Royalty Pharma plc (Nasdaq: RPRX) today reported financial results
for the fourth quarter and full year of 2023 and introduced full
year 2024 guidance for Portfolio Receipts. “Royalty Pharma
delivered outstanding results in 2023,” said Pablo Legorreta,
Royalty Pharma’s founder and Chief Executive Officer. “We reported
another year of strong growth in royalty receipts and deployed
substantial capital in value-enhancing transactions, including our
strongest year ever for synthetic royalty transactions.
Furthermore, a number of positive clinical and regulatory
milestones strengthened the outlook for our diversified royalty
portfolio. Based on the strong fundamental tailwinds underpinning
our business, our strong balance sheet and robust deal pipeline, I
am confident we are in an excellent position to fund life sciences
innovation and deliver attractive, long-term compounding growth.”
Portfolio Receipts show strong growth for full year
2023
- Portfolio Receipts (previously referred to as Adjusted Cash
Receipts) decreased 31% to $736 million in the fourth quarter,
reflecting the accelerated Biohaven payments received in the fourth
quarter of 2022.
- Portfolio Receipts increased 9% to $3,049 million for full year
2023, driven primarily by strong portfolio performance and new
royalty acquisitions, and consistent with the raised guidance
provided on January 8, 2024.
- Royalty receipts grew 10% for the quarter and 8% for the full
year.
Significant transaction activity in 2023 with eight
potentially transformative therapies added to
portfolio
- Announced value of new transactions was $4.0 billion for full
year 2023.
- Transactions since 2020 expected to add approximately $1.2
billion to Portfolio Receipts in 2025.
Positive updates in the fourth quarter across
development-stage royalty portfolio
- Phase 3 results for Cytokinetics’ aficamten met the primary
endpoint for hypertrophic cardiomyopathy.
- Bristol Myers Squibb announced the acquisition of Karuna
(marketer of KarXT for schizophrenia).
- Phase 3 results for MorphoSys’ pelabresib met the primary
endpoint in myelofibrosis; Novartis announced the acquisition of
MorphoSys.
Financial guidance for full year 2024 (excludes
contribution from future transactions)
- Royalty Pharma expects 2024 Portfolio Receipts to be between
$2,600 million and $2,700 million.
- 2024 Portfolio Receipts guidance
includes expected growth in royalty receipts of 5% to 9%.
Financial & Liquidity Summary
|
Three Months EndedDecember 31, |
Twelve Months Ended December 31, |
|
(unaudited) |
($ and shares in millions) |
2023 |
2022 |
2023 |
2022 |
Portfolio Receipts |
736 |
1,064 |
3,049 |
2,789 |
Net cash provided by operating activities |
773 |
570 |
2,988 |
2,144 |
Adjusted EBITDA (non-GAAP)* |
682 |
983 |
2,806 |
2,566 |
Portfolio Cash Flow (non-GAAP)* |
687 |
996 |
2,708 |
2,421 |
Weighted average/fully diluted Class A ordinary shares
outstanding |
598 |
607 |
603 |
607 |
* See “Liquidity and Capital Resources” section. Adjusted EBITDA
and Portfolio Cash Flow are non-GAAP liquidity measures calculated
in accordance with the credit agreement. Portfolio Cash Flow is a
non-GAAP measure that is calculated as Adjusted EBITDA minus
interest paid or received, net.
Fourth Quarter 2023 Portfolio Receipts
As previously announced (January 8, 2024 press release),
Portfolio Receipts is now being reported as a key performance
metric. The calculation of Portfolio Receipts will result in the
same amount as Royalty Pharma’s previous presentation of Adjusted
Cash Receipts (which will no longer be reported).
This change of presentation will facilitate increased
transparency into the economics of individual royalties as royalty
receipts by product and franchise will now be reported net of
legacy non-controlling interests. In addition, Royalty receipts and
Milestones and other contractual receipts will be reported as two
separate subtotals summing to Portfolio Receipts. This change will
provide greater clarity on the underlying trends of Royalty
Pharma’s royalty portfolio versus other contractual payments which
may be more variable over time. Prior-period results using this
updated presentation are available for download on the Quarterly
Results page of the company’s website under Supplemental Financial
Information (link here).
