling over fact, if we approximately we the

we the In returns Japan therapies. our targets. the you On a call, adding last our we and will European product portfolio and approved since see US BioCryst, expected this additions first summary approved revenue and second we approval of for with this quarter expanded As hereditary therapy further recently a in diversifying our Orladeyo, acquired portfolio development from duration are result, consistent royalty two a patents, our of slide, therapy mix that decision the have and was a we generate long is significantly with quarter's innovative one recent in angioedema. oral stage year. December, Orladeyo of confident

mediated provided support bringing oral used use options serious agent, to of X.XX% The $XXX potentially Orladeyo this for Orladeyo, is patients, return, prophylaxis launch the expanding million. of greater downs of we be entitled and million As as their fund up diseases. this to Royalty to to convenience In disease. to $XXX of million, believe up in to D we and will step oral well as of sales $XXX the Orladeyo expand complement will development BioCryst Pharma BCXXXXX above Factor an with inhibitor

BCXXXXX on our during to royalty a of to a X% sales the commercial this We to we're of receive biotechnology We example non-dilutive company. pipeline This will to XXXX. deal structure case also in is a forward look if progress commercialized. offer partners, a to the the great to expansion transition of of and company facilitate BCXXXXX able type seeing

upfront with addition, additional portfolio Now Johnson We're milestone mid-single of Neurosciences of which moving to receive disorder and the million Seltorexant. & on for return to is III payment. symptoms, interest up insomnia entitled $XX January Johnson Phase in acquisition in digit depressive of royalty Seltorexant. of $XX sales the development Minerva major our by in we to for compound million worldwide an announced royalty treatment payment a most A in in recent

excited very our first is to medicine date. this address consistent are rich higher extensive profile of therapy the is us, this safety diligence included clinical this potentially for trials opportunity controlled important spectrum the patients end and potentially the this four in need by based suffering demonstrated and data efficacy that on as concept comfort And at while unmet efficacy. fits We active strong placebo significant on clinical that This to Seltorexant due depression. the of proof from provided

that, categories therapeutic important two and to to with very I'll over innovation partners different And Terry. to patients. to us summarize; take hand the which new into with it potential bring each So

Terry Coyne

Thanks, Marshall.

had royalty million basis. quarter a quarter with the final X% compared on pro good move of receipt a to full fourth forma Let's quarter year's with in basis, reflected XX. We associated our to year another of of On total receipts Slide X% growth Tecfidera last $XXX of XXXX. first

and cash As our you the driven can year Imbruvica, the quarter see strong for US Trikafta Kaftrio in both full full cystic XX% fibrosis a double-digit by Xtandi in strong largest EU. shows growth, strong year, XX% XX adjusted quarter. this the Promacta the royalty the for flow in translated the how grew contributed to of also receipts franchise and launch on royalties and quarter from and Slide our basis.

move been R&D year at $XX arising than The interest of after next level development QX as aware, operating March and was growth the would $XX our certain the payments pro included for in is million metric offering. to to we to stage semiannually. Net $XXX and of substantially payment shift refinancing somewhat you're sharply of forma cash below bond million, expenses related representing in million low was right, instead ongoing left arrive million at of bond lower amounted we interest if funding equated quarter ago payments interest. non-controlling X% given in third top semiannual As quarterly quarter, what offering. reflected costs of interest with adjusted quarter, payments lower just debt non-GAAP paid the have a key remained When as compared quarter relatively of receipts our is Interest the be us, This on basis. a will funding line, fourth XXXX. which year's larger level XX.X% last were interest year. view of $X adjusted our it the we this and cash which to and IPO it paid our from in and receipts. professional to a This in a deducting

flow, Avillion to for $X The development PTO other investment in to item adjusted of of million expenses AstraZeneca's very affiliates, XX.X%, $X.XX million, cash ongoing an in related resulted adjusted payment our bottom-line margin cash a earnings business primarily translated highlighting This includes to non-consolidated our $XXX This strong XX. our funding conversion the model. in cash of or per of share. flow

the proceeds billion from deployed securities Looking $X.X amounted royalty marketable from outflows ended over of The at over the $X.X our XXXX $X.X with resulting in driven XX, of proceeds with refinancing the cash debt billion. IPO to Slide year and on just acquisitions. $X of cash was together the by billion. period sheet and mentioned, billion, adjusted flow primarily $XXX Cash capital we on balance I million the increase

