Dri Healthcare Trust · TSX:DHT.U
Dri Healthcare Trust — Investor Presentation (February 2024)
36 slides from Dri Healthcare Trust's investor presentation, February 2024
Slide 1: Advancing Science in the Fast-Growing Pharmaceutical and Biotechnology Sector
ADVANCING SCIENCE in the Fast-Growing Pharmaceutical and Biotechnology Sector February 2024
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by DRI Healthcare Trust (the “Trust”). The Trust is an unincorporated open-ended fund trust governed by the laws of the Province of Ontario, Canada and is externally managed by DRI Capital Inc. (“DRI Capital” or the “Manager” and together with the Trust
Slide 3: Low risk exposure to rapid biopharma growth
Low risk exposure to rapid biopharma growth Ophthalmology 31% For the last twelve months ended September 30, 2023 35-year1 Dermatology $113M History Endocrinology 2% 26 3% Total Income Royalty assets $3.0B+ $94M Capital deployed Neurology 9% 20 Hematology Adjusted EBITDA2 Products 15% 74 86% Royalty
Slide 4: Investment Highlights
Investment Highlights The longest standing and a global leader in buying healthcare royalties Well positioned to capitalize on generational industry growth delivering attractive uncorrelated cash flows Diversified portfolio of products by therapeutic area and marketer High yield and high margin valu
Slide 5: Our competitive advantages
Our competitive advantages 1 Seasoned 2 Disciplined 3 Proactive 4 Strong team capital sourcing execution of specialized allocation proprietary fundamental investment based on robust database tracking ground-up professionals with investment criteria royalties on more diligence on life science that ha
Slide 6: Track record of delivering growth and value
Track record of delivering growth and value Drug Royalty I Drug Royalty II Drug Royalty III DHT 2006 – 20081 2009 – 20131 2013 – 20181 2021 - present 19 New Royalties 27 New Royalties 15 New Royalties 13 New Royalties & 1 Loan valued at valued at valued at valued at up to $645M $730M2 $586M $987M3 I
Slide 7: Delivering on our long-term objectives
Delivering on our long-term objectives Guidance at IPO Guidance Today (Feb 2021) Initial target of Raised deployment target to Capital deployment target $650 – 750 million over 5 years over $1.25 billion over 5 years1 High-teens royalty income CAGR through Declining cash curve due to expected asset
Slide 8: Current deployment exceeds targets
Current deployment exceeds targets ($M) 1000 1-Feb-24 14-Aug-23 900 Additional milestones Actual deployment 25-Jul-23 800 29-Jun-23 700 8-Mar-232 25-Nov-22 600 30-Sep-22 500 400 9-Sep-22 300 30-Sep-21 28-Feb-22 20-Jul-221 200 25-Aug-21 100 0 Feb-21 May-21 Aug-21 Nov-21 Feb-22 May-22 Aug-22 Nov-22 Fe
Slide 9: Robust pipeline
Robust pipeline $3.0 billion in near-term opportunities Address important Provides strong Marketed by leading unmet needs with life- intellectual property biotech or biopharma changing therapies for and regulatory companies patients protection Further portfolio diversification and extension with att
Slide 10: Long-term drivers support royalty financing growth
Long-term drivers support royalty financing growth Growth of Biopharma Projected Growth of Worldwide Projected Growth of Worldwide clinical pipeline1 Biopharma R&D Spend ($B)2 Medicine Spending ($B)3 +49% +17% +39% 6,147 278 2,238 238 4,126 1,607 2017 2022 2022 2027E 2023 2028E • Genomics • Pace of
Slide 11: State of the biotech market
State of the biotech market Biotech IPOs1 Biotech Equities Performance2 16 120 140 33% 130 14 100 120 12 110 80 Total Proceeds ($B) 10 100 -11% Number of IPOs 90 8 60 80 6 70 -38% 40 60 4 20 50 2 40 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20
Slide 12: US SMID Biotechs' limited cash reserves
US SMID Biotechs’ limited cash reserves Net Loss vs. Capital Raised ($B)1 Cash Runway for Unprofitable NASDAQ Biotechs2 14 12 ≥24 10 <12 8 YE 2023 Estimate 6 18-24 4 2 12-18 0 3Q22 4Q22 1Q23 2Q23 3Q23 • 43% have cash runway of less than 12 months • 30% have cash runway between 12-24 months Net Loss
