We're going to go ahead and get started. Welcome back to the 2025 RBC Capital Markets Global Healthcare Conference. My name is Greg Renzi, one of the biotech equity research analysts here, and we're pleased to be joined now by Royalty Pharma. And representing the company is the Head of Research and Investments, Marshall Urist. Marshall, it's great to see you. Great to have you here at the conference. Yeah, Greg, thanks to you and RBC for having us. We're excited to be here. Great, great. I think many investors certainly have taken interest in what really is an interesting and revolutionary model when it comes to Royalty Pharma and the role that you play in the biotech and biopharma and, frankly, the healthcare ecosystem. Maybe just to start off for those who aren't familiar with the Royalty Pharma story, it'd be great to get a brief introduction of the company, your key portfolio assets, and your outlook on the biopharma and royalty space. Yeah, of course. For people who don't know us, we are one of the largest funders of life sciences in the world and certainly the largest funder of royalty-based funding in the world. The company is over 25 years old at this point. Our founder and CEO, Pablo Legorreta, was really one of the founders of this kind of entire space. The business started, you know, the real roots of it were in academic royalty monetization. So, you know, universities sell royalties on approved products. The business evolved from there through many iterations. If Pablo was here, you would get the very, very long story. I'll give you the quick one, which was, you know, we went from there to, you know, buying royalties from companies and also moving sort of backwards from approved through, you know, first it was things that have been on the market for a while, early launch, then phase three, and then, you know, that's still the kind of part of the business today. The other thing that's changed a lot is that we've also started to create royalties as a funding mechanism, not just buying pre-existing ones. I'm sure you'll ask about that, but it's been, you know, an exciting thing to witness is how the growth of what we call synthetic royalties has really grown a lot over the last three, over the last few years as a new way of funding biopharma. We went public five years ago in 2020. We're now a big business today. We have about, you know, $3 billion plus of revenue, you know, nice growth on top of that. We've talked about capital deployment every year of $2 billion-$2.5 billion a year. It's a pretty simple business model, actually. You know, we own royalties on upwards of, I don't know if the number is right now, 40, 45 products. We collect that royalty. We have some expenses. We service our debt, pay some dividends. The rest of that, you know, we deploy either through returning that capital to shareholders through a buyback. We have a large buyback program we announced earlier this year. That is also how we reinvest to grow the business. You know, the business compounds that way. It has been a great compounding story over the last couple of decades. That is great. Marshall and the team really have such a unique and important role in participation in innovation. As we think about the process, and as when you went public five years ago, folks were interested in what is the secret sauce, right? It starts from maybe starting from that beginning of this process of the vetting process, maybe working backwards a little bit. It would be great to get some perspective on how you approach that vetting process for royalty purchases, where it starts. What's the framework that you and the team talk about, how that funnel starts and goes from there? Yeah, sure. Just a little bit on our team. Royalty Pharma now has about 100 people, round about. Our research and investments team is about 30 people overall. That encompasses investment professionals, and then we have a very active data science team that works really closely with our investment team to help drive our investments. You know, what do we look for? What are our framework? It's actually, you know, pretty simple at a high level, which is, you know, we really strive to invest in and build a portfolio of important products, products that are, you know, meaningful to patients, the system, caregivers in some way. It is a really different style of investing because I think we don't start from, you know, is there an opportunity to generate an attractive return? We start from, is this a really exciting product? Then how do we structure something around it that generates a great outcome for us and for our partner? You know, we have a very deep diligence process. You know, we do, you know, I think diligence from strategics, when you think about what they do for M&A targets, you know, we do it in a little bit different way, but I think we, you know, we really strive to go to that depth. And that's kind of inherent in a way in our style. Passive investors, right? Once we make an investment, we do not have, you know, joint development committees and committees, you know, we are passive. So we have to do a ton of work upfront to make sure that we understand everything we possibly can about a product. Certainly in our space, it is hard to walk these hallways or see headlines or frankly just feel it intrinsically, some of the macro pressures that are occurring globally, but also in our industry, there is just rapid change. I wanted to get Marshall, just your view on how you foresee R&D funding from external sources, also the concept of the synthetic royalty playing a role in this industry and the biopharma industry over 2025 and frankly over the next three to five years. Yeah, you know, people ask us that a lot if we see our business as almost like countercyclical to the kind of biopharma funding environment. The fact of the matter is we do not see it that way. I think it is certainly a tailwind, but I think the kind of macro secular driver to our business is that, you know, we all know there is so much capital need in this industry. We have really had such a short menu of options for companies over the