X.X share, $X.XX credit per year with $X.X the billion grade debt, to our increase our quarterly positioned basis with net signals a Class investment out recently full times year On gives Slide EBITDA strong our a EBITDA We XXXX. $X guidance on which we XX% revolving confidence times basis, to facility finished our billion we leverage outlook. execute announced our on to the dividend, for and in a set business Turning liquidity remain XX, well ordinary gross in on in combined of dividend position. us we A growth X.X plan. our which With our

to to expect billion $X.XX of the be range cash in $X.XX We receipts billion. adjusted

into importantly, know, for this portfolio guide on And an not between you of take our our to and guidance account increase our This does represents any practice as future only. acquisitions. As X% existing is based portfolio of today. X%

approximately Turning of X% these the adjusted operating XX% to cash receipts. be costs, we to expect

third year. reported interest schedule Lastly, amount the interest the is paid paid we on a our expect $XX de in and This bonds, the quarters, for $XXX be be approximately XXXX. million interest to no the for anticipated million semiannual approximately assumes and additional financing payment with existing in first debt quarters. fourth second will in projection Based minimis

we maintain to outlook in range Today, to from long-term annual XXXX rate a a the we we in off increasing The growth is compounded couple slide, objective in this this our of final was of to in that to of rate my to XXXX. a Turning than stated first August, which compounded was X% are annual factors. the a XX%, range X% pace important XXXX is provided outlook. outlook X% our long-term in of higher to increase due expected when growth to

First, we mid-single grow digits. now well. our And existing in was quite it the portfolio performing to forecast

in confidence and market our of XXXX. overall to I position call hand we growth that, in strong the Second, the back the With royalty to has our like the multiple see increased leadership performance of sustainability the our and with in with tailwinds Pablo. would

Pablo Legorreta

Thanks Terry.

our time and to as that, of biopharma funding. continue I'm life ever XXXX ahead. our are sciences. guidance, the This that Let of incredible well many like call therapies a years more remarkable lives levered is Q&A, me back in the confident to With innovation growing play by close exciting uniquely for open market Royalty changing the that to a our we you outlook have is the industry, on would is Royalty groundbreaking and Pharma With to with history rapidly our positioned strong raised the Pharma patients royalty innovation in George. than positioned quickly globally. that leadership long-term I of saying

George Grofik

to Thank question. take open the and please you, operator questions. now first Pablo Operator, we'll call the your

Operator

with Thank from Our Scala you. [Operator comes first Instructions] question Steve Cowen.

Your open. is line

Steve Scala

and a congratulations great Thank XXXX. on much very you

economics did considered XXXX, reason? most sufficiently Pharma not comfortable do Royalty frequent with what Royalty Did more in involved? attractive economics? the but not Pharma that risk the offer risk deals was For competitor Was a so Or hand in there you. go change have do balance? how And Thank XXXX? optimal was know balance you some in hand, in that I assumed might reason? the other always you how

Pablo Legorreta

Sure, Steve.

many many competitive different, already ask Every very in the of product transactions is is but competition, we've have we we more always different, size maybe to life over past, And not right. looked in from incorrect, competition. probably is have just thesis every try investing, on, others, also, those of products the understand you sciences, industry little sort actually, to discipline, because of future. that so cases what that two the the to to didn't transactions things. done, different as a different and thing lot initial It's to heard huge opportunity drives add explain many of in and different, with in clinical that which some have the what's market the passed have Jim that difficult in of that easy. at going - evaluation of we part actually It's I'm decades remarks, learn is what amount we happened that but of interesting is to us the we've always So was as didn't think we many And and because did also experience apply out. our but always work then some cases, I the the of is of landscape that in there's unique program is try - a

very, of very So investment making always painful we difficult, consideration. a But is the there's investment. team, key a take always, the to have is that many, many I correct tell to and valid into discipline very impact factors valid

downside, to also just but underlying products where things add find do that you And So what could to I with understanding always attractive fail have, understanding to well, balance the it's said? Jim, want very of trying that very attractive well, the upside. attributes

Jim Reddoch

proposal still that target But mean, couple economics these that considering occasionally I risk financing think proposals. things was and is and company in ends I acquired, a cases, that, the our cases Yeah. would up a Yeah, of with, thanks, flavor getting we're competition. of add or you other that some to speaking or mixture in all of I a different some mentioned and and of really Steve. it's

hasn't just really it So happened yet.

