Royalty Pharma Plc · NASDAQ:RPRX
Royalty Pharma — Investor Presentation (November 2024)
68 slides from Royalty Pharma's investor presentation, November 2024
Slide 1: Royalty Pharma
ROYALTY PHARMA
Slide 2: Corporate Presentation November 2024
Corporate Presentation November 2024
Slide 3: Forward looking statements & Non-GAAP Measures
Forward looking statements & Non-GAAP Measures 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 does not purpor
Slide 4: Our vision Our mission
Our vision Our mission To be the leading partner By collaborating to funding innovation accelerate innovation, in life sciences we enable our partners to transform patient lives 4
Slide 5: Royalty Pharma: A unique way to invest in biopharma
Royalty Pharma: A unique way to invest in biopharma (Nasdaq: RPRX) Market leader and pioneer Compounding growth through value creation 27 ~60% 10%+ Low-teens years of compounding value share of pharmaceutical top-line CAGR expected % average unlevered IRR over royalty market(1) over this decade(2) m
Slide 6: Deep network across the biopharma ecosystem
Deep network across the biopharma ecosystem Leading provider of funding solutions for life sciences innovation Academic institutions Non-profits Small / mid-cap biotechnology Global pharmaceuticals 6
Slide 7: Clear strategic plan to drive robust and value-enhancing growth
Clear strategic plan to drive robust and value-enhancing growth 1 2 3 Existing royalties Synthetic royalties / Launch & R&D funding development capital(1) Acquire existing royalties on market- Acquire newly-created royalties on Additional funding in exchange leading or late-stage development approve
Slide 8: Advancing our partners' core mission with win-win solutions
Advancing our partners’ core mission with win-win solutions Structure Potential benefits to partner • Diversification of asset portfolio Existing • Non-dilutive funding for business growth and investment royalties • Upfront capital today in exchange for a long-dated stream of payments • Funding for
Slide 9: Simple and efficient business model focused on cash flow
Simple and efficient business model focused on cash flow Funding to Biopharma partners Return of capital New royalty (Dividends and share Sales of leading repurchases) therapies acquisitions Portfolio Cash generated % of sales Receipts(1) for deployment (“top-line”) Diversified portfolio of royaltie
Slide 10: Efficient model generates substantial cash flow to reinvest
Efficient model generates substantial cash flow to reinvest $ in millions Q4 2023 FY 2023 % PR Commentary Royalty Receipts(1) 65 2,449 +8% YoY Recurring cash inflows of our royalty portfolio Milestones & other contractual receipts 599 +15% YoY More variable cash receipts Portfolio Receipts 3,049 +9%
Slide 11: Track record of delivering strong growth
Track record of delivering strong growth Portfolio Receipts(1) Capital Deployment (annual average) ~2.9x +24% $3.05bn $2.04bn $1.65bn $1.05bn 2012 2023 2012-2017 2018-2023 1. Portfolio Receipts for periods 2020 and earlier are pro forma for current non-controlling interests. See slide 68 for additio
Slide 12: Unique business model powering strong growth since IPO
Unique business model powering strong growth since IPO Royalty Receipts (year/year growth; $ in millions) +14% YTD +15% +14% $732 +9% +10% $705 +6% +11% +16% +9% +12% $637 $651 $616 $605 +14% +10% $584 $593 +7% $581 +11% +11% +35% $545 +12% +4% $537 $530 +19% $500 $511 $472 $482 $462 $445 -7% $371 Q
Slide 13: Innovative business model supports biopharma ecosystem
Innovative business model supports biopharma ecosystem Fund Structure Ongoing Business Ongoing Business Public Company (IPO) in June 2020 1996 to 2003 2004 to 2011 2012 to 2020 Inaugural Bond Issuance in August 2020(1) 1.0 2.0 3.0 4.0 • Funded only with equity • Lowered cost of capital with • Develo
Slide 14: Strong competitive moat in biopharma royalty funding
Strong competitive moat in biopharma royalty funding Business model Scale Platform • Publicly traded company • Portfolio >45 products • Long-tenured team • Long royalty durations • Large investment capacity • Singular biopharma focus • ~7-8% cost of capital • Deep capital markets access • Long colla
Slide 15: Simple business model drives compounding growth