years, right? There has been equity, we all know it. As companies mature, they can do a partnership. You know, you give up a ton of economics. Once companies are mature, they can access debt markets. There is really nothing in the middle. I think that is where, you know, we have really focused on, in a way, building our synthetic royalty and our R&D funding business is giving companies the ability to fund against a single drug or a single R&D program, right? It is almost like investing in equity in a single product, right? That is what we have built. You know, there is just a need for it in the marketplace, right? I think certainly this environment is, you know, is certainly helpful. We are very busy, as you might imagine. You know, we've successfully deployed a lot of capital into great products over the last five years, which have seen, you know, to your point, low points like now in terms of the funding environment and also to the highest, you know, to the highest points. We've been successful in building our portfolio with the kind of products that we want to over that whole stage. I hope that the, and I'm certainly hopeful that the funding environment improves, you know, we're an important part of it, but I think we want the, you know, we do best when there's a healthy broader environment out there too. That's great. Each investment can provide a really nice case study. Maybe we can talk about some recent ones, maybe starting with the lupus, is the $250 million R&D collab with Biogen, Marshall. Have you announced that for one asset? What did Royalty see there? How was this deal structured and how is this fitting into the longer term objectives of the company? Yeah, you know, R&D funding, just to give a little bit of the background. In early part of this year, we announced a deal with Biogen to fund a phase three program of a lupus drug called Litifilimab, which is in phase three for two forms of lupus. We're going to provide them with $250 million over time, over about six quarters. In exchange for that, we get some milestones and then also a mid-single digit royalty on worldwide sales. You know, it's a great win-win, you know, for Biogen. We take on a significant piece, remaining piece of the development expense for that program in exchange for, you know, what is a pretty small piece of the economics, right, at the end of the day. You know, it's a great example of it's a really exciting drug. It has, you know, an incredibly strong set of phase two data, which gives us, you know, a high degree of confidence that phase three is going to work out. You know, it had two back-to-back papers in New England Journal of Medicine. I think if you take a big step back, you know, lupus is an interesting market. We've talked a little bit about this. Lupus is almost where like a psoriasis or an IBD was 15 years ago, right? Those are massive markets today. There's a ton of products. You know, our team did a really interesting analysis that basically tracked that, right? We do a lot of this, you know, we have a very active data analytics team where we could say, you know, you can track these markets and, you know, they need two things to grow, right? One is new products, right? The second is an identifiable population of patients in need. You've seen that in all these markets. That's what we see, which is that's a market that I think is less than 10% penetrated today. You know, we're going to have there's two approved biologics today. Fast forward five, six years from now, you know, there's going to be many more. Litifilimab will be one of them and you're going to have significant growth in that market. Biogen's a big company that should be able to participate in that and, you know, maximize value globally. That's sort of how we think about things. It's a good kind of case study of an R&D pharma R&D funding deal. We've done those with Pfizer, AstraZeneca, Sanofi, Teva, Merck, multiple ones over the years. That's great. You mentioned the attractiveness of the big markets, of credible partners, you mentioned inflammatory bowel disease. Certainly there are several cycles of success there, value created through strong sales and life cycle and even M&A. You know, we talk about J&J's Tremfya a little bit. Just walk us through, you know, how that was originally landed on your views and the opportunity in the I&I for the program. Certainly a big market that matures, but as you're mentioning, you need analyses to justify kind of continued investment and continued play there. Yeah. MorphoSys is actually a great story. It's a, you know, one of our growth drivers and a royalty that we own that we're really proud of. We actually got that from a company, some people might remember, called MorphoSys, that was bought by Novartis several years ago. We actually helped MorphoSys. They were undergoing a strategic transformation from a technology platform that made antibodies and created royalties into a development company. They sold us a set of assets, Tremfya being one of them. We actually got a royalty on the Roche brain shuttle, Gantenerumab, Trontinemab, which is just entering phase three from that as well. Tremfya was really the centerpiece of that. We have owned that royalty. That is a great example of another one where, you know, these markets, their ability to grow is something that we study really closely. I think that our ability to take the very long-term view is, you know, is something that we have the luxury of doing, right? Because we can own royalties. We want to own royalties for 10 years, 12 years, 15 years, as long as we can, right? Duration is important. It allows us to take that long view and really believe in the long-term growth potential of the markets. You highlighted it. It's been interesting to hear the CEO of J&J sort of almost scolding his analysts, saying, "I think the peak sales of this drug are $10 billion and consensus is only, I think, five or six right now." You do not hear that all the time, but, you know, J&J as a company we admire a lot and certainly in IBD and, you know, in inflammation, they're one of the best out there. Exactly