Q1 2026 Royalty Pharma PLC Earnings Call

May 6, 2026

Operator 2: Ladies and gentlemen, thank you for standing by. Welcome to the Royalty Pharma Q1 2026 Earnings Conference Call. I would like now to turn the conference over to George Grofik, Senior Vice President, Head of Investor Relations and Communications. Please go ahead, sir.

George Grofik: Good morning and good afternoon to everyone on the call. Thank you for joining us to review Royalty Pharma's Q1 results. You can find the press release with our earnings results and slides to this call on the investors page of our website at royaltypharma.com. On slide 2, I'd like to remind you that information presented in this call contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from these statements. We refer you to our most recent 10-K on file with the SEC for a description of these risks. All forward-looking statements are based on information currently available to Royalty Pharma. We assume no obligation to update any such forward-looking statements.

George Grofik: Non-GAAP liquidity measures will be used to help you understand our financial results and the reconciliation of these measures to our GAAP financials is provided in the earnings press release available on our website. With that, please advance to slide 3. Our speakers on the call today are Pablo Legorreta, Chief Executive Officer and Chairman of the Board, Christopher Hite, Chairman, Partnering and Investments, Marshall Urist, EVP, Head of Research and Investments, and Terrance Coyne, EVP, Chief Financial Officer. Pablo will discuss the key highlights, after which Christopher will discuss the growing opportunity for R&D co-funding. Marshall will provide a portfolio update and Terrance will review the financials. Following concluding remarks from Pablo, we will hold the Q&A session. With that, I'd like to turn the call over to Pablo.

Pablo Legorreta: Thank you, George, and welcome to everyone on the call. I am happy to report a strong start to 2026 as we execute towards our goal to be the premier capital allocator in life sciences with consistent compounding growth. Slide 5 summarizes our strong business momentum in the Q1. Starting with the financials, we delivered 10% growth in portfolio receipts, our top line, and 13% growth in royalty receipts, which are our recurring cash flows. This sustained double-digit momentum was driven by strength of our diversified portfolio. We also maintained strong returns in our business with returns on invested capital of around 14% and returns on invested equity of around 20%. By combining strong growth and attractive returns, we're confident that we have a clear path to drive shareholder value creation.

This is sustained double digit. Momentum was driven by strength of our Diversified portfolio.

Pablo Legorreta: Turning to capital allocation, we had a busy quarter with $1.25 billion of announced transactions on three attractive therapies, while capital deployed was in excess of half a billion dollars. We also repurchased 1 million shares for $50 million in the quarter and increased our dividend by 7%. Moving to our portfolio, we are thrilled to see a number of positive clinical and regulatory updates, including the extraordinary phase 3 results for Revolution Medicines' daraxonrasib in pancreatic cancer and FDA approval of Denali's AVLAYAH in Hunter syndrome. We also expanded our portfolio through R&D co-funding agreements with Teva, which we discussed on our previous earnings call, and recently with J&J for their autoimmune therapy JNJ-4804. Chris will highlight the growing market opportunity for R&D co-funding with Global Biopharma.

We also maintain strong returns, in our business. With returns on invested, capital of around 14%, And Returns on invested, Equity of around 20% by combining strong growth and attractive returns. We're confident that we have a clear path to drive shareholder value creation.

Turning to Capital location. We had a busy quarter with $1.25 billion of announced transactions on 3 assets or therapies.

while Capital deployed was in excess of half a billion dollars,

We also repurchased 1 million shares for 50 million in the quarter and increased our dividend by 7%.

Moving to our portfolio, we're thrilled to see a number of positive clinical and regulatory updates, including the extraordinary Phase 3 results for Revolution Medicines that are some RAS-ed.

In pancreatic cancer and FDA approval of Denali aaya in Hunter syndrome. We also expanded our portfolio through R&D co-funding agreements with Teva which we discussed on our previous earnings call and recently with J&J for their autoimmune therapy for 48.04,

Pablo Legorreta: Lastly, we were pleased to acquire a royalty on Jazz and BeOne Ziihera, an approved cancer therapy with blockbuster potential. Looking ahead, we're increasing our 2026 full year guidance based on the strong business momentum I just highlighted. Slide 6 is one that I keep coming back to each quarter as it demonstrates our consistent double-digit growth on average since our IPO. We have delivered this impressive record year in, year out, regardless of the market backdrop. This speaks to the quality of our investment selection and our unique business model. In Q1, we also took major steps to strengthen our global platform and capabilities in partnering the Asia Pacific region and artificial intelligence. We have brought in exceptional new leaders to our team with Greg Butz, Kenneth Sun, and Lucas Glass.

Chris will highlight the growing Market opportunity for R&D co-founding with global biofarma.

Used to acquire a royalty on Jazz and D1 Sahara. An approved cancer therapy with Blockbuster potential.

Looking ahead, we're increasing our 2026 full-year guidance, based on the strong business momentum I just highlighted.

Slide 6 is 1 that I keep coming back to each quarter as a demonstrates, our consistent double-digit growth on average. Since our IPO, we have delivered this impressive record year in year out, regardless of the market backdrop.

This speaks to the quality of our investment selection and our unique business model.

In the first quarter, we also took major steps to strengthen our Global platform and capabilities in partnering, the Asian Pacific region, and artificial intelligence

Pablo Legorreta: Their expertise will support our long-term growth ambitions and help to strengthen our competitive moats as the undisputed leader in the biopharma royalty market. Chris Hite, who has served as our Vice Chairman throughout our journey as a public company, has moved into a new role as Chairman, Partnering, and Investments. In this role, we will continue to expand our global relationship network and play a central role in transactions. Chris has been an incredible partner, and I am delighted that he will continue to provide strong leadership and leverage his relationships in this role. With that, I will hand it over to Chris.

We have brought in exceptional new leaders to our team, with Greg Butts, Ken's son, and Lucas Glass.

Their expertise will support our long-term growth Ambitions and help to strengthen our competitive modes. As the Undisputed leader in the biopharma royalty Market.

Chris kite who has served as our vice chairman throughout our journey, as a public company, has moved into a new role as chairman partnering and investments. In this role, we will continue to expand our Global relationship Network and and play our Central role in transactions.

Chris has been an incredible partner and I delighted that he will continue to provide strong leadership and leverage his relationships in this role with that. I will hand it over to Chris.

Christopher Hite: Thanks, Pablo. I'm genuinely excited about the new capabilities we're building and the opportunity to forge even stronger, more meaningful relationships across the biopharma ecosystem. For my section today, I want to focus on the major opportunity we see for R&D co-funding with Global Biopharma. Beginning on slide 9, we see R&D co-funding as a win-win solution for Global Biopharma and for Royalty Pharma. This market has enormous potential with over $1 trillion of cumulative projected R&D spend by Global Biopharma in the next 5 years. Co-funding arrangements allow Biopharma to share risk at scale, to enhance program return on investment, to expand R&D capacity, and to diversify pipelines. From Royalty Pharma's perspective, we see multiple potential benefits.

Thanks, Pablo. I'm genuinely excited about the new capabilities for building and the opportunity to forge even stronger more meaningful relationships across the biofarma ecosystem.

For my section. Today, I want to focus on the major opportunity. We see for R&D co-funding with global biofarma.

Beginning on slide 9, we see R&D co-funding as a win-win solution for Global biofarma and for royalty Pharma.

This market has enormous potential, with over $1 trillion of cumulative, projected R&D spend by global biopharma in the next 5 years.

Co-funding Arrangements, allow biofarma to share risk at scale to enhance program return on investment to expand R&D capacity and to do diversify Pipelines.

Christopher Hite: These include unlocking a new market opportunity, gaining access to high-priority clinical programs, leveraging our partners' global development and commercialization expertise, and the ability to conduct deep diligence to drive high conviction in our investments. Slide 10 illustrates the strong momentum for this funding modality. The demand by biopharma was impacted by accounting uncertainty last decade, but over the last several years, more clarity around contra-R&D accounting treatment has resulted in a surge for co-funding deals. As an example, in the Q1 alone, we signed deals with J&J and Teva totaling $1 billion in announced value. On the right-hand side of this slide, you can see that the number of global biopharma companies that have utilized this funding modality has doubled since 2020, which underscores the growing acceptance of this form of funding.