Simple business model drives compounding growth Capital deployment Returns $10-$12 billion expected capital Returns Consistent attractive returns deployment, 2022-2026 meaningfully above cost of capital Mix of approved and development- Targeting low teens blended stage therapies with strong PoC unle
Slide 16: Significant accomplishments since IPO
Significant accomplishments since IPO 2020 2023 Increase Portfolio Receipts(1) $1.8bn $3.05bn ~69% Growth 2020-2025 Portfolio Receipts CAGR outlook(2) 6-9% 11-14% >65% Announced deal value (prior 3 years) $3.4bn $10.2bn ~3.0x Capital deployment 5-year capital deployment target(3) >$7bn $10-12bn >55%
Slide 17: Industry fragmentation and complexity drive royalty creation
Industry fragmentation and complexity drive royalty creation Academia / non-profit e Lic ns en (>5,000 labs) Lice se ies Ro alt yal Roy ties Large Pharma Biotechs Synthetic Synthetic royalties, royalties (~25 companies) (>8,000 companies) L&D capital Royalties L ic e nse & Partner, M&A L&D: launch &
Slide 18: Significant opportunity to fund biopharma innovation
Significant opportunity to fund biopharma innovation Biopharma ecosystem cumulative R&D spend over next decade Global pharma market(2) >$1 trillion(1) by Third-party royalties academic, Third-party royalties non-profits >$2 trillion Biopharma revenues (2033e) >$2 trillion >$1 trillion by by profitab
Slide 19: Strong momentum for biopharma royalty market
Strong momentum for biopharma royalty market Dollar value of transactions(1) Biopharma royalty market share ($ in billions) (2023) >12x Other royalty buyers 7.4 6.3 34% 5.4 5.1 4.5 4.2 #2 royalty buyer 13% 53% 2.2 1.5 0.6 2015 2016 2017 2018 2019 2020 2021 2022 2023 Royalty Pharma maintained its lea
Slide 20: Royalty Pharma dominates large royalty transactions
Royalty Pharma dominates large royalty transactions Royalty transactions ≥$500m Market share of deals ≥$500m (announced value; $ in millions) (by count) Lead product Acquiror Post-IPO Transaction size Trikafta(1) 3,352 Tysabri 2,850 Trelegy(3) 1,653 Tremfya(4) 1,575 Evrysdi 1,500 Keytruda Other 1,29
Slide 21: Royalty Pharma is the leader in royalty transactions
Royalty Pharma is the leader in royalty transactions Biopharma royalty market size and share by transaction value, 2012-2024 YTD(1) $17bn $11bn $25bn 10% 7% 9% 83% 81% 21% 53% 52% 4% 26% 21% <$250m $250-500m >$500m Royalty Pharma #2 royalty buyer Other royalty buyer Royalty Pharma has maintained a m
Slide 22: Long duration portfolio consistently replenished
Long duration portfolio consistently replenished Duration of portfolio Duration of royalties acquired Duration of portfolio (At IPO) 2020-2023 (Today) (by present value) (by present value) (by present value) Beyond Beyond Beyond 2030 2030 2030 ~70% + ~95% = >90% ~13 year weighted average royalty por
Slide 23: Strong early performance from recent transactions
Strong early performance from recent transactions(1) Percent change in 2025 consensus sales(2) since acquisition Development-stage therapies (Transactions since 2020; approved therapies) (Transactions since 2020; select events) Therapy Indication Event Status 85% aficamten oHCM Phase 3 results 38% s
Slide 24: Industry leading exposure to blockbuster products
Industry leading exposure to blockbuster products ~1.7x 15 9 Sales of $1-3bn(1) Sales >$3bn(1) Biopharma peers (median) Portfolio includes premier products and franchises backed by strong support from marketers Peers consist of Eli Lilly, Johnson & Johnson, Merck, Pfizer, AbbVie, Bristol Myers Squib
Slide 25: 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 Neuroscience frexalimab Royalty Prostate cancer Pharma Migraine Oncology Diabetes HIV Schizophrenia V
Slide 26: Repeat transactions highlight value of Royalty Pharma partnership
Repeat transactions highlight value of Royalty Pharma partnership , Voranigo, aficamten, omecamtiv, CK-586 $300m total funding $1.16bn total funding Up to $1.13bn total funding Up to $2.15bn total funding 2x 2023, 2024 2x 2020, 2024 3x 2017, 2022, 2024 3x 2020, 2023, 2024 Fumapharm , BCX10013 , Zavz
Slide 27: Deploying substantial capital with repeat partners
Deploying substantial capital with repeat partners Multiple benefits to long-term partnerships Capital deployed with repeat partners (~$15bn of announced transaction value since 2020) Speed of Information execution edge Ability to transact Potentially in-depth quickly given strong access to product
