Royalty Pharma Plc · NASDAQ:RPRX
Royalty Pharma — Q3 2023 Earnings Presentation
33 slides from Royalty Pharma's earnings presentation, Nov 8, 2023
Slide 1: Royalty Pharma
ROYALTY PHARMA
Slide 2: Q3 2023 Financial Results
Royalty Pharma plc Q3 2023 Financial Results November 8, 2023 2
Slide 3: Forward Looking Statements & Non-GAAP Financial Information
Forward Looking Statements & Non-GAAP Financial Information This presentation has been prepared by Royalty Pharma plc (the “Company”), is made for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy securities. The information set forth herein do
Slide 4: Agenda
Agenda Key Highlights Pablo Legorreta Founder & Chief Executive Officer PTC Partnership Chris Hite EVP, Vice Chairman Portfolio Update Marshall Urist EVP, Head of Research & Investments Financial Results Terrance Coyne EVP, Chief Financial Officer Conclusion Pablo Legorreta Founder & Chief Executive
Slide 5: Key Highlights
Key Highlights Pablo Legorreta Founder & Chief Executive Officer 5
Slide 6: Executing against our strategic objectives in Q3 2023
Executing against our strategic objectives in Q3 2023 1 2 3 Financial performance Capital allocation Raising full-year guidance Prior to Biohaven-related payment Acquired incremental royalties on Adjusted Cash Receipts(1) expected to be in Q3 2022: Roche’s Evrysdi, synthetic royalties on $2,950m to
Slide 7: Solid financial performance in Q3 2023
Solid financial performance in Q3 2023 Adjusted Cash Receipts(1) Adjusted EBITDA(1) Adjusted Cash Flow(1) ($ in millions) ($ in millions) ($ in millions) +7% reported Adjusted Cash Receipts(1) growth +6% reported Adjusted EBITDA(1) growth +8% reported Adjusted Cash Flow(1) growth 637 $25m upfront $5
Slide 8: Impressive track record of strong top-line growth since IPO
Impressive track record of strong top-line(1) growth since IPO Adjusted Cash Receipts(1) (year/year growth) +18% +10% +9% YTD (prior to accelerated Biohaven payments) (prior to Biohaven) +11%(4) +9%(5) +15% +2% +12%(3) +24% +12% +7%(5) +37% +10% +9%(2) +3% +24%(2) +12%(2) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 9: Well positioned in evolving interest rate environment
Well positioned in evolving interest rate environment Existing capital structure Future investments Long duration, low-cost debt an underappreciated asset Higher risk-adjusted returns • Fixed weighted-average coupon of ~2.5% • Higher royalty return expectations in on $6.3bn of investment grade bonds
Slide 10: Continuing to create value in changing market environment
Continuing to create value in changing market environment Lower interest rates Higher interest rates (2012-2021) (2022-today) Returns above cost of capital remain attractive with spreads maintained ~7-8% Adstiladrin (2) ~6% (1) Cost of Debt: ~5 - 7% Cost of Debt: ~3 - 4.5% Cost of capital Value crea
Slide 11: PTC Partnership
PTC Partnership Chris Hite Executive Vice President Vice Chairman 11
Slide 12: Strengthening partnership with PTC on Roche's Evrysdi
Strengthening partnership with PTC on Roche’s Evrysdi • July 2020 – acquired 43% of PTC’s Evrysdi royalty(1) Evrysdi consensus sales evolution(7) ($ in millions) ▪ $650m upfront payment Consensus (current) $3.3bn ▪ Royalties cease when 2x return achieved ($1.3bn) 3,300 Consensus (July 2020) • Octobe
Slide 13: Portfolio Update
Portfolio Update Marshall Urist, MD, PhD Executive Vice President Head of Research & Investments 13
Slide 14: Growing synthetic royalty market highlighted by recent deals
Growing synthetic royalty market highlighted by recent deals Transaction size Up to $500 million(1) $150 million Marketer Ferring Ascendis Therapy Adstiladrin Skytrofa Royalty acquired 5.1%, increasing to 8.0% on U.S. sales(2) 9.15% on U.S. sales(3) Mechanism of action Human interferon alpha 2B (IFN
Slide 15: Unique ability to invest in multiple products in the same class
Unique ability to invest in multiple products in the same class Lipoprotein(a) Hematology Anti-TNFs olpasiran pelacarsen Cardiology Immunology Spinal Muscular Atrophy Multiple sclerosis Rare Disease Neurology Royalty Prostate cancer Pharma Migraine Oncology Diabetes HIV Schizophrenia Virology KarXT
Slide 16: Healthy mix of approved and development-stage therapies
Healthy mix of approved and development-stage therapies ~$22.7 billion in cumulative capital deployed Annual capital deployment ($ in billions) 100% 14% $14 $14.0 IPO 86% 62% average for approved $8.7 $0 0% 2012 2020 2021 2022 2023 2012 2020 2021 2022 2023 YTD YTD Approved Development-stage Approved
Slide 17: Increased transaction value given large funding opportunity
Increased transaction value given large funding opportunity June 2020 IPO $3.4 billion 3-year avg. announced value(1) 7 deals/year Larger capital $1.8 billion deployment leads 3-year avg. announced value(1) to greater value $1.6 billion 6 deals/year creation and 3-year avg. announced value(1) predic
