Royalty Pharma Plc · NASDAQ:RPRX
Royalty Pharma — Investor Day (May 2022)
114 slides from Royalty Pharma's investor day presentation, May 17, 2022
Slide 1: Royalty Pharma
ROYALTY PHARMA
Slide 2: Investor Day: Accelerating Innovation, Compounding Growth
Royalty Pharma plc Investor Day Accelerating Innovation, Compounding Growth May 17, 2022
Slide 3: Forward Looking Statements & Non-GAAP Financial Information
Forward Looking Statements & Non-GAAP Financial Information 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 do
Slide 4: Today's agenda
Today’s agenda 11:05am Case studies 8:30am Opening remarks Brienne Kugler George Grofik VP, Research & Investments SVP, Head of Investor Relations & Communications Vlad Coric, MD Accelerating innovation, compounding growth Chairman and Chief Executive Officer, Biohaven (video) Pablo Legorreta Sara K
Slide 5: Royalty Pharma at a glance
Royalty Pharma at a glance(1) Neurology Company Rare Disease Cancer Neurology 1996(2) (32%) (24%) (16%) (18%) Founded Evrysdi Trodelvy Nurtec ODT 66 Trikafta Xtandi Tysabri Employees Kalydeco Imbruvica gantenerumab Portfolio Orkambi Symdeko Cabometyx Erleada zavegepant seltorexant ~45 Oxlumo CPI-020
Slide 6: Pablo Legorreta: Accelerating innovation, compounding growth
Accelerating innovation, compounding growth Pablo Legorreta Founder and Chief Executive Officer
Slide 7: Our vision and our mission
Our vision Our mission To be the leading partner We accelerate innovation funding innovation in in life sciences and transform life sciences patient lives globally 7
Slide 8: 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 9: Accelerating innovation, compounding growth
Accelerating innovation, compounding growth 1 2 3 4 5 Strong track Unique Large Significant Compounding record model moat opportunity growth Industry pioneer Exposure to best 60% share of royalty >$1 trillion of capital 11-14% ACR(1) CAGR delivering 13% attributes of funding market(2) required to fu
Slide 10: Deep network across the biopharma ecosystem
Strong track record Unique model Large moat Significant opportunity Compounding growth 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 10
Slide 11: Track record of delivering exceptional growth
Strong track record Unique model Large moat Significant opportunity Compounding growth Track record of delivering exceptional growth Adjusted Cash Receipts(1) Capital deployed (annual average) ~2x +41% $2.10bn $2.13bn $1.49bn $1.05bn 2012 2021 2012-2016 2017-2021 1. Adjusted Cash Receipts for period
Slide 12: We are consistently innovating new funding solutions
Strong track record Unique model Large moat Significant opportunity Compounding growth We are consistently innovating new funding solutions 1990s 2000s 2010s-present Future • Achieved proof of concept • Converted to ongoing business • Invested in development-stage • Significantly scale business • Fu
Slide 13: A unique way to invest in biopharma
Strong track record Unique model Large moat Significant opportunity Compounding growth A unique way to invest in biopharma Maximizing • Exposure to transformative therapies • Revenue and profit diversification • Therapeutic area breadth • Long weighted average portfolio duration Minimizing • Consist
Slide 14: Strong competitive moat in biopharma royalty funding
Strong track record Unique model Large moat Significant opportunity Compounding growth 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 • Sing
Slide 15: Our competitive position has strengthened since our IPO
Strong track record Unique model Large moat Significant opportunity Compounding growth Our competitive position has strengthened since our IPO Pre-IPO Today Increase ~$24bn Depth & Equity ownership structure(1) Private Business Public market value Accessibility model Debt portfolio weighted average
Slide 16: Royalty Pharma is the leader in royalty transactions
Strong track record Unique model Large moat Significant opportunity Compounding growth Royalty Pharma is the leader in royalty transactions Biopharma royalty market size and share by transaction value, 2012-2022 YTD(1) $10bn $8bn $15bn 7% 83% 21% 53% 26% <$250m $250-500m >$500m Royalty Pharma #2 roy
Slide 17: Drivers of growth are diversified across the portfolio
Strong track record Unique model Large moat Significant opportunity Compounding growth Drivers of growth are diversified across the portfolio Established growth portfolio Recently launched products Development-stage pipeline Future royalty acquisitions ~25 approved products 9 recent launches of whic
Slide 18: Long duration portfolio consistently replenished
Strong track record Unique model Large moat Siginficant opportunity Compounding growth Long duration portfolio consistently replenished Duration of portfolio Duration of royalties acquired Duration of portfolio (At IPO) 2020-2022 YTD (Today) (Today) (by NPV) (by NPV) (by NPV) Beyond Beyond Beyond 20
Slide 19: Industry leading exposure to blockbuster products
