I'm Geoff Meacham. I'm the Senior Biopharma Analyst here at B of A, and we're excited to have Royalty Pharma on stage with us. So we have Terry Coyne, CFO, Marshall Urist, Head of Research and Investments, R&I. R&I, that's it. Yeah. Yeah. Okay. Great. So coming off a good 1Q for you guys, got a new deal going with Sanofi. So maybe just, you know, refresh everyone here, maybe for those on the webcast and, you know, just the terms of that and kind of the diligence process that went into that. Sure. So yeah, we're really excited. We announced the acquisition of a royalty on a Sanofi product called frexalimab. We, for $525 million, we bought the royalty, you know, from the small private company who originally developed the product. So just to catch everyone up, this is an anti-CD40 ligand antibody that's in development for multiple sclerosis in phase III. Had some extremely, you know, strong phase II-B data that was recently in the New England Journal of Medicine, and we'll have phase III data in the 2027 timeframe. So we're really excited about that. You know, Sanofi has talked about it as having non-risk-adjusted peak sales of over EUR 5 billion. The center of the thesis was really, though, the MS indication, which is where we have, you know, where all the most of the clinical data are. We talked about seeing that as a, you know, $3 billion+ opportunity alone in that one indication. And we are— we're really excited. So it, it's a big royalty, high single, low double digits. We also purchased a series of milestones associated with that, that could add significantly to the value as well. So we're excited to have it. Yep. Yeah, Marshall, just along those lines, I mean, I think since you guys IPO'd, and, you know, obviously, the— you guys have acquired royalties for, you know, decades. But this one, though, you know, seems like, you know, it seems like the more recent ones are kind of pipeline and a product type of deals, you know? So I guess the question is, I know the answer is probably not by much, but how has the process for evaluating products like this in the past couple of years evolved over time? Are you looking for different things as some of these, some therapeutic markets sort of mature and, and have disruptive candidates that d on't have processes, royalties processes in place? Yeah, I mean, one of the big changes over the years has been, you know, we've all seen the explosion of the number of sort of companies, new things in across every therapeutic area. You know, the speed of innovation has definitely, you know, prompted us to continue to evolve our diligence process. So, you know, there's no question that, you know, thinking about competitive landscape, not just today, but you know, where it might be, what are real kind of moats around products in this business is, you know, something that we've had to, you know, do a lot more thinking on, I think, like everyone else around. But yeah, but definitely, definitely evolved, and we've—y ou know, that's why you've seen us, you know, among other things, we've grown the team, we've grown our kinda research and investments team pretty significantly over the past few years. We've talked about investments in data and other things. And so the, you know, the key thing is we wanna, you know, stay at the forefront of accessing kind of every resource we can, you know, to make our diligence process as, you know, as sort of robust and efficient as possible. Right. Yeah, and just really along those lines, when we, years ago, when there was sort of a wave of newer, more mostly technology kind of IPOs, those were probably too early for you guys, right? Cell therapy, gene therapy, et cetera. But now you have a situation where, you know, a 50-patient phase I is de-risked, your next trial is a phase III, so it advances a lot, it's a lot faster. So does that open the aperture up a little bit more as we see more of those being validated in the markets? So, yeah, there's, there's two interesting themes there. I think the first one is, you know, and we probably talked about this back when we were in the sort of platform IPO phase, was that we sort of saw that as an exciting leading indicator because those stories were gonna mature, those platforms were gonna have to be kind of focused into specific products. And so that's much more in our, in our wheelhouse, right? And I think we're starting to see that today. And you're right, you know, the definition of proof of concept, what is de-risked, you know, has definitely evolving with time as well, and I think, you know, that's why you've seen us, you know, get creative also in terms of deal structures. You know, are there, are there ways, you know, when something is a little bit earlier, you know, can we, invest smaller amounts and, you know, as it gets de-risked, we can kind of grow with the product and those kind of themes? We've done some of that, and I think that's something, definitely something, you know, that we'll continue to evolve with. Right. Right. You know, and, and Terry, I think the question has always been, you know, is there another, you know, Vertex out there, right? A deal with a, with a quite, very high magnitude, but super high revenue potential. And historically, you guys have just dominated the bigger deals, right? Has that, has that changed over time as some of these private, you know, private equity and, and, and even, like, private