From royalty Farmers perspective. We see multiple potential benefits.

These include unlocking a new market opportunity, gaining access to high priority clinical programs leveraging. Our, our partners Global development, and commercialization expertise, and the ability to conduct deep, diligence to drive high conviction in our investments.

Slide 10 illustrates the strong momentum for this funding modality.

The demand by biofarma was impacted by accounting uncertainty last decade. But over the last several years, more clarity around contrarian accounting treatment has resulted in a surge for co-funding deals.

As an example, in the first quarter alone, we signed deals with Jane, Jane Teva, totaling $1 billion, and announced value.

On the right hand side of this slide, you can see that the number of global biofarma companies that have utilized this funding, modality has doubled since 2020.

Christopher Hite: Slide 11 shows our capital deployment mix by funding modality and how this has changed over time and where we see it heading in the future. At the start of the 2000s, we were a business focused almost exclusively on acquiring existing royalties. Today, existing royalties remain a stable and important component of our capital deployment, but we have evolved into a more diversified with a growing emphasis on providing capital through innovative funding structures, most notably synthetic royalties with emerging biopharma companies, which has been a key growth driver. While R&D co-funding with large biopharma companies has historically represented a smaller share of our activity, we see a clear opportunity to scale this significantly in response to increasing demand. Importantly, this shift creates meaningful upside potential.

Which underscores the growing acceptance of this form of funding.

Slide 11 shows, our Capital deployment, mix by funding modality, and has this, and how this has changed over time and where we see it heading in the future.

At the start of the 2000s, we were a business focused almost exclusively on acquiring existing royalties.

Today existing royalties remain as stable and important component of our Capital deployment but we have evolved in a much in a into a more Diversified with a growing emphasis on providing Capital through Innovative funding structures.

Most notably synthetic royalties with emerging biofarma companies, which has been a key key growth driver.

While R&D co-funding with large biofarma, companies has historically represented a smaller share of our activity.

We see a clear opportunity to scale the significantly in response to increasing demand.

Christopher Hite: In addition, potential business from acquiring existing royalties that have originated in China, where we are actively building a platform, represents another avenue for future growth that could drive the existing royalty market significantly. Slide 12 highlights the number of the R&D co-funding agreements that we have entered into since 2022. Together, these five highlighted deals at the time of announcement had the potential to provide up to $1.8 billion in capital to our partners, including up to $1 billion alone in the Teva and J&J transactions that we announced in the Q1 this year, as I previously noted. As you can see, these deals check the core elements of our investment framework. Specifically, each transaction involves a biopharma with deep clinical expertise and global commercial infrastructure and provides Royalty Pharma with royalty rights to a potentially transformative therapy covering a diverse range of indications.

Importantly, this shift creates meaningful upside potential.

In addition, potential business, from acquiring existing royalties that have originated in China, where we are actively building a platform, represents another Avenue for future growth. That could drive the existing royalty Market significantly.

Together. These 5 highlighted deals at the time of announcement, had the potential to provide up to 1.8 billion in capital to our partners.

Including up to $1 billion alone in the Teva and J&J transactions.

That we announced in the first quarter this year, as I previously noted.

As you can see these deals, check the core elements of our investment framework.

Christopher Hite: On slide 13, I want to close by highlighting why we are so confident that Royalty Pharma is well-positioned to scale R&D co-funding. Remember that we have been partnering with Biopharma for approximately 30 years as we pioneered the royalty market. When we think about the depth of our relationships, our brand reputation, our responsiveness, and our flexibility in structuring, Royalty Pharma is the clear leader. In addition, we take a long-term view with royalties and milestones paid over many years, and we have a cost of capital similar to pharma, so we can offer competitive pricing and win more deals. For these reasons, we expect to be able to capitalize strongly on this tremendous growth opportunity in the coming years. With that, let me hand it over to Marshall.

Specifically each transaction involves a biofarma with deep clinical expertise, and global commercial infrastructure and provides royalty Pharma with royalty rights to a potentially transformative therapy covering a diverse range of indications.

On slide 13. I want to close by highlighting, why, we are so confident that royalty Farmers. Well, positioned to scale R&D co-funding

Remember that we've been partnering with Biofarma for approximately 30 years, as we pioneered the royalty market.

when we think about the depth of our relationships, our brand reputation, our responsiveness, and our flexibility, and structuring

Royalty Farm, is the clear leader.

In addition, we take a long-term view with royalties and milestones paid over many years, and we have a cost of capital similar to pharma, so we can offer competitive pricing and win more deals.

For these reasons, we expect to be able to capitalize strongly on this tremendous growth opportunity in the coming years.

Marshall Urist: Thanks, Chris. I want to focus today on several exciting updates to our portfolio. First, our recent royalty deal for Ziihera, an approved cancer therapy. Second, the incredible Phase 3 data that was recently disclosed by our partner, Revolution Medicines, for daraxonrasib in pancreatic cancer. Third, a look forward to important upcoming events across our broad development stage portfolio. Beginning on slide 15, we entered into a strategic funding agreement in March with Zymeworks, where we provided $250 million upfront in return for 30% of their royalty on Jazz and BeOne Ziihera, which translates to a low- to mid-single-digit royalty for Royalty Pharma. For those less familiar, Ziihera is a HER2-targeted bispecific antibody which is FDA-approved for a rare tumor, metastatic biliary tract cancer.

With that, let me hand it over to Marshall.

Thanks Chris. I want to focus today, on several exciting updates to our portfolio. First our recent royalty deal for sahera, an approved cancer therapy. Second, the incredible phase 3 data. That was recently disclosed by our partner Revolution medicines for directs and raseed and pancreatic cancer. And third, a look forward to important upcoming events. Across our broad development stage portfolio.

Beginning on slide 15. We entered into a strategic of funding agreement in March with zy Works, where we provided 250 million dollars upfront in return for 30% of their royalty on Jazz. And B1 zahira, which translates to a low to mid single digit royalty for royalty Pharma.

Marshall Urist: From a patient and commercial perspective, the real excitement here is that Ziihera was recently submitted for approval in gastric cancer, which represents a particularly high unmet need with a 5-year survival rate of less than 10%. The pivotal study in this indication demonstrated an impressive 5- to 7-month, or nearly 40% overall survival advantage over currently available therapies. In our view, this positions Ziihera to become the standard of care in this very tough-to-treat indication, supporting blockbuster potential. Consensus models include peak sales of Ziihera of greater than $2 billion. Based on this outlook, we expect the transaction to deliver attractive returns with an unlevered IRR in the low double digits. Moving to daraxonrasib on slide 16. Revolution Medicines recently reported unprecedented results from the RASolute Phase 3 trial in second-line pancreatic cancer.

For those less familiar. Zeira is a her to targeted by specific antibody, which is FDA approved for a rare tumor, metastatic biliary, tract cancer.

from a patient in commercial perspective, the real excitement here is that the hero was recently submitted for approval and gastric cancer which represents a particularly High unmet need with a 5-year, survival rate of less than 10%

The pivotal study in this indication demonstrated an impressive 5- to 7-month, or nearly 40%, overall survival advantage over currently available therapies. In our view, this positions the therapy to become the standard of care in this very tough-to-treat indication, supporting blockbuster potential.

Consensus models include peak sales of Zahira of greater than $2 billion. Based on this outlook, we expect the transaction to deliver attractive returns with an unlevered IRR in the low double digits.

Moving to directs on Ras of on side 16.

Marshall Urist: On our last earnings call, I said that daraxonrasib has the potential to revolutionize this devastating disease, and these phase 3 results certainly support this. The key headline is that daraxonrasib nearly doubled overall survival from just under seven months with chemotherapy to over 13 months. These are truly remarkable outcomes for patients in a disease that has seen no true innovation for decades. The next step for Revolution Medicines is to submit for approval by global regulatory agencies, including the FDA, under the commissioner's national priority voucher that has the potential to speed the time to approval. In terms of the implications for Royalty Pharma, as a reminder, we agreed in 2025 to provide up to $2 billion in long-term funding to Revolution Medicines to help the company aggressively pursue clinical development and commercialization of daraxonrasib.