Portfolio Receipts Highlights
|
|
|
Three Months Ended December 31, |
|
|
|
(unaudited) |
($ in millions) |
|
|
2023 |
2022 |
Change |
Products: |
Marketers: |
Therapeutic Area: |
|
|
|
Cystic fibrosis franchise |
Vertex |
Rare disease |
208 |
187 |
11% |
Tysabri |
Biogen |
Neuroscience |
68 |
73 |
(7)% |
Trelegy |
GSK |
Respiratory |
60 |
47 |
28% |
Imbruvica |
AbbVie, Johnson & Johnson |
Cancer |
50 |
58 |
(13)% |
Promacta |
Novartis |
Hematology |
44 |
40 |
9% |
Xtandi |
Pfizer, Astellas |
Cancer |
38 |
38 |
1% |
Tremfya |
Johnson & Johnson |
Immunology |
35 |
29 |
21% |
Evrysdi |
Roche |
Rare disease |
20 |
14 |
44% |
Cabometyx/Cometriq |
Exelixis, Ipsen, Takeda |
Cancer |
18 |
15 |
18% |
Spinraza |
Biogen |
Rare disease |
17 |
— |
n/a |
Trodelvy |
Gilead |
Cancer |
10 |
6 |
64% |
Erleada |
Johnson & Johnson |
Cancer |
9 |
5 |
72% |
Orladeyo |
BioCryst |
Rare disease |
8 |
6 |
29% |
Nurtec ODT/Zavzpret |
Pfizer |
Neuroscience |
5 |
4 |
20% |
Other products(5) |
63 |
71 |
(12)% |
Royalty receipts |
651 |
593 |
10% |
Milestones and other contractual receipts |
84 |
470 |
(82)% |
Portfolio Receipts |
736 |
1,064 |
(31)% |
|
|
|
|
Results for full year
2023 and 2022 are shown in Table 4. Amounts shown in the table may
not add due to rounding. |
Portfolio Receipts was $736 million in the
fourth quarter of 2023, a decrease of 31% compared to the same
period in 2022. The decrease in the fourth quarter was attributable
to the accelerated redemption of all outstanding Series A and
Series B Biohaven Preferred Shares following Pfizer’s acquisition
of Biohaven in October 2022, which is reflected within milestones
and other contractual receipts. Royalty receipts increased 10%,
primarily driven by growth in the cystic fibrosis franchise,
Trelegy and Evrysdi, and the addition of new royalties on Spinraza.
These positive factors were partially offset by declining royalty
receipts on Imbruvica, Tysabri and other products.
Liquidity and Capital Resources
Royalty Pharma’s liquidity and capital resources are summarized
below:
As of December 31, 2023, Royalty Pharma had cash and cash
equivalents of $477 million and total debt with principal value of
$6.3 billion.
Liquidity Summary
|
Three Months EndedDecember 31, |
Twelve Months EndedDecember 31, |
($ in millions) |
2023 |
2022 |
2023 |
2022 |
Portfolio Receipts |
736 |
1,064 |
3,049 |
2,789 |
Payments for operating and professional costs |
(54) |
(81) |
(243) |
(223) |
Adjusted EBITDA (non-GAAP)* |
682 |
983 |
2,806 |
2,566 |
Interest received/(paid), net |
5 |
14 |
(98) |
(145) |
Portfolio Cash Flow (non-GAAP)* |
687 |
996 |
2,708 |
2,421 |
Amounts may not add due to rounding.*Adjusted EBITDA and
Portfolio Cash Flow are calculated in accordance with the credit
agreement.
Adjusted EBITDA and Portfolio Cash Flow are supplemental
non-GAAP liquidity measures that are key components of certain
material covenants contained in Royalty Pharma’s credit
agreement.
- Adjusted EBITDA (non-GAAP) was $682 million in
the fourth quarter of 2023. Adjusted EBITDA is calculated in
accordance with the credit agreement as Portfolio Receipts minus
payments for operating and professional costs. The calculation of
Adjusted EBITDA results in the same total as under Royalty Pharma’s
previous presentation of Adjusted EBITDA.
- Portfolio Cash Flow (non-GAAP) was $687
million in the fourth quarter of 2023. Portfolio Cash Flow is
calculated in accordance with the credit agreement as Adjusted
EBITDA minus interest paid or received, net. This non-GAAP measure
was added to our disclosure to align with a material covenant
contained in Royalty Pharma’s credit agreement. This measure
reflects the cash generated by Royalty Pharma’s business that can
be redeployed into value-enhancing royalty acquisitions, used to
repay debt, returned to shareholders through dividends or share
purchases or utilized for other discretionary investments. The
calculation of Portfolio Cash Flow does not include
development-stage funding payments - upfront and milestone. This is
the primary material difference from Royalty Pharma’s previous
presentation of Adjusted Cash Flow (which will no longer be
reported).
Royalty Pharma has provided a reconciliation of each non-GAAP
measure to the most directly comparable GAAP financial measure, net
cash provided by operating activities in Table 5.
Royalty Pharma announced new transactions of up to $4.0 billion
in 2023, which includes upfront payments and potential future
milestones. Royalty Pharma is now providing an aggregate amount for
total Capital Deployment, which reflects cash payments during the
period for new and previously announced transactions. Capital
Deployment was $1.0 billion in the fourth quarter and $2.2 billion
in 2023. See the detail of Capital Deployment by category
below.
