Core Viewpoint - Royalty Pharma plc has received overwhelming shareholder approval (99.9%) for its transition from an external management model to an integrated corporate structure, marking a significant milestone for the company [1][4]. Financial Impact - The internalization transaction is expected to generate cash savings exceeding $100 million in 2026 and over $175 million in 2030, with cumulative savings projected to exceed $1.6 billion over the next ten years [3][8]. - The total transaction value is approximately $1.1 billion, which includes 24.5 million shares of Royalty Pharma equity, $100 million in cash, and the assumption of $380 million in existing Manager debt [5][6]. Corporate Governance and Structure - The internalization is anticipated to enhance corporate governance, increase transparency, and align the leadership team more closely with shareholder interests [2][3]. - Following the transaction, all employees of the external Manager will become direct employees of Royalty Pharma, simplifying the corporate structure [7][8]. Shareholder Benefits - The acquisition is expected to strengthen shareholder alignment and ensure management continuity, with shares received by management vesting over 5 to 9 years [3][9]. - The internalization may also expand Royalty Pharma's shareholder base and enhance the company's valuation over time [3][8]. Background Information - Royalty Pharma has operated under an external management model since its founding in 1996, paying quarterly fees to the Manager based on portfolio receipts and security investments [7].

Core Viewpoint - Royalty Pharma plc has demonstrated strong performance with double-digit sales growth, marking a positive start to the earnings season for the company [1]. Group 1: Financial Performance - The company reported positive results for Q4 and FY 2024, indicating robust financial health and growth potential [1]. Group 2: Market Position - Royalty Pharma is actively engaging with buy-side hedge professionals who focus on fundamental, income-oriented, long-term analysis across various sectors in developed markets [1].

Core Insights - Royalty Pharma reported revenue of $839 million for the quarter ended March 2025, reflecting a 17% increase year-over-year and surpassing the Zacks Consensus Estimate of $793.58 million by 5.72% [1] - The company's EPS for the quarter was $1.06, up from $0.98 in the same quarter last year, also exceeding the consensus EPS estimate of $0.99 by 7.07% [1] Revenue Performance - The total portfolio receipts from royalty products amounted to $788 million, exceeding the average estimate of $777.88 million, representing an 11.9% year-over-year increase [4] - Key product performances included: - Cystic fibrosis franchise: $250 million, up 14.4% year-over-year, exceeding the estimate of $234.18 million [4] - Xtandi: $52 million, a 26.8% increase year-over-year, surpassing the estimate of $49.97 million [4] - Trelegy: $85 million, reflecting a 20.4% year-over-year increase, slightly above the estimate of $84.96 million [4] - Evrysdi: $53 million, a 17.9% increase year-over-year, exceeding the estimate of $51.98 million [4] Stock Performance - Over the past month, Royalty Pharma's shares returned +1.5%, while the Zacks S&P 500 composite increased by +11.3%, indicating underperformance relative to the broader market [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the market in the near term [3]

Financial Data and Key Metrics Changes - Royalty Pharma reported a 12% growth in royalty receipts, reflecting strong performance in a diversified portfolio [6][20] - Total portfolio receipts grew by 17% to $839 million, driven by milestone payments and strong underlying performance [20][23] - The company repurchased $723 million of its shares in Q1 2025, part of a $2 billion share repurchase plan for the year [7][25] Business Line Data and Key Metrics Changes - The cystic fibrosis franchise, including Trelegy and Xtandi, was a key driver of growth in royalty receipts [20] - Milestone and other contractual receipts amounted to $51 million, including a significant milestone payment of $27 million related to Air Supra [21] Market Data and Key Metrics Changes - The company expects portfolio receipts for 2025 to be between $2.975 billion and $3.125 billion, reflecting a growth rate of 6% to 12% [9][28] - The weakening U.S. Dollar is expected to provide a tailwind to revenue growth [9] Company Strategy and Development Direction - Royalty Pharma is focused on being a leading partner in funding innovation in life