Revolution Medicines recently reported unprecedented results from the RAS(ON) space retrial in second-line pancreatic cancer. On our last earnings call, I said that DuraX and RAS(ON) have the potential to revolutionize this devastating disease, and these Phase 3 results certainly support this.

The key headline is that directs and raseed nearly doubled overall survival from just under 7 months with chemotherapy to over 13 months. These are truly remarkable outcomes for patients in a disease that has seen no true innovation for decades.

The next step for revolution medicines is the sub submit for approval by global Regulatory Agencies, including the FDA under the commissioner's National priority. Voucher that has the potential to speed the time to approval.

Marshall Urist: With the positive data, Royalty Pharma has now invested a total of $500 million for a synthetic royalty that begins at 4.55% on sales up to $2 billion and then tiers down from there. Based on consensus peak annual sales of greater than $10 billion, we expect peak potential annual royalties to be in the range of approximately $180 million based on the currently funded amount and up to $340 million if they draw the additional $750 million of synthetic royalty funding. We are excited to see what the future holds for this incredible medicine backed by a phenomenal team. I'll turn to our development stage pipeline and upcoming events. We're exceptionally well-positioned for our next wave of value creation with a deep and innovative pipeline.

In terms of the implications for royalty Pharma as a reminder, we agreed in 2025, to provide up to 2 billion dollars in long-term funding to Revolution, medicines to help the company aggressively pursue clinical development and commercialization of direct and assets with the Positive data royalty Pharma has now invested, a total of $500 million for a synthetic royalty that begins at 4.55% on sales up to 2 billion dollars and then tears down from there, based on consensus Peak annual sales of greater than 10 billion. We expect Peak potential annual royalties to be in the range of approximately 180 million dollars. Based on the currently funded amount and up to 340 million. If they draw the additional 750 million up, synthetic royalty, funding.

We are excited to see what the future holds for this incredible medicine backed by a phenomenal team.

Marshall Urist: Slide 17 shows that in addition to daraxonrasib, our portfolio has delivered a number of successful clinical readouts and regulatory approvals already in 2026. Just yesterday, we were thrilled to see the positive top-line results for Myqorzo in its pivotal trial in nonobstructive hypertrophic cardiomyopathy. Other highlights include positive clinical trial results for Zenas' obexelimab in IgG4-Related Disease, positive phase 2 results for Biogen's litifilimab in cutaneous lupus, FDA approval of Denali's AVLAYAH in Hunter syndrome, and the filing of Nuvalent's neladalkib in ALK-positive non-small cell lung cancer. As you can see, there are plenty more events anticipated this year, and we expect these to lead to several new royalty-generating launches in 2026 and 2027.

Slide 17 shows that in addition to directs and wrath it, our portfolio has delivered a number of successful clinical readouts and Regulatory approvals already in 2026.

Just yesterday, we were thrilled to see the positive Topline results for my corso and its pivotal trial and non-obstructive, hypertrophic cardiomyopathy.

Other highlights include positive clinical, trial, results present. This is OBC sell in igg4 related disease, positive Phase 2 results, for biogen's, laphil Madden. Cutaneous lupus, FDA approval of denials of Lia in Hunter syndrome and the filing of new veillance Nella delib. In Elk positive non small cell, lung cancer

Marshall Urist: To highlight positive news on one of our pipeline products, last week Teva announced the acquisition of MLX for up to $900 million with regulatory submission planned for MLX's ecopipam for Tourette's in H2 of the year. As a reminder, Royalty Pharma is entitled to royalties of 6% on ecopipam sales up to $400 million and 10% on sales of $400 million or greater, and we are excited to see ecopipam in the hands of Teva, a marketer with deep commercial expertise in neuroscience. Expanding on this theme, Slide 18 shows that there is much more to come from our development stage pipeline, with multiple major pivotal readouts expected over 2026 and 2027. Over the remainder of 2026, we'll see the results of the outcomes trial for Novartis' pelacarsen.

As you can see, there are plenty more events anticipated this year, and we expect these to lead to several new royalty-generating launches in 2026 and 2027.

To highlight positive news on 1 of our pipeline products. Last week, Teva announced the acquisition of MLS for up to 900 million dollars with regulatory submission, planned for mls's Echo pipe, and for Tourette's in the second half of the year.

As a reminder royalty Pharma is entitled to royalties of 6% on Echo pipe and sales up to 400 million dollars in 10 on sales of 400 million or greater. And we are excited to see Echo pipe him in the hands of Teva. A marketing, a marketer with deep commercial expertise in neuroscience.

Expanding on this theme. Slide 18 shows that there is much more to come from our development stage Pipeline with multiple major major pivotal readouts expected over 2026 and 2027.

Marshall Urist: We continue to believe that the Lp(a) class could be the next major class of drugs in cardiovascular disease, and we're perfectly positioned with the two lead pipeline products in pelacarsen and Amgen's olpasiran. We'll also see phase 3 data for litifilimab in systemic lupus. In 2027, we expect pivotal data from Sanofi's frexalimab in multiple sclerosis and from J&J's seltorexant in major depressive disorder. We also expect phase 3 results from daraxonrasib in non-small cell lung cancer and litifilimab in cutaneous lupus. Each of these potentially transformative therapies would add significant royalties to our top line. To close, we see tremendous potential for our pipeline to unlock substantial value in the near term. With that, I'd like to hand it over to Terry.

Over the remainder of 2026, we'll see the results for the of the outcomes trial for novartis's. Polo Carson, we continue to believe that the lp little a class could be the next major class of drugs in cardiovascular disease, and we're perfectly Physicians with the 2 lead pipeline products in pellek Carson and Amgen will pass around. We'll also see phase 3 data for lit aab. In systemic lupus.

Terrance Coyne: Thanks, Marshall. Let's move to slide 20. This slide shows how our efficient business model generates substantial cash flow to be reinvested. Royalty receipts grew by 13% in Q1, reflecting the strength of our diversified portfolio. Portfolio receipts, our top line, grew 10% in the quarter, which was strong performance considering a sizable year-over-year decline in milestones and other contractual receipts. We move down the column, operating and professional costs were 3.9% of portfolio receipts in Q1. This is a clear reflection of the benefit of the cash savings we are delivering from the internalization transaction, which we completed last May. Net interest paid was $167 million in the quarter. This reflects the semiannual timing of our interest payment schedule, with payments primarily in Q1 and Q3.

In 2027, we expect pivotal data from Santa fees for Excel and add in multiple sclerosis and from J&J cells are accent and major depressive disorder. We also expect phase 3 results from directs and Rapid in non small cell, lung, cancer, and Leti, mapping cutaneous lupus, each of these potentially transformative therapies would add significant royalties to our top line. So to close, we see tremendous potential for our pipeline to unlock substantial value in the near term with that. I'd like to hand it over to Terry.

Thanks Marshall. Let's move to slide 20.

This slide shows how our efficient business model, generates substantial cash flow to be reinvested.

Royalty, receipts grew by 13% in the first quarter reflecting the strength of our Diversified portfolio.

Portfolio receipts. Our Top Line grew 10% in the quarter, which was strong performance, considering a sizable, year-over-year decline in milestones, and other contractual receipts.

As we move down the column, operating a professional costs were 3.9% of portfolio receipts in the first quarter. This is a clear reflection of the benefit of the cash savings. We are delivering from the internalization transaction which we completed last May

Terrance Coyne: Moving further down the column, we have consistently stated that when we think of the cash generated by the business to then be redeployed into value-enhancing royalties, we look to portfolio cash flow, which is adjusted EBITDA less net interest paid. This amounted to $722 million for the quarter. Our net margin of around 78% again demonstrates the high underlying level of cash conversion and efficiency in the business. Capital deployment in the quarter of $528 million mainly reflected upfront payments for the Ziihera and AVLAYAH transactions and a milestone payment related to TRELEGY. Lastly, our weighted average share count declined by approximately 4% in the quarter versus the prior year period, reflecting the impact of our share buyback program. Slide 21 provides more detail on the evolution of our top line in the Q1.