credit, you know, kind of firms have, have expanded it more broadly into healthcare? So we still feel like we have a major competitive advantage when it comes to the bigger deals, because of our scale, because of our cost of capital, because of the fact that when we add a big product to the portfolio, it doesn't concentrate us, it actually diversifies us, and because of the team and the reputation that we have. So, you know, we can, we think we should continue to maintain a really strong share of the big deals. And there's a lot of them out there. We never know, you know, the stars need to align in terms of, you know, when there's a sort of willing buyer, willing seller. But they tend to come along every year or two, and we're always, you know, we're always trying to, you know, figure out how we can make deals happen, and there's a lot of them out there. Same goes for synthetics. Is that still an intended, you know, strategy to— Oh, yeah. Do more of those going forward? Yeah, for sure. There's—a nd that's a huge opportunity for us. Yeah, we—l ast year was a record year in terms of synthetics. I think we announced $775 million or so of synthetic deals last year. We think we're still at the tip of the iceberg there. There's a lot of opportunity. The capital needs are massive. Every company now is thinking about royalties as one of the tools that they can use- to fund themselves, and I think our position has been that if you're a successful biopharma company and you're bringing a product into phase III or bringing it to market, you're gonna need a lot of different sources of capital, and royalties should be one of them. Right. Right. Yeah, and just take a step back when you think about the maybe the negotiation process. I know you guys, you know, try to throw up a lot of the, you know. It, it's not trivial to develop these drugs, it's not trivial to commercialize them. You have the macro picture, but so I wanted to ask you, you know, is do you find companies that are looking to, you know, sell royalties, are they thinking that the IRA or elections or policy backdrop, do they blow it off? And then counter to that, are those any, in any of those, items for royalties core business? Is that something you take into more consideration now that we're, you know, getting closer to it? Yeah. So, you know, every seller is a little bit different, I think, in the terms of the way that they think about it, what's incorporated into their forecast and not. I think we have a little bit of a different style, where, you know, we even in, you know, bilateral negotiations, I think we really prize trying to be open about, you know, where we might be different and engage in a conversation about it, rather than, you know, it being sort of a kind of a bilateral, adversarial process. You know, like, "I can't tell you anything about where my forecast is." You know, we sort of welcome that, and it's great because it sort of drives dialogue. We learn something from our partners, they learn something from us. And so, you know, we tend to sort of try to push on that a lot, right? Sort of get in a room and and talk about it. You're right. I think from a diligence perspective, you know, IRA, beyond just IRA, you know, the Part D redesign's coming up, other things are happening, and so there's no question that's become a core part of diligence. Every time, you know, there are scenarios around that that we think through. And, you know, it's definitely ranges, 'cause I think we'd all admit, right? We don't exactly know exactly how it's all gonna play out, in the fullness of time, but definitely something that we're thinking about, trying to do our best to put numbers around. Yeah. In your existing portfolio, how do you guys think about that, looking to, you know, kind of next year and beyond? So we're pretty fortunate in that we don't have much IRA exposure in the existing portfolio. The couple of products that we've talked about are Xtandi and Imbruvica and Trelegy. And Imbruvica was on the— They're already on the way down anyway, right? Uh, well. Deceleration. Yeah, and Imbruvica is. It hasn't been a growth product lately. Xtandi is still growing, Trelegy is growing a lot. Yeah. But they're all different. So, you know, like we've said, Imbruvica is, it has been declining and, but that is on the list, the initial list of drugs that will be negotiated. For Xtandi, Astellas has talked about the impact of the IRA in their 2025 numbers, so I think that that's sort of understood at this point. And then Trelegy is one where, you know, it's already—it's a product for a much larger market, a lot of discounting already. So that might be one where, you know, where the dynamic could be a little different than a high-priced oncology drug. I think the thing that, you know, we still don't know about it, the unknown is the potential offsets of just improved access and, you know, more patients getting their scripts filled, and the lower out-of-pocket costs leading to more volume. So I think that's a dynamic that's harder to assess today, but, you know, could be helpful in the outer years. But as we go from 10 drugs to 20- 50, I think the sort of industry fear is that, you know, first-in-class drug may affect, you know, maybe a better fast follower. For sure, yeah With a significant option, right? So that, does that derivative come, go into your thinking when looking at