Royalty Pharma (RPRX) 15 Feb 232022 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Royalty Pharma Fourth Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the call over to George Grofik, Senior Vice President, Head of Investor Relations and Communications. Please go ahead, sir.

afternoon on good call. and morning to the everyone Good Royalty us quarter Thank joining review Pharma's results. you for XXXX to fourth year and full

and website at the our on find release royaltypharma.com. Investors slides results the our can call to of You page this press earnings with

in from known risks. these available non-GAAP that Slide financial reconciliations presented materially be performance. earnings used and of assume to statements. uncertainties other I statements we no factors to unknown cause you information XX-K that on X, obligation forward-looking actual understand to differ the contains press The to release the to to on like GAAP website. help to measures currently risks, will call you Moving you our I refer such based file our Non-GAAP statements available may All results update description financial are remind SEC Royalty statements. these and would forward-looking to in information Pharma any on provided this that involve our a for and with are forward-looking

And with to that, X. please advance Slide

Chairman; update, a Terry in our Our Urist, Research today trends pipeline. the Pablo Pablo Vice Legorreta, the transaction will speakers the Chris EVP, and Executive Coyne, financials. and Officer; key will Hite, portfolio review EVP, and Officer. provide on Head Chief Investments; EVP, Chief of discuss are will and discuss will then Chris Founder call after Marshall Financial which highlights Terry Marshall

we a session. hold Q&A will Following from Pablo, concluding remarks

to turn the And over with Pablo. call like that, to I'd

year as and Sciences. leading am on call. strategy funder of delighted to welcome and of Thank a you, George the on our I to execution another strong Innovation Life report everyone

portfolio power our Slide our strong and financial model. momentum underscore and the our business of achievements in X which XXXX summarizes

will prior grew flow a to financial adjusted XX% which Adjusted XX% line by slide. cash all adjusted First, are in cash by Biohaven the on were redemption receipts, top payments we delivered which the and performance. XX%, received discuss an next I by accelerated our strong EBITDA quarter

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that, it to pipeline. on I you hand update will With Chris over to transaction our

Thanks, Pablo.

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with that, over And I will to hand it Marshall.

Chris. Thanks,

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With over Terry. that, it hand to I'll

Thanks, Marshall.

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moderation today's Given U.S. strength, the relatively minus is of the dollar modest minus X% expected recent of represent headwind FX to using rates. X% to a

to the Pablo closing like that, back his comments. I With call for to would hand

Terry. Thanks,

top the to many many our diversification positive common offers while to business enter take challenges. its finish never looked strong trends to line. Pharma's pleased where attractive Let and a XXXX to solid We maximizing am bottom how our would invest but with you by with I way to only XXXX. close moment minimizing I line offer XX, industry on remind Slide prospects of Not performance better. our exposure saying a do on momentum unique model me in To exposure we Royalty have in biopharma, like

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will your that, happy questions. With be to take we

open the to Operator, the questions. take now will your call up We please question. first

Our Instructions] from Goldman Chris with Sachs. comes [Operator first Shibutani question

Two questions, if I your may. that, on of certain that comment And from targeted another One in and funnel about Marshall your therapy. general on you're characteristics seeing.

On the XXX evaluation the you with levels and the single you think through in we digits. the go it was I updates of before closing low and trend conclude starts various that's finally XXX, funnel, appreciate historical over then something on

mix the how the about in bias think Or and are of various is noticed there recent what's or you go years? in as stages that commercial particular, the a entering seeing terms consistent? remain versus you developmental shift you As you funnel down, of further

the seeing particular. to there? therapy comment evolving increased and to the it's in that's on around see how appreciated Large targeted therapeutic could interesting on areas on Marshall targeted think areas, thoughts would Marshall then your vocabulary that love immunology, And you're that across therapy viewing up? we're how other I from hear shape development for cardiovascular Lp(a), how

and on ratio answer over your we $XX since XX% our made And question to X have the that been your funnel. if remarks where unapproved. I you ask about IPO, my for the Hite is has the comments But last of XX% I'm in to years question, the Thanks billion, Chris deployed recall, approved one Chris. going

closer of XX-XX look period approved, to time, unapproved. you be a it XX if Now, or longer XX XX-XX, over to tends

But Chris, go ahead.

in really, was and question, about Yes. hasn't is changed. reviews And changed. approved And which in-depth at your in-depth drugs. the answer initial preapproved on in that year and to sort mix the detail the XX-XX, The haven't XX% side, XX% royalties by and actually synthetic that Thanks mix is basically great synthetic, reviews XX% general, XX% on Day And question by pre-approval reviews preapproved in-depth our reviews, at last things of answer XXXX. level XX% the it's looked for But that We the provided pre-existing approved. Chris. products your it's of in question XXXX versus really synthetic. and Analyst a approved didn't pre-existing XX% that the about really and review are and change to

question would we I second create that think oncology. on Analyst outside I more is to Neurology And opportunities in where interesting is good is the some the agree as Day, example. But this highlighted then, to mean future. on a of we'll you in area at of immunology we I with an starting and going of why good this We that. think mentioned theme therapies examples your more those. targeted is interesting cardiology new Absolutely. see another see

