Group 1 - The core viewpoint is that Royalty Pharma plc (NASDAQ: RPRX) continues to demonstrate consistent execution, leading to a recommendation of a Buy rating following their Investor Day and Q2 results [1] - The company is supported by buy-side hedge professionals who conduct fundamental, income-oriented, long-term analysis across sectors globally in developed markets [1] Group 2 - The article emphasizes that the analysis is based on the author's own opinions and does not involve compensation from any company mentioned [2] - There is a beneficial long position in the shares of RPRX, indicating confidence in the company's future performance [2]

Group 1 - The core viewpoint is that Royalty Pharma plc (NASDAQ: RPRX) continues to demonstrate consistent execution, leading to a recommendation of a Buy rating following their Investor Day and Q2 results [1] - The company is supported by buy-side hedge professionals who conduct fundamental, income-oriented, long-term analysis across sectors globally in developed markets [1] Group 2 - The article emphasizes the importance of consistent performance and execution in maintaining investor confidence and positive outlook for Royalty Pharma [1]

Group 1 - The event is an Investor Day hosted by Royalty Pharma, led by George Grofik, the Senior VP and Head of Investor Relations & Communications [1] - A copy of the presentation and press release for the event is available on the Investors page of Royalty Pharma's website [2] - There will be two Q&A sessions during the event, and attendees are encouraged to identify themselves when asking questions [3]

Core Insights - Royalty Pharma plc (NASDAQ:RPRX) is recognized as one of the best performing biotech stocks in 2025, focusing on biopharmaceutical royalties by investing in innovative drug products and partnering with various entities to fund clinical trials and product launches [1] Financial Performance - In Q2 2025, Royalty Pharma reported a 20% increase in Portfolio Receipts to $727 million and an 11% rise in Royalty Receipts, driven by products such as Trelegy, Evrysdi, and Tremfya [2] - The company updated its full-year 2025 guidance for Portfolio Receipts to a range of $3.05–$3.15 billion, indicating projected growth of 9%–12% [2] Strategic Moves - A significant milestone was the acquisition of RP Management, LLC in May 2025, which streamlined operations and integrated the royalty portfolio with the company's intellectual property assets, enhancing efficiency and strategic flexibility [3] - The firm expanded its oncology presence by acquiring a royalty interest in Amgen's Imdelltra for an upfront payment of $885 million, with potential royalties of up to $65 million [4] - Royalty Pharma also entered a $2 billion funding arrangement with Revolution Medicines, which included $1.25 billion for a synthetic royalty on daraxonasib and a secured senior loan of $750 million [4] Investment Commitments - In September 2025, Royalty Pharma committed up to $300 million to Zenas Biopharma's obexelimab program in exchange for royalties, highlighting its dedication to supporting innovative pipeline products [5]

Group 1 - The company is responsible for the development of all transcript-related projects [1] - The company publishes thousands of quarterly earnings calls per quarter and is expanding its coverage [1]

Summary of Royalty Pharma Investor Day Company Overview - **Company**: Royalty Pharma (NasdaqGS:RPRX) - **Industry**: Biopharma royalty market - **Event Date**: September 11, 2025 - **Key Leadership**: George Brofic (Investor Relations), Pablo (CEO), Ashwin (EVP), Chris (EVP), Marshall, Brienne, Terry Core Messages and Financial Performance - **Execution of Strategy**: Royalty Pharma has successfully executed its strategy since its IPO in 2020, delivering strong growth and returns in the rapidly expanding royalty market [21][23][24] - **Market Growth**: The biopharma royalty market has more than doubled in size since 2020, with expectations for continued growth driven by increasing capital needs in the biopharma sector [24][34] - **Financial Targets**: The company is on track to achieve a compounded annual growth rate (CAGR) of 12% in top line revenue since 2020, with a target of at least $4.7 billion by 2030 [26][28][59] - **Capital Deployment**: Royalty Pharma has deployed approximately $14 billion in capital on new royalty transactions since 2020, generating a 15% return on invested capital [26][29] Competitive Advantages - **Business Model**: Royalty Pharma has refined its business model over nearly 30 years, positioning itself as the optimized buyer of royalties, with a focus on delivering win-win solutions for partners [24][39] - **Investment Approach**: The company employs a rigorous investment process, historically transacting on only 2% of initial reviews, and maintains a healthy balance between approved and development stage investments [42][44] - **Risk Mitigation**: Royalty Pharma focuses on low-risk opportunities, with 90% of its royalty investments since 2020 projected to exceed its cost of capital [43][46] Industry Dynamics - **Funding Role of Royalties**: Royalties are increasingly recognized as a critical funding source for biopharma, offering flexibility and non-dilutive capital compared to traditional debt and equity [30][31] - **Market Demand**: The total addressable market for funding in biopharma is projected to exceed $1 trillion over the next decade, driven by high capital needs and the increasing number of licensing deals [34][88] - **Megatrends**: Key trends include rapid scientific innovation, R&D fragmentation, and significant capital requirements in the biopharma sector, all contributing to the growth of the royalty market [82][84][88] Survey Insights - **Deloitte Study**: A recent survey by Deloitte indicates that 87% of biotech executives would consider using royalties for financing, highlighting the growing acceptance and strategic importance of royalties in the capital structure [67][71] - **Executive Perspectives**: The survey revealed that two-thirds of executives cited the lack of equity dilution as a key benefit of royalties, with many expressing increased interest in royalty financing over the past three years [68][71] Philanthropic Efforts - **Community Engagement**: Royalty Pharma emphasizes its commitment to philanthropy and public service, supporting health equity, STEM education, and community initiatives [63][64] Conclusion - **Future Outlook**: Royalty Pharma is positioned for strong value creation, with a best-in-class investment platform and a commitment to delivering mid-teens annualized total shareholder returns over the next five years [60][63]