Strong track record Unique model Large moat Significant opportunity Compounding growth Industry leading exposure to blockbuster products 1.5x 12 8 Sales of $1-3bn(1) Sales >$3bn(1) Top 15 biopharma (median) Portfolio includes premier products and franchises backed by strong support from marketers (1
Slide 20: Portfolio agnostic to therapeutic area, modality and drug class
Strong track record Unique model Large moat Significant opportunity Compounding growth Portfolio agnostic to therapeutic area, modality and drug class Unique ability to invest in multiple products in the same class or TA Rare Disease Anti-TNFs Immunology Migraine Cardiology ~35 Approved Neurology Mu
Slide 21: Expanding opportunity set driving accelerated capital deployment
Strong track record Unique model Large moat Significant opportunity Compounding growth Expanding opportunity set driving accelerated capital deployment 5-year forward capital deployment target Implied average annual cash deployed (year-to-year variability expected) >50% ~$10-12bn(2) $4.0-5.0bn >$7bn
Slide 22: Growth outlook has accelerated with strong business momentum
Strong track record Unique model Large moat Significant opportunity Compounding growth Growth outlook has accelerated with strong business momentum Adjusted Cash Receipts(1) (“top-line”) 2020-2025e CAGR outlook 11-14% 7-10% 6-9% At IPO Corporate update Today (June 2020) (February 2021) (May 2022) In
Slide 23: Expect faster growth than S&P 500, healthcare & biopharma
Strong track record Unique model Large moat Significant opportunity Compounding growth Expect faster growth than S&P 500, healthcare & biopharma Top-line growth comparison 2020-2025e(1) ~1.5x ~1.5x >2x 11-14% 11-14% 11-14% 9% 8% 5% S&P 500(1) Healthcare(1,3) Biopharma group(1,4) revenue ACR guidance
Slide 24: ESG – driving value for all stakeholders
ESG – driving value for all stakeholders Environmental Social Social Governance Governance We are laying the groundwork We are committed to our Risk management, compliance for a robust environmental people, our stakeholders and and high ethical standards are program the community as a whole foundati
Slide 25: Passionate about philanthropy and supporting our communities
Passionate about philanthropy and supporting our communities Select philanthropic donations by Royalty Pharma and management $20m cumulative multi-year commitment to address disparities in medicine and promote health equity $7.5m cumulative multi-year commitment to address disparities in blood cance
Slide 26: Combating health disparities in underserved communities
Combating health disparities in underserved communities Creation of the Mount Sinai-Royalty Pharma Alliance for Health Equity Research Study and address biological, social, financial, neighborhood and other factors that affect health outcomes for racial, ethnic, gender minorities and other underse
Slide 27: Engaged, team-oriented culture with owner-operator mindset
Engaged, team-oriented culture with owner-operator mindset Key statistics 49% 30% 50% 16 women in employees are of new hires are different workforce ethnically diverse ethnically diverse nationalities 66 employees 7% 12 34% 26% employee year executive shares owned by advanced turnover team average e
Slide 28: Powerful engine for value creation and compounding growth
Powerful engine for value creation and compounding growth Attractive Compounding Efficient business top-line growth model shareholder Value returns creation Consistently replenishing portfolio, powering long-term compounding growth 28
Slide 29: 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 30: Chris Hite: Royalty Pharma's opportunity
Royalty Pharma’s opportunity Chris Hite Executive Vice President and Vice Chairman
Slide 31: Key messages
Key messages 1 2 3 4 5 Expanding Significant Innovative Facilitating Differentiated opportunity capital needs funding M&A sourcing Industry fragmentation >$1 trillion of capital Synthetic royalties Trusted partner Proprietary sourcing and increasing drug required to fund broaden opportunity enabling
Slide 32: Advancing our partners' core mission with win-win solutions
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing 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
Slide 33: Industry fragmentation and complexity drive royalty creation
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing Industry fragmentation and complexity drive royalty creation Academia / non-profit (>5,000 labs) Large Pharma Biotechs Synthetic Synthetic royalties, royalties (~25 companies) (>8,000 companie
Slide 34: Existing royalties created by academia and non-profits
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing Existing royalties created by academia and non-profits NIH federal funding increasing Royalty Pharma transactions Select academic & non-profit partners (2012-present, committed capital) $50 Ac
Slide 35: Existing royalties created through licensing and partnering