Slide 18: Financial Results
Financial Results Terrance Coyne Executive Vice President Chief Financial Officer 18
Slide 19: Solid growth in total royalty receipts in Q3 2023
Solid growth in total royalty receipts in Q3 2023 Selected products Q3 2023 Royalty receipts(1) Growth $ in millions % year/year CF Franchise 238 14 87 -5 62 -16 58 36 54 8 47 3 27 27 17 18 16 64 15 n/a 11 70 (2) Other 105 -25 Total 737 5 CF: cystic fibrosis 1. Amounts may not add due to rounding. 1
Slide 20: Existing portfolio powered ~9% top-line growth despite LOEs
Existing portfolio powered ~9% top-line(1) growth despite LOEs Q3 2023 Adjusted Cash Receipts(1) ($ in millions) 0 ~+7% 0 ~+9% 597 Series A fixed payment(2) 49 17 637 (13) Drivers: Driver: 584 + Cystic Fibrosis + Spinraza + Trelegy + Erleada #2 + Evrysdi #1 + Tremfya Headwinds: - Imbruvica - Tysabri
Slide 21: Efficient model generates substantial cash flow to reinvest
Efficient model generates substantial cash flow to reinvest YoY % $ in millions (except per share amount) Q3 2023 change % ACR Comments Royalty receipts 737 5% Distributions to legacy non-controlling interests- royalty receipts -100 -6% Adjusted Cash Receipts(1) (non-GAAP) 637 7% “Top line” Payments
Slide 22: Significant financial capacity for future royalty acquisitions
Significant financial capacity for future royalty acquisitions Cash, cash equivalents & marketable securities ($ in millions) Adjusted EBITDA less • Financial capacity of ~$3.0bn with cash net interest = $2,021m generation and total leverage to ~4.0x • Projected cash and equivalents of ~$700- 2,124
Slide 23: Raising full-year 2023 guidance
Raising full-year 2023 guidance(1,2) August 8, 2023 November 8, 2023 Comments Adjusted Cash Receipts (non-GAAP) • Strong portfolio performance, partially offset by Imbruvica weakness excluding transactions announced $2,900m - $2,975m $2,950m - $3,000m • $475m Zavzpret milestone in Q1 2023 subsequent
Slide 24: Underlying growth in 2023 driven by existing portfolio
Underlying growth in 2023 driven by existing portfolio Biohaven payment added $509m in ACR(1) in 2022 Solid underlying ACR(1) growth expected in 2023 ($458m accelerated payment; $52m Series A fixed payment) ($ in millions) ($ in millions) ILLUSTRATIVE ~+9% to +11% 0 underlying growth $2,950-$3,000 Z
Slide 25: Conclusion
Conclusion Pablo Legorreta Founder & Chief Executive Officer 25
Slide 26: On track to meet or exceed 5-year capital deployment target
On track to meet or exceed 5-year capital deployment target Transactions announced in 2022 and 2023 5-year capital deployment target(1,2) (Announced value, since January 1, 2022) 12 $10-12bn target Approved 10 Announced value ($ in bn) 8 ~$7.3bn since Jan 2022 6 2022 2023 4 Development-stage aficamt
Slide 27: Confident in achieving our long-term financial outlook
Confident in achieving our long-term financial outlook(3) 2020-2023 2020-2025 2020-2030 ~$13bn in announced transactions 23 new therapies added to portfolio(1) 11%-14% 10%+ Adjusted Cash Receipts(2,4) CAGR Adjusted Cash Receipts(2,4) CAGR 39% increase in Adjusted Cash Receipts(2,3) Raised long-term
Slide 28: Footnotes
Footnotes 1) To aid in comparability, quarter-over-quarter growth in 2020 is calculated based on pro forma 2019 results, which adjusts certain cash flow line items as if Royalty Pharma’s Reorganization Transactions (as described in the Company’s final prospectus filed with the SEC on June 17, 2020 (
Slide 29: Appendix
Appendix ROYALTY PHARMA 29
Slide 30: Distributions to legacy non-controlling interests (NCI)
Distributions to legacy non-controlling interests (NCI) Products Q3 2023 NCI as a % of royalty receipts Cystic fibrosis franchise(1) 17.6% • Royalty Pharma includes several non-controlling Tysabri 17.6% interests in our financial statements. Imbruvica 17.6% • The largest of these impacting the non-G
Slide 31: Important milestones expected over the next year
Important milestones expected over the next year 2023 2024 Select recent and expected upcoming events Q3 Q4 Cabometyx, Tecentriq Phase 3 results for mCRPC (CONTACT-02)(1) PFS met, positive trend of OS Cabometyx, Opdivo, Yervoy Phase 3 OS results for 1L renal cell carcinoma (COSMIC 313)(1) Continuing
Slide 32: Potential royalties on ~40 projects in late-stage development
Potential royalties on ~40 projects in late-stage development Phase 2 Phase 3 Registration New molecular entity MK-8189 trontinemab aficamten pelacarsen olpasiran KarXT Schizophrenia Alzheimer’s disease oHCM Cardiovascular disease Cardiovascular disease Schizophrenia tulmimetostat (CPI-0209) pelabre
Slide 33: Illustrative marginal cost of debt over time
Illustrative marginal cost of debt over time BBB corporate index yield as a proxy for Royalty Pharma BBB Index (1) 2022-Date: ~5 - 7% 7% Estimated Marginal Cost of Debt 9/2/2020: Refinanced existing term loan debt with $6.0bn senior unsecured notes carrying a weighted average coupon of 2.1% (2.4% yi