Capital Deployment Details
|
Three Months EndedDecember 31, |
Twelve Months EndedDecember 31, |
($ in millions) |
2023 |
2022 |
2023 |
2022 |
Acquisitions of financial royalty assets |
(1,002) |
(250) |
(2,116) |
(1,742) |
Development-stage funding payments - upfront and milestone |
— |
(50) |
(50) |
(175) |
Development-stage funding payments – ongoing |
(1) |
(1) |
(2) |
(2) |
Purchases of available for sale debt securities |
— |
(86) |
— |
(480) |
Milestone payments |
— |
— |
(12) |
— |
Investments in equity method investees |
(2) |
— |
(13) |
(10) |
Acquisitions of other financial assets |
— |
— |
— |
(21) |
Contributions from legacy non-controlling interests - R&D |
0 |
0 |
1 |
1 |
Total Capital Deployment |
(1,005) |
(386) |
(2,192) |
(2,428) |
Amounts may not add due to rounding.
In October 2023, Royalty Pharma drew $350 million under its
existing unsecured revolving credit facility, which was repaid
during the fourth quarter of 2023. Royalty Pharma also executed an
amendment to its credit agreement during the fourth quarter of 2023
to increase its borrowing capacity under the revolving credit
facility to $1.8 billion and to extend the maturity for a portion
of the commitments.
Royalty Pharma began repurchasing its Class A ordinary shares in
April 2023 under a $1.0 billion multi-year share repurchase
program. During the fourth quarter of 2023, Royalty Pharma
repurchased approximately 957,000 shares for $26 million. The
weighted-average diluted Class A ordinary shares outstanding for
the fourth quarter of 2023 was approximately 598 million and the
fully diluted Class A ordinary shares outstanding was approximately
607 million for the fourth quarter of 2022. Royalty Pharma
repurchased approximately 10 million shares for $305 million in
2023 under this repurchase program.
Recent Transactions
During the fourth quarter of 2023, Royalty Pharma announced new
transactions of up to $1.6 billion. Announced transactions amount
reflects the entire amount of capital committed for new
transactions during the year, including potential future
milestones.
Recent transactions include:
- In November 2023, Royalty Pharma acquired a royalty interest in
long-acting injectable olanzapine (TEV-’749), a Phase 3
development-stage product for the treatment of schizophrenia, from
Teva Pharmaceuticals Industries Ltd. (press release). Under the
terms of the agreement, Royalty Pharma will provide R&D funding
of up to $125 million to support the development of TEV-’749.
- In October 2023, Royalty Pharma acquired additional royalties
on Roche’s Evrysdi (press release), an approved product for the
treatment of spinal muscular atrophy, from PTC Therapeutics, Inc.
(PTC) for an upfront payment of $1.0 billion. Until December 31,
2025, PTC will have the option to sell the remainder of the Evrysdi
royalty retained by PTC to Royalty Pharma for $500 million less
royalties received in five equal tranches. If PTC exercises fewer
than three of these options, Royalty Pharma has the option to
purchase 50% of the remaining PTC royalty for $250 million less
royalties received until March 31, 2026.
- Additionally, in January 2024, Royalty Pharma acquired a
royalty interest in ecopipam for an upfront payment of $49 million
and up to $44 million in milestone payments contingent on the
achievement of certain regulatory milestones. Ecopipam is in Phase
3 development by Emalex Biosciences for the treatment of Tourette
Syndrome.
The information in this section should be read together with
Royalty Pharma’s reports and documents filed with the SEC at
www.sec.gov and the reader is also encouraged to review all other
press releases and information available in the Investors section
of Royalty Pharma’s website at www.royaltypharma.com.
Key Developments Relating to the PortfolioThe
key developments related to Royalty Pharma’s royalty interests are
discussed below based on disclosures from the marketers of the
products.