the long term, too? Just as, as a potential risk. Yeah, absolutely. Yeah. Yeah. We're thinking about, and it's kind of scenario-based. We don't know exactly what's going to happen, but we, you know, we wanna be comfortable that we can generate a return that we like under a range of scenarios, including scenarios where, you know, IRA puts pressure on the entire class, as an example. Right. Yep. Yep. And, I hate to ask this 'cause this was the question for over a year, but the updated thoughts on the, you know, Vanza. I know Vertex just, you know, they're, they're gonna use a PRV filing. We've heard, you know, I think a range of commentary coming from pulmonologists, CF experts about, you know, about switching, but—s o talk about that in the context of, you know, what you guys have modeled, and then bigger picture, are there kind of steps along the way in the dispute that you'll be updating investors on? Yeah. So just to take a step back for people who don't know the background. So r ight now, we're entitled to royalties on all four of Vertex's products, and the biggest of which is Trikafta. There's three components. We receive royalties on all three of those components. Vertex has developed a new triple combination therapy that had data earlier this year. They have filed and used a priority review voucher, like you mentioned, and there is—w e know that we're entitled to royalties on one component of that new triple. There's no, no debate there, the tezacaftor component, and that would take our royalty on that new triple to 4%. The question is, are we entitled to royalties on the deuterated ivacaftor or deuterated Kalydeco portion of that new triple combination? We think we are. Our position is that deuterated Kalydeco is the same as Kalydeco, and we should get the same royalty rate. And Vertex has a different position. So the bookends there are either a 4% royalty rate or 8% royalty rate. And what we tried to do to help investors understand the potential impact of a range of scenarios is, you know, provide some sensitivities. And I think that what everyone is focused on is the downside, and so let's spend time there, is that if we're wrong and we're only entitled to a 4% royalty rate, and 50%-75% of patients switch, then the impact to our outer year numbers later this decade, 2030, call it, will be a couple hundred million dollars of headwind. So it's pretty small in the grand scheme of things, in terms of our overall business. We think that that range of switching still makes sense as sort of the scenarios to look at. You know, in terms of updates or any other thing regarding Vertex, we don't have any updates at this point. But you know, the key for us is that we're continuing to add products every day or every quarter to the portfolio. And if there is a little bit of a, you know, headwind from any one of the products in our portfolio, and we've certainly had them in the past, and we'll have them again in the future, we think we're confident that we can keep growing through them because of the diversification of the portfolio and our ability to reinvest and find new, exciting assets every day, like frexalimab, which Marshall was talking about. But we highlighted on our third quarter earnings call that we have a number of products in our portfolio that are not yet approved, that we think will ultimately be approved and that have peak royalty potential north of $1 billion. We don't think people are paying very much attention to that right now, but that kind of, you know, that solves a lot of any potential headwinds from anything in the portfolio, so. The potential headwind, I think, is well more than reflected in the multiple than the true fundamental impact on, on CF, right? For sure. For sure. Yeah, yeah, we agree with that. Is there, but will there be.—y ou know, if there is, if you do formalize this, I'm not sure of the legal strategies, and you're probably not going to talk about it here, but is— will there be, like, a cadence of things to follow on a docket, or do you, is this, would you, we expect this to be more of a private kind of. Yeah. Operation? This is probably just not, you know, we just can't really talk much about that. Okay At this point. Makes sense. I understand why you're asking. No, I know. Thought I'd give it a shot. Yeah. So when you think about the, you know, the, I guess, therapeutic areas, I mean, MS, you know, neurology is one that, you know, you guys have historically done. Orphan is another, you know, there's another big one. As these innovations have come and as you know, the maybe the IRA has also come and gone, what is the. Is there any sort of nuance to, you know, kind of the therapeutic areas that may have the maybe most ripe for bigger products, for more innovation? Do you guys look at it through that, you know, that kind of lens, so by basically top-down as well as bottom-up from a technology perspective? Absolutely. I mean, the way we think about it is probably from both directions, right? You know, we are very product-focused, right? So when we do business development, planning, and thinking about what are the products we want to be involved with, it is very much sort of a bottom-up. Yep. This product, this company, they're in this sort of fact pattern and situation with respect to capital and timing and everything else, and, you know, that's how we sort of think about that strategically. You