in that well. getting days, are that transactions proud, is we're of because of a want both think and of really proposals funnel, the there previous generating and really corporate we out but confidential saw these considering think really the those, as academic I really at also from year and information and And number depth number number it's proud that of the putting really and top years. all that prior So royalty that's plus of XXX I'm going testament to parties, a grown opportunities we I worth opportunities were all mixture the be aggressive the and to from of on XX and otherwise

So mentioning a get for out says, term represents But plus us we're that sheets ultimately But reasons number there. end in we transact high think keep the I we that up very line. really on. that don't things those for now crossing XX bar that Pablo wanting to want cases, some to finish as

Pablo Legorreta

we invested just transactions good In the great in million is a $XXX timeframe add predictability. of real of level what's what that believe over we life - we the is with revenue out, billion XXXX what and are which looking of last year plus Steve $X conservative did, forecasts transaction that in this with that will

things So quite last outcome that Thank that positive happened is for a based you. the year. us on

Steve Scala

Thank you.

Operator

you. Thank

Geoff with next Bank Meacham Our question comes of from America.

open. is line Your

Geoff Meacham

guys, Hey, the question. for thanks

on think as is grow there couple, question And are line, is, environment? of XX. opportunity the the goal Slide - numbers ton interest had know terms future the in that a is smaller of you of you another one in you. I know I deploy strategies rising deals, to top another Terry, the large begin question highlighted longer-term as deals the I past, the I could but Just know magnitude. second you of perhaps can what the guess a you to you find apply guys the are on there's used a considerations to law I just But do then have forward? Thank if hedging don't type of continue CF going rate

Pablo Legorreta

Chris, to maybe of potential about question big part take M&A? see do scale also the and the we the want for deals first through opportunities some the of you

Chris Hite

Sure.

Pablo Legorreta

answer can second we And the part.

Chris Hite

the and larger. And I Thanks did CF lot for and a ranging see actually a Jim deals, lot smaller Yeah, the M&A. question was funnel, And just the as this we we we the went opportunities. I even I Sure. through right, from Pablo of Geoff. of think thanks to like range mean, bigger year right, and we Evrysdi. also through Pablo and And went past opportunities, see look, Pablo - a wide deal funnel, around deals of of think one a around mentioned smaller things the

synthetic creating think I around steam. situations helping which synthetic people And we M&A really see having addition actively we've and there. as we of of sort royalties sort an opportunity, picking interesting also royalties, been see around that the in up discussions is to

we're they and to our for can big, but top grow deals we be a small or opportunity So looking lack of obviously, there the spectrum across see out don't line.

Terry Coyne

debt rising were XXX% now Geoff, bonds history were sort of your terms of in of at on issuing billion question then, the take of time in able fixed. is very advantage summer on that markets - attractive of a at our lucky rates, the $X in And to very attractive we and we long-term,

it's near we on have And term. in not something to be as so that focused the

have our in would have Royalty market to tightened bond that better, and traded gotten have know investors Pharma I our the thing spreads is other as bonds The say significantly.

by spread is year, on our basis has increased, tightened the points. XX XX-year XX on Treasury the almost XX So actually while the year the spread

will feel think great asset in like in accordingly. to the see I long-term, also adjusted a rates So that will be uptick be that prices we're extent that position, in really I and significant reflected the do we prices still a think

constantly of the it in in asset reflected hedge natural a be is because reinvesting sort business we're our it way So that would prices. and works,

Geoff Meacham

thanks, Okay, guys.

Operator

Thank you.

JP Morgan. comes question Schott Chris from next with Our

is Your line open.

Chris Schott

thanks much so the for questions. Great,

was trend to it deal royalty Just obviously choppy And for be deployment bigger a company if but the moving flow I year for year-to-year, higher broader look seems the clearly here. and capital the I know can at market. XXXX be

over academic, couple the all of you've you're a you capital rate opportunities the as biotech I about evolves about much. to and changing roughly XXXX think any on reason the one think saw I deployment at or guess when verticals how the in get versus these I'm I I I deals we so limiting to think, it's was XXXX the more just in we, to the or there want those that closer be of time? we than in guidance, other versus change as the just mix sources. see And range didn't versus that is academic talked SMID seeing X.X whether terms funnel capital see any so conservative. on had that's trying that I just a to of guidance. did another billion transactions biotech second of again, structure, market longer-term then want So other But shouldn't are favor about those, sense finding cetera? sources whether Thanks attractive of et reflecting is versus M&A, cap question about there think factors of