Pelabresib |
In February 2024, Novartis announced that it has entered into an
agreement to make a voluntary public takeover offer to acquire
MorphoSys at an offer price of €68.00 per share in cash, for a
total equity value of €2.7 billion. The closing is expected in the
first half of 2024.In November 2023, MorphoSys announced positive
topline results from the Phase 3 MANIFEST-2 study investigating
pelabresib in combination with ruxolitinib compared with placebo
plus ruxolitinib in JAK inhibitor-naive patients with
myelofibrosis. A New Drug Application (NDA) is expected to be
submitted to the U.S. Food and Drug Administration (FDA) in the
second half of 2024. |
Cystic fibrosis franchise |
In February 2024, Vertex announced positive Phase 3 results from
its new triple combination therapy for the treatment of cystic
fibrosis (CF). Vertex plans to file for approval with global
regulators for people with CF ages 6 years and older by mid-2024.In
November 2023, Vertex announced that the European Commission
granted approval for the label expansion of Kaftrio in a
combination regimen with ivacaftor for the treatment of children
with CF ages 2 through 5 years old. |
Trodelvy |
In January 2024, Gilead announced that the Phase 3 EVOKE-01 study
evaluating Trodelvy compared to docetaxel did not meet its primary
endpoint of overall survival in patients with previously treated
metastatic non-small cell lung cancer. |
Aficamten |
In December 2023, Cytokinetics announced positive topline results
from SEQUOIA-HCM, the pivotal Phase 3 clinical trial of aficamten
in patients with symptomatic obstructive hypertrophic
cardiomyopathy. The full results will be presented at an upcoming
conference. |
KarXT |
In December 2023, Bristol Myers Squibb announced it has agreed to
acquire Karuna for $330 per share in cash, for a total equity value
of $14.0 billion with an expected closing in the first half of
2024.In November 2023, Karuna announced that the FDA accepted its
NDA for KarXT for the treatment of schizophrenia with an FDA action
date of September 26, 2024. |
Skytrofa |
In December 2023, Ascendis Pharma announced positive topline
results from foresiGHt, its Phase 3 trial to compare TransCon hGH
with placebo and daily hGH in adults with growth hormone
deficiency. Ascendis plans to submit a supplemental Biologics
License Application to the FDA in 2024. |
Xtandi |
In November 2023, Astellas and Pfizer announced that the companies
received an approval by the FDA of a supplemental NDA for Xtandi
for the treatment of patients with nonmetastatic
castration-sensitive prostate cancer with biochemical recurrence at
high risk for metastasis. |
Trontinemab |
In October 2023, Roche presented interim results of a Phase 1b/2a
study for trontinemab, a novel brainshuttle Aβ antibody for the
treatment of Alzheimer’s disease. This study demonstrated that
trontinemab rapidly reduces amlyoid plaque reduction in patients
with Alzheimer’s disease. |
2024 Financial Outlook
Royalty Pharma has provided guidance for full year 2024,
excluding transactions and borrowings announced
after the date of this release, as follows:
|
Provided February 15, 2024 |
Portfolio Receipts |
$2,600 million to $2,700 million |
Payments for operating and professional costs |
8% to 9% of Portfolio Receipts |
Interest Paid |
$160 million |
The above Portfolio Receipts guidance includes expected royalty
receipts growth of 5% to 9% in 2024.
Royalty Pharma’s full-year 2024 guidance reflects a negligible
estimated foreign exchange impact to Portfolio Receipts, assuming
current foreign exchange rates prevail for 2024.
Total interest paid is based on the semi-annual interest payment
schedule of Royalty Pharma’s existing notes and is anticipated to
be approximately $160 million in 2024. Interest paid is anticipated
to be approximately $79 million in each of the first and third
quarters of 2024 with de minimis amounts being recorded in the
second and fourth quarters of 2024. The projection assumes no
additional debt financing in 2024, including no drawdown on the
revolving credit facility. In 2023, Royalty Pharma also collected
interest of $72 million on its cash and cash equivalents, which
partially offsets interest paid.
Royalty Pharma today provides this guidance based on its most
up-to-date view on its prospects. This guidance assumes no major
unforeseen adverse events and excludes the contributions from
transactions announced subsequent to the date of this press
release. Furthermore, Royalty Pharma may amend its guidance in the
event it engages in new royalty transactions which have a material
near-term financial impact on the company.
Financial Results Call
Royalty Pharma will host a conference call and simultaneous
webcast to discuss its fourth quarter and full year 2023 results
today at 8:00 a.m., Eastern Time. Please visit the “Investors” page
of the company’s website at
https://www.royaltypharma.com/investors/events to obtain conference
call information and to view the live webcast. A replay of the
conference call and webcast will be archived on the company's
website for at least 30 days.
About Royalty Pharma plc
Founded in 1996, Royalty Pharma is the largest buyer of
biopharmaceutical royalties and a leading funder of innovation
across the biopharmaceutical industry, collaborating with
innovators from academic institutions, research hospitals and
non-profits through small and mid-cap biotechnology companies to
leading global pharmaceutical companies. Royalty Pharma has
assembled a portfolio of royalties which entitles it to payments
based directly on the top-line sales of many of the industry’s
leading therapies. Royalty Pharma funds innovation in the
biopharmaceutical industry both directly and indirectly - directly
when it partners with companies to co-fund late-stage clinical
trials and new product launches in exchange for future royalties,
and indirectly when it acquires existing royalties from the
original innovators. Royalty Pharma’s current portfolio includes
royalties on more than 35 commercial products, including Vertex’s
Trikafta, GSK’s Trelegy, Roche’s Evrysdi, Johnson & Johnson’s
Tremfya, Biogen’s Tysabri and Spinraza, AbbVie and Johnson &
Johnson’s Imbruvica, Astellas and Pfizer’s Xtandi, Novartis’
Promacta, Pfizer’s Nurtec ODT and Gilead’s Trodelvy, and 14
development-stage product candidates.
