All right, I will do a quick intro and then we can go. Okay, great. Thank you all for being here today. It's wonderful to have Royalty Pharma here with us. We are very, very privileged to have you joining us for the conversation. For anyone who doesn't know me yet, my name is Courtney Breen. I cover the large-cap pharma names focused on the U.S. at Bernstein. I'm very privileged to have this conversation today. I think Royalty Pharma is in a unique space in the market and kind of plays across biotech partners through large-cap pharma partners. I am looking forward to diving into that a little bit. First of all, we're going to let Marshall take us through a few slides, learn a little bit about Royalty Pharma together, and then we'll dive into Q&A. Just a reminder for everyone, we do have the Pigeonhole app. If you have particular questions that you want me to integrate into the Q&A, please send those through and I will integrate them into the conversation. With that, Marshall, thank you so much for being with us. I will let you take the floor and run us through a couple of slides that you have. Absolutely. Great. Thank you so much for having us. Just to introduce myself, my name is Marshall Urist. I head up the Research and Investments team at Royalty Pharma. Been there for going on 12 years now. Why don't we go through a few slides just to introduce everyone to who we are and what we do, which is well timed because we actually just finished up our investor day this year about 10 days ago. If anyone wants to take a deep dive, go to our website and spend three, four hours with us going through everything you could ever possibly want to know about Royalty Pharma. Maybe to level set for a little bit to give everyone a sense of who we are and our scale. We are the number one buyer, the largest buyer of biopharmaceutical royalties in the world. We've been at this for coming up on 30 years. Our founder and CEO was one of the sort of originators and creators of this space. I think that competitive, that kind of market lead kind of still gives us some real advantages to this day. We're a big company now for our space. We have over 50 products in our portfolio. We are guiding to portfolio receipts, that's kind of like the aggregate royalties that we receive every year, of $3.1 billion this year. Cash flow of about $2.5 billion. We have a market cap of $20+ billion, about 100 employees right now. We went public in the summer of 2020. I think we've really enjoyed the challenge of executing in front of the public market over the last five years and are super confident and excited about the future. We've delivered low double- digit 12% kind of CAGR of our royalty receipts every year. We gave at our recent investor day some kind of detailed look at our returns. We've delivered unlevered, I think it's an important point, the unlevered IRRs in the mid-teens consistently since our IPO over the last five years. We've grown the company significantly. Our team has deployed a lot of capital, deployed $14 billion since our IPO. At the same time, and this is an important theme, we allocate capital really carefully. We've returned over $4 billion through buybacks and repurchases over that time. We are always trying to kind of simplify and optimize our structure. We internalized our investment manager for anyone who is kind of familiar with the technicalities of that structure. I think one of the most exciting things about our business is the dramatic growth and expansion that our space is seeing. We've seen an explosion of biotech innovation, and with that has come the need for a broader number of capital sources that serve company needs in different ways. That is really the role that we play across all the parts of our business. You can see the business has grown very significantly over the last nearly 30 years. This is one of the key themes that we talk about. I think a really important thing and message about how we think about our company, which is we always want to be the optimized buyer of royalties in the world. What that means at a very high level is we are always evolving our company, if it's our approach, our structure, how we buy royalties to make sure that we maintain market leadership. We certainly don't rest on our position in the industry. We always want to be pushing. As I mentioned, we really kind of founded this industry in a lot of ways and have kind of built on all of our competitive advantages that are all here over that time. I think an important thing about the spirit of how we do it is that we are always trying to get better in every way. Our kind of big, our overarching ambition is to be the best capital allocator in the life sciences space. This is the framework that we talk about with our shareholders, which is we are always thinking every investment really carefully about how we are allocating capital. Is every dollar we send out the door the highest and best use of that capital for our shareholders? This is kind of the framework that we think about it. When we think about it, and it's our stock price and how attractive the royalty opportunities are. When there's a lot of attractive opportunities and our stock is trading at a discount to its intrinsic value, like it has been recently, we've been doing both. We've been deploying capital to grow our portfolio and new royalties and also buying back stock. As the world, as things evolve, as the market for royalties maybe is more or less attractive over time and our share price, obviously hope it shifts to the right here over time as well, we will incorporate all of that information into how we allocate capital. One of the things