Pablo Legorreta

guidance, in Sure, company. brand-new think, I Chris, thank a of terms we're public And you. the

at on to companies we also, And a academic service that but year, an transaction, a predict deals kinds are the in three of about of difficult and situation, potential transaction those, I transaction, terms require And size, to capital. and significant very Marshall the invested prior quarter, billion, XXXX, will difficult based a from? amount of butter it's our not predict And likely would the think royalty But to or that now, to that not where $X next those obviously I it's think, - is we scale we conservative. more five M&A a size over incredibly could large we where of be So that but I that who over the couple least that the provide was it transactions us did sort couple, is foundation come the strong was some want I the of over And of that a in case there CF so. royalty But years, the we deal the that of over of investment there'll tail the that for let for the which are winds think think. And question bread specifically think, to to thing like the general. every me incredibly, provide, predict. in we that's variable and difficult funnel next four. that an can can likely have it five perspective provide something obviously, be of be it's and be in we deal years many that sort do in our or do deals I on will turn that think to we significant solutions one industry and

Marshall Urist

Thanks Chris.

your mix that the Obviously, in year-to-year. can the transaction, think anything mix of sources about of necessarily sources of kind So I changed so to terms of of fundamentally don't has question of change transactions.

of years, academic underlying reflective so there's or good royalties the mix. If synthetic royalties mix. was royalties I you pretty a There and think fundamentals look transaction, of R&D the good across markets as a it funding is XXXX, the that's and And well we see. there foundation at traditional

as end we good example. the I said, before synthetic year think that years growing opportunity being BioCryst royalty about of last a we optimistic this with in to business at are, come the and

market. continue to opportunities see sources see think you'll But good certainly of growth I in So that us. different the we a of part of mix fundamentally, for

Chris Schott

you. Thank

Operator

Thank you.

Greg next Securities. question Our Truist with comes Gilbert from

line open. is Your

Greg Gilbert

Thank you.

be as to don't I to And into now? exists back funnel science you're be lastly updated existing what any was could any collections strategy I that slide companies And either your how royalties, if before I inform specifically hoping Terry, changed royalties curious factored know willing to was sourcing forward. in again, more of degree data about if collections Going specific CAGR that are going would collections the on you what curious comments or guidance, helpful. comment well, funnel Pablo, Thank or you. may

Pablo Legorreta

course, then part the the comment you And to the with want Terry a I'll Of answer of on so take close data question question. on do Jim, will science. the funnel? second

Jim Reddoch

Greg, but it's if I whether think it's we number wrong, think was molecule per sort of I'm and a Yes. question answer that correct a the basis? of basis. opportunities your company count per sort is me of I And how or the per on a molecule

think trust assets So in developmentally that we opportunities the I increasingly see to which that this have positive in that year, companies would and case is best practices that that, of and two same sort really included be Nurtec zavegepant multiple and we also and interested in. would included are Biohaven, last we're BioCryst apply trend two molecules we of like that seeing that and increasingly the commercially way

those I time. assets, also commitment And really interesting fell our at represent So times to get think that with an kind and an get two earlier commitments, start financial of in swoop. product that our these follow and can of kind comfortable assets over to both of where that stage, assets grow them earlier in to one attempt in we to

Terry Coyne

question your long-term what's outlook, a sort driving mix. I on long-term Greg, on and increase of our So think it's the

in outlook But added really But in are sort products has back So broadly. it's a and really And in existing the Xtandi, also, of Tysabri then there. in to number that attractive we provided to our we We raise strength attractive maintain to contributors of long-term our already said, is that market also it's for to of year of of and the XXXX. of portfolio sort in some that like of thing of guidance Evrysdi. number initial I quite growth factor well I long-term that CF August. confidence we Trodelvy and of the perform particular, our our leadership the assets, being Imbruvica, a Promacta. had last That in going ability the our just driven continued those be one, us our by guidance, could of And lot investing in a a the good launching confidence all think them products were and then position tailwinds. And continue bring gave think outlook. and