Slide 13: Loss of exclusivity fuels M&A and expands royalty opportunity set
Loss of exclusivity fuels M&A and expands royalty opportunity set Revenue loss from pending loss of exclusivity ($B)1 Trailing three-year average value of transactions ($B)2 60 The impact in the next five 7 years is expected to increase to $192 billion 6 50 5 40 4 30 3 20 2 10 1 0 0 2019 2020 2021 2
Slide 14: Creating win-win deals for multiple counterparties
Creating win-win deals for multiple counterparties Monetize long-term royalties in Provide royalty financing flexible, tax advantaged deals to fund capital projects Research Inventors institutions Flexible approach – Existing royalties – Synthetic royalties – Launch & development capital Monetize ex
Slide 15: Proven track record of closing accretive transactions
Proven track record of closing accretive transactions Investment Thesis Transaction Size Uncapped transaction on established product $125 million Up to $170 million1 providing cash accretion Newly approved and first in class oncology product $85 million Up to $140 million2 with uncapped growth poten
Slide 16: Positive effect of compounding of cash flows
Positive effect of compounding of cash flows New asset Total Cash acquisitions Receipts1 Cash for Adjusted redeployment EBITDA1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 2 Cumulative effect of compounding Annual CF without compounding Annual CF with compounding Virtuous
Slide 17: Robust diversified portfolio
Robust diversified portfolio By Therapeutic Area1 By Product1 Dermatology 3% Endocrinology Other Lysosomal Storage 2% 7% Disorder Empaveli/Syfovre 4% Oracea 3% Immunology 3% Omidria 5% Xenpozyme 26% Oncology 4% 31% Neurology Zejula 9% 4% Xolair 5% Hematology Spinraza 15% 9% Vonjo Orserdu 14% 25% Oph
Slide 18: Q3 financial highlights
Q3 financial highlights Normalized Total Cash Receipts1 Total Income Adjusted EBITDA1 $25.2 million $34.1 million $20.3 million +34% over Q3 2022 +29% over Q3 2022 +28% over Q3 2022 Adjusted Cash Earnings per Declared Cash Distributions Adjusted EBITDA Margin1 Unit1 per Unit 80% $0.46 $0.0750 1. Nor
Slide 19: Strong cash generation
Strong cash generation Adjusted EBITDA for the Last Twelve Months Ended September 30, 2023 ($M)1 $8.6 $113.1 ($1.8) ($1.2) $110.1 ($8.7) $104.5 ($7.3) $94.1 Adjusted EBITDA Margin1 86% Adjusted Cash Earnings per Unit1,5 Royalty Income Total Interest and Other Total Income Net Change in Royalties Non
Slide 20: Omidria II royalty transaction
Omidria II royalty transaction TRANSACTION HIGHLIGHTS STRONG GROWTH POTENTIAL $115 million up front purchase price Mature product brings stable sales plus up to $55 million in potential history and predictable growth milestones Anticipated significant 30% royalty rate on US net sales contribution to
Slide 21: Orserdu royalty transactions
Orserdu royalty transactions TRANSACTION HIGHLIGHTS STRONG GROWTH POTENTIAL Orserdu I Approved by the FDA in January 2023 $85 million up front purchase price and the EMA in September 2023 for Mid single digit tiered royalty on advanced/metastatic breast cancer worldwide net sales patients with ESR1
Slide 22: Vonjo II royalty transaction
Vonjo II royalty transaction TRANSACTION HIGHLIGHTS STRONG GROWTH POTENTIAL $66 million purchase price for tiered First year of sales strongly exceeded royalty on worldwide net sales analyst consensus estimates Approved by the FDA in February $6.5 million payment made to CTI 2022 as the only treatme
Slide 23: Portfolio performance
Portfolio performance ($ thousands) Net Book Value Total Cash Royalty Receipts1,2 Asset Primary Marketer(s) Therapeutic Area Pro Forma LTM 9/30/2023 9/30/23 Hematology / Ophthalmology 707 25,445 Ophthalmology 8,457 18,735 Influenza 2,213 - Endocrinology 2,381 13,592 Ophthalmology 11,420 225,161 Derm
Slide 24: Growth opportunities from existing assets