the kind of product that we try to add to the portfolio. Just ask the room, we're just kind of talking about classes that you're in, that you're not in. Some of the white space is still available to us in the biopharma sector. When it comes to classes and your ability to sort of double down on classes and not have to pick one horse and one winner, when we think of the Lp(a) space, maybe just walk us through how you're looking at your exposure to Pelacarsen as well as to Olpasiran and the royalty agreements and the rights that you've established there. The Lp(a) space continues to evolve quite nicely. We're sort of nearing maybe some pretty important stretch in this year and especially next year in the late 2020s. Maybe just walk us through your positioning there and just give us a 30,000. Yeah. You know, we own, we are, cardiovascular disease is an interesting area because it was obviously one of the biggest areas of pharma for a long time. You know, other than PCSK9 has not gotten a lot of play until recently. We had the opportunity over the past couple of years to buy royalties in, you know, the two leading products to lower Lp(a). For anyone who does not know, this is a sort of alternative form of cholesterol that is not lowered by LDL drug statins and is thought to be kind of an independent risk factor for cardiovascular disease. We bought royalties on both of the leading products in the space. We bought a royalty on the Novartis product. It is going to be first in class from Ionis. Then we own a royalty on Amgen's Olpasiran that we bought from Arrowhead, another siRNA platform company, over the last few years. This is a market we are really excited about. You are right. The big question we still have to answer, which is we know these drugs lower Lp(a), but do they prevent heart attacks and strokes and events? We're eagerly awaiting the outcome of those studies. I think we'll see the first one in the first part of next year. You know, certainly we have to answer that question, but I think, you know, you have two of the best cardiovascular marketers in the world, right, behind those two products, millions of patients with high Lp(a). As soon as you have active products, I think it is a very easy step to start to test people for Lp(a). You could all ask your doctors today if you're curious. It's easy to do. Yeah, that's a market that we think has to form. You know, we can't think of two better companies than Amgen and Novartis to make that happen. As you think about investing in different platforms and technologies, again, cycles of technology that you have participated in, many of the IRA pricing pressures and forecasting that maybe has plagued the sector or some portfolios over the last few years related to small molecules, of course. I'm just curious how you assess the different modalities when you look at making investments. You know, what is most fundamental getting to that long duration blockbuster potential, which really is an important end game. I think there are a lot of examples over your past investments where you've just gained an index of confidence about market differentiation, even some smaller markets. Maybe just walk us through some of those that come to mind for you. Yeah, I think one of the things that served us well, actually, is we aren't technology focused, right? We are product focused. And so, you know, in a way, a technology platform is, you know, just makes new products for new diseases possible. And so that's the way we look at it, right? Like a gene therapy, you know, is we've done one investment in gene therapy over the years because, you know, have we seen really great products that got us excited yet? I think, you know, if you take a step back from the space, that served us pretty well over time commercially. You know, that is the way that we really approach things. You know, we certainly are following technologies and looking at them, but it's really about the products. You mentioned the Lp(a). We've made three investments now, I think, in RNA-based therapeutics, but it's been about great products, right? You mentioned Lp(a). We own a royalty in Spinraza, which is an ASO for SMA, and then a small royalty on another orphan product for, you know, that Alnylam market. That's our approach on technology and we'll be very, very patient. If it's not right, it's not right and we'll wait for the right thing to come along. Fantastic. Maybe as we're touching on this, when it comes to, you know, your indexes of confidence as far as intellectual property, you know, what gets you comfortable with screening from an IP estate standpoint? This is always something that applies a great degree of expertise. You mentioned not being sort of technocrats, but at the same time, you have to get that longer-term comfort. Just walk us through some of that assessment that you're talking about. Yeah. As you might imagine, when you buy royalties and buy licenses, IP is a core kind of core competency from a diligence perspective. Like I mentioned at the start, you know, over two decades of history doing IP diligence, we, you know, make big investments every year in getting the best outside legal advice. You know, we have a good system there of understanding what kind of ambiguities we're comfortable with, what kind we're not. You know, sometimes people ask us why, what are the reasons you pass on things. You know, IP can be a big one. There is, you know, for whatever reason, we just couldn't get comfortable with the license. We couldn't get comfortable with those patents. We will walk away. It's something we've been doing for a long time. Then just structurally, you had this next step of internalization of your manag ement company. I believe the deal just closed and came final. When you talk about the evolution of royalty, maybe just touch on the importance of this transaction. Maybe for those who aren't familiar, just walk through that structure and what it means for the company. Yeah. Without getting into all of the details of this, you know, we announced a really exciting transaction at the beginning of this year, which was to internalize