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing Existing royalties created through licensing and partnering Pharma licenses and partnerships Exelixis’ Cabometyx: industry collaborations resulted in multiple royalties (average per approved d
Slide 36: Significant opportunity to fund biopharma innovation
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing 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-
Slide 37: Biotech company formation expands our opportunity set
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing Biotech company formation expands our opportunity set Venture capital biotech investments Biotech initial public offerings Public biotech companies (>$500m market cap) ~3x >3x >3x $36bn 74 308
Slide 38: Synthetic royalty opportunity is underpenetrated
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing Synthetic royalty opportunity is underpenetrated >$260bn biopharma industry funding, 2017-2021(1,2) • Synthetic royalties – a recent innovation with significant Convertible Debt growth potenti
Slide 39: Synthetic royalty market has room for significant growth
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing Synthetic royalty market has room for significant growth Biopharma funding sources(1,2) Synthetic royalty opportunity (2017 to 2021) (Cumulative next 5 years(3)) >$450bn >$260bn Opportunity to
Slide 40: Expansion of partnerships validates unique model
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing Expansion of partnerships validates unique model Capital provided Assets acquired Nurtec ODT and zavegepant royalties, Up to ~$835m across four transactions commercial launch capital, preferre
Slide 41: Providing needed capital for M&A transactions
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing 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 Challen
Slide 42: Sourcing is integral to our business and a key focus for growth
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing Sourcing is integral to our business and a key focus for growth Comprehensive database of royalties and licenses Landscape mapping and screening Sourcing Closely follow clinical and commercial
Slide 43: Effectively reaching significant majority of potential partners
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing Effectively reaching significant majority of potential partners Meetings in Royalty Pharma network • Meetings with 79% of companies Phase 3 or later >$1bn market cap 79% Meetings with 66% of
Slide 44: Proprietary sourcing provides competitive advantage
Expanding opportunity Significant capital needs Innovative funding Facilitating M&A Differentiated sourcing Proprietary sourcing provides competitive advantage Source of deals(1) Network of deep relationships 30% 59% 18% Track record of “win-win” outcomes 28% 52% Scale advantages 13% Pharma M&A Bila
Slide 45: Key messages
Key messages 1 2 3 4 5 Expanding Significant Innovative Facilitating Differentiated opportunity capital needs funding M&A sourcing Industry fragmentation >$1 trillion of capital Synthetic royalties Trusted partner Proprietary sourcing and increasing drug required to fund broaden opportunity enabling
Slide 46: Marshall Urist: Scaling our unique investment capabilities
Scaling our unique investment capabilities Marshall Urist, MD, PhD Executive Vice President, Head of Research & Investments
Slide 47: Case studies
Case studies Partnering with biotechs to support their growth journey Brienne Kugler Vice President, Research & Investments Executing complex transactions with our full suite of funding solutions Sara Klymkowsky Vice President, Research & Investments
Slide 48: Key messages
Key messages 1 2 3 Top-tier Differentiated Scalable talent process platform Attract and develop the best Exhaustive diligence process Built to leverage our unique and brightest is key to our long- institutionalized over 25+ years position and capabilities in life term success sciences Add value to o
Slide 49: 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 50: Our foundation for success starts with our people
Top-tier talent Differentiated process Scalable platform Our foundation for success starts with our people Sandy Balkin, PHD Sara Klymkowsky Vivian Liu, MD Bill Grau, PhD Senior Vice President, Vice President, Vice President, Vice President, Strategy & Analytics Research & Investments Research & Inv
Slide 51: Growing our team for the significant opportunity ahead
Top-tier talent Differentiated process Scalable platform Growing our team for the significant opportunity ahead Research & Investments team(1) Deep experience in Research & Investments(1) >3x 21 professionals 21 ~5 year average tenure at Royalty Pharma (2) 13 6 ~14 year average biopharma and/or inve
Slide 52: Scaling our platform and innovating new funding solutions