Forward-Looking Statements
The information set forth herein does not purport to be complete
or to contain all of the information you may desire. Statements
contained herein are made as of the date of this document unless
stated otherwise, and neither the delivery of this document at any
time, nor any sale of securities, shall under any circumstances
create an implication that the information contained herein is
correct as of any time after such date or that information will be
updated or revised to reflect information that subsequently becomes
available or changes occurring after the date hereof.
This document contains statements that constitute
“forward-looking statements” as that term is defined in the United
States Private Securities Litigation Reform Act of 1995, including
statements that express the company’s opinions, expectations,
beliefs, plans, objectives, assumptions or projections regarding
future events or future results, in contrast with statements that
reflect historical facts. Examples include discussion of Royalty
Pharma’s strategies, financing plans, growth opportunities and
market growth. In some cases, you can identify such forward-looking
statements by terminology such as “anticipate,” “intend,”
“believe,” “estimate,” “plan,” “seek,” “project,” “expect,” “may,”
“will,” “would,” “could” or “should,” the negative of these terms
or similar expressions. Forward-looking statements are based on
management’s current beliefs and assumptions and on information
currently available to the company. However, these forward-looking
statements are not a guarantee of Royalty Pharma’s performance, and
you should not place undue reliance on such statements.
Forward-looking statements are subject to many risks, uncertainties
and other variable circumstances, and other factors. Such risks and
uncertainties may cause the statements to be inaccurate and readers
are cautioned not to place undue reliance on such statements. Many
of these risks are outside of the company’s control and could cause
its actual results to differ materially from those it thought would
occur. The forward-looking statements included in this document are
made only as of the date hereof. The company does not undertake,
and specifically declines, any obligation to update any such
statements or to publicly announce the results of any revisions to
any such statements to reflect future events or developments,
except as required by law.
Certain information contained in this document relates to or is
based on studies, publications, surveys and other data obtained
from third-party sources and the company’s own internal estimates
and research. While the company believes these third-party sources
to be reliable as of the date of this document, it has not
independently verified, and makes no representation as to the
adequacy, fairness, accuracy or completeness of, any information
obtained from third-party sources. In addition, all of the market
data included in this document involves a number of assumptions and
limitations, and there can be no guarantee as to the accuracy or
reliability of such assumptions. Finally, while the company
believes its own internal research is reliable, such research has
not been verified by any independent source.
For further information, please reference Royalty Pharma’s
reports and documents filed with the U.S. Securities and Exchange
Commission ("SEC") by visiting EDGAR on the SEC's website at
www.sec.gov.
Portfolio Receipts
Portfolio Receipts is a key performance metric that represents
our ability to generate cash from our portfolio investments, the
primary source of capital that we can deploy to make new portfolio
investments. Portfolio Receipts is defined as the sum of royalty
receipts and milestones and other contractual receipts. Royalty
receipts include variable payments based on sales of products, net
of contractual payments to the legacy non-controlling interests,
that is attributed to Royalty Pharma.
Milestones and other contractual receipts include sales-based or
regulatory milestone payments and other fixed contractual receipts,
net of contractual payments to legacy non-controlling interests,
that is attributed to Royalty Pharma. Portfolio Receipts does not
include proceeds from equity securities or proceeds from purchases
and sales of marketable securities, neither of which are central to
our fundamental business strategy.
Portfolio Receipts is calculated as the sum of the following
line items from our GAAP consolidated statements of cash flows:
Cash collections from financial royalty assets, Cash collections
from intangible royalty assets, Other royalty cash collections,
Proceeds from available for sale debt securities and Distributions
from equity method investees less Distributions to legacy
non-controlling interests - Portfolio Receipts, which represent
contractual distributions of royalty receipts, milestones and other
contractual receipts to the Legacy Investors Partnerships and
RPSFT.
Use of Non-GAAP Measures
Adjusted EBITDA and Portfolio Cash Flow are non-GAAP liquidity
measures that exclude the impact of certain items and therefore
have not been calculated in accordance with GAAP. Management
believes that Adjusted EBITDA and Portfolio Cash Flow are important
non-GAAP measures used to analyze liquidity because they are key
components of certain material covenants contained within Royalty
Pharma’s credit agreement. Royalty Pharma cautions readers that
amounts presented in accordance with the definitions of Adjusted
EBITDA and Portfolio Cash Flow may not be the same as similar
measures used by other companies or analysts. These non-GAAP
liquidity measures have limitations as analytical tools, and you
should not consider them in isolation or as a substitute for the
analysis of Royalty Pharma’s results as reported under GAAP.