Net interest paid was 167 million in the quarter. This reflects, the semiannual timing of our interest payment schedule with payments primarily in the first and third quarters.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Royalty Pharma Q1 2026 Earnings Conference Call. I would like now to turn the conference over to George Grofik, Senior Vice President, Head of Investor Relations and Communications. Please go ahead, sir.

Moving further down the column. We have consistently stated that when we think of the cash generated by the business to then be redeployed and drive value, enhancing royalties, we look to portfolio cash flow, which is adjusted EBITDA less net interest paid.

This amounts to $722 million for the quarter.

Our net margin of around 78% again demonstrates the high underlying level of cash conversion and efficiency in the business.

Capital deployment in the quarter of $528 million, mainly reflected upfront payments for the Zahara and AA transactions, and a milestone payment related to Trilogy.

Lastly our weighted average share count declined by approximately 4% in the quarter versus the prior year period reflecting the impact of our share buyback program.

Terrance Coyne: Royalty receipts, which we consider our recurring cash inflows, grew by 13%. Key drivers were the strong performances of TREMFYA, VORANIGO, and Evrysdi. In the case of Evrysdi, on top of the underlying growth, we benefited from the additional royalties we acquired in December. I should also note that we were able to absorb a 3% headwind to royalty receipts due to the loss of exclusivity of PROMACTA and still deliver double-digit growth. Moving to portfolio receipts, these grew by 10%, reflecting the lower one-time milestones and other contractual receipts. Slide 22 updates our portfolio return metrics for the quarter.

Slide 21 provides more detail in the evolution of our top line in the first quarter.

Royalty receipts, which we consider our recurring. Cash inflows grew by 13%.

Key drivers were the strong performance of trump, FIA borano, and Evie.

In the case of ever risky, on top of the underlying growth, we benefit from the additional royalties, we acquired in December.

I should also note that we were able to observe a 3% headwind to royalty receipts

Due to the loss of exclusivity of Promacta, it still delivered double-digit growth.

Moving to portfolio receipts, these grew by 10%, reflecting the lower one-time, milestone, and other contractual receipts.

Terrance Coyne: Return on invested capital was 14.1% for the last 12 months ending in Q1 2026. Return on invested equity, which shows the impact of conservative leverage on our equity returns, was 19.7% for the last 12 months ending in Q1. As I previously stated, we are in the returns business. These metrics show that we are continuing to invest at attractive returns that will drive long-term value for our shareholders. Slide 23 shows that we continue to maintain the financial flexibility to execute our strategy and return capital to shareholders. At the end of March 2026, we had cash and equivalents of $586 million. In terms of borrowings, we have investment-grade debt outstanding of $9.2 billion and the weighted average duration is around 12 years.

Slide 22 updates, our portfolio return metrics for the quarter.

Quarter 2026 and return on invested equity, which shows the impact of conservative leverage on our Equity returns was 19.7% for the last 12 months ending in the first quarter.

As I've previously stated we are in the returns business and these metrics show that we are continuing to invest at attractive returns that will drive long-term value for our shareholders.

Slide 23 shows that we continue to maintain the financial flexibility to execute our strategy and return capital to shareholders.

At the end of March 2026, we had cash and equivalents of 586 million.

Terrance Coyne: Importantly, Fitch recently upgraded our credit rating to triple B from triple B minus. Our leverage now stands at 2.9x total debt to adjusted EBITDA or 2.7x on a net basis. We also have access to our $1.8 billion revolver, which is undrawn. Taken together, we have access to approximately $4 billion of financial flexibility through cash on our balance sheet, the cash our business generates, and access to the debt markets. Turning to our capital allocation framework, we deployed $528 million of capital on attractive royalty deals in the quarter. At the same time, we returned approximately $186 million to our shareholders, including share repurchases of $50 million and our growing dividend. On slide 24, we are raising our full year 2026 financial guidance.

In terms of borrowing, we have investment grade debt outstanding of 9.2 billion and weighted average and the weighted average duration is around 12 years.

Importantly, Fitch recently upgraded. Our credit rating to Triple B from Triple B minus.

Our leverage now stands at 2.9 times. Total debt to adjusted Eva de or 2.7 times on a net basis.

We also have access to our 1.8 billion revolver, which is on drawn.

Taken together, we have access to approximately 4 billion dollars of financial flexibility through cash on our balance sheet, the cash our business generates and access to the debt markets.

Turn into our Capital, allocation framework, we deployed 528 million of capital on attractive, royalty deals, in the quarter.

at the same time, we returned approximately 186 million to our shareholders, including share repurchases of fifty million dollars and our growing dividend

Terrance Coyne: We now expect portfolio receipts to be in the range of $3.325 billion to $3.45 billion, up from $3.275 billion to $3.425 billion previously. This assumes growth in royalty receipts of around 4% to 8%, which reflects the strong underlying momentum of our diversified portfolio. Our guidance takes into account the loss of exclusivity for Promacta, as well as the launch of biosimilar Tysabri in the US and the potential impact of IRA. It also reflects an expected decrease in milestones and other contractual receipts from $128 million in 2025 to approximately $60 million in 2026.

On slide 24. We are raising our full year 2026 Financial guidance.

We now expect portfolio of receipts to be in the range of 3.325 billion to 3.45 billion up from 3.275 billion to 3.425 billion previously.

This assumes growth in royalty receipts of around 4% to 8%, which reflects the strong underlying momentum of our Diversified portfolio.

Our guidance takes into account the loss of exclusivity for Promacta, as well as the launch of biosimilar Tysabri in the United States, and the potential impact of IRA.

Terrance Coyne: Importantly, and consistent with our standard practice, this guidance is based on our portfolio as of today and does not take into account the benefit of any future royalty acquisitions. For modeling purposes, we would remind you that several of our largest royalties, such as the CF franchise, TRELEGY, Evrysdi, and others, are upward-tiering royalties, which means they reset to a lower rate in the first quarter. As our royalty receipts lag reported sales by the marketers by one quarter, this has the effect of decreasing royalties sequentially in the second quarter. Given these dynamics, we are providing guidance for the second quarter portfolio receipts, which we expect to be between $740 million and $760 million.

It also reflects an expected decrease in milestones and other contractual receipts from 128 million in 2025 to approximately 60 million dollars in 2026.

Importantly, and consistent with our standard practice. This guidance is based on our portfolio as of today and does not take into account the benefit of any future royalty acquisitions.

For modeling purposes, we would remind you that several of our largest royalties, such as the CF franchise, Trilogy, Everiz, and others, are upward-tiering royalties, which means they reset to a lower rate in the first quarter.

As our royalty receipts lag reported sales by the marketers by one quarter, this has the effect of decreasing royalties sequentially in the second quarter.

Terrance Coyne: Turning to expenses, payments for operating and professional costs are still expected to be in the range of approximately 5.5% to 6.5% of portfolio receipts in 2026, reflecting cost savings from the internalization of the manager. Interest paid is still expected to be around $350 million to $360 million in 2026. Based on our semi-annual payment cycle, we anticipate interest paid to be around $175 million in Q3, with de minimis amounts payable in Q2 and Q4. This guidance does not take into account interest received on our cash balance, which was $6 million in Q1. To close, we have had a great start to the year.

Given these Dynamics, we are providing guidance for the second quarter portfolio overseas. Which we expect to be between 100, sorry, which we expect to be between 740 million and 760 million.

Turning to expenses payments for operating a professional costs are still expected to be in the range of approximately 5 and a half to 6 and a half percent of portfolio overseas in 2026 reflecting cost savings from the internalization of the manager.

Interest paid is still expected to be around 350 million to 360 million in 2026.

Based on our semi-annual payment cycle, we anticipate interest paid to be around 175 million in the third quarter. With the minimum amounts, payable in Q2, and Q4.

This guidance does not take into account interest received on our cash balance which was 66 million in the first quarter.

