Royalty Pharma Plc Q1 FY2025 earnings call

• Delivered 12% growth in Royalty Receipts and 17% growth in Portfolio Receipts in Q1 2025. • Announced an evolution to a dynamic capital allocation framework, repurchased $723 million of shares in Q1, deployed over $100 million on value-creating royalty transactions, and increased dividends. • Expanded development stage pipeline with a Phase 3 R&D funding collaboration with Biogen for litifilimab in lupus and positive Phase 3 results for ecopipam in Tourette’s syndrome. • Raised 2025 full-year guidance for Portfolio Receipts to $2.975 billion to $3.125 billion, driven by diversified portfolio strength and weakening U.S. dollar. • Upcoming Investor Day on September 11th in New York City to provide update on driving shareholder value creation.

Royalty Receipts grew by 12% in the first quarter, driven by the strength of the diversified portfolio. Portfolio Receipts, which include milestones and other contractual receipts, grew by 17%. Key drivers of Royalty Receipts growth were the strong performance of the cystic fibrosis franchise, Trelegy, and Xtandi. Milestones and other contractual receipts included a $27 million payment on Airsupra. Royalty Receipts represent recurring cash flow, while Portfolio Receipts are the topline including more variable elements.

• Expect Portfolio Receipts to be between $2.975 billion and $3.125 billion in 2025, a $75 million increase vs prior year guidance. • Growth in Portfolio Receipts expected to be around 6% to 12%, reflecting portfolio momentum. • Milestones and other contractual receipts expected to increase from $31 million in 2024 to approximately $60 million in 2025. • Guidance is based on current portfolio and does not include future royalty acquisitions. • Expected second quarter Portfolio Receipts between $700 million and $725 million, up 15% to 19% from prior year.

• Policy uncertainties and regulatory changes could impact dealmaking environment. • Potential impact of tariffs on business, though Royalty Pharma does not expect significant impact due to supply chain dynamics. • Uncertainty related to future royalty acquisitions and their impact on financials.

Q: How has regulatory and policy uncertainties impacted dealmaking environment and risk evaluation?

A: Pipeline remains robust, and policy uncertainties haven't significantly impacted opportunity set. The U.S. biotech industry's need for capital creates attractive opportunities for Royalty Pharma to step in.

Q: Any updates on Vertex cystic fibrosis portfolio negotiations and arbitration timeline?

A: No update at this time; continue to feel strongly about position on deuterated Kalydeco but no update on arbitration.

Q: Thoughts on tariffs impact and tools pharma may use to offset tariffs?

A: No significant impact expected, and tough to speculate on tools pharma may use.

Q: Contextualize ecopipam clinical benefit and parallels to tardive dyskinesia?

A: Tourette’s hasn't seen new innovation in long time; TD could be a market comp, but pricing and adoption rates not commented on.

Q: Where does initial quarter fall relative to Alyftrek launch expectations?

A: Still early days, but Vertex CF franchise expected to continue as major contributor long-term.

Q: How does capital allocation decision-making work between new deals and buybacks?

A: Dynamic, based on relative share price vs intrinsic value and royalty opportunities; will continue balanced approach if operating in upper left quadrant.

Q: Is there a timeline on Vertex dispute resolution?

A: Can't comment on timing of potential dispute with Vertex.