So definitely interesting, something to watch.

actively just the are getting about opportunities strategy. think themes the we're Although over access our today. overall to would saying strategy and But going those important guide for and those exciting think remind thinking thematically what physicians our looking to offer benefit we I seeing everyone focused opportunities interesting is on out I are the we're We that really themes, of talk system take not those most long be driver the things that when going that we're our opportunity those of patients, to term. and meaningful to a staying core to necessarily

Chris from JPMorgan. Instructions] with Schott next comes [Operator question Our

for [indiscernible] is Schott. This Chris

the first surprised environment. wanted on some of The challenges the seen we there? deal just out your is haven't you deals funding one more generally, current -- thoughts Are given

sciences. reflects think we with funnel we I in today more than have capital And past. our see Sure. very that, years environment ask Marshall, But in deployed my which from significantly definitely funding significant if And we appropriate feel in have add consistent prior life had the think challenging increase you the as I'll to a and Chris seen I comments. they to

deployment talking deployment the us of billion the guidance billion at our to And we the to of to $XX $X obviously, activity like to billion. We $X.X more enabled has billion maybe billion guidance IPO, If over billion, average something years X our $X.X over billion the to about years. you were guided X increase look sort and $X at increased now. next like $XX time $X.X

we like deployed last something year. really $X.X that today billion reported We

excited interesting morning drugs critical a is about the it And the quality -- activity think very those is going very what deployment. is X Lp(a) opportunities of now talked really and for the that but think the upside. reflect really a day, X more investors this in underlying So larger a the And [ph]. have does seen see is and been product. which Marshall, And significant developed I than in the we many are to with of results our is with us our the having royalties many, lot key had royalties analysts end deployed more while significantly we're class remain ended and At on obviously significant about also disciplined earlier. we where class that about capital And thing in much What's be we clear anyway we this we we and more for historically and the very and that few X X side. we've being products have deals that capital maybe discussions. much others we that up is

is was in mean robust. that year year the been to royalty market actually add a record would think last I I XXXX. thing only I has The really Yes.

market the As record and whole. said of prepared the since tenfold value was I XXXX highlights the year transactions the has those and is And year my Slide in up XX dollar XXXX. remarks grown last a of since a sixfold number for as transactions

is activity of level really strong. the So

So there's real growth the we think going we actually. think is and -- to continue

with Our comes from next Stanley. question Morgan Terence Flynn

maybe Chris, And Two the appreciate law? think I of Marshall. royalty on background new under this the opportunities or either how IRA for to Again, going you returns as impact Lp(a). wondering think maybe for was about for is look your analysis at then I to if all you me. Pablo

drugs? Just versus than wondering Obviously, how about think here robust creation people been have PCSKX less you anticipated. market initially the those

plays how think to you Lp(a) do So out PCSKXs? relative

Sure.

I have comment question, am Marshall But are been that helping then we our answers. and So occurring incredibly the creative changes other that the think regarding provide is to IRA Chris, can one in as challenges, for going go in a very regarding good you that profitable us issues, I I take forced sector achieve IRA in -- try creating know, that goals. question Chris. their mean, to framework not And address problems. for But to help opportunities end work obviously, just they people is only really us. to companies also up And challenges by them with the ahead,

really the our changes in of comment think I we around price and changes model and that adapt the and how in the key investments investments. we're sort in have wait But seen and around Pablo laws. can we're feel -- the capital, any that's for laws class. quite uniqueness changes implemented of deploying of the types highlighting is in fact implemented changes was it really we obviously going some given we'll your Thanks if significant adapt new seen just how these I positioned future think as specifically implemented. being X-year Yes. quickly to we question. I the uniquely of redesigned that's making changes and would there's around we negotiation, enacted And we've see what [indiscernible] the and feel quickly to And can business that is price actually constantly we industry, you've to be now. make The

Marshall?

Great.

yes, question, on on thank your Lp(a). Terence, so And second

comments there. few a So

is show creating what and market of important first think foremost, the that us. in I outcome most terms thing study the

very studies, a will I I certainly think show those that driver if as be think going formation cardiovascular there. that's we to a show significant strong we market event benefit, of hope if they

thing script, important -- this highlighted is are lots where LDL. to therapies the is opposed and manage ways in Second as we of that the there PCSKX to

going meaningfully lowering only the Lp(a) these agents. option be really are Here, to for

a in different category. So I put does them think that

Lp(a) a centers And some the development then academic for think, standard. straightforward. isn't lastly except, is around test for I there in is, technology testing some I market But there, today be will pretty that the think

in companies check once having patients I need is to And powerful happen. coming be boxes all and Novartis we going physicians of patients the the you profile, and from great think disease make these together. that terms to their approved cardiovascular So and of help have show a to all market Amgen agents, clinically between families that driver a that compelling X in