sciences, with a dynamic capital allocation framework to address share price discounts and pursue attractive royalty acquisitions [7][26] - The company is expanding its development stage pipeline, including a new collaboration with Biogen for litafilimab in lupus, which has significant commercial potential [8][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong financial performance in 2025, supported by a robust portfolio and strategic capital allocation [33] - The company anticipates continued growth in the biopharma royalties market, driven by the need for alternative funding sources in the biotech sector [50] Other Important Information - The company raised its full-year 2025 guidance, reflecting strong portfolio performance and favorable currency effects [28] - Royalty Pharma maintains significant financial capacity, with cash and equivalents of approximately $1.1 billion at the end of Q1 2025 [24] Q&A Session Summary Question: Impact of regulatory and policy uncertainties on deal-making - Management noted that while there is policy uncertainty, it has not significantly impacted the deal-making environment, and the pipeline remains robust [41][42] Question: Updates on Vertex cystic fibrosis portfolio negotiations - No updates were provided on the Vertex situation, but management remains confident in their position regarding KALYDECO [43] Question: Potential impact of tariffs on royalties - Management does not expect tariffs to have a meaningful impact on royalties, as tariffs are typically paid upstream of the royalty-bearing sale [32][52] Question: Opportunities in academia and nonprofits due to policy changes - Management highlighted the urgent need for alternative funding in the biotech sector, presenting an opportunity for Royalty Pharma to step in [50] Question: Clinical benefit of echopipam and market parallels - Management emphasized the lack of new options for Tourette's patients and the potential for echopipam to fill this gap, drawing parallels to the tardive dyskinesia market [78] Question: Timeline for potential dispute resolution with Vertex - Management could not comment on the timing of any potential dispute with Vertex [80]

Core Insights - Royalty Pharma (RPRX) reported quarterly earnings of $1.06 per share, exceeding the Zacks Consensus Estimate of $0.99 per share, and showing an increase from $0.98 per share a year ago, resulting in an earnings surprise of 7.07% [1] - The company achieved revenues of $839 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 5.72%, and up from $717 million in the same quarter last year [2] - Royalty Pharma's stock has increased by approximately 28.4% since the beginning of the year, contrasting with a decline of 4.3% in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.07, with expected revenues of $665.88 million, and for the current fiscal year, the EPS estimate is $4.44 on revenues of $2.97 billion [7] - The estimate revisions trend for Royalty Pharma is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Medical - Biomedical and Genetics industry, to which Royalty Pharma belongs, is currently ranked in the top 33% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - The company reported a 12% growth in royalty receipts, reflecting strong performance in a diversified portfolio [5][19] - Portfolio receipts grew by 17% to $839 million, driven by milestone payments and strong underlying performance [20][22] - The company repurchased $723 million of its shares in the first quarter, part of a $2 billion share repurchase plan for 2025 [6][24] Business Line Data and Key Metrics Changes - The cystic fibrosis franchise, including Trelegy and Xtandi, was a key driver of growth in royalty receipts [19] - Milestone and other contractual receipts amounted to $51 million, including a significant milestone payment of $27 million [20] Market Data and Key Metrics Changes - The company expects portfolio receipts for 2025 to be between $2.975 billion and $3.125 billion, reflecting growth of 6% to 12% [8][27] - The weakening of the U.S. Dollar is expected to provide a tailwind to revenue growth [8] Company Strategy and Development Direction - The company is focused on a dynamic capital allocation framework, balancing share repurchases with attractive royalty acquisitions [6][24] - A new Phase III R&D funding collaboration with Biogen for latifilumab in lupus was announced, indicating a focus on high-potential therapies [7][10] - The company aims to leverage its unique business model to drive shareholder value in the growing biopharma