Terrance Coyne: We have again raised our guidance. We expect to deliver another full year of strong financial performance in 2026. Now, before I hand it over to Pablo, I want to provide a brief update on the timing of the arbitration with Vertex. Based on the arbitration panel's final schedule, we now expect the dispute to be resolved by around the middle of 2027. With that, I would like to hand the call back to Pablo.

To close, we have had a great start to the year. We have again raised our guidance, and we expect to deliver another full year of strong financial performance in 2026.

Now before I hand it over to Pablo, I want to provide a brief update on the timing of the arbitration with vertex.

Based on the arbitration panel's final schedule. We now expect it to be dispute to be resolved by around the middle of 2027.

With that, I would like to hand the call back to Pablo.

Pablo Legorreta: Thanks, Terry. To conclude, I am delighted with our strong start to 2026. We have again delivered strong growth and returns. We've continued to diversify our portfolio of attractive biopharma royalties, and we have strengthened our leadership team and capabilities. I want to close on slide 26 with a reminder of why we believe we're well-positioned to drive strong value creation. First, we're the clear leader in the rapidly expanding biopharma royalty market with strong fundamental tailwinds, reflecting the huge demand for funding life sciences innovation. Second, we have a best-in-class platform for investing in the most transformative and innovative products marketed by premier biopharma companies, and we expect to remain the undefeated leader. I am confident that the expansion of our global platform and capabilities that I talked about today will further strengthen our position at the forefront of our industry.

Thanks Terry to continue them delighted with our strong start to 2026, we have again, delivered, strong growth and returns we've continued to the diversify, our portfolio of attracted by from our royalties and we have strengthened our leadership team and capabilities.

In the rapidly expanding biopharma royalty market, with strong fundamentals and tailwinds reflecting the huge demand for funding life sciences innovation.

Second, we have a best-in-class platform for investing in the most transformative and Innovative products marketed by Premier bio Pharma companies and we expect to remain The Undefeated leader.

Pablo Legorreta: Third, we expect to deliver strong low volatility, top and bottom line growth through 2030 and beyond. Lastly, we have an incredible track record of delivering consistent and attractive returns, including an IRR and return on invested capital in the mid-teens and return on invested equity in the 20% plus range. With that, we will be happy to take your questions.

I am I am confident that the expansion of our Global platform and capabilities that I talked about today, will further strengthen our position at the Forefront of our industry.

Third, we expect to deliver strong low, low low volatility, top and bottom line growth through 2030 and Beyond. Lastly, we have an incredible track record of delivering consistent and attractive returns including an IRA and return on invested capital in the mid teens and return on invested equity in the 20% plus range.

Operator 2: Thank you, Tad.

With that, we will be happy to take your questions.

George Grofik: We'll now welcome your conference with questions. Operator, please take the first question.

Thank you.

Operator 2: The first question comes from Christopher Schott with JPMorgan. Your line is open.

Hardik Parekh: Hi, this is Hardik Parekh in for Christopher Schott. Thank you for taking our questions. I think you've set like a portfolio receive target for 2030 of approaching $5 billion. I was just wondering, now with these recent updates you've had in your development pipeline, can you talk about how much of that 2030 target is de-risked, and how much do you think it comes from investments that are already commercial? Thank you.

Operator. Please take the first question. Thank you. And to ask a question. Please press star, 1, 1 1 on your telephone and wait for your name, to be announced to withdraw your question. Please press star 1 1, 1 1 again. The first question comes from Christopher shot with JP Morgan. Your line is open.

Hi. This is hardik pin for Chris shot. Thank you for taking our questions. Um, you you, you said like a portfolio received Target for 2030 approaching 5 billion. And I was just wondering now, with these recent updates you've had in your, in your development pipeline. Can you talk about how much of that 2030 Target is de-risked and how much using it comes from? Um, investors are already commercial. Thank you.

Pablo Legorreta: Terry, that's a question for you, if you can please take it.

Terrance Coyne: Yeah. Hardik, we feel like we're really on track to, you know, meet or exceed that target. The portfolio is doing really well. We've had a lot of positive developments. We've executed some great deals. You know, we haven't gotten into specifics on that at this point, but feel like we're very much on track, feel very confident in, you know, in meeting or exceeding that long-term guidance.

Barry, that's a question for you if you can, please take it.

Yeah, so hardy. Um, we feel like we're really, we're really on track to to, you know, meter exceed that Target. Uh, the portfolio is doing really well. We've had a lot of positive developments. We've executed some great deals. Um, so, you know, we haven't gotten into specifics on on that, uh, at at this point, but feel like we're, we're very much on track feel very confident in in, you know, in in meeting or or exceeding, that, that long-term guidance.

George Grofik: Operator, next question, please.

Operator 2: Thank you. The next question is gonna come from Michael Nedelkovich with TD Cowen. Your line's open.

Operator next question, please.

Michael Nedelkovich: Hi. Thanks so much for the questions. I have three, if you allow me. My first is on the arbitration update you just provided. Can you provide any insight into the reason for the push-out? My second question is on Myqorzo. How much of an advantage do you think approval in the non-obstructive HCM setting could be relative to Camzyos? Did you assume success of the ACACIA-HCM trial in your internal valuation? My third question is on frexalimab. The multiple sclerosis category is evolving somewhat rapidly, especially with the prospect of oral BTK inhibitors gaining approval. Has anything changed relative to your initial assumptions around frexalimab's competitive positioning, assuming it succeeds in the clinic? Thank you.

Thank you. And the next question is going to come from Mike Nettlecovich with TD Cowen. Your line's open.

Hi. Thanks so much for the questions. I have, uh, 3, if you allow me, my first is on the arbitration update, you just provided, can you provide any insight into the reasons for the push out? Um then my second question is on my Corso, how much of an advantage do you think approval in the non-obstructive? HCM setting could be relative.

Pablo Legorreta: Sure. Thanks for the question, Mike. I guess, Terry, you can take the question on arbitration, Marshall will take the question on Myqorzo and frexalimab.

To Kansas and did you assume success of the acacia trial in your internal valuation? And then my third question is on FX alamab, the multiple sclerosis category is evolving somewhat rapidly especially with the prospect of oral BTK Inhibitors. Gaining approval, has anything changed relative to your initial assumptions around FX alamab competitive positioning, assuming it succeeds in the clinic. Thank you.

Terrance Coyne: Sure. On the timing of the arbitration, it's just simply based on the availability of the arbitration panel.

Sure. Thanks for the question Mike and I guess Terry you can take the question on arbitration and then Marshall will take the question on my course. And, for example,

Sure, so on the timing of the arbitration it it it's just simply based on the the availability of the of the arbitration panel.

Marshall Urist: Hi, Mike, good morning. On your other 2 questions, thanks for the question on Myqorzo. There were, I think multiple parts to it, but just to give you our thoughts, you know, we were really excited to see the data yesterday, and I think, you know, it's clear evidence that, you know, by the strength of the team and a well-designed trial and a, you know, and a really good medicine in aficamten. Multiple parts to your question. I think the first one was, did we assume that in our base, in our base thesis when we made the investment? The answer to that is no. The base investment was really premised on the obstructive or the currently approved indication and its potential there.

Marshall Urist: I think the early evidence that we saw from the early launch with Cytokinetics yesterday, you know, it is evidence of that. You know, that the team is doing a great job launching into that market, and we're really excited to see where that goes. The adding nonobstructive to the label, you know, can only be helpful, right? It gives a broader label. It provides another patient population for doctors to use the medicine in and, you know, overall will certainly be helpful in the launch and certainly upside to our original estimates when we made that partnership with Cytokinetics. Your third question was on frexalimab and on the multiple sclerosis market in general.

And hi, Mike. Good morning. So on your other 2 questions. So first, thanks for the question on my Corso. Um, there were, uh, I think multiple parts to it, but just to give you our thoughts, you know, we were really excited to see the data yesterday and I think, you know, it's a it's clear evidence that, you know, by the the strength of the team in a well-designed trial and a, you know, and a really good medicine in afy Campton. So, um, multiple parts of your question? I think, the first 1 was, did we assume that in our base, um, in our base thesis when we when we made the investment, the answer to that is no the the base investment was really premised on the obstructive or the currently approved indication and its potential there. And I think

The early evidence that we saw from the early lunch was set of kinetics.