The definitions of Adjusted EBITDA and Portfolio Cash Flow used
by Royalty Pharma are the same as the definitions in the credit
agreement. Noncompliance with the interest coverage ratio, leverage
ratio and Portfolio Cash Flow ratio covenants under the credit
agreement could result in lenders requiring the company to
immediately repay all amounts borrowed. If Royalty Pharma cannot
satisfy these covenants, it would be prohibited under the credit
agreement from engaging in certain activities, such as incurring
additional indebtedness, paying dividends, making certain payments,
and acquiring and disposing of assets. Consequently, Adjusted
EBITDA and Portfolio Cash Flow are critical to the assessment of
Royalty Pharma’s liquidity.
Adjusted EBITDA and Portfolio Cash Flow are used by management
as key liquidity measures in the evaluation of the company’s
ability to generate cash from operations. Management uses Adjusted
EBITDA and Portfolio Cash Flow when considering available cash,
including for decision-making purposes related to funding of
acquisitions, debt repayments, dividends and other discretionary
investments. Further, these non-GAAP liquidity measures help
management, the audit committee and investors evaluate the
company’s ability to generate liquidity from operating
activities.
The company has provided reconciliations of these non-GAAP
liquidity measures to the most directly comparable GAAP financial
measure, being net cash provided by operating activities in Table
5.
Royalty Pharma Investor Relations and
Communications
+1 (212) 883-6637ir@royaltypharma.com
Royalty Pharma plcCondensed Consolidated
Operations (unaudited)Table 1 |
|
Three Months EndedDecember 31, |
Twelve Months EndedDecember 31, |
($ in millions) |
2023 |
2022 |
2023 |
2022 |
Income and other revenues |
|
|
|
|
Income from financial royalty assets |
523 |
547 |
2,198 |
2,125 |
Revenue from intangible royalty assets |
0 |
0 |
1 |
37 |
Other royalty income |
73 |
19 |
156 |
75 |
Total income and other revenues |
596 |
566 |
2,355 |
2,237 |
Operating expenses |
|
|
|
|
Research and development funding expense |
1 |
51 |
52 |
177 |
Provision for changes in expected cash flows from financial royalty
assets |
(77) |
309 |
561 |
904 |
Amortization of intangible assets |
— |
— |
— |
6 |
General and administrative expenses |
59 |
73 |
250 |
227 |
Financial royalty asset impairment |
— |
616 |
— |
616 |
Total operating expenses, net |
(17) |
1,048 |
862 |
1,930 |
Operating income/(loss) |
613 |
(483) |
1,492 |
307 |
Other (income)/expense |
|
|
|
|
Equity in (earnings)/losses of equity method investees |
(0) |
7 |
(29) |
9 |
Interest expense |
47 |
47 |
187 |
188 |
Other (income)/expense, net |
(152) |
74 |
(366) |
(120) |
Total other (income)/expense, net |
(105) |
127 |
(208) |
77 |
Consolidated net income/(loss) before tax |
718 |
(610) |
1,700 |
230 |
Income tax expense |
— |
— |
— |
— |
Consolidated net income/(loss) |
718 |
(610) |
1,700 |
230 |
Net income/(loss) attributable to non-controlling interests |
223 |
(154) |
565 |
187 |
Net income/(loss) attributable to Royalty Pharma
plc |
494 |
(456) |
1,135 |
43 |
Amounts may not add due to rounding.
Royalty Pharma plcSelected Balance Sheet Data
(unaudited)Table 2 |
($ in millions) |
As of December 31, 2023 |
As of December 31, 2022 |
Cash and cash equivalents |
477 |
1,711 |
Marketable securities |
— |
24 |
Total current and non-current financial royalty assets, net |
14,827 |
14,184 |
Total assets |
16,382 |
16,813 |
Current portion of long-term debt |
— |
998 |
Long-term debt, net of current portion |
6,135 |
6,119 |
Total liabilities |
6,298 |
7,288 |
Total shareholders’ equity |
10,084 |
9,525 |
Royalty Pharma plcConsolidated Statements
of Cash Flows (unaudited)Table 3 |
|
Three Months Ended December 31, |
Twelve Months EndedDecember 31, |
($ in millions) |
2023 |
2022 |
2023 |
2022 |
Cash flows from operating activities: |
|
|
|
|
