Royalty Pharma(US:RPRX)2020-08-12 13:07Financial Performance - Royalty receipts are the primary measure of operating performance, encompassing cash collections from financial royalty assets and other sources [205]. - Adjusted Cash Receipts and Adjusted Cash Flow are key liquidity measures used to evaluate the company's ability to generate cash from operations [207]. - Total royalty receipts from growth products reached $567.993 million for the three months ended June 30, 2020, compared to $409.833 million in the same period of 2019, representing a 38.6% increase [220]. - Adjusted Cash Receipts for the six months ended June 30, 2020, totaled $844.1 million, down from $1,075.6 million in 2019, indicating a decrease of 21.5% [220]. - Adjusted EBITDA for the six months ended June 30, 2020, was $774.1 million, a decline of 24.7% from $1,028.5 million in 2019 [220]. - Total income and other revenues for the three months ended June 30, 2020, reached $510.9 million, an increase of $53.3 million or 11.7% year-over-year [250]. - Consolidated net income for the three months ended June 30, 2020, was $602.0 million, a significant increase of $423.2 million or 236.7% year-over-year [250]. - Net income attributable to controlling interest for the three months ended June 30, 2020, was $442.1 million, an increase of $290.4 million or 191.4% year-over-year [250]. - Adjusted Cash Flow decreased by 19.0% year-over-year to $666.498 million for the six months ended June 30, 2020 [299]. - The company reported an increase in financial royalty receipts of $108.4 million for the six months ended June 30, 2020, contributing to the overall growth in cash provided by operating activities [339]. Revenue Sources - The portfolio includes royalties on over 45 marketed therapies and four development-stage product candidates, addressing areas such as rare diseases, oncology, and diabetes [209]. - Income from financial royalty assets increased by $57.2 million to $474.2 million for the three months ended June 30, 2020, representing a 13.7% increase compared to the same period in 2019 [250]. - The cystic fibrosis franchise contributed $136.119 million in revenue for the three months ended June 30, 2020, up from $85.745 million in 2019, marking a 58.7% increase [220]. - The HIV franchise generated $64.692 million in revenue for the three months ended June 30, 2020, compared to $52.193 million in 2019, reflecting a growth of 24.0% [220]. - Royalty receipts from the cystic fibrosis franchise increased by $42.8 million, driven by the successful launch of Trikafta in the U.S. [303]. - Royalty receipts from Tysabri increased by $11.7 million, benefiting from extra shipping days and a pricing adjustment in Italy [304]. - Royalty receipts from Imbruvica increased by $31.9 million, driven by continued penetration in chronic lymphocytic leukemia patients [305]. - Royalty receipts from the HIV franchise increased by $20.0 million, primarily due to strong performance of Biktarvy [306]. Acquisitions and Investments - Royalty Pharma has deployed $12 billion to acquire royalties on approved products since its inception in 1996, with $7 billion acquired from 2012 to 2019 [195]. - The company has invested $6.1 billion in royalties on development-stage product candidates since 2012 [195]. - The company acquired a royalty on risdiplam for $650 million, which was approved by the FDA in August 2020, marking a significant addition to its portfolio [333]. - The company invested $497.2 million in royalties and related assets during the second quarter of 2020, totaling $667.3 million for the first six months of 2020, including four new investments [331]. Debt and Liquidity - The company raised $1.9 billion in net proceeds from its IPO in June 2020, significantly enhancing its liquidity position [335][343]. - As of June 30, 2020, the company had cash and cash equivalents totaling $2.4 billion, up from $283.7 million as of December 31, 2019 [344]. - The company had total long-term debt outstanding of $5.7 billion as of June 30, 2020, down from $6.0 billion as of December 31, 2019 [337]. - The company has entered into new senior secured credit facilities totaling $6.04 billion, consisting of a Term Loan A of $3.12 billion and a Term Loan B of $2.83 billion, with interest rates of 1.50% and 1.75% above LIBOR, respectively [345]. - The company is required to make total term loan amortization payments of $5.95 billion over the next five years, with $94.2 million due in the remainder of 2020 [354]. Operational Efficiency - The company operates with a capital-efficient business model, reducing exposure to common industry challenges like high R&D costs [194]. - Management emphasizes that income from royalties should not be viewed as a direct measure of near-term financial performance due to accounting volatility [204]. - The total operating expenses for the three months ended June 30, 2020, were $101.6 million, a decrease of $28.2 million or 21.7% compared to the same period in 2019 [250]. - General and administrative expenses increased by $12.5 million to $42.8 million for the three months ended June 30, 2020, reflecting a 41.0% increase compared to the same period in 2019 [250]. Regulatory Approvals - The FDA approved a supplemental New Drug Application for Erleada in September 2019, expanding its market [285]. - Vertex's cystic fibrosis franchise received FDA approval for Trikafta in October 2019, significantly expanding the addressable market and extending royalty duration to 2037 [286]. - Epizyme received FDA approval for Tazverik for relapsed or refractory follicular lymphoma, marking a significant regulatory milestone [290]. - The FDA granted accelerated approval for Trodelvy, the first antibody-drug conjugate approved specifically for metastatic triple-negative breast cancer [292].