Marshall Urist: No real change. I think if you go back in our view, despite some of the changes that are going on with the orals, with oral medicines there, what we said at the time of that investment was what really excited us and what we saw as an unmet need and what continues to be an unmet need in that market is novel mechanisms that aren't solely focused on B-cells. I think that opportunity in the market very clearly still exists, and we're really excited about frexalimab and seeing those data next year.

You know, oh, overall, we'll, we'll certainly be helpful helpful in the launch and certainly outside to our original estimates. When we made the, when, when we made that partnership with Saito, your third question was on FX Salam, um, and on, and on the multiple sclerosis Market in general, um, no, real change. I think if you go back in, in our view, despite some of the changes that are going on with, um, with the orals with oral medicines there. Um, what we said at the time about investment was, what, really excited us, and what we saw as an unmet need and what continues to be an unmet need in that market is novel mechanisms that that aren't solely focused on on B cells. And so I think that opportunity in the market very clearly still exists and we're really excited about file a map and seeing those data next year.

Michael Nedelkovich: Thanks so much.

Operator 2: Thank you. The next question comes from Geoffrey Meacham with Citi. Your line's open.

Geoffrey Meacham: Great. Morning, guys. Thanks for the question. Just had a couple. The first one maybe for Terry. You know, you guys had a higher level of capital deployment, this quarter or last quarter. Looking forward, are you at the upper end of the range leverage-wise, or is there a capacity constraint or just, you know, status quo? The second one, I guess maybe for Marshall. In deals like RevMed or Servier, where, you know, the royalties could really ramp pretty quickly based on a strong launch, you know, are there considerations on some of these types of products where you could add additional royalty investments depending on the pace of the launch?

Thanks so much. Thank you. And the next question comes from Jeff Meacham with City, your Line's open.

Great. Uh morning guys. Thanks for the question. Uh, just had a couple, the first 1 maybe for Terry, you know, you guys had a higher level of capital deployment of this quarter or last quarter looking forward. Are you at the upper end of the range, leverage wise or is there?

Geoffrey Meacham: I think that, you know, I don't know if that's been under consideration before, but that, you know, seems like you'd want to add capital to drugs that are launching pretty quickly. Thank you.

Capacity constraint or just, you know, status quo uh, and then the second 1, um, I guess maybe for Marshall and Deals like revmed or or servier where, you know, the royalties could really ramp pretty quickly based on a strong launch. You know, are there considerations on some of these types of products where you could add additional royalty Investments depending on the um the pace of the launch. I think that you know, I don't know if that's been under consideration before but that you know seems like you'd want to add Capital to to drugs that are launching pretty quickly. Thank you.

Pablo Legorreta: Terry and Marshall, do you wanna go ahead?

Terrance Coyne: Yeah. Jeff, on your leverage question, we're actually, you know, have quite low leverage right now, 2.9x total debt to adjusted EBITDA. We have a lot of financial flexibility. If deal flow increases, we absolutely will be, you know, prepared to, you know, invest if the right opportunities come along. I think we laid out in our slides that we have $4 billion of financial capacity, and that grows every quarter, as you can imagine. We feel like the balance sheet has never been stronger. We're in a really great position there.

Very much and Marshall. Do you want to go ahead?

Marshall Urist: Jeff, good morning on your other two questions. On launching products and opportunities to deploy additional capital. You know, nothing specific with respect to the ramp, but I would say that, you know, the VORANIGO launch, as you pointed out, has gone incredibly well, and we are so excited to have that as part of the portfolio. As a reminder, there is a, there is a sharing component to that one. You know, we do share a portion of the royalty above $1 billion with back to Agios. Second, RevMed, we are, as we talked about in the prepared remarks, we are really excited about this data. Agree with you that the unmet need is so great that this could be a really rapid launch.

Yeah, so Jeff. So, on on, on your leverage question, we're actually, uh, you know, have quite quite low leverage right now, 2.9 times total debt to, to adjusted Eva. Um, and so, we have a lot of financial flexibility if deal flow increases. We feel like we, we, we absolutely will be, you know, prepared to, uh, to, you know, invest, uh, if the right opportunities come along, I think we, we laid out in our slides that we have 4 billion dollars of financial capacity and that grows every quarter as you can imagine. So, uh, so we feel, we feel like we're the balance sheet had never been stronger. We're in a really great position there

Marshall Urist: As a reminder, the RevMed deal, we've done $500 million of the $1.25 billion of synthetic royalty. There are additional opportunities that will come at FDA approval, which we expect to see this year, and then with a certain sales milestone, and then there's a label expansion later on. There are other opportunities. However, the future tranches are all at the option of Revolution Medicines. You know, it was one of the really, I think, attractive and exciting parts of our partnership with them, that it gave our partner lots of flexibility in terms of access to capital going forward. There certainly is that potential, and we will see what happens in the months and years to come.

And Jeff good morning on your other T question. So um on launching products and opportunities to deploy additional Capital. So you know, nothing specific with respect to the ramp, but I would say that, you know, the VOR launches you pointed out has gone incredibly. Well, and we're so excited to have that as part of the portfolio. As a reminder, there is a um, there is a sharing component to that 1. So, um, you know, we we do share a portion of the royalty above a billion dollars with back to igio and then second revmed. We are as we talked about in the prepared remarks, we are really excited about this data. Agree with you that that the unmet need is so great that this could be a really rapid, a really rapid launch as a reminder, the revmed deal. Um, we've we've done 500 million of the 1.25 billion of synthetic royalty. There are additional opportunities that will come, um, at FDA approval, um, which which

To expect to see this year and then um with a a certain sales Milestone and then there's a label expansion later on. So there are other opportunities. However, the future tranches are all at uh the option of of Revolution medicine. So you know and it was 1 of the really I think attractive and exciting parts of our partnership with them. That it gave our partner, lots of flexibility in terms of access to Capital going forward. So there's there certainly is that potential and

Geoffrey Meacham: Thank you.

We will see and and we will see what happens in the months and years to come.

Operator 2: Thank you. Our next question's gonna come from Jason Gerberry with Bank of America. Your line's open.

Jason Gerberry: Hey. Good morning, guys. Thanks for taking my questions. First is the policy question. I'm just curious how you guys are thinking about forecasting underwriting value for OUS launches around MFN risk, just given that we haven't really seen how pharma companies' launch behaviors and pricing strategies are mirroring in those select OUS markets. In the absence of that, concrete information, I'm just kinda curious how you guys navigate that risk. Then on the R&D co-funding deals flagged in the slides, the two recent deals, can you help us understand, do the IRR expectations meaningfully differ at all for the co-funding structure versus a traditional royalty acquisition? And if those two deals have a, like, royalty payment capping mechanism, embedded in them? Thanks.

Thank you. And our next question is going to come from Jason Gerber with Bank of America your lines open.

Hey, good morning guys. Um, thanks for taking my questions. Um, first is the policy question? I'm just curious how you guys are thinking about, um, forecasting underwriting value for us. Launches around mfn risk.

Pablo Legorreta: Sure, Jason. Marshall, I think both questions are for you, the one on OUS launches and also on co-funding.

Risk. And then on the R&D co-funding deals flagged, uh, in the slides, the 2 recent deals. Can you help us understand the irr, expectations meaningfully differ at all for the co-founding structure versus say a traditional royalty acquisition and and and if those 2 deals have a like royalty payment, capping mechanism, uh embedded in them. Thanks.

Marshall Urist: Sure, Jason. Thanks for those two questions. On your first policy question on MFN, it's certainly something that we, I think like the rest of the industry, is thinking through. Agree with you, there isn't a lot of precedent, so we've taken the approach that we always have, which is to think through a lot of different scenarios and make sure that given the wide range of possibilities in the future, that we're still comfortable with the investment. I think certainly something that we are taking into account and making sure that we structure and, you know, protect us and all of our shareholders appropriately when we think about all the ways this could play out in the future.