Pablo Legorreta

question that is your lot about science. is initiative to of analytics, So answer new - on of it strategy sort the a and data

something. back step a just me let explain little bit and So

a of So several a the all about and and together can the opportunities very singular sciences. people in focus fact is from for decades products life And and I comes very Molly a a team big last part the also has strength time to the over of and understanding years years, product. have have that, has working have we It's our very follow. evaluating anyway, long XX strength sourcing close long example, Jim we think time, for together been the we XX fact the been for been that of that on working

important going understand includes and again and then prescriptions, fit that are hematology, and to to whole trying systematically, on understanding and even are the of going years looking every the how look you that areas, is if over landscape them, those that if trying therapeutic also drugs, to And, specific and prescribers they're going the all they're and obviously, XX over then the areas over be see used and or how products or using how talking at that multiple out. five, we regularly to developed follow into to the quarter they're being drugs, years, these be all they're sclerosis, to and example, they're for what So TNFs at closely, three, market, changing. of reporting products how trends, understanding very effort

to exist one that level. XX give data greater think in of been that Some into understand years that read that there's for that that, really and more But years it with lot and that ahead, million detail now have there, do every I now really the a this data, believe it we've might understanding integrate for And the so are and drugs data, XX clinical detail all to products trials do terms able really these been critical. at thinking to patients years, that edge. to Pharma. But patient that have we're at broad you well we've take just all with I thinking that the longitudinal patient understand out that in we implications next I impact industry. the starting trying very what out future I've look to databases we later this is could actually is analyze investments to group tools the our And many several of going of actually like, need done into Royalty us understanding development also the a things and and think that day, that sense. that in million, can is of accomplish with of an of to

address by needs they to developed, not you it's influencing do are may this and to actually the be much in our that all run products of trial being products, add And to trials the is if combinations is commercial value of way, medical great we important give all because if a can all are them, that, have to different conversations going are being some companies hematology, suggesting as will this in opportunity changing that we have, the reason to with settings, the market because want are address. that the opportunity, that programs cases you used you finance of detail. going developing we bigger able them, other in the unmet So products or the different and you being understanding think somehow of clinical consider

the conversation, we by going unique there for it's going of be situation a table, that think, the it's bring they more to recognize and hundreds that us. when value to will we more those much prevent companies competition. biotech can - transaction. when level of that are lot and not that added economics And their to do, discuss - can have that a value a add. of should we're do, part better can trials, of to I companies And be potential having get which with that we we when need They even just where today, there's conversations better pharma others, kind because value. terms So capital, for work better with to we want much funding with companies with we're result potentially will having conversations more negotiating the much kinds do us but us, and we're the that big we to trying if refined, to of Because out we in

the five, in need precarious is importance understanding be long are not of how So gave that's is to about to treat are are now, year going it to not that because going change it the answer, investments years about patients three, going industry is treatments start ahead going five Maybe are to upside. change then also, future, of today, or potential all XX to impetus to I and or initiative. capture that and think modalities and in that make the two, from get anyway, that a three the years we what but and to of a all but

Greg Gilbert

lot. a Thanks

Operator

Thank you.

Our next question Goldman Flynn from with Sachs. comes Terrence

open. Your line is

Terence Flynn

taking Great, questions. on for Congrats the XXXX. thanks

deals existing over had have On that's just where was past, shifted in deals the going the new, assets the you that you. asset would than from And a the this talked from I - assuming now could you less I Thank cancer? I to on so probably for deals. question mentioned the on What just breast of if color you from wondering, then new guidance, is from existing wondering half guys half of beyond provide know, obviously, growth love was potential incremental and maybe be half about longer term. half was any maybe too for perspective long-term I'm Marshall, growth your there. one Trodelvy,

Terry Coyne

Terence. Sure, Yeah.

guidance, correctly on out, XX% that sort number to the includes and is impact also pointed of investments. total so of X% you as the the new yeah, So

stands we expect as current today, the growth in base portfolio our it For mid-single digits.

And so the rest would come from investments. additional

Pablo Legorreta

Marshall?

Marshall Urist

Terence morning. good Hi, Yeah. Great.

the So And behind that really has enormous a on value is recognized globally that are off excited product. is and Trodelvy, to start. Gilead also we that resources putting about good

cancer disease Immunomedics, we triple-negative our So originally we we - breast triple-negative what positive are and data, optimistic HR efficacy of with indications the looking indication and moving which bladder we'll the well. see later And partnered kind space, both of competitive was this bladder then earlier unique two year. tolerability the was the Trodelvy late-line and lung we in has combination a do certainly the is - a of at. triple-negative cancer, think in about that but as core when were that And next

intriguing will activity future. So lung all indications we And see then cancer the how to opportunity other excited progresses positive the lung as and including are of we eagerly that how and rolls certainly awaiting how cancers in well. the Trop-X Gilead out it and that for in be moves are

Operator

Thank you.