Slide 28: Participating in most important waves of biopharma innovation
Participating in most important waves of biopharma innovation frexalimab - MS pelacarsen/olpasiran - CV disease Next exciting wave Cobenfy - schizophrenia of biopharma innovation Voranigo - brain cancer aficamten - oHCM trontinemab - AD Trikafta - cystic fibrosis Xtandi Tremfya - immunology Trikafta
Slide 29: Synthetic royalties are an attractive funding modality
Synthetic royalties are an attractive funding modality Benefits to biopharma partner Royalty Debt Equity Non-dilutive to equity / preserves equity upside Customized and tailored funding solutions Independent validation of therapy’s value to patients Share risk of development and/or commercialization
Slide 30: Synthetic royalties are a rapidly growing funding modality
Synthetic royalties are a rapidly growing funding modality >$280bn biopharma industry funding(1,2) Record year for RP synthetic royalty transactions (2019-2023) (Announced value)(3) >2x Convertible Debt Existing royalties Synthetic Royalties $925m (3%) Licensing deals (upfront) $775m $664m $375m $29
Slide 31: Synthetic royalty market has room for significant expansion
Synthetic royalty market has room for significant expansion Biopharma funding sources(1,2) Synthetic royalty opportunity (2019 to 2023) (Cumulative next 5 years(3)) >$470bn >$280bn Opportunity to capture significant share of this growing market ~$38bn ~$19bn ~3% ~$8bn penetration Total capital Synth
Slide 32: Providing needed capital for M&A transactions
Providing needed capital for M&A transactions Mid-cap M&A Large pharma M&A Divestitures Cash flow constraints historically Non-strategic assets at target Increasing FTC scrutiny of M&A Challenge have meant equity is the primary companies may significantly transactions may reduce funding source incre
Slide 33: Emerging funding paradigm for successful biotechs
Emerging funding paradigm for successful biotechs Immunomedics raised ~$1.9bn in capital(1) Biohaven raised ~$3.2bn in capital(2) Other Royalty Pharma Pfizer partnership Royalty Pharma Partnership Partnership 23% 13% 16% 26% Debt 4% Debt 23% 60% 35% Equity Equity Acquired by Gilead for ~$21bn Acquir
Slide 34: Proprietary sourcing provides competitive advantage
Proprietary sourcing provides competitive advantage Source of deals(1) Network of deep relationships 32% 60% 16% Track record of “win-win” outcomes 23% 51% 18% Scale advantages Pharma M&A Bilateral Limited process(2) Auction Strong record of value-enhancing acquisitions Majority of Royalty Pharma tr
Slide 35: Unique Research & Investments team and process
Unique Research & Investments team and process Pioneering the royalty One Royalty Pharma team at the Open business model: tailored market for 25+ years center of every transaction solutions and true partnerships Innovating new funding solutions, Long-tenured expert team Proud of partnerships that gr
Slide 36: Our framework focuses on key product success factors
Our framework focuses on key product success factors Strong Significant impact Conviction in probability of Mission and Strong marketer and scientific on patients and/or clinical and regulatory success execution-oriented global commercial rationale caregivers for pre-approval programs management tea
Slide 37: One Royalty Pharma team at the center of every transaction
One Royalty Pharma team at the center of every transaction Traditional business development Royalty Pharma process Business Corporate • Executive leadership R&D Commercial Legal Royalty Pharma • Research & Investments(1) Development M&A Deal Team • Legal Identify & Structure & Identify & Structure &
Slide 38: Extensive due diligence process sharpened over decades
Extensive due diligence process sharpened over decades Clinical Regulatory, IP, Commercial Contracts, Manufacturing Governance Physician diligence Non-clinical Intellectual property Claims analysis Market sizing Transactional • US/EU/Japan • Pharmacokinetics • US/EU/Japan and other • Patient diagnos
Slide 39: Leveraging the best internal and external expertise available