Sure. Jason Marshall I think both questions are for you, the 1 on exas launches and also on co-funding

Marshall Urist: It is still very new. I think we're in the same boat with everyone else trying to think this through. Your second question on R&D co-funding. The first part of your question was on IRR expectations. I think as Chris outlined, the answer to your question is no. You know, we have said that our return expectations for products that are not approved are kind of greater than the low double digits. You know, we certainly see returns and the IRR co-funding is very consistent with what we've communicated publicly in terms of return expectations. You know, that's one of the reasons that we're really excited about that opportunity.

Uh, sure Jason. So thanks for those 2 questions. So on uh, your first uh, policy question on mfn. It's certainly something that we I think like the rest of the industry is thinking through, um, agree with you. There isn't there isn't a lot of precedent. So we've taken the approach that we always have, which is to think through a lot of different scenarios and make sure that given the wide, uh, range of possibilities in the future that we're still that we're still comfortable with with the investment. So, I think certainly something that we are taking into account and making sure that we structure and structure, and, you know, protect us and all of our shareholders appropriately when we think about all the ways, this could, this could play out in the future, it is still very new. So I think we're in the same, we're in the same boat, with, with everyone else, trying to trying to think this through. Um, are your second question on R&D co-funding, um,

Marshall Urist: In terms of capping at it, You asked about some of the structural features. You know, We haven't disclosed all of the structural features for these, so it's a little hard to comment generally. I think our philosophy when we put these together is, you know, we're investing in a phase 3 program, and we certainly wanna have every opportunity to explore and benefit from the full potential of these products, both in the near term as the indications that are certainly being pursued right now play out, but then in the long term as there's potential for label expansion, geographic expansion, and general market expansion of what we invest in.

So the first part of your question was on irr, expectations. I think as Chris outlined are the answer to your question is no. Um, you know, we have said that, um, that uh, our return expectations for products that are not approved, are kind of greater than, than the low double digits. And so, you know, we we certainly see. Um, we certainly see returns in the irr, co-funding is very consistent with what we've communicated publicly in terms of return expectations. And so, you know, that's 1 of the reasons that that we're really excited about that opportunity. Um, in in terms of uh, capping at it, you you asked about some of the structural features, you know, the we haven't disclosed all of the all of the structural features for for these. So it's a little hard to comment generally, but I think our philosophy when we put these together is, you know, we're we're investing in a phase 3 program and we certainly want to have every opportunity.

Marshall Urist: You know, our philosophy and our discipline in terms of how we structure these, and how we make sure that we're getting appropriate risk-adjusted returns for us and for our shareholders are very much consistent with how we've been operating.

To um, to explore and benefit from the Full Potential from the full potential of these products both in the near term as the indications that are certainly being pursued right now. Play out. But then in the long term as there's potential for label expansion Geographic expansion and you know and General Market expansion of what we invest in. So, you know, our philosophy and our discipline in terms of how we structure these, um, and how we make sure that we're getting appropriate risk, adjusted return,

Operator 1: Great. Thanks, guys.

For us. And for our shareholders are very much are very much consistent with how we've been operating.

Operator 2: Thank you. The next question will come from Ashwani Verma with UBS. Your line's open.

Great. Thanks guys.

[Analyst] (UBS): Hi, good morning. This is the asking question on behalf of Ash. Congrats on the quarter. I have two questions. The first one, can you update us on your view on thoughts about like potential royalty stream from Myqorzo? I guess with the positive result now, on nonobstructive, do you believe there's a halo effect on their ongoing launch in the obstructive side? My second question is, what are your thoughts on the consolidation among the smaller royalty players like Ligand and XOMA Royalty recently? Does this scale up in any way increase the competition for you in the smaller royalty transaction space? Thanks.

Thank you, and the next question will come from Ash Verma with UBS. Your line is open.

Pablo Legorreta: Sure. Maybe I'll take briefly your question on competition, and then I'll turn it back to Marshall, you know, to talk about the Myqorzo launch. In terms of competition, I mean, we follow it all the time and, you know, it's not news to us. In fact, that consolidation, you know, might even reduce competition when you have, you know, Ligand acquire XOMA Royalty, there'll be less competition, one entity, you know, consolidating two companies. The reality is that, if you just think of those two players in the market, you know, we have very significant advantages versus companies that are in the royalty space. Obviously, we've talked of many of disadvantages in the past. Scale is one.

Hi, good morning. This is the, uh, asking question on behalf of Ash, um, congrats on the quarter. Um, I have 2 questions, um, the first 1, can you update? Uh, can you update us on your view, uh, on thoughts about like potential rotary stream from? Uh, uh my course though. So, I guess with the positive result now. Um, on non obstructive, do you believe there's a halo effect on their, um, hongo lunch in the obstructive side? And then my second question is, uh, what are your thoughts on the consolidate, consolidation among the smaller Roti players like uh, legant and then zoma Roti recently. Does this scale up in any way? Increase the competition for you in the smaller reality. Transaction space, thanks.

Sure, so maybe I'll take, uh, briefly your question on competition and then I'll turn it back to Marshall, um, you know, to talk about the Microsoft launch. Um, and in terms of competition, we did, I mean, we followed all the time and, you know, it's not news to us. And in fact, um, that, uh, consolidation, you know, might even reduce competition. When you have, you know, like in the choir Zoma, um, there'll be less,

1, 1 ENT, you know, consolidating 2 companies but the reality is that, um, if you just think of those 2, uh, players in the market, um, you know, we have very significant advantages versus, uh, companies that are in the royalty space. Um,

Pablo Legorreta: Also another issue that, you know, companies that are, you know, interested in acquiring royalties have is that they're taxpayers. As you know, we have a very efficient, you know, tax structure. Other things like access to capital. In our case, it's, you know, significantly lower cost of capital and access to, you know, a lot more capital than, you know, the smaller players. It's no real big change in competition. At the end, as we said in the past many times, we think competition is a good thing. We welcome it because it just expands the market. It makes a lot of the potential partners that we do business with, have, you know, many alternatives, and it just gives them comfort to know that it's a, you know, very dynamic market.

That you know, companies that are, you know, interested in a grande royalties have is that their taxpayers? Um and as you know we have a very efficient, you know, tax structure and then other things like access to Capital. In our case it's it's you know, significantly lower cost of capital and access to you know a lot more Capital than

Pablo Legorreta: I'll turn it back to Marshall now for the question on Myqorzo.

Marshall Urist: On Myqorzo, you know, certainly yes, we believe that the positive data yesterday, you know, provide an advantage to aficamten in the marketplace. You know, having a broader label, you know, having experience in a broader selection of patients, you know, can really only help the medicine as Cytokinetics launches it. We're excited about the way Cytokinetics is gonna execute in the current indication of obstructive disease, certainly the broader label and the non-obstructive data is only a tailwind to that.

You know this modern player so it's not real big change in competition. And at the end as we said in the past many times, uh, we we think competition is a good thing. We welcome it because it just expands the market. It makes a lot of the potential partners that we do business with um, have you know, many Alternatives and it just gives them Comfort to know that, that it's a, you know, very Dynamic market. So I'll turn it back to Marshall. Now, for the question on my cursor,

Yep on. So on my Corso you know certainly yes we believe that the positive data yesterday you know provide a pro provide an advantage to after camping in the marketplace. You know, ha having a broader label, you know, having experience in a broader in a broader selection of patients, you know, can really can can really only help the medicine at at cytokinetics launches it. So we're we're we're excited about the way cytokinetics is going to execute in the current indication of obstructive disease and then certainly the, the the broader label and the non-obstructive data is only a Tailwind to that.

Operator 1: Awesome. Thank you.

Operator 2: Thank you. The next question will come from Nicholas Jennings with Goldman Sachs. Your line is open.

Awesome. Thank you.