Top-tier talent Differentiated process Scalable platform Scaling our platform and innovating new funding solutions Royalty Pharma functions Investment capabilities Commercial Launch Capital Strategy & Development Analytics Capital Investments & Synthetic Synthetic Capital Strategies Royalties Royalt
Slide 53: Fundamental drivers of our investment process
Top-tier talent Differentiated process Scalable platform Fundamental drivers of our investment process Approach Diligence Accountability • Select best project team based • Exhaustive research led by • One Royalty Pharma team on therapeutic area expertise decision makers owns entire deal process • Fl
Slide 54: One Royalty Pharma team at the center of every transaction
Top-tier talent Differentiated process Scalable platform One Royalty Pharma team at the center of every transaction Traditional business development Royalty Pharma process Business Corporate • Research & Investments(1) R&D Commercial Legal Royalty Pharma • Legal Development M&A Deal Team • Executive
Slide 55: Exhaustive due diligence process sharpened over decades
Top-tier talent Differentiated process Scalable platform Exhaustive 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 •
Slide 56: Leveraging the best internal and external expertise available
Top-tier talent Differentiated process Scalable platform 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 mul
Slide 57: Innovating our process through Strategy & Analytics
Top-tier talent Differentiated process Scalable platform Innovating our process through Strategy & Analytics Research & Strategy & Analytics Investments In-house data team tightly integrated with …and further strengthens Royalty Pharma Research & Investments… as a strategic partner Data driven with
Slide 58: Our ambitious vision for Strategy & Analytics
Top-tier talent Differentiated process Scalable platform 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 mapp
Slide 59: Cytokinetics case study: hypertrophic cardiomyopathy (HCM)
Top-tier talent Differentiated process Scalable platform Cytokinetics case study: hypertrophic cardiomyopathy (HCM) Background Challenge Royalty Pharma solution What is the size of the commercial Conducted detailed market evaluation market for aficamten in HCM? • Unique Royalty Pharma capability • B
Slide 60: Proprietary data driven insights drive conviction
Top-tier talent Differentiated process Scalable platform Proprietary data driven insights drive conviction Claims analysis Result oHCM market independently verified Significant market building opportunity • Strategy & Analytics provided (diagnosed patients in thousands) (subsequent MD visits for pat
Slide 61: 2021 investment funnel highlights disciplined approach
Top-tier talent Differentiated process Scalable platform 2021 investment funnel highlights disciplined approach 2021 Royalty Pharma investment activity >300 initial reviews ~85 CDAs signed 61 in-depth reviews 33 proposals submitted Executed 5 transactions for $3.0bn(1) (Acquired royalties on 10 ther
Slide 62: Maintaining a disciplined investment process
Top-tier talent Differentiated process Scalable platform Maintaining a disciplined investment process Increasing inbounds lead to greater initial reviews High quality bar for in-depth reviews Streamlined and Expanding number Increasing market Outbound calls still Selective on Balance between efficie
Slide 63: Successful history of investing in development-stage therapies
Top-tier talent Differentiated process Scalable platform Successful history of investing in development-stage therapies Robust development-stage portfolio Development-stage investments Royalty Pharma approval success rate(2) (by primary disease area(1)) • Invested ~$8bn in development-stage therapie
Slide 64: Positive market backdrop supports strong pipeline trends
Top-tier talent Differentiated process Scalable platform Positive market backdrop supports strong pipeline trends Strong growth in initial reviews Opportunity set increasing Robust royalty acquisition activity Initial reviews In-depth reviews Announced transaction value +50% +53% +37% >300 61 $3.0bn
Slide 65: Our framework focuses on key product success factors
Top-tier talent Differentiated process Scalable platform 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 rati
Slide 66: TA agnostic investment approach follows best opportunities
Top-tier talent Differentiated process Scalable platform TA agnostic investment approach follows best opportunities Selected investment themes of interest looking forward Under-innovated New modalities Brain Targeted therapy large markets for new diseases disease beyond oncology e.g. migraine e.g. c
Slide 67: Adding unmatched portfolio breadth over the last two years
Top-tier talent Differentiated process Scalable platform Adding unmatched portfolio breadth over the last two years 21 products – 25 diseases(1) Infectious Hereditary Type 1 disease angioedema hyperoxaluria (3) Inflammatory Hereditary bowel disease Solid tumors PsO, PsA, IBD angioedema (3) AML, MDS