Leveraging the best internal and external expertise available Internal team(1) External support (# of employees) (# of experts) 4 86 9 49 aficamten Amplifying our team with 7 ~18x 87 the best external advice average available to drive high multiplier conviction investments 4 77 BCX9930 Paused projec
Slide 40: Our ambitious vision for Strategy & Analytics
Our ambitious vision for Strategy & Analytics Strategic search and evaluation Data and analytics Development Therapeutic area Monitoring Clinical trial meta- Medical claims Real world Sales & marketing Payor & formulary landscape scanning mapping emerging science analysis and design analysis evidenc
Slide 41: Announced $4.0 billion of transactions in 2023
Announced $4.0 billion of transactions in 2023 2023 Royalty Pharma investment activity >400 initial reviews 126 CDAs signed 93 in-depth reviews 47 proposals submitted Executed 7 transactions for $4.0bn(1) Maintained strong financial discipline: ~2% of initial reviews resulted in an acquired royalty
Slide 42: Strong Royalty Pharma pipeline trends given market backdrop
Strong Royalty Pharma pipeline trends given market backdrop Opportunity set increasing Robust royalty acquisition activity In-depth reviews Announced transaction value ($ in bn) +133% ~+100% 93 $4.0 $3.4 70 61 $2.9 50 $2.4 40 $2.0 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Pre-IPO Post-IPO 42
Slide 43: Healthy mix of approved and development-stage investments
Healthy mix of approved and development-stage investments Annual Capital Deployment ~$24.8 billion in cumulative Capital Deployment (since 2012 – 2024 YTD) 100% 65% 63%, ~$15.6bn 37%,~$9.2bn 37% ,~$8.3bn Approved products Development-stage Development-stage therapies therapies 35% 0% 2012 2020 2021
Slide 44: Strong track record of investing in development-stage therapies
Strong track record of investing in development-stage therapies Capital Deployment on development-stage therapies(1, 2) (since 2012) • Invested ~$9bn in development-stage Approved since acquisition therapies since 2012 ▪ Require strong proof of concept data 10% ▪ Broad landscape of opportunities Not
Slide 45: Significant growth and diversity of development-stage pipeline
Significant growth and diversity of development-stage pipeline Pipeline evolution since IPO Strong diversity of pipeline (by number of therapies) (by number of therapies) 50x Immunology 15 Cardiology Rare disease 9 Cancer 3 Psychiatry Neurology June 2020 December 2021 Current 45
Slide 46: Unique and powerful approach to development-stage investing
Unique and powerful approach to development-stage investing Product selection Deal structure Post proof of concept with strong evidence of Risk mitigation strategies through clinical & regulatory clinical efficacy and safety milestones, royalty tiering, option periods, etc. Approach Partnering direc
Slide 47: Multiple important events expected over next 12 months
Multiple important events expected over next 12 months 2024 2025 Select recent and expected upcoming events Q3 Q4 trontinemab Phase 1/2b results for Alzheimer’s disease(1) Trodelvy Phase 3 results for 1L metastatic triple-negative breast cancer (ASCENT-03)(2) Clinical TEV-‘749 Phase 3 safety results
Slide 48: Big products with world class marketers and large royalties
Big products with world class marketers and large royalties Potential first- or Potential peak sales Potential peak Expected Therapy Lead indication Marketer best-in-class (non risk adjusted)(1) royalties launch year(2) frexalimab multiple sclerosis Sanofi >$5bn >$400m 2028 olpasiran cardiovascular
Slide 49: Capital allocation strategy to drive shareholder value creation
Capital allocation strategy to drive shareholder value creation $20 billion in projected 2022-2026 capacity to reinvest and return to shareholders Royalty acquisitions Share repurchases $10-$12bn 5-year target(1) Up to $1bn (announced March 2023) • Announced ~$10.2bn since 2022 • Repurchased ~16m sh
Slide 50: Consistently attractive returns amplified by conservative leverage
Consistently attractive returns amplified by conservative leverage Royalty Pharma target returns Leverage benefit to target returns 25 High teens to low 20s % 20 Low teens Benefit of Teens % blended % conservative Low teens % 15 leverage average returns(1) High-single to low-double-digit % 10 Roughl
Slide 51: What does $1bn of investment mean for future top-line?