know, there is a kind of top-down thematic, kind of overlay to all that. You know, we've had some, you know, some kind of bigger picture, thesis views that we've talked about in the past that sort of, when you look back, led some of our investments. Like, you know, one of them is we said, you know, well, there's, you know, pharma had skewed and pharma and biotech in general had skewed so far in the direction of specialty markets, right? That there had been kind of a movement away from the bigger. Some of the bigger high volume, lower price markets and, you know, that were heavily genericized. So that sort of led a lot of our interest in migraine, or we've done, you know, several investments in schizophrenia and psychiatry, you know, with KarXT, Merck, as well as the Teva, you know, the Teva LAI for olanzapine that just had positive data last week is another one of our investments. So, you know, those are the kind of things, you know, that we, that we like. Another one we've talked about a little bit is, you know, broadening the scope of targeted therapy beyond, you know, how we traditionally think of it in oncology, so defining sort of patient subgroups. The Lp(a) investment was a little bit part of that, right? Because that's a, you know, the thesis there was for everyone who don't, doesn't know, that's a, kind of a, a cholesterol, a novel cholesterol target that's sort of the next phase after LDL, which we know is pretty well, pretty well treated at this point. And so that's another one where identifying a group of patients who might have outsized benefit to a given drug and, you know, Lp is an example of that. So w e kind of come at it from both directions that way. Right. So one question is, you know, you guys have done equity investments in a, in a lot of the, you know, drugs that you, that you've taken a royalty position in. Likely, I mean, your interests are, are clearly aligned, right? You want the, the drug to be successful. If you look at some of the categories that have grown really fast, like I'm thinking like, you know, maybe GLP-1s now, Hep C historically, there hasn't really been, you know, like a rising tide has lifted many different companies and many strategies. But you guys usually pick one, you know, one drug, you know, in a class. So like I, I'm thinking like, you know, for HCM, right? I mean, there are a couple assets. Like, is there a focus to own more than one royalty in the same sort of therapeutic area, same modality, or is that situation just doesn't come up very often? We actually like making multiple investments in a therapeutic area that we like and are comfortable with. So, we've done it in the past, you know, going back to the anti-TNFs, we own three of them. Yep. Okay. We own the sort of fundamental HIV drugs. You know, looking at, like, even Xtandi and Erleada, they're very similar products for prostate cancer. So we absolutely will make multiple investments in the same class of drugs, and it's, honestly, we prefer to do that. Yeah. If we find something we like, and we can leverage all the work that we've done, it's great for us. So yeah, I think I wouldn't necessarily read into, "Oh, you only own one of them, so you don't like the class." It's probably more just opportunity driven. I gotcha. Yeah. And as the top line continues to grow and you guys are more successful with these, do you look to equity stakes increasingly to try to generate more returns? I just think it continues to be a higher hurdle, right? The drugs have to be bigger if they're making a royalty contribution, but the equity piece, you know, is more valuable, right? I guess over time. It can be, and it's an element of our business. But we wouldn't say it's a core part of the business or ever gonna be like the driving force of the business. We're Royalty Pharma, so it's gonna be focused on royalties. But I think, you know, we view equity in the right situation as a good thing for our partners and a good thing for us. But it's usually in the context of a royalty deal, where we might, you know, they might have a capital need that is, you know, call it $250 million, but they—like in the case of Immunomedics, it's $250 million, but they had a, they had a specific royalty rate in mind, and that rate to us was worth, you know, $175 million, but we want to be there to, to, you know, fill that, that entire capital need, and so we can use equity. And that's, that's, you know, that's, that's an example. But the, the nice thing about equity in, in these deals is that, you know, typically it's—the, the company is driven by the product we're getting a royalty in, and that's going to drive the equity. And so, there's alignment there, and the equity is gonna typically anticipate the performance of the royalty over the long run, so—a nd it can kind of accelerate some of the returns for us. That makes sense. Are there some categories that, you know, you would expect to see a real explosion? So, you know, I'm thinking GLP-1s across the board. In that case, does the process edit itself to maybe you take more risks, you go with an earlier stage asset just to have, you know, kind of a horse in the race, so to speak? Because if by the time it gets to be phase II or phase III, it's likely that there's not gonna be, you know, you know, a lot of engagement to, you know, to, to sell a royalty. Yeah. You know, on that one, I'd say at a high level, the