Cash collections from financial royalty assets |
747 |
663 |
3,201 |
2,507 |
Cash collections from intangible royalty assets |
0 |
1 |
1 |
73 |
Other royalty cash collections |
75 |
18 |
159 |
70 |
Distributions from equity method investees |
— |
6 |
19 |
39 |
Interest received |
8 |
14 |
72 |
25 |
Development-stage funding payments - ongoing |
(1) |
(1) |
(2) |
(2) |
Development-stage funding payments - upfront and milestone |
— |
(50) |
(50) |
(175) |
Payments for operating and professional costs |
(54) |
(81) |
(243) |
(223) |
Interest paid |
(3) |
(1) |
(169) |
(170) |
Net cash provided by operating activities |
773 |
570 |
2,988 |
2,144 |
Cash flows from investing activities: |
|
|
|
|
Distributions from equity method investees |
5 |
— |
44 |
— |
Investments in equity method investees |
(2) |
— |
(13) |
(10) |
Purchases of equity securities |
— |
(25) |
— |
(88) |
Proceeds from equity securities |
— |
165 |
— |
211 |
Purchases of available for sale debt securities |
— |
(86) |
— |
(480) |
Proceeds from available for sale debt securities |
1 |
495 |
1 |
542 |
Purchases of marketable securities |
— |
— |
— |
(235) |
Proceeds from sales and maturities of marketable securities |
— |
116 |
24 |
792 |
Acquisitions of financial royalty assets |
(1,002) |
(250) |
(2,116) |
(1,742) |
Acquisitions of other financial assets |
— |
— |
— |
(21) |
Milestone payments |
— |
— |
(12) |
— |
Other |
(2) |
— |
(2) |
— |
Net cash (used in)/provided by investing
activities |
(1,000) |
415 |
(2,073) |
(1,029) |
Cash flows from financing activities: |
|
|
|
|
Distributions to legacy non-controlling interests - Portfolio
Receipts |
(92) |
(119) |
(377) |
(442) |
Distributions to legacy non-controlling interests - other |
— |
(29) |
— |
(31) |
Distributions to continuing non-controlling interests |
(24) |
(33) |
(120) |
(144) |
Dividends to shareholders |
(89) |
(84) |
(358) |
(333) |
Repurchases of Class A ordinary shares |
(30) |
— |
(305) |
— |
Contributions from legacy non-controlling interests - R&D |
0 |
0 |
1 |
1 |
Contributions from non-controlling interests - other |
1 |
1 |
7 |
6 |
Cash acquired in connection with purchase of non-controlling
interest |
5 |
— |
5 |
— |
Proceeds from revolving credit facility |
350 |
— |
350 |
— |
Repayment of revolving credit facility |
(350) |
— |
(350) |
— |
Repayment of long-term debt |
— |
— |
(1,000) |
— |
Debt issuance costs and other |
(2) |
(1) |
(2) |
(1) |
Net cash used in financing activities |
(232) |
(266) |
(2,149) |
(945) |
Net change in cash and cash equivalents |
(459) |
719 |
(1,234) |
170 |
Cash and cash equivalents, beginning of period |
936 |
992 |
1,711 |
1,541 |
Cash and cash equivalents, end of period |
477 |
1,711 |
477 |
1,711 |
Amounts may not add due to rounding.
Royalty Pharma plcFourth Quarter and Full
Year Portfolio Receipts Highlights
(unaudited)Table 4 |
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
($ in millions) |
2023 |
2022 |
Change |
2023 |
2022 |
Change |
Products: |
|
|
|
|
|
|
Cystic fibrosis franchise |
208 |
187 |
11% |
771 |
690 |
12% |
Tysabri |
68 |
73 |
(7)% |
279 |
305 |
(8)% |
Imbruvica |
50 |
58 |
(13)% |
210 |
258 |
(18)% |
Trelegy |
60 |
47 |
28% |
203 |
90 |
126% |
Promacta |
44 |
40 |
9% |
161 |
150 |
8% |
Xtandi |
38 |
38 |
1% |
146 |
154 |
(5)% |
Tremfya |
35 |
29 |
21% |
116 |
97 |
20% |
Evrysdi |
20 |
14 |
44% |
66 |
41 |
63% |
Cabometyx/Cometriq |
18 |
15 |
18% |
66 |
55 |
19% |
Spinraza |
17 |
— |
n/a |
45 |
— |
n/a |
Trodelvy |
10 |
6 |
64% |
33 |
20 |
62% |
Orladeyo |
8 |
6 |
29% |
29 |
22 |
35% |
Erleada |
9 |
5 |
72% |
27 |
18 |
55% |
Nurtec ODT/Zavzpret |
5 |
4 |
20% |
18 |
15 |
23% |
Other products(5) |
63 |
71 |
(12)% |
277 |
355 |
(22)% |
Royalty receipts |
651 |
593 |
10% |
2,449 |
2,269 |
8% |
Milestones and other contractual receipts |
84 |
470 |
(82)% |
599 |
520 |
15% |
Portfolio Receipts |
736 |
1,064 |
(31)% |
3,049 |
2,789 |
9% |
Amounts may not add due to rounding.