and the team that I lead that we're really proud of is our investment approach. We are highly, highly selective in how we choose the products that we want to be involved with. Our number one product selection criteria is the quality and the importance of the product. It's not do we see a return here? Simply, is this an important medicine that we want to be a part of our portfolio? When you look at the products we have in our portfolio, I think you'll see a clear theme of that across all the products. We might touch on some of those today. To achieve that, we have to have a very flexible approach and a really open model. We've built our team to be able to invest in any therapeutic area, approved, unapproved, any therapeutic area. We've invested across, I think, something like 60 different therapeutic areas or 60 different diseases over the last five years alone. I think we talked about the consistency of our returns, but we really think a lot about risk-reward and how we can structure our investments to be optimally positioned for us and for our shareholders and for our partners. This is what our kind of transaction funnel looked like in 2024. We saw, because we are the biggest player in a growing space, a ton of things. We saw over 440 different things last year. This funnel shows you just how selective we are. We looked at 440 things and ended up doing eight deals last year. We are highly, highly selective in the products that we're involved with. To the point I just made, you can see some of the things that we invested in last year, some really premier products that are having great launches this year, like Voranigo or Niktimvo, Yorvipath from Ascendis. Some really great products here. Did I skip? No, it's right. One of the exciting things about our market is we do buy royalties. You think about a pre-existing royalty as one part of our business. It's a royalty that comes out of a licensing transaction. The other big part of our business is what we call synthetic royalties. That's basically when we work directly with a company to invest in that company and create a royalty. We basically get a portion of future revenue to fund the business. As you can see here, this market has been expanding dramatically, over $3 billion in 2024. We think the future is really exciting for these. Synthetic royalty has represented over the last four years, I guess five years, excuse me, just low single- digits of 3% of all the capital raised in our space. We've grown, and this has been a big growth driver for us. This tells you why we're so excited about this, because that number could double or triple. It would still be that 3% could double or triple. That's a really attractive growth opportunity for us and still would be a small minority of the capital that's raised in our space. I think that's an important theme that we see how this industry should be funded, which is it's going to take all of these things, equity, debt, partnership, whatever it might be. Royalty is going to be an important part of the kind of biopharma capital structure of the future. How are we tracking towards our financial targets? Here's two that we talked about. We have our financial target number one is a portfolio receipt CAGR of 10% or more between the decade 2020- 2030. You can see we're tracking above that 12% CAGR through this year. We feel really good about where we are. Second, we had a five-year capital deployment target that we talked about in 2022 of $10 billion- $12 billion. You can see we're tracking really nicely towards that. If you think about it purely on actual capital out the door, if you think about total capital committed, we're already well above that target. Really finding attractive places to invest. We have publicly communicated return targets for our investments that have been consistent. We haven't really changed. We haven't changed these at all since we went public. This is a common question for investors, which is approved products. We target an unlevered IRR. That unlevered is important. Talk about that in one minute of high single to low double- digits. In reality, I think we've seen an environment that's really kind of a low double- digit kind of unlevered IRRs for our approved products. Development stage products are teens. You can see we've also been in that range or above. I think why don't we stop there? I think this puts together why we are in a great market. We have the platform that is optimized to invest in this space. We've consistently generated attractive returns. Our growth outlook is really attractive. That's a quick spin through our piece, but happy to talk about any of these topics or anything else. Fantastic. Thank you so much, Marshall. I think that's really good underpinning for contextualizing royalty and where you're at today in the journey that you've been on. As I heard you go through those slides and as I spent some time digging through your website and digging through the invest today, I think there are a couple of things that I noticed. First is that distinctive ability to identify deals that are going to be positive. The second was also identifying opportunities that translate to a lucrative outcome, not only for you, but also for the partner at play, the royalty payer over the time. I want to start with a few basics to understand and begin to understand your approach to delivering that. First is you also spoke in these slides about 60 different disease areas over the last five years. Certainly, from my experience, and when you talk to large-cap pharma companies, they say, to be able to look at research that's going on outside, I need to be doing research inside