market [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong financial performance in 2025, citing a robust pipeline and effective capital allocation [32][34] - The company does not expect significant impacts from tariffs on its royalties, as tariffs are typically incurred upstream of royalty-bearing sales [31][50] Other Important Information - The company raised its full-year 2025 guidance, reflecting strong portfolio performance and favorable currency effects [8][27] - The company maintains significant financial capacity with cash and equivalents close to $1.1 billion and investment-grade debt [22][23] Q&A Session Questions and Answers Question: Impact of regulatory and policy uncertainties on deal-making - Management noted that while there is policy uncertainty, it has not significantly impacted their opportunity set, and the investment environment remains strong [39][40] Question: Updates on Vertex cystic fibrosis portfolio negotiations - No updates were provided on the Vertex situation, but management remains confident in their position regarding KALYDECO [41] Question: Potential for Royalty Pharma to step in as a funding source - Management highlighted the significant capital needs of the biotech sector, presenting an opportunity for Royalty Pharma to provide necessary funding [48][49] Question: Clinical benefit of echopipam and market parallels - Management emphasized the unmet need in the Tourette syndrome market and the potential for echopipam to fill this gap, while also acknowledging the TD market as an interesting comparison [77] Question: Timing for potential dispute with Vertex - Management could not comment on the timing of any potential dispute with Vertex [79]

Financial Performance - Total income and other revenues for Q1 2025 were $568.247 million, a slight increase of $269 thousand or 0.0% compared to Q1 2024[170]. - Consolidated net income for Q1 2025 was $433.433 million, a significant increase of $437.706 million compared to a net loss of $4.273 million in Q1 2024[170]. - Net income attributable to Royalty Pharma plc was $238.349 million in Q1 2025, a substantial increase of $233.571 million compared to $4.778 million in Q1 2024[170]. - Adjusted EBITDA for Q1 2025 was $737.6 million, an increase from $656.5 million in Q1 2024[215]. - Portfolio Cash Flow for Q1 2025 was $610.8 million, an increase of 4.0% compared to $583.9 million in Q1 2024[216]. - The company reported a net loss of $61.5 million for Q1 2025, with operating expenses of $81.4 million[233]. Revenue Sources - Royalty Pharma's portfolio includes royalties on over 35 commercial products, contributing significantly to its revenue streams[138]. - Income from financial royalty assets decreased by $2.056 million or 0.4% to $539.490 million in Q1 2025, primarily due to a decline in the cystic fibrosis franchise[171]. - Portfolio Receipts for Q1 2025 totaled $839.3 million, a 17.1% increase from $717.0 million in Q1 2024[188]. - Royalty Receipts increased by $83.8 million to $788.3 million in Q1 2025, reflecting an 11.9% growth compared to $704.5 million in Q1 2024[188]. - Milestones and other contractual receipts surged by $38.5 million to $51.0 million in Q1 2025, marking a 308.7% increase from $12.5 million in Q1 2024[188]. - The cystic fibrosis franchise generated $249.7 million in Q1 2025, up 14.3% from $218.5 million in Q1 2024, driven by strong global demand for Trikafta/Kaftrio[188][190]. - Trelegy royalties rose by $14.7 million to $85.2 million in Q1 2025, a 20.8% increase from $70.6 million in Q1 2024, due to strong volume growth[188][190]. - Xtandi royalties increased by $11.5 million to $52.5 million in Q1 2025, reflecting a 28.0% growth from $41.0 million in Q1 2024, driven by demand from the nmCSPC indication[188][191]. - Spinraza royalties increased significantly by $6.3 million to $12.9 million in Q1 2025, a 94.7% increase from $6.6 million in Q1 2024[188][191]. Expenses and Costs - General and administrative expenses primarily include Operating and Personnel Payments, legal expenses, and share-based compensation[162]. - General and administrative expenses rose by $53.1 million or 92.0% in Q1 2025, driven by higher Operating and Personnel Payments[176]. - R&D funding expenses consist of payments made to acquire royalties or milestones on product candidates, which can be upfront or milestone-based[161]. - R&D funding expense increased by $50.0 million in Q1 2025, related to a payment to Biogen for litifilimab[175]. - Interest expense increased by $21.0 million or 47.5% in Q1 2025, primarily