Slide 68: Benefits of Royalty Pharma platform and scale will grow
Top-tier talent Differentiated process Scalable platform Benefits of Royalty Pharma platform and scale will grow Number of transactions Royalties acquired(1) (by transaction type) (by approval phase) >2x >2x 28 35 Synthetics Approved M&A related 12 15 Synthetics Development- Third-party Approved sta
Slide 69: Brienne Kugler: Partnering with biotech to support growth
Partnering with biotech to support their growth journey Brienne Kugler Vice President, Research & Investments
Slide 70: Royalty Pharma begins long-term partnership with Biohaven
Royalty Pharma begins long-term partnership with Biohaven Nurtec ODT an attractive opportunity Significant unmet need in migraine • Nurtec ODT, an oral CGRP inhibitor, developed by • Migraines are characterized by disabling headaches Biohaven for the treatment of migraine and reduced functionality •
Slide 71: 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 72: 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 73: Biohaven acquisition accelerates Royalty Pharma returns
Biohaven acquisition accelerates Royalty Pharma returns Strong returns for Royalty Pharma shareholders(1) • Pfizer, a strong global marketer, is positioned to maximize ~1.8x potential cash the potential of Nurtec ODT and zavegepant >$6bn return by H1 2023 peak Doubling number of sales representati
Slide 74: Royalty Pharma capital critical to enabling biotech growth
Royalty Pharma capital critical to enabling biotech growth Biohaven raised ~$3.2bn in capital(1) Cytokinetics raised ~$2.0bn in capital(2) BioCryst raised ~$1.3bn in capital(3) (May 2017 – YTD 2022) (June 2013 – YTD 2022) (December 2012 – YTD 2022) Royalty Pharma Royalty Pharma Royalty Pharma Pfizer
Slide 75: Sara Klymkowsky: Executing complex transactions
Executing complex transactions with our full suite of funding solutions Sara Klymkowsky Vice President, Research & Investments
Slide 76: Transformational transaction enabled by Royalty Pharma
Transformational transaction enabled by Royalty Pharma • Antibody research capabilities • Expertise in biologics Accelerates growth strategy with “Pipeline-in-a-product” candidates • Marketed product Bolster position in hematology-oncology and entry into solid tumors • Epigenetics and small molecule
Slide 77: Providing a complete funding solution to MorphoSys
Providing a complete funding solution to MorphoSys Upfront cash payment Milestone payments Launch & Development Capital Equity purchase Up to Up to ~$1.4bn $150m $350m $100m paid to MorphoSys on Purchased at transaction of clinical, regulatory and with flexibility to draw over a close(1) of Constell
Slide 78: Core strategic pillars brought to bear in MorphoSys transaction
Core strategic pillars brought to bear in MorphoSys transaction 1 2 3 Existing royalties Synthetic royalties / Launch & development R&D funding capital(1) gantenerumab pelabresib Development otilimab CPI-0209 funding bonds Acquire existing royalties on market-leading or Acquire newly-created royalti
Slide 79: Comprehensive Royalty Pharma approach and process
Comprehensive Royalty Pharma approach and process • MorphoSys relationship built over 10+ years Sourcing • Prior in-depth discussions with Constellation • Developed deep understanding of MorphoSys’ capital needs • Deep history in target TAs Execution Tracking • Deployed full breadth of solutions; •
Slide 80: Flexible approach and structuring creates attractive risk/return
Flexible approach and structuring creates attractive risk/return Acquired 6 cash flow streams with a diversified risk profile anchored by Tremfya royalty and Development funding bonds • Existing royalty on MorphoSys partnered-therapy in the hands of premier company gantenerumab • Higher clinical and
Slide 81: Key messages
Key messages 1 2 3 Top-tier Differentiated Scalable talent process platform Attract and develop the best Exhaustive diligence process Built to leverage our unique and brightest is key to our long- institutionalized over 25+ years position and capabilities in life term success sciences Add value to o
Slide 82: Terrance Coyne: A leading compounding growth company
A leading compounding growth company Terrance Coyne Executive Vice President and Chief Financial Officer
Slide 83: Key messages
Key messages 1 2 3 4 Strong business Diversified Efficient Sustainable long- momentum portfolio growth compounding engine term growth Increasing outlook for ~35 commercial therapies Highly efficient business Expect to achieve ACR(1) growth and deployment including 12 blockbusters model generating si
Slide 84: Simple and efficient business model focused on cash flow
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth Simple and efficient business model focused on cash flow Funding to Biopharma partners Return of capital New royalty (Dividends and potential Sales of leading share repurchases) therapies
Slide 85: Proven track record and increased growth outlook