to fully understand what good looks like. How on earth do you have the capability spread and the context to be able to look at those 60 disease states and feel good about those opportunities? What's your secret sauce here? Also, how early do you start evaluating these opportunities versus when you actually decide, I've got enough data in my hands to feel good about this? How do you get along that comfort pathway? Yeah, those are key questions. We've, as I mentioned, been at this for a while. We've developed a system to kind of deal with that complexity. We've had to evolve a lot because the world's gotten more complex over the past few years. The way our team operates, everyone in our team kind of operates as a generalist. That's why we have incredible people on our team, and we develop them to be generalists. The way we can work on 60 different things over time is what we've gotten really good at, which is our internal team. We supplement our internal team by going out for each and every transaction and identifying the very, very best people for that specific project to work with us for that project. That's clinical, commercial, manufacturing, formulation, devices, whatever it might be. We will build a team around that disease area or that specific product for each and every investment. Being able to grow that team and then transact or not transact and move on is how we build our team to be able to do that. The other thing is, and this sounds simple but is really important, we do really start with important products that have good data. I know we all know when you're sitting there, when you have to squint at the data and squint at the curves, or is this a difference, or work hard to convince yourself, usually that tells you something. That's something that really guides us, which is if we have to work hard to convince ourselves that it's important data, usually there's value in that. That's the other thing that really helps us because we really try to focus on things that are kind of important in some way. The other part of your question was that's also why when you're working on great drugs, great data, it's also really helpful in terms of getting to a great answer with your partner. At that point, you kind of both want the same thing. It's not like a zero-sum game. We're really excited about this product. We want to put capital into it to help you move faster, get it to the next stage in a way that works for you and works for us. That's how we operate. It's more like a partnership than it is sort of a kind of us versus them adversarial zero-sum approach. It's been really powerful for us. Fantastic. The other part of your question was. It's probably the success. Yeah, a couple of things. I think you asked when. And when. We have been investing pre-approval now for over a decade plus. If you look historically, about 40% of our dollars invested have been prior to approval, and that percentage has been pretty consistent over time. If you look even recently, it's a surprise in a way, but we've put more capital to work in approved products over the past few years than I think we necessarily expected. We usually are phase III and later, and that's for two reasons. One is that that's when the capital needs are greatest. We're a big company. To do transactions that matter, we need to focus on when capital needs are greatest, which naturally sort of forces us later, which speaks to your other part of your question, which is probability of success. We are sort of privileged and lucky in the sense that we work with companies who have done the really hard work to get things to that stage. Where the risk is highest is not where we are most active, and I think that really helps us. The last piece is coming back to this theme. We are sort of high conviction. When it's a royalty, it's not whether it's 70% or 80% because 80% of zero from a royalty perspective is still zero. We really focus on super high conviction things, and if we don't feel it, we don't do it. That's sort of why we've been fortunate to have the track record we have. Super helpful. Maybe just to dig in a little bit more, as you think about kind of the ideal partner or the ideal therapy or modality, are there particular kind of segments that stand out that just become more no-brainers than other areas where you have to spend a bit more time convincing yourself? Yeah. The kind of high level to answer your question is no, because we are so product-based. Everything is about the fact pattern around that single product. That's why you've seen us invest. There's no rhyme or reason to it. It's sort of all over the place. We definitely have thematic things that we think are interesting. I'll give you an example and how it led to some of our investments. One of the things we had noticed several years ago is there were some really big markets that pharma, in the total shift to specialty and high-priced drugs, had kind of left behind. Migraine was one example for us. You had seeds of generics, but they were all the same drug. We said, that's interesting. We went out and looked for, are there things that are interesting? We ended up making several investments in the CGRP space that were interesting. Psychiatry was another one. It had been totally abandoned by pharma. We went and looked for opportunities there. We've made a couple of investments there. We invested in Cobenfy, which is a product Bristol's launching now. We made an investment in Teva's phase III for a long-acting injectable of olanzapine that Teva recently presented some great data for. We invested in that. We never go out and say, I need a product in obesity. We don't