Royalty Pharma plcGAAP to Non-GAAP
Reconciliation (unaudited)Table 5 |
|
Three Months EndedDecember 31, |
Twelve Months EndedDecember 31, |
($ in millions) |
2023 |
2022 |
2023 |
2022 |
Net cash provided by operating activities
(GAAP) |
773 |
570 |
2,988 |
2,144 |
Adjustments: |
|
|
|
|
Proceeds from available for sale debt securities(6) |
1 |
495 |
1 |
542 |
Distributions from equity method investees(6) |
5 |
— |
44 |
— |
Interest (received)/paid, net(6) |
(5) |
(14) |
98 |
145 |
Development-stage funding payments - ongoing |
1 |
1 |
2 |
2 |
Development-stage funding payments - upfront and milestone |
— |
50 |
50 |
175 |
Distributions to legacy non-controlling interests - Portfolio
Receipts(6) |
(92) |
(119) |
(377) |
(442) |
Adjusted EBITDA (non-GAAP) |
682 |
983 |
2,806 |
2,566 |
Interest received/(paid), net(6) |
5 |
14 |
(98) |
(145) |
Portfolio Cash Flow (non-GAAP) |
687 |
996 |
2,708 |
2,421 |
Amounts may not add due to rounding.
Royalty Pharma plcDescription of Approved
Indications for Select Portfolio TherapiesTable
6 |
Cystic fibrosis franchise |
Cystic fibrosis |
Tysabri |
Relapsing forms of multiple sclerosis |
Imbruvica |
Hematological malignancies and chronic graft versus host
disease |
Trelegy |
Chronic obstructive pulmonary disease and asthma |
Promacta |
Chronic immune thrombocytopenia purpura and aplastic anemia |
Xtandi |
Prostate cancer |
Tremfya |
Plaque psoriasis and active psoriatic arthritis |
Evrysdi |
Spinal muscular atrophy |
Cabometyx / Cometriq |
Kidney, liver and thyroid cancer |
Spinraza |
Spinal muscular atrophy |
Trodelvy |
Breast and bladder cancer |
Orladeyo |
Hereditary angioedema |
Erleada |
Prostate cancer |
Nurtec ODT |
Acute and preventative treatment of migraine |
Notes
(1) Portfolio Receipts is a key performance metric that
represents our ability to generate cash from our portfolio
investments, the primary source of capital that we can deploy to
make new portfolio investments. Portfolio Receipts is defined as
the sum of royalty receipts and milestones and other contractual
receipts. Royalty receipts include variable payments based on sales
of products, net of contractual payments to the legacy
non-controlling interests, that is attributed to Royalty Pharma.
Milestones and other contractual receipts include sales-based or
regulatory milestone payments and other fixed contractual receipts,
net of contractual payments to the legacy non-controlling
interests, that is attributed to Royalty Pharma. Portfolio Receipts
does not include proceeds from equity securities or marketable
securities, both of which are not central to our fundamental
business strategy.
Portfolio Receipts is calculated as the sum of the following
line items from our GAAP consolidated statements of cash flows:
Cash collections from financial royalty assets, Cash collections
from intangible royalty assets, Other royalty cash collections,
Proceeds from available for sale debt securities and Distributions
from equity method investees less Distributions to legacy
non-controlling interests - Portfolio Receipts, which represent
contractual distributions of royalty receipts and milestones and
other contractual receipts to the Legacy Investors Partnerships and
RPSFT.
(2) Adjusted EBITDA is defined under the credit agreement
as Portfolio Receipts minus payments for operating and professional
costs. Operating and professional costs reflect Payments for
operating and professional costs from the statements of cash flows.
See GAAP to Non-GAAP reconciliation in Table 5.
(3) Portfolio Cash Flow is defined under the credit
agreement as Adjusted EBITDA minus interest paid or received, net.
See GAAP to Non-GAAP reconciliation in Table 5. Portfolio Cash Flow
reflects the cash generated by Royalty Pharma’s business that can
be redeployed into value-enhancing royalty acquisitions, used to
repay debt, returned to shareholders through dividends or share
purchases or utilized for other discretionary investments.
(4) Capital Deployment is calculated as the summation of
the following line items from our GAAP consolidated statements of
cash flows: Investments in equity method investees, Purchases of
available for sale debt securities, Acquisitions of financial
royalty assets, Acquisitions of other financial assets, Milestone
payments, Development-stage funding payments - ongoing,
Development-stage funding payments - upfront and milestone less
Contributions from legacy non-controlling interests - R&D.
(5) Other products primarily include royalty receipts on
the following products: Cimzia, Crysvita, Emgality, Entyvio,
Farxiga/Onglyza, IDHIFA, Januvia, Janumet, Other DPP-IVs, Lexiscan,
Mircera, Nesina, Prevymis, Soliqua and distributions from the
Legacy SLP Interest, which is presented as Distributions from
equity method investees on the GAAP consolidated statements of cash
flows.
(6) The table below shows the line item for each adjustment
and the direct location for such line item on the GAAP consolidated
statements of cash flows.
Reconciling Adjustment |
Statements of Cash Flows Classification |
Interest (received)/paid, net |
Operating activities(Interest receivedlessInterest paid) |
Distributions from equity method investees |
Investing activities |
Proceeds from available for sale debt securities |
Investing activities |
Distributions to legacy non-controlling interests - Portfolio
Receipts |
Financing activities |
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