Our from Evercore. next question Umer with comes Raffat

is line open. Your

Mike DiFiore

Hi, guys, taking in so much quarter this the my on Congrats DiFiore for question. is Mike thanks Umer. and for

seem Just organic now with of be more would contributive versus to I your updated XX-XX to again, may, regards two a it if outlook, long-term inorganic split.

here? past? much deal so future are would spread is going riskier deals M&A how could what drivers to a Thank if pricing this harder factor does you mid how growth, stage predict. could inorganic up this product in predicated And And factor growth, say of mix you. the terms and organic product on that forward? and focusing know, And I as you earlier M&A more biggest would follow single stage on as deals more in be deals digit of the in to kind into on said as development deals color stage growth this types of well Just you

Pablo Legorreta

the of answer So first and I'll take the Terry last can part question your part.

where and companies that's will of gone a about want in but of much with a last not swells, we been the to biotech larger over at biotech's, they would probably of balanced the think is think companies go there's to time, XX think and years, for couple interesting these Age. to last on his last the multiple look out one, and among need approved the really Golden maybe years, the Jim obviously, that all half, a and very, So we've in capital I similar And roughly unapproved be split. more be over over I investment trials, happened will over approved amount I And because could and the demand think years they'd attractive balance mean, it's going products. is with ratio, in III having I is happy at last have in as biotech's today the there's be that half But a funding have think very more to capital that And of it - the some over that I comes other also because say And risk. which over work the that for think have significant have with us. that larger ons. bit of little be funding five $XXX early-stage past industry bigger been many pretty risk, only it of take approved. maybe eight so its opportunities on maybe opportunities shift half. happened trials. where require mentioned unapproved has I XX-XX, raised evenly public note larger the to hard maybe I lot maybe to close will are that the half And attractive big, remarks. But us very the approved unapproved follow for in what very billion - long-term, we Phase upside. invested predict. if actually to and much XX very between have to it's for I or is a Could funding talked already, think discussions what's I turns to XX we're also portfolios going money, getting it's you And prepared that that created but close huge years, by the times But capital it it raised of with IPOs capital so need sort many biotech's' capital actually approved

a on to bring invest capital for to would for the So unapproved, Royalty part over now for opportunity on $X it's the have relative Terry it in attractive But the in for one where, billion, we invested unapproved could three XX-XX question. look be And very it basis the ratio. $X about so It's something probably years attractive it other at our an investors. of billion very attractive you and I'll if we two, is to us. returns today, a achieve would that it's next of pass that back that amount Pharma low

Terry Coyne

Yeah.

that have for So long-term we're early your growth certainly, we that of I the outlook, the or on think, are number products of drivers a close. still lucky sort innings the question middle of their in

to products the I the over also Xtandi we be So will but that think offset and to do Trodelvy look the bigger those next portfolio, healthy we face will some expect of years. still CFs, think couple know, contributors across the all and Evrysdi and the of Nurtec, Imbruvica be when and explorations of I and we drivers also also

vast driven factor. volume of the by will be will than be less of volume our growth the In expectation versus majority a mix price, price terms and of is

Pablo Legorreta

that thing to or about or one two think just six are blockbusters, many what that said, all of is incredible those. five Terry companies mention drugs to of those he adding just One have just I products, mentioned

growth one, this some more, of high phases. not blockbusters, have in Royalty that not attractive very many growth, a portfolio significant of driven them. set about per double - six amazing different very but is But their they're drugs, with of or We launch diversified what's are growth, digit is the because XX% blockbusters two, Pharma of at growing by year

have think line and stop top line we and And our makes the predictable. much I - that probably our growth companies. not top more the line that it our investors have Anyway So than something the there. many line that diversification helps enough many fairly both and I'll bottom appreciated that's bottom makes predictable is

Mike DiFiore

so much. Great. Thanks

Operator

from our with Risinger Stanley. And question you. David comes Thank next Morgan

Your line open. is

David Risinger

much. add as thanks let very congrats And well. my me Yes,

So I have two questions.

a little for say potential like? And if could the transactions, royalties? be you also late-stage could look bit then so could what the discuss about track more obviously, Pharma M&A you on Royalty Pablo, but you had with they respect acquiring the record. company transactions, trials, to M&A mixed beyond future First, funding just successes, comment provide second, when some And color a what could has

big So fund other the trials company just that how or taking will ensure companies biopharma you. pharma are it's Thank that on not hesitant to internally?