due to the issuance of $1.5 billion of senior unsecured notes[178]. - The provision for changes in expected cash flows from financial royalty assets was a loss of $127.140 million in Q1 2025, compared to a provision income of $583.600 million in Q1 2024[173][174]. Acquisitions and Investments - The company plans to acquire its Manager for approximately $1.1 billion, which is expected to reduce costs and enhance economic returns[144]. - The acquisition of the remaining 34% interest in Royalty Pharma Collection Trust was completed in December 2023[141]. - The company expects the acquisition of its Manager to close in the second quarter of 2025, pending shareholder approval[144]. - The company invested $101.3 million in royalties, milestones, and other contractual receipts during Q1 2025, continuing its strategy of acquiring new royalty assets[197]. - The company expects to continue making acquisitions in the ordinary course of business to support long-term growth in Royalty Receipts[196]. - The company acquired a synthetic royalty on Niktimvo for an upfront payment of $350 million, which is approved for chronic graft-versus-host disease treatment[198]. Cash Flow and Financing - The company generated $596.1 million in net cash from operating activities for Q1 2025, a decrease of $68.6 million compared to $664.6 million in Q1 2024[199][205]. - As of March 31, 2025, the company had $1.1 billion in cash and cash equivalents, up from $929 million as of December 31, 2024[208]. - The company has $7.8 billion in outstanding senior unsecured notes as of March 31, 2025, with a total debt carrying value of $7.6 billion[200][209]. - Cash provided by investing activities in Q1 2025 was $503.9 million, compared to cash used of $86.7 million in Q1 2024, primarily driven by the sale of MorphoSys Development Funding Bonds[204][206]. - Cash used in financing activities increased by $729.3 million in Q1 2025, primarily due to repurchases of Class A ordinary shares[207]. - The company has access to $1.8 billion under its Revolving Credit Facility as of March 31, 2025[211]. - The company paid dividends of $95.4 million in Q1 2025, compared to $93.8 million in Q1 2024[220]. - In Q1 2025, the company repurchased 22.7 million shares at a cost of approximately $723.1 million, with $2.3 billion remaining under the new share repurchase program[221]. Strategic Collaborations - The company expanded its strategic funding collaboration with Cytokinetics to provide up to $575 million, including $250 million in upfront payments[203]. - The company has a long-term funding arrangement with Cytokinetics totaling up to $525 million, with $75 million drawn in March 2025[223]. - As of March 31, 2025, the company had $350 million remaining available under the Cytokinetics Funding Commitments[223]. Future Obligations - Future principal payments under the Notes total $7.8 billion, with interest payments amounting to $3.5 billion over the next five years[227]. - As of March 31, 2025, committed capital requirements for R&D activities were approximately $216.3 million[225].

3 Royalty Pharma plc Q1 2025 Financial Results May 8, 2025 2 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 purport to be complete or to contain all of the information you may desire. Statements contained herein are made as of the date of this presentation unless s ...

Financial Performance - Portfolio Receipts for Q1 2025 reached $839 million, a 17% increase from $717 million in Q1 2024[5] - Royalty Receipts grew 12% to $788 million, driven by strong performance from the cystic fibrosis franchise, Trelegy, and Xtandi[10] - Adjusted EBITDA for Q1 2025 was $738 million, up 12% from $656 million in Q1 2024[21] - The company reported total income of $568 million for Q1 2025, consistent with Q1 2024, while operating income improved to $534 million from a loss of $74 million in the previous year[55] - Cash collections from financial royalty assets for Q1 2025 were $830 million, an increase from $745 million in Q1 2024[60] - Adjusted EBITDA for Q1 2025 was reported at $738 million, compared to $656 million in Q1 2024[64] - Net cash provided by operating activities for Q1 2025 was $596 million, down from $665 million in Q1 2024[63] Guidance and Projections - The company raised its full year 2025 guidance for Portfolio Receipts to between $2,975 million and $3,125 million, representing expected growth of 6% to 12%[4] - Royalty Pharma's 2025 Portfolio Receipts guidance is projected to be between $2,975 million and $3,125 million, reflecting a growth of