America. Meacham of with next from Bank Our comes Geoff question

[ph] This for Geoff. on is Susan

question company's interest affect in what the and rate Our interest for is, assumptions underlying that, will income? company's changes changes rates? to XXXX And related how the are interest net expense

Thank for the Terry, question, that you one. take you should

So currently the as XX% where fortunate are a our rates. matures XXXX in very remarks, in beyond mentioned and of and we borrowing very position we're debt prepared we in low at

fortunate very feel we So there.

outstanding not does our additional guidance just around billion at imply any debt. the current It's have Our we $X.X of coupon X.XX%.

have the in coming As And we in a the longer billion Biohaven we lot year. position a are because maturity acquisition. particularly towards of $X nice this a of we with do look there we term, flow have end cash

the debt, year, flexibility revolver. that could we repay plays refinance. also some could We have how depending we out our the we So pipeline use over could on

not is environment that revolver rate the prepayable. If is at time the attractive particularly because

So in very a position. I we're feel think good like we

capital. have of We to plenty access

to to opportunistic capital royalties. deploy cash balance flow strong and have be a in nice a and great generation We new sheet

feel So we good. very

from next Evercore. question Umer Raffat with comes Our

ex-U.S. deal view want Umer. Mike your in prospects ask is Spinraza of the just note recent with fact does the are long-term how Univision well contribution for acquiring a to possible especially Spinraza have for royalties. of DiFiore adult and your to SMA high-dose struggled that Spinraza, share as resiliency much What I as BIB Ionis' meaningful given the a although sales the U.S. opportunity? regarding This on

Marshall? Sure.

Yes. Thanks for the question, Mike.

in future a the for a in for think has market role all a perspective patients, we we've families and took world. I the for -- followed we management medicines into and the major treatment at for the diligence when on doing paradigm important of first-in-disease were physicians. looked a definitely their there. I overall, first-in-class, very see SMA And being around there Ionis, of SMA Spinraza the role meaningful for fresh the is years think Spinraza

for Spinraza Spinraza. these really view need happy supported underlying the do the Ionis' portion in really That's be to as we're as the well Evrysdi well was -- need these that why given of unmet the as patients investment that participate Ionis options. our and patients, So to

other as could the into and contemplated. more dose as all an expansion things investment, the make on and in about therapy two, well scenarios from the continued high were we the future. Whenever all as in we those we think and And think gene see data we Spinraza adults. competition Zolgensma, On high-dose adults the adults of well I the

remind just year. every only you, would billion our is royalty I sales $X.X Although on to up

all some that these how -- approach our scenario-based to portfolio. it's of of very impact et and and can So in of sales these part structured. the because to Spinraza -- happy investment less as a take some feel about participate we that the always very dose, these things, have be of way high have cetera, think an of we of we on regardless, portion impact But might of the

And materializing digit, returns are products internally approved our and add, single total just if deployed comfortable $XXX target for Spinraza, low high allocated the capital we're which to look that maybe on very digit. with different million, you at on double we how just delivering scenarios

allocated upside Lp(a) transaction. very a to we the at So obviously component that that is this important that really aspect you the should new on the And very for if class. then exciting look significant us transaction, provide this of of capital

making deliver we this was on the very high this a its debt attractive each going which returns, own returns enhances returns. Spinraza cost and characteristic Obviously, that approach us. of with a sure again, really also to investment for that unlevered discipline that investment -- lever we of lot can with So dramatically low has

Our with next question comes Verma from UBS. Ashwani

I two. have

The first franchise. one on just the fibrosis cystic

expected they're vanza the Phase [ph], by is of this SKYLINE study complete to end year. the triplet So the III

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Our question from comes with Stephen last Cowen. Scala

how great legislation. you asked CF about. and as one, has trajectory were is about competition future many IRA years including wondering guidance you concerning which and/or bigger competition the what risks bright believe which is Vertex current The sometimes X ibrutinib quarters, for different The momentum, you Pablo. such a increasingly potential adequately even you of ago? all questioned Pharma's little and you are am were quarters, challenges questions. get asked you is bit to this clear consistent. picture question from Other asked very if the or with And I business Royalty situation a X tax about second It have captures about that expected But AbbVie get risks? I similar is adverse

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your guess, will I can So some back question. and take provide first and bigger this strategic on I perspective then question come Terry

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my your that's question. answer to So

the like closing conference would to Legorreta I remarks. Pablo for to now turn back

the for And continued in operator. everyone Royalty you, call Pharma. to your on you interest Thank Sure. thank

to out questions, feel reach If you you, free Thank everyone. any have follow-up please to George Grofik.

conference you participating. for call. today's concludes This Thank

You disconnect. may now