What does $1bn of investment mean for future top-line? Representative annual Portfolio Receipts(1,2) (“top-line”) from $1bn of investment - based on blend of historical acquisitions (As of May 2022 Investor Day) $300m Period of accelerated growth Period of reduced growth in latter- during product la
Slide 52: CF to remain important contributor regardless of triple scenario
CF to remain important contributor regardless of triple scenario See Appendix slide 60 for details Triple combination 2030 franchise sales Scenarios Components blended royalty(1) (As of August 8, 2023) 2030 PR from CF(3) Duration(4) Status quo elexacaftor ivacaftor tezacaftor ~9% ~$11.5bn ~$900m 203
Slide 53: Long-term growth powered by consistent portfolio refreshment
Long-term growth powered by consistent portfolio refreshment Portfolio Receipts evolution through 2030(1) Continued execution on strategy (2030 growth target provided at May 2022 Investor Day) Power of business model 10%+ • Transactions since 2020 expected to add >$1.2bn in PR by 2025 0 CAGR Future
Slide 54: 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 ~3.1% • Higher royalty return expectations in on $7.8bn of investment grade bonds
Slide 55: 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 56: Maximizing industry strengths and minimizing challenges
Maximizing industry strengths and minimizing challenges Maximizing • Exposure to transformative therapies • Revenue and profit diversification • Therapeutic area breadth • Long weighted average portfolio duration Minimizing • Consistent and sustainable growth • Management team continuity • Early-sta
Slide 57: A unique way to invest in biopharma
A unique way to invest in biopharma Large biopharma(1) Growth Maximizing 2020-2030 top-line(2) CAGR 10% or more(2) 6%(3) Scale Number of blockbusters(4) 15 9 Cost of capital Estimated WACC ~7-8% ~7-8% Post proof-of-concept to Pre-clinical to Risk Stage of development approved approved Return Histori
Slide 58: A simple investment proposition in a highly complex industry
A simple investment proposition in a highly complex industry Successful biopharma investing is extremely complex offers a simple solution Efficient business of collecting share of top- Drug line revenues on leading products pricing Competition, Legal innovation Strong track record of product selecti
Slide 59: Appendix
Appendix ROYALTY PHARMA
Slide 60: Detailed calculation assumptions for CF triple scenarios
Detailed calculation assumptions for CF triple scenarios 2030 franchise sales Scenarios Product Blended royalty(1) Sales split (As of August 8, 2023) Royalty Receipts NCI % 2030 PR from CF(3) Status quo (Trikafta only) ~9% 100% ~$11.5bn(2) ~$1,050m (13%) ~$900m Trikafta ~9% 50% New CF Triple ~8% 50%
Slide 61: Biohaven partnership blossoms with additional transactions
Biohaven partnership blossoms with additional transactions Date June 2018(1) December 2018 March 2019(2) August 2020(3) Funding type Royalty and common equity Common equity Preferred equity Royalty and Launch capital Support Nurtec ODT Phase 3 Support Nurtec ODT Priority review voucher to Pipeline f
Slide 62: Nurtec ODT – one of the strongest recent launches in biopharma
Nurtec ODT – one of the strongest recent launches in biopharma March 2018 December 2018 February 2020 March 2020 May 2021 November 2021 May 2022 Positive pivotal Nurtec ODT Positive Nurtec ODT long- FDA approval of Nurtec ODT Positive Phase 3 Nurtec ODT FDA approval of Nurtec ODT Biohaven Ex-U.S. Pf
Slide 63: Biohaven acquisition accelerates Royalty Pharma returns
Biohaven acquisition accelerates Royalty Pharma returns Strong returns for Royalty Pharma shareholders • Pfizer, a strong global marketer, is positioned to maximize ~1.9x cash return the potential of Nurtec ODT and Zavzpret >$6bn year-to-date peak ▪ Doubling number of sales representatives detailing
Slide 64: Potential royalties on >40 projects in late-stage development
Potential royalties on >40 projects in late-stage development Phase 2 Phase 3 Registration CK-586 trontinemab omecamtiv mecarbil pelacarsen olpasiran Vanzacaftor/tezacaftor/deutivacaftor Initial indication Heart failure Alzheimer’s disease Heart failure Cardiovascular disease Cardiovascular disease
Slide 65: Updates to non-GAAP measures
Updates to non-GAAP measures Previous New Comments Calculation of Portfolio Receipts will result in the same total as under Maximizing Adjusted Cash Receipts Portfolio Receipts previous presentation of Adjusted Cash Receipts (Non-GAAP) Individual royalties to be reported net of legacy non-controllin
Slide 66: Royalty Pharma Liquidity Summary
Royalty Pharma Liquidity Summary $ in millions FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 (PF)(1) Portfolio Receipts 3,049 2,789 2,129 1,800 1,776 Payments for operating and professional costs (243) (223) (185) (180) (145) Adjusted EBITDA (non-GAAP) 2,806 2,566 1,944 1,621 1,631 Interest (paid)/receive
Slide 67: Royalty Pharma GAAP to non-GAAP reconciliations
Royalty Pharma GAAP to non-GAAP reconciliations $ in millions FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 (PF)(1) Net cash provided by operating activities (GAAP) 2,988 2,144 2,018 2,035 1,673 Adjustments: Proceeds from available for sales debt securities 1 542 63 3 150 Distributions from equity method
Slide 68: Footnotes
Footnotes (1) To aid in comparability, 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 (“Prospectus”) and it
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