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth Proven track record and increased growth outlook Adjusted Cash Receipts(1)(2) (“top-line”) 2010–2025e CAGR: 11–14% $3.0-3.5bn CAGR: 13% $1.8bn $2.3-2.7bn estimated at June 2020 IPO $0.5bn
Slide 86: Growth outlook has accelerated with strong business momentum
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth Growth outlook has accelerated with strong business momentum Adjusted Cash Receipts(1) (“top-line”) 2020-2025e CAGR outlook 11-14% Total growth 7-10% 6-9% Future royalty investments High-s
Slide 87: New royalties have diversified and enhanced portfolio growth
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth New royalties have diversified and enhanced portfolio growth Robust transaction activity since the beginning of 2020 Contribution to 2020–2025e CAGR by product today (3) Other Cystic fibro
Slide 88: Expanding opportunity set driving accelerated capital deployment
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth Expanding opportunity set driving accelerated capital deployment 5-year forward capital deployment target Implied average annual cash deployed (year-to-year variability expected) >50% ~$10
Slide 89: Growth diversified across multiple components of the portfolio
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth Growth diversified across multiple components of the portfolio Portfolio components Adjusted Cash Receipts(1) (“top-line”) Cumulative CAGR (excl. gantenerumab)(1): $3.0-3.5bn Future royalt
Slide 90: Established growth portfolio provides a strong foundation
Strong business momentum Diversified portfolio growth 1 Efficient compounding engine Sustainable long-term growth Established growth portfolio provides a strong foundation Adjusted Cash Receipts(1) (“top-line”) Key therapies Therapy Marketer(s) 2021 market position(3) 2025e sales(4) Cystic fibrosis
Slide 91: Recently launched products amplify and diversify growth
Strong business momentum Diversified portfolio growth 2 Efficient compounding engine Sustainable long-term growth Recently launched products amplify and diversify growth Adjusted Cash Receipts(1) (“top-line”) Key growth drivers Therapy Marketer(s) 2025e market position(2) 2025e sales(2) J&J #2 for p
Slide 92: Development-stage pipeline includes many potential launches
Strong business momentum Diversified portfolio growth 3 Efficient compounding engine Sustainable long-term growth Development-stage pipeline includes many potential launches… Adjusted Cash Receipts(1) (“top-line”) Development-stage therapy candidates Potential Therapy Marketer(s) Indication(s) launc
Slide 93: Expected to power growth through 2030 and beyond
Strong business momentum Diversified portfolio growth 3 Efficient compounding engine Sustainable long-term growth …expected to power growth through 2030 and beyond 2030e sales ($ in billions)(2) Illustrative 2030e Adjusted Cash Receipts(1) (“top-line”) Potential ’30 Therapy Risk adj. Non-risk adj. b
Slide 94: Highly efficient business model generates significant cash flow
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth Highly efficient business model generates significant cash flow Overview of 2021 non-GAAP metrics(1) $ in millions (except per share amount) FY 2021 YoY growth (%) % ACR(1) Commentary Roya
Slide 95: We expect to deliver leading top-line growth through 2025
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth We expect to deliver leading top-line growth through 2025 FY 2025e Commentary Adjusted Cash Receipts (non-GAAP) (1) • “Top-line” $3.0 to $3.5 billion including future royalty acquisitions
Slide 96: Significant firepower to drive growth and create value
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth Significant firepower to drive growth and create value Capacity for capital deployment over 5 years Cumulative Capital allocation priorities 5-Year capacity: >$20bn Royalty acquisitions (p
Slide 97: Consistent attractive returns amplified with conservative leverage
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth Consistent attractive returns amplified with conservative leverage Estimated unlevered returns Leverage benefit to return profile Rolling 5-year investment periods (%)(1) Based on investme
Slide 98: We are well positioned for the emerging macro environment
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth We are well positioned for the emerging macro environment 1 Inflation and recessionary risks 3 Biotech market pressure • Significant magnitude, duration and diversity of non-cyclical growt
Slide 99: Participating in most important waves of biopharma innovation
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth Participating in most important waves of biopharma innovation Next exciting waves of biopharma innovation Trikafta - cystic fibrosis Xtandi Tremfya - immunology Trikafta Cabometyx - kidney
Slide 100: What does $1bn of investment mean for future cash receipts?