Financial Performance and Growth - Royalty Pharma is on track to deliver $4.7 billion+ in top-line revenue in 2030, representing a 10%+ CAGR from 2020 to 2030[10, 353] - The company has delivered consistent mid-teens ROIC (Return on Invested Capital)[11, 354] - Royalty Pharma's 2030 top- and bottom-line outlook is >10% above analyst consensus[11, 354] - The company's goal is at least mid-teens TSR (Total Shareholder Return) over the next 5 years[11, 354] - Portfolio Receipts are expected to reach approximately $3.1 billion in 2025, based on guidance provided on August 6, 2025, plus expected contribution from the Imdelltra royalty acquisition announced on August 25, 2025[21] Market Dynamics and Strategy - The average annual royalty market size was $6 billion from 2020-2024, representing ~130% growth from the prior 5-year period[10, 353] - Royalty Pharma has a market share of ~50% from 2020 to present, which is ~4-fold higher than the next largest competitor, with >70% share of transactions ≥$500 million[120, 191] - Repeat partners have driven ~30% of announced transaction value since 2020[120, 191] - 87% of biopharma executives would consider royalties as part of their capital raising plans over the next 3 years[110] - Since 2012, Royalty Pharma has deployed approximately $27 billion of capital, with 65% allocated to approved products and 35% to development-stage therapies[46, 49]

Core Insights - Royalty Pharma is hosting an Investor Day to discuss its strategies for shareholder value creation through its unique business model in the biopharma royalty market [1][2] - The company anticipates continued strong growth in the biopharma royalty market, targeting a mid-teens average annual total shareholder return through 2030 [2][12] Financial Performance and Projections - Royalty Pharma expects a compound annual growth rate of approximately 12% in Portfolio Receipts from 2020 to 2025, aiming for at least $4.7 billion in Portfolio Receipts by 2030 [3][4] - The company has achieved a Return on Invested Capital (ROIC) of approximately 15% and a Return on Invested Equity (ROIE) of approximately 21% since 2019 [6][7] - The biopharma royalty market has seen significant growth, averaging $6.2 billion in announced transaction value per year from 2020 to 2024, more than double the previous five-year average [7][9] Capital Deployment and Investment Strategy - Royalty Pharma is on track to exceed its five-year capital deployment target of $10 billion to $12 billion, with $14 billion in announced transactions and $9 billion deployed to date [4][5] - The company expects to achieve an unlevered internal rate of return (IRR) in the mid-teens on its post-IPO investments, with strong returns on both approved and development-stage products [5][6] Market Trends and Industry Position - A Deloitte market study indicates growing interest in royalty funding among biopharma executives, with 54% reporting increased interest and 87% considering royalties for capital needs [9][10] - Royalty Pharma has expanded its workforce approximately three-fold since its IPO, enhancing its capabilities in data and analytics to support its growth strategy [10][11] Shareholder Value Creation - The company aims to be a premier capital allocator in life sciences, with plans for share buybacks and a commitment to grow dividends by a mid-single digit percentage annually [11][12] - Royalty Pharma's investment platform is expected to gain recognition, potentially leading to significant upside beyond the targeted mid-teens total shareholder return [12]

Core Insights - The report by Royalty Pharma and Deloitte highlights the increasing importance of royalties in funding biopharma innovation, marking a shift towards a diversified funding model in the industry [1][2][6] - Royalties are recognized as a vital component of capital structure, providing flexible, non-dilutive capital to support significant capital requirements in biopharma [2][3][6] Industry Dynamics - The study involved over 110 biopharma leaders, primarily CEOs and CFOs, to gather insights on royalty funding, revealing that royalties play a crucial role in supporting life sciences innovation and commercial success [3][6] - The report indicates a growing acceptance of royalties as part of a diversified funding strategy, driven by their non-dilutive nature, absence of covenants, and retention of operational control [7] Market Outlook - 87% of surveyed biopharma executives expressed willingness to consider royalties in their capital raising plans over the next three years, indicating a positive outlook for royalty funding in the industry [7] - The strategic benefits of royalties, including attractive cost of capital and positive investor perception, are contributing to their increasing adoption in the biopharma sector [6][7] Company Overview - Royalty Pharma, founded in 1996, is the largest buyer of biopharmaceutical royalties and a key funder of innovation, collaborating with various entities from academic institutions to leading global pharmaceutical companies [4] - The company has a diverse portfolio of royalties, entitling it to payments based on the sales of over 35 commercial products, including notable therapies from Vertex, GSK, Roche, and others [4]

PresentationTerence FlynnEquity Analyst Great. Thanks for joining us, everybody. I'm Terence Flynn, Morgan Stanley's U.S. biopharma analyst. Very pleased to be hosting Royalty Pharma this afternoon. Joining us from the company, we have Pablo Legorreta, who is the company's Founder and CEO; and Terry Coyne, the company's CFO. Thank you both so much for being here. I've just got to read a disclosure statement first before we get started. Please see the Morgan Stanley research disclosure website at www.morgans ...