our external manager. A little bit of a history lesson is probably important. You know, Royalty Pharma was private for 21 years of its life. You know, like a lot of investment structures, it was structured as an external manager, right, where you had capital and the employees worked for a manager and you were compensated with a management fee. When we went public, we carried that structure into the public entity. The transaction we announced was sort of, if you, the way we thought about it was sort of a natural evolution of our business, which was we put together the royalties we own, which was the public entity, with the team and kind of the intellectual capital of the company into kind of one entity, which makes a lot of sense. It's the right move. It was kind of part of the roadmap to bring together because, you know, it aligns us with shareholders completely, the whole team. We're always very aligned. You know, this transaction aligns us completely. If you think about one of the things that we think is most interesting about Royalty Pharma, it isn't just a vehicle for royalties, right? We are an ongoing business, right? We have platform value and the team and all of the intellectual capital that we've accumulated over the two decades, right? You're bringing all of that into one structure. We think that's a really important part of the story. That is why this internalization was a big deal. I should mention along with that, we announced a large, you know, a $3 billion buyback program. One of the things that we talked about to sort of help our shareholders understand was, you know, what is our kind of capital allocation framework? I think what we talked about was, you know, we're constantly assessing how exciting the investments we're seeing versus the value we see in our stock. We're going to always do the right thing for shareholders between balancing buyback when we look at the value of the stock and the number of external opportunities we see to reinvest. I think it was a pretty strong message to our shareholders that, you know, we are committed to creating shareholder value. I think that transaction was a big step in that direction. Maybe last question for me, just coming off of first quarter disclosures and while the sector and just the larger markets are on watch about performance and what the outlooks are for 2025, just given the macro, you and the team raised guidance for the portfolio receipts. Just walk us through some of that thinking to increase just those base assumptions on the variety of portfolio contributors that you have. Yeah. It is actually pretty simple. We raised guidance for two reasons. About half of it, we said on the call, was FX, just our portfolio mix had moved. The second piece was sort of same store sales, right? Was growth in the royalties that we have. We talked about some of them, you know, Trilogy, Tremfya. You know, we own a royalty in the CF, in the Vertex CF portfolio. It was really just the underlying growth in the portfolio. The other thing I would mention is, you know, we made an exciting investment last year in a product that's probably off of people's radars a little bit, which is a new drug for low-grade glioma, so a form of brain cancer that was being marketed by a company called Servier. It is a private French company. You know, it's sort of off people's radar. You know, we paid a little over $900 million last year for a 15% royalty on U.S. sales. That drug is off to a great start. It is nice to see some of those new products contributing as well. Just to keep in mind, you know, our guidance does not include any assumption about new investments. Anything we add during the year is incremental to our guidance. Great. Great. Yeah. Kind of we're sitting in model for many years. It's great to see. Yeah. It's such a great product. We're excited to have it. Definitely. As are we. Just before we break, Marshall, I just want to open up to the audience here in New York. Any questions for Marshall and Royalty Pharma? Oh, yes, we have one here. Yep. Diligence platform. Could you say more about your diligence platform, what it consists of, what are the specialties of the people that are involved? Yeah, absolutely. You know, we have invested a lot in our diligence platform over the last few years. I think from an investment team perspective, we're really set up as generalists, right? We want our team to be able to look at any therapeutic area out there. We think that that's a strength that we have, that we're not therapeutic area focused. If you look at our track record of investments, you know, we've invested very broadly. The second piece of it is, I referenced a little bit, we've made a big investment in data over the last few years. Right, we spend a lot every year on forms, on lots of data sources, claims data. We do all of that work internally. We've hired several people out of Pharma who did real-world evidence work there, who work closely with our team. We can do truly deep proprietary market evaluations, you know. That gives us sort of unique kind of conviction and confidence. You know, as part of our diligence, I think something that an advantage that we have is, you know, when we work directly with companies, right, we can know everything they know, right? We're not sort of public investors in that way. You know, we can see all kinds of trial data, regulatory correspondence, you know, even sometimes down to sort of individual patient trial data. When we're working with companies, we can ask for specific analyses and that kind of thing. The other part of our platform is, you know, the way that we work is we'll have kind of a small internal team. One of the things we do really well is we will go out and find the very, very best sector-specific advice we can across clinical development, regulatory, commercial, manufacturing, whatever it is for that product. You know, we've built this platform over many years, and I think we're in a great place for the future. Marshall, thanks for joining us. Yeah, thanks for having us. Thank you. Thanks, everyone. Awesome. Yeah, that's great. Great to see you.