have an obesity investment right now. You might imagine we get asked every day we go out, what are you doing in obesity? We're not going to go out and check a box just to have something in a space. If it doesn't make sense, we're not going to do it. There are plenty of places for us to invest. We don't need to say, I must be in this space or that space. Fantastic. I think what you've done through the presentation and answering a couple of these questions is paint a very compelling case for Royalty Pharma's business model and what you're able to do. Why aren't there other royalty farmers out there? What makes you the clear leader in this space? There aren't many followers trying to replicate exactly what you're doing. What enables you to stand apart and perhaps deliver this uniquely compared to others? It's a great question. It actually was one of the kind of thematic organizing principles for this last investor day that we just did. There are lots of directions to that question. I think one is we have a very, very unique structure, the way Royalty Pharma is structured. This business started 30 years ago as a typical, you think about a serial fund model. Like what private equity does, you raise some money, you invest it. If the returns are good, people give you more money and you keep going. I think our founder tells the story that he invested in a royalty fund. It was a ton of work. He had this great phase of royalties. He was sort of thinking about starting over. He was fortunate at the time to have an investor base that wasn't institutional and was actually in the early 2000s able to convert Royalty Pharma to an ongoing evergreen business model, which was a profound event for us because what it meant is it turned us into a totally different thing than a typical investor because it became a self-funding business model. The way it works is the capital we invest is obviously the royalties from our prior investments. The business scaled and scaled and scaled. That did two really important things. One is our cost of capital came down dramatically. Because you were an ongoing business model, you could lever the business. Debt became an important part of our structure. That brought our cost of capital down very dramatically. The second thing is it allowed us to invest in a totally different way. Just at a high level, a royalty is usually a 10, 15, 20-year stream. Owning that in a fund that has a 5- 10-year life is really not very efficient. We are structured to match what we do. I think that is something that's very, very hard to recreate, number one. The second thing is everything we invest in, there's only one of them. To even think about recreating kind of who we are, it would take three decades and billions and billions of dollars. I'm not even sure then you could do it. I think that is why I think there isn't someone who looks exactly like us. The other thing to put in mind, the other thing is that there's been different flavors of competition in our space over time. We really welcome it. Having a robust market where sellers feel like there's multiple bidders is really positive. We don't see this as we are the only kind of player in our space. We dictate price, there's no competition. That's not how it works at all. We are unique, and I think that gives us multiple competitive advantages in a growing space. We certainly think there will be other players in our space who are successful. They probably won't do it just like us, but we see, given the size of the opportunity, we want there to be sort of a vibrant marketplace for royalties. Absolutely. You've done a variety of different deals recently, and you spoke about a few of them that were particularly asset-specific. You also did a pretty sizable transaction with Revolution Medicines, which looks like it's a bit unique compared to perhaps what you've done in the past. Can you share some of the basics on this particular transaction, how it differs to prior deals, and why this made sense for you and for Revolution now? Yeah, it's a good question. It was a very exciting deal that we signed over the summer. For anyone who doesn't know, Revolution Medicines is an oncology biotech that's in phase III and works in a target called RAS. They're in phase III for pancreatic cancer. It looks like they, we certainly believe they have what is going to be the first real breakthrough in pancreatic cancer, which, as I'm sure everyone knows, is just a horrible disease. There's been no real progress in this disease despite all of the innovation in our space. The background of the deal was that Revolution Medicines was at a point that is very familiar to people who have been following this space, which is you've built and built and built. You're in phase III. You're thinking about commercialization. You have to invest in your pipeline behind you to continue to scale. Oncology is an extremely competitive space. You need to move as fast as possible, push everything as fast as possible. You need a lot of capital at that point. Historically, the only way to really access that kind of capital was you went and signed a partnership with a big company. A partnership with a big company has some positives to it, but it has some huge negatives, we all know. One is that you end up giving away a huge amount of value. It can be half of everything globally, or it can be a huge part of the ex-U.S. It sort of strategically changes your company. You have a partner. They probably slow you down. You have to have committees and meetings about everything. They were at this point. In the past, you would have to go do this deal. That can kind of limit shareholder value