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth What does $1bn of investment mean for future cash receipts? Representative annual Adjusted Cash Receipts(1,2) (“top-line”) from $1bn of investment - based on blend of historical acquisitio
Slide 101: Layering of future royalty acquisitions has compounding effect
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth Layering of future royalty acquisitions has compounding effect +$2.5bn Illustrative projected annual Adjusted Cash Receipts(1,2) (“top-line”) >$2.5bn (+/-$500m) Assumes $2.0-2.5bn annual d
Slide 102: Long-term growth powered by consistent portfolio replenishment
Strong business momentum Diversified portfolio growth Efficient compounding engine Sustainable long-term growth Long-term growth powered by consistent portfolio replenishment Adjusted Cash Receipts(1)(2) (“top-line”) 10%+ CAGR 13% CAGR 11-14% CAGR Unusual period with 4 large royalty expirations: Tec
Slide 103: Key messages
Key messages 1 2 3 4 Strong business Diversified Efficient Sustainable long- momentum portfolio growth compounding engine term growth Increasing outlook for ~35 commercial therapies Highly efficient business Expect to achieve ACR(1) growth and deployment including 12 blockbusters model generating si
Slide 104: Pablo Legorreta: Closing remarks
Closing remarks Pablo Legorreta Founder & Chief Executive Officer
Slide 105: Accelerating innovation, compounding growth
Accelerating innovation, compounding growth 1 2 3 4 5 Strong track Unique Large Significant Compounding record model moat opportunity growth Industry pioneer Exposure to best 60% share of royalty >$1 trillion of capital 11-14% ACR(1) CAGR delivering 13% attributes of funding market(2) required to fu
Slide 106: Appendix Slides
Appendix Slides
Slide 107: Acquire approved and development-stage royalties
Acquire approved and development-stage royalties Approved Status at Acquisition(1) Current Status(1) Since Acquisition Approved Products (2) • Predictable and de-risked Development-Stage Products Not Approved cash flows Total - ~$24bn $3bn, 13% $1bn, 4% (2) • Growth from increased penetration • Addi
Slide 108: Compounding tailwinds are driving new royalty opportunities
Compounding tailwinds are driving new royalty opportunities Drug development complexity and industry collaborations Increasing industry New royalty participants with capital needs opportunities Increasing drug approvals and applications New modalities Biologic (cell/gene therapy, etc.) 5 understandi
Slide 109: Update to presentation of non-GAAP financial measures
Update to presentation of non-GAAP financial measures(1) Update to Adjusted Royalty acquisition Cash Flow ($ in millions) 2020 Royalty Amount BCX9930 ($6) ACF (prior) $1,483 ACF (modified) $1,477 Third-party royalty Synthetic royalty Synthetic royalty Change (%) -0.4% (approved / development-stage)
Slide 110: Royalty Pharma non-GAAP financial measures
Royalty Pharma non-GAAP financial measures $ in millions FY 2021 FY 2020 Royalty receipts 2,609 2,344 Distributions to non-controlling interests (480) (544) Adjusted Cash Receipts (non-GAAP)(1) 2,129 1,800 Payments for operating and professional costs (185) (180) Adjusted EBITDA (non-GAAP)(1) 1,944
Slide 111: GAAP to non-GAAP reconciliation – Adjusted Cash Receipts
GAAP to non-GAAP reconciliation – Adjusted Cash Receipts $ in millions FY 2021 FY 2020 Net cash provided by operating activities (GAAP) 2,018 2,035 Adjustments: Proceeds from available for sales debt securities 63 3 Distributions from equity method investees – investing 1 15 Interest paid, net 127 9
Slide 112: GAAP to non-GAAP reconciliation – Adjusted EBITDA
GAAP to non-GAAP reconciliation – Adjusted EBITDA $ in millions FY 2021 FY 2020 Net cash provided by operating activities (GAAP) 2,018 2,035 Adjustments: Proceeds from available for sales debt securities 63 3 Distributions from equity method investees – investing 1 15 Interest paid, net 127 95 Devel
Slide 113: GAAP to non-GAAP reconciliation – Adjusted Cash Flow
GAAP to non-GAAP reconciliation – Adjusted Cash Flow $ in millions FY 2021 FY 2020 Net cash provided by operating activities (GAAP) 2,018 2,035 Adjustments: Proceeds from available for sales debt securities 63 3 Distributions from equity method investees – investing 1 15 Distributions to non-control
Slide 114: 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 i