Growth opportunities from existing assets1 Phase 1 Phase 2 Phase 3 Phase 4 RESPOND: Spinraza in patients who had received Zolgensma Spinraza ASCEND: Higher dose Spinraza in patients who had received Evrysdi DEVOTE: Higher dose Spinraza Vonjo PACIFICA: Confirmatory trial in Myelofibrosis Xolair OUTMA
Slide 25: Trust units are undervalued relative to royalty peers
Trust units are undervalued relative to royalty peers Price / Price / book operating Dividend yield cash flow 1.0x 5.0x 3.0% 2.1x 8.1x 2.8% 2.2x Neg 0.0% 1.9x 9.2x 0.0% 4.4x 20.8x 1.2% 3.1x 28.9x 1.3% Valuation comps highlight Trust’s underlying value Information sourced from respective companies’ Q
Slide 26: Committed to best practices in ESG
Committed to best practices in ESG Environmental Social Governance Building a platform for sustainability Valuing diversity and community Accountability and integrity as core support values • Review of sustainability practices of our • Highly diverse and inclusive team • Best practice governance pol
Slide 27: Our key priorities
Our key priorities Invest in our people and build the industry leading royalty investment team People Execute on strong pipeline and operate at Execution peak performance in all aspects of our business Results Focus on long-term, sustainable growth generating strong unitholder returns 27
Slide 28: Contact Us
Contact Us David Levine ir@drihealthcare.com
Slide 29: Appendix – Deal Summaries
DRI HEALTHCARE a aa Appendix - Deal eo
Slide 30: Tzield royalty transactions
Tzield royalty transactions ACQUISITION FROM MACROGENICS SALE TO SANOFI Sanofi announced agreement to $100 million up front purchase price acquire Provention Bio days after for a single digit royalty on DRI Healthcare’s acquisition of Provention Bio’s worldwide net sales the royalty Up to a $50 mill
Slide 31: Xenpozyme royalty transaction
Xenpozyme royalty transaction TRANSACTION HIGHLIGHTS STRONG GROWTH POTENTIAL $26.5 million in potential $30 million up front purchase price milestone payments based on cumulative royalties received First and only approved product Approximately 1% royalty on for the treatment of Acid worldwide sales
Slide 32: Omidria I royalty transaction
Omidria I royalty transaction TRANSACTION HIGHLIGHTS STRUCTURED GROWTH Annual Royalty Receipt Caps ($M) $30 $26.5 million in potential $125 million up front purchase price, milestone payments based on 26.25 27.50 subject to annual cash receipt caps cumulative royalties 25.00 25.00 received 25.00 25.
Slide 33: Zejula royalty transaction
Zejula royalty transaction TRANSACTION HIGHLIGHTS STRONG GROWTH POTENTIAL $10 million milestone payment if Zejula is approved by FDA for the $35 million up front purchase price treatment of endometrial cancer by December 31, 2025 In development for metastatic castrate sensitive and resistant 0.5% ne
Slide 34: Empaveli royalty transaction
Empaveli royalty transaction TRANSACTION HIGHLIGHTS STRONG GROWTH POTENTIAL Represents a significant $28.2 million purchase price1 plus a advancement in the standard of $4.0 million potential milestone care for Paroxysmal Nocturnal payment Hemoglobinuria Approved as the first and only <1% royalty on
Slide 35: Oracea royalty transaction
Oracea royalty transaction TRANSACTION HIGHLIGHTS STRONG GROWTH POTENTIAL Immediate accretive value with $50.5 million purchase price for substantial royalty receipts netted royalties on worldwide sales out of purchase price Among leading treatment options Two additional royalty interests for managi
Slide 36: Deal structure case study: CTI BioPharma / Vonjo
Deal structure case study: CTI BioPharma / Vonjo - Funding for Vonjo launch preparation Pre-approval $50 million secured loan - Secured loan provided downside protection if approval not granted - Funding for Vonjo launch $60 million tiered royalty - Sliding royalty rates as annual sales increase Upo
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