approximately 6% to 12% year-over-year[31] - The company plans to provide further details on its long-term outlook at the upcoming Investor Day in September 2025[3] - The company expects to update its guidance for operating and professional costs following the internalization transaction expected in Q2 2025[32] Capital Management - Royalty Pharma repurchased approximately 23 million Class A ordinary shares for $723 million during Q1 2025[14] - Capital Deployment in Q1 2025 was $101 million, primarily for R&D funding for Biogen's litifilimab[17] - The total transaction value for recent acquisitions is approximately $1.1 billion, emphasizing the company's commitment to strategic growth[71] - The company aims to redeploy cash generated from operations into discretionary investments, debt repayment, and shareholder returns[71] Cash and Debt Position - Cash and cash equivalents as of March 31, 2025, were $1.1 billion, with total debt of $7.8 billion[12] - Interest paid in 2025 is anticipated to be approximately $260 million, with $119 million expected in Q3 2025[33] - Total liabilities as of March 31, 2025, were $7,820 million, slightly down from $7,880 million at the end of 2024[58] - Royalty Pharma's cash and cash equivalents increased to $1,088 million as of March 31, 2025, up from $929 million at the end of 2024[58] Operational Efficiency - Adjusted EBITDA is defined as Portfolio Receipts minus payments for operating and professional costs, reflecting the company's operational efficiency[71] - Portfolio Cash Flow, calculated as Adjusted EBITDA minus net interest paid or received, indicates the cash available for value-enhancing royalty acquisitions and shareholder returns[71] - Distributions to legacy non-controlling interests are classified under financing activities, impacting cash flow management[70] Revenue Streams - Other products contributing to Royalty Receipts include Cimzia, Crysvita, and Emgality, among others, highlighting a diverse revenue stream[71] - A milestone payment of $27 million related to Airsupra contributed to the increase in Portfolio Receipts[11] - Royalty Receipts include variable payments based on product sales, showcasing the company's performance-linked revenue model[69] - Royalty Pharma's portfolio includes royalties on over 35 commercial products, indicating a strong market presence and potential for future revenue growth[38]

Core Insights - Royalty Pharma plc reported strong financial results for Q1 2025, with a 17% increase in Portfolio Receipts and a positive outlook for the full year, raising guidance for Portfolio Receipts to between $2,975 million and $3,125 million, reflecting expected growth of 6% to 12% year-over-year [1][6][28] Financial Performance - Portfolio Receipts reached $839 million in Q1 2025, up from $717 million in Q1 2024, driven by strong performances in the cystic fibrosis franchise, Trelegy, and Xtandi [11][10] - Royalty Receipts grew 12% to $788 million, primarily due to the same product performances [10][7] - Adjusted EBITDA for Q1 2025 was $738 million, a 12% increase from $656 million in Q1 2024 [19][5] - Net cash provided by operating activities was $596 million, down 10% from $665 million in the previous year [5][12] Capital Allocation and Shareholder Returns - The company repurchased approximately 23 million Class A ordinary shares for $723 million under a $3 billion share repurchase program [14][3] - A quarterly dividend increase of approximately 5% was announced, reflecting the company's commitment to returning value to shareholders [7][2] Strategic Developments - Royalty Pharma entered into a Phase 3 R&D funding partnership with Biogen for litifilimab, committing up to $250 million over six quarters [20][2] - The company is on track to acquire its external manager, RP Management, LLC, which is expected to generate significant cost savings and enhance shareholder alignment [22][24] Market and Product Updates - Positive clinical and regulatory updates were reported, including FDA and EC approvals for Johnson & Johnson's Tremfya in Crohn's disease and ulcerative colitis, and positive Phase 3 results for Emalex's ecopipam in Tourette syndrome [26][27][7] - The cystic fibrosis franchise, Trelegy, and Xtandi were highlighted as key growth drivers for the company's revenue [10][11] 2025 Financial Outlook - The updated guidance for Portfolio Receipts reflects a growth expectation of approximately 6% to 12% year-over-year, with payments for operating and professional costs anticipated to be around 10% of Portfolio Receipts [28][29]