creation because you sort of signed away a big piece of the pie. What we were able to craft with Revolution Medicines was a $2 billion partnership, so capital at the scale that you could get from a big company, but allows them to remain completely independent, control their own destiny, and continue to develop all of their drugs as long as they want to. It doesn't mean that they won't sign a partnership or it might be in the future, but allows them to continue to do it and allow them to accrue more value for their shareholders. What we designed was very unique. The scale of it in our space was completely, completely novel. The second thing is that it's a staged deal, which is kind of unique because we put $250 million in upfront. There are four more tranches of $250 million along the way, each bringing successively more synthetic royalty to us. We really partnered with them to give them significant capital now when the phase III works out, when the product's approved, when they hit a certain sales milestone, and when they get a major label expansion. We also gave them access to senior secured debt and another $750 million of senior secured debt. It was a major package of funding that allows them to continue to push as fast and as hard as they want to, but gives them a lot of flexibility. Of the $2 billion, only $750 million of it is actually that they will take. The rest of it is at their option. Another unique aspect was the way it was structured: the tranches in the future actually come at successively lower cost of capital to our partner, which is cool because we are pre-wiring all of that now. We will give them a form of capital, which they can decide at the time, how does this compare to their cost of equity or whatever they might do in the future. We have a royalty, which we think will be competitively priced at that time. It was a super novel structure. An important thing is it reflects, to your last question, our progress in becoming an institution in our space. Revolution Medicines is an incredible company, great team. They are really partnering with us and trusting us like they would Merck or Pfizer or whoever might partner with them, that in five years, six years, whenever some of these cards might turn over, we're going to be there. We are a partner who will be there with you over that whole time. To your question, that's probably very difficult for someone in a fund structure to do that kind of thing. We are really excited about this. We think for really strong companies who are in a strong position, this is a really attractive way to fund your business. We've gotten a lot of incoming inquiries from companies around the space since we put this out there. We've had to explain to people, not everyone is ready for this kind of deal. For the right companies, we're excited about offering an innovative package like this. Fantastic. That's super helpful to understand because it is very unique and, exactly as you say, offers a different way to access those expansion opportunities for your business when you feel like you have so much promise, but you just need a lot of cash all at once to get those things off the ground. Exactly. One other angle that I kind of wanted to probe at this from is when we look at where kind of the biotech through pharma sector is today, there is kind of fragmented research that's going on. It's now fragmented across many more biotechs contributing to late-stage pipelines. It's also fragmented more geographically with kind of China becoming a bigger and bigger player and contributor of innovative biomedicines. On the other side of the equation, you look at these large-cap names and they have narrowed their focus away from consumer and devices and all these other places and perhaps become more risk-on because they're focused on innovative biopharma, which is kind of probably the success and patent cliff. I mean, you've got to navigate through a whole lot more. As you think about those pressures, does that translate to a higher kind of path for royalty environment? Do some of those things get in the way of the trajectory for Royalty Pharma and royalties becoming a larger and larger source of business going forward? Yeah, it's a good observation. I think everything you mentioned to us creates opportunity for a whole host of reasons. The fragmentation of the industry has been going on for a long time. A lot of that fragmentation, each time there's a transition point of innovation across the industry, there's a royalty created or something in a license. That nature of the industry creates our opportunity. One of the cool things about our space is it also renews our opportunity all the time as those things happen. Pharma, same thing. We have another part of our business we didn't touch on. We partner with large pharma companies to fund specific R&D programs. Another part of what we've done, we've done it with Pfizer, Merck, Sanofi, AZ, lots of companies around the world. Certainly, as they feel more stress, more need to move faster, I think that different ways to fund the pipeline in a way that is sort of P&L bandwidth expanding is attractive. I think we offer that to companies as well. You mentioned China. Super interesting. I think it kind of highlights one of the attractive parts of our model, which is what we see with all that China licensing activity is that's another, I don't know, in aggregate how many transactions there's been, 75, 100. All of those generally create new royalties. A lot of them create new royalties that are in the hands of multinational pharma companies around the world. That's our bread and butter. To us, you've created a whole