answer to that's no. You know, we're not gonna go out necessarily and say, "Oh, we must have an obesity asset," because, you know, we get asked about it a lot, and everyone's, you know, very much focused on it as a class. But, you know, I do think we've shown over time that, you know, we're disciplined. We look at a lot of things in this space, and we will, you know, certainly be aggressive when it makes sense. The other thing that we've been doing, though, is, I mentioned it briefly before, you know, evolving our structures and how we can work with companies in different ways. So are there ways where, yeah, we can do something small, you know, when something is a little bit earlier stage, but then, you know, it's good for us, it's good for the partner because our partner knows they have a deep-pocketed funding partner who's gonna be there alongside them? A ll the way through, and we like it, obviously, because we can get involved in something smaller and grow with it over time as it becomes de-risked. So there's lots of different structures as we've evolved that we've, you know, kind of dealt with, or how can we work in areas where maybe, you know, there are opportunities at an earlier stage. Right. Are there ways, Marshall? I know you and your team have had a very deep knowledge. You do a lot of diligence on not just drug classes, therapeutic areas. Have you thought about ways to leverage that, you know, that knowledge, right? I mean, you take that into your conversations with potential, you know, royalty sellers, r ight? But is there any way to, you know, I mean, I don't leverage that economically. I'm trying to think, 'cause it's the, it's sort of the intellectual firepower, but it's, you know, you're keeping that internally. Yeah. I don't know how you can, you know, monetize it. Well, I think the biggest, the biggest way we monetize it is, you know, through the way that we use it to engage with partners, right? And, you know, we're, you know. I think one of part of the vision for what we're doing and as we build up this diligence infrastructure, is to be kind of, you know, more than a capital provider, is start to be y ou know, yes, we bring capital, but we also bring, you know, strategic value to it as well, through, you know, through the work that we do, helping companies think through their market sizing, development plans, that kind of thing, based on all of the work that we do. So we do a lot of that today, and, you know, we strongly believe that, you know, when you bring something more to the table than just capital, right? That is monetizing it, right? Because we're gonna, you know, we're gonna get, you know, a somewhat more favorable deal. We'll be in line to grow that relationship with that company over time because we've developed a real relationship that's not just kind of a financial transaction. Right. And I think you guys have done, have been part of a few, like, M&A transactions, right? Where the royalty kind of kicked off was, you know, you gained some economics to that. Yeah, I mean, we've seen it happen in multiple ways. Like, you think about, you know, the experience with Biohaven is a great example. Yeah. Right? Yep. You know, we've worked with Cytokinetics now over, you know, over two deals over time. You know, we've supported Morphic, you know, when they did their deal for, you know, in M&A, when they did their M&A deal as well. So, you know, yeah, that kind of relationship building, I think, is kind of core to our strategy, and I think some way, it's something that really differentiates us. Gotcha. Terry, from the capital deployment side, I know, the buyback, you guys talked about that initially, I don't know, like a year o r so ago. I mean, that was obviously to, you know, show conviction that you still have— I mean, that you have in the business, but you haven't bought a lot of that stock back. What's the— I know you're now committed to the dividend, not you haven't been before, but, you know, there was sort of the language on the. Right, right. Yeah. First quarter call about that. So what is there something to read into, like the buyback, or is it just, you know, is it just, look, we wanna preserve as much capital for deals, and that's our, that's our regular? Yeah, so I think what we've said is that our number one priority in terms of capital allocation is buying new royalties. Yeah. We've been really busy, and there's a lot of opportunities out there. So I think, you know, for us, we always have to look at that and buying back stock in the context of some of the opportunities that we have that we're looking at, and it's a balance. So we like it as a tool. It's a tool that, you know, I think we will continue to use over time. But again, the number one priority has always been buying royalties. But we did on our first quarter call, you mentioned we've been growing our dividend every quarter for, since we've been public, but also for the 20 years prior to being public. Right We grew the dividend. So, but we just wanted to sort of make sure people understood what to expect, and that's that, that we will continue to grow the dividend by mid-single digits, you know, going forward. You don't have sort of a yield, you know, target in mind for say? No, no, no. It's, it's, it's, I think it's just sort of a growth target right now. Gotcha. Okay, awesome. Thank you, guys. All right. Yeah. Thanks, Geoff. Yeah.