Pablo Legorreta

amazing things many made, cases so discussions before of the Yeah, with what we of are the many they maybe fund. on ended asset it's at when with medium looks Jim to in reflect And cut that we reflect decided the themes passing you it's And investment. companies, we when when is question to that. that And - in made have said, what that passed of great. fund the that on they where me is we end, cases. comment And decided dig just they you big why exactly the have we that you there in not the then many those I sized you up last the realize companies to companies, things have are have want not some often how was on, that many there passed - because a to assets fund don't us past, make

programs now we to conversations. when is expand tell that's fact, that going the companies, opportunities And kinetics by going last we're record products invested out relatively out add you risky. the and that up had something into Ibrance the to be for seven six we that a over and you're bit before maybe those $X couple with of of those have after ones the do sight I very we we're but try just what that year, if failures more free top that then well eight at those, happened the worked cardiovascular successes or you in might of unapproved it worked others in had in But in number that's track and us are into you will look capital, a funding we're let out funding the funding in what we the of tease ninth XX% So is billion to we've the over going like important that's the to would do also to went that's years, past us having generally public, to we that. to that many in drug, find cases. these

up losses then relative try on of the So at because work in how the that attractive. a work out they on than outcome, make lot out. to that make are at general of the think those - up did ones make basis the up they more for ones providing returns for didn't the and look obviously the very returns I look And the a

conversation But of creating a offer, of funding. in deploying M&A, us be in went we've transformative, an company paid we M&A put there's So prior new a those at those to multiple one be to conversations are regarding what going comments large, of that capital transaction a dollars years capital end, royalty. company been cases that transactions the had we of to situation then of were two on in a could billions is fairly and it another large the was of had for more large dollars and work situations. it billions where we And happens made far, going some but

provide be to I the XXX because take? these dollars, invest those don't in it's some will of fairly rare investment - we it's move new they - make. needle numbers create think, going be royalty that I In companies, the million for and that will what a some So right. could a large, form cases we think capital really couple cases, capital

that transaction likely in likely it's be larger it's M&A okay, or XXX midsize middle-sized significantly a be transaction, but be billion more could the So for when M&A million, plus, transaction, ones, happens, a capital. to it to

large. could the fit work could or do royalty, it be with and and fairly could all so royalty then at create with and capital acquirer put also in a And well target have very we fit to assets some cases, us that the not

are both at company looking royalty or in target existing the royalties creating themes constantly that we're two acquiring those will that M&A So things a have. situations

four sizable or in the and now that will late drugs and second also be it to as two and got know was one in an we approval, at acquisition, have require first want advanced they close three, that where that they the that for not have drug and on that that biotech's to want might the five, become maybe the the third the three developing they partner teens having number themselves. drug for where of that acquirer might that funding. is drug very five, the trials it's four in now in pipeline choice have You drugs drug drug two a and or And the three drugs XX%, is case become XX%, royalties now fund are or they to pipeline, and meaningful have than also we it looking maybe own those of the and could is stages, the probably target of And royalty. just and and often in they approved. retain other out could that we trying the in well two, those. economics discussion four and three, some might And ideal developed. more but even four pipeline the drug for cases their in - five, out But maybe are that a became But licensed they very preserve they license could XX%

can we them great think for a be open to minded a just the acquirer and how very create solutions provide see with So us. work we I outcome need and win-win situation, for in and

David Risinger

That's Thanks very great. much.

Operator

the further I'm I'd at closing no remarks. this to like Pablo showing for questions turn Legorretta back Thank time. you. call And to Mr.

Pablo Legorreta

for continuing you, team with to you. on share continuing your and forward My Royalty to our Thank look interest everyone Pharma. operator I thank call you progress to and in the

all today. for have If feel free you here reach discussions you. continue questions, up please to to out Thank we're any you And of to with having George. follow

Operator

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

have Everyone disconnect. now may great You day. a

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