new sort of source of innovation, a whole new market. We have been doing the work to be positioned to be able to hopefully have that as a part of our business in the future. We're excited about that too. If one of these VEGF PD-L1 drugs turns out to be big and it's in the hands of Bristol or Pfizer or whoever it is, that's an attractive royalty that we could potentially transact on. Fantastic. Maybe coming at some of these different pressures in another angle as well, one part of this is you're talking about a royalty stream. Royalty streams are usually a percentage of revenue, so knowing what revenue is going to look like in the future is really, really important. There's a lot of uncertainty in the world as we think about drug pricing, as we think about different geographical opportunities going forward. In addition, you put that great funnel up on the slide earlier where you're saying you looked at 440 opportunities and eight came out the bottom. You've got to think about these scenarios, run this analysis in a very efficient way to evaluate what might be the parameters that we're playing in. What investments have you made to set yourselves up for success here? What data, what infrastructure do you use? Also, how do you think about the world that we're playing in and how much variety there might be in the future in terms of the economics for pharma products? It feels as though we've been living with the question of sort of price uncertainty forever. It's certainly the volume that's been turned up to 11 recently. We obviously think really deeply about that, and there is no one answer right now. We try to gather all the intelligence that we can to understand it. I think we take a few different approaches to it. One is we are believers that when you focus on important drugs that offer real value, whatever happens in the future, those drugs are going to be better positioned. Second is our portfolio right now is in a good position with a lot of these cross-currents. We get questions about portfolio composition. I think one of the things we have relatively little or limited, I should say, kind of U.S. government pay exposure right now. Medicaid, I think, is less than 10% or so of our business. Medicare is maybe similarly sized, maybe slightly larger, but has a couple of pieces which are shorter duration royalties right now where we're closer to the end of the royalty. We own royalties in Imbruvica, in Xtandi, in Trelegy. Imbruvica and Xtandi have been negotiated, but are going to go out of our portfolio naturally anyway. We're pretty well positioned right now. The other thing that we do a lot about, we think about this in structuring. We have conversations with our partners and say, look, there's a lot that can happen. We need to share in that together. We can have structures where if there are underperformance scenarios because of that, the royalty rate might adjust. There are lots of things that we can do to help mitigate that. Certainly, we are looking forward to more, hopefully one day having more clarity on how all this is going to play out. We all are. Yeah. In the last few minutes, I really wanted to just take a step back and ask you to talk a little bit about kind of deal structures and Royalty Pharma over the next 5- 10 years. What does good look like? We've talked a little bit about kind of the last three decades and the evolution that the business has been on. As you think about the future and as you're starting to perhaps invest a little earlier in some opportunities, do some new deal structures, what might the proportion of business or what might kind of the shape of Royalty Pharma look like over the next decade? Yeah. We are really excited about where we sit in the ecosystem. One of the things we really love to do is innovate on structure. That is why the Revolution Medicines deal that we talked a lot about is so exciting, because we have really taken pride in the fact that we've tried to be a real innovator and are a real innovator in structuring and coming up with new ways to fund companies through royalties. That obviously feeds back positively because it then creates more opportunity for us to invest into the future. I think we're going to be doing kind of all of the above when you look forward. When I look at our pipeline today, where we are, the variety is incredible across the board in terms of regular royalties, synthetic royalties, working with pharma on R&D. It's all moving forward. Where might we innovate? There probably are areas where we could, and we have done a proof of principle like this with Merck actually, where we invested very small dollars to us in something that is maybe post-proof of concept, but needs to find a dose. Where we're committed to, once the card turns over positively, really blow out and expand that investment to fund phase III. That is a way where for very selected opportunities, we wanted to use our scale and the depth of our resources to put very much smaller dollars to work in things a little earlier that would commit us to funding it as the capital needs grow. I'm sure we'll come up with new and different ways to innovate as well. Fantastic. Thank you so much for sharing a little bit about Royalty Pharma with us today. I think this has been a super interesting conversation. You certainly play at a really interesting place in the entire sector, particularly as we think about the pressures, the evolution, and all the things that are going on in the environment, not to mention kind of the funding environment that we're all in as well. Thank you for having us. Super fun and great questions. Thank you. Thank you so much, Marshall.