Nicholas Jennings: Thanks. Hi, it's Nick on for Asad and the Goldman Sachs team. We have two questions. First, Chris, congratulations on the new focus with global biopharma R&D co-funding. Our question's on the implications of this as a growing part of the portfolio. Should we expect the complexion of the overall portfolio to shift over time as more of these partnerships are done with global biopharma companies? Second, how is the China market progressing? Any update on what types of assets you're looking at there, and when do you think we'll see the first deal? Thank you.

Thank you. And the next question will come from Nick Jennings with Goldman Sachs, your line is open.

Pablo Legorreta: Sure. Chris, why don't you take both questions?

Thanks. Hi, it's Nick on for Assad and the Goldman team. We have two questions. First, Chris, congratulations on the new focus with global bio pharma R&D. Co-funding. Our questions are on the implications of this as a growing part of the portfolio. Should we expect the complexion of the overall portfolio to shift over time as more of these partnerships are done with global bio pharma companies? And then second, how is the China market progressing? Any update on what types of assets you're looking at there, and when do you think we'll see the first deal? Thank you.

Christopher Hite: Okay, great. Thanks for the question.

Sure. Uh Chris why don't you take both questions?

Christopher Hite: In terms of the first one around, the R&D co-funding, you know, we have been investing in development stage products since 2012. For us, it's really just expanding the opportunity when we're now seeing more opportunity to co-fund R&D at the large pharma stage. You know, if you look at our capital at work slide, I think it's in the appendix, you can see that roughly 85% of our capital work is in approved products today, and roughly 10% is in development stage. Roughly 3% of those in development stage has already had positive pivotal results. That's exciting for us. I mean, it's a huge opportunity. These companies need a lot of money to fund their R&D.

Okay, great. Uh, thanks for the question.

in terms of the first 1 around, uh, the R&D co-funding

You know, we have been uh investing in development stage products, and 2012 and uh for us it's really just expanding the opportunity when we're now uh seeing more opportunity to to co-fund R&D at the large Pharma stage. Um,

You know, if you look at our, uh, Capital At Work slide and it's, I think it's in the appendix. You can see that roughly 85% of our Capital at work, is in approved products today, and 10% is in roughly 10% is in development stage.

And roughly 3% of those in development stages, has already had positive pivotal results. So that's exciting for us. I mean, it's a it's a huge opportunity.

Christopher Hite: We certainly are excited about the opportunity and, you know, that certainly could lead to a great percentage of capital work. We're gonna be very disciplined in how we approach that. In terms of China, I just remind you know, BeOne obviously, we did the transaction with them last year, that from Imdelltra, which is roughly $900 million. Obviously, that caught the attention of a lot of companies in China, that look at BeOne as a great company, originally coming out of China. We hired Ken Sun. He starts actually next week. He was the former head of Asia at Morgan Stanley. Super excited to have him on board. He will hit the ground running.

These companies need a lot of money to, to fund their R&D.

Operator: Thank you, Tad.

George Grofik: We'll now welcome your conference with questions. Operator, please take the first question.

So we certainly are excited about the opportunity, and you know, that certainly could lead to a greater percentage of capital work, but we're going to be very disciplined in how we approach that.

Uh, in terms of China, uh, I'll just remind you, you know, B1, obviously, uh, we did the transaction with them last year. Um,

Operator: The first question comes from Christopher Schott with JPMorgan. Your line is open.

Hardik Parikh: Hi, this is Hardik Parekh in for Christopher Schott. Thank you for taking our questions. I think you've set like a portfolio receive target for 2030 of approaching $5 billion. I was just wondering, now with these recent updates you've had in your development pipeline, can you talk about how much of that 2030 target is de-risked, and how much do you think it comes from investments that are already commercial? Thank you.

That, uh, from Delta, which is roughly 900 million dollars, obviously. Um, that caught a, the attention of a lot of, uh, companies in China, uh, that that look at B1 as a, as a great, as a great company. Uh, originally coming out of China,

Christopher Hite: We've obviously been to China a lot, the existing teams here at Royalty Pharma. We are monitoring all of the out-licensing that's ongoing from China to Western multinationals. We have a, you know, tracking those very aggressively. I think the BeOne transaction evidences to those companies in China what, you know, what a great opportunity it is to potentially monetize those royalties they've created over the last five years or so. We're super excited about China. Ken coming on board will really catalyze that effort.

Pablo Legorreta: Terry, that's a question for you, if you can please take it.

Uh, we hired Ken son, uh, he starts actually next week. Uh, he was a former head of uh, Asia at Morgan Stanley. Uh, super excited to have him on board. He will hit the ground running. Uh, We've obviously been to China a lot, uh the existing teams here at royalty Pharma. So we are monitoring all of the out licensing that's ongoing. Um from China to Western multinationals, we have a, you know, tracking those very aggressively and I think the B1 transaction evidences to those companies in China. What you know what a great opportunity it is to potentially monetize. Those royalties, they've created over the last 5 years or so. So we're super excited about China. Ken coming on board really catalyze that effort

Operator 2: Thank you. Our next question is gonna come from Terence Flynn with Morgan Stanley. Your line is open.

George Grofik: Operator, next question, please.

Operator: Thank you. The next question is gonna come from Michael Nedelkovich with TD Cowen. Your line's open.

Terence Flynn: Hi. Thanks for taking the questions. I guess two for me. Maybe first for Marshall, you could just provide your perspective on the J&J DUET data, and what this ultimately might mean for the TREMFYA tail, given the co-formulation approach there? On the use of AI, I think many investors view the company as a beneficiary here. Are you able to provide any kind of case studies of how you're implementing AI across your enterprise and in terms of your processes and what that means in terms of, you know, number of deals or efficiencies that you can comment on? Thanks so much.

Thank you. And our next question is going to come from Terrence Flynn with Morgan Stanley. Your line is open.

[Analyst] (TD Cowen): Hi. Thanks so much for the questions. I have three, if you allow me. My first is on the arbitration update you just provided. Can you provide any insight into the reason for the push-out? My second question is on Myqorzo. How much of an advantage do you think approval in the non-obstructive HCM setting could be relative to Camzyos? Did you assume success of the ACACIA-HCM trial in your internal valuation? My third question is on frexalimab. The multiple sclerosis category is evolving somewhat rapidly, especially with the prospect of oral BTK inhibitors gaining approval. Has anything changed relative to your initial assumptions around frexalimab's competitive positioning, assuming it succeeds in the clinic? Thank you.

Pablo Legorreta: Sure. I'll take the first question or the second question on AI, and then I'll let Marshall take the other one. Data is extremely important for our business and for this whole ecosystem. You know, everything is based on data, as you know. Royalty Pharma has been making significant investments in data for many years, decades. We had in our investor day a slide that actually provided a perspective on what we really mean by, you know, investing in data. We have about 200 million people, claims data for 200 million Americans. We have relationships with great data providers that are feeding us, you know, this data continuously. We have electronic medical records for 44 million Americans and about 9 years of longitudinal data.

Perspective on the J&J duet data. Um and what this ultimately might mean for the trim FIA tail, given the co-formulation approach there um and then on um the use of AI, I think many investors view the company as a beneficiary here, are you able to provide any kind of case, studies of how you're implementing AI across your Enterprise and in terms of your processes and what that means in terms of, you know, number of deals or efficiencies that you can come in on? Thanks so much.

Pablo Legorreta: Sure. Thanks for the question, Mike. I guess, Terry, you can take the question on arbitration, Marshall will take the question on Myqorzo and frexalimab.

Terrance Coyne: Sure. On the timing of the arbitration, it's just simply based on the availability of the arbitration panel.

Pablo Legorreta: The way we use this is for our own internal purposes to, you know, make better investments, understand better what's going on with the products and how we forecast them. One of the very exciting things for Royalty Pharma is to actually use data with our partners and share insights that we gain as we do our analysis and as we follow the ecosystem. We think that is a differentiating aspect that, you know, is important to us because, you know, we don't see ourselves like others as purely capital providers, but we see ourselves as partners with the companies that we're partnering with, where we can provide, we add value by sharing data and insights with them, and they appreciate that.

I'll take the first question or the second question on AI and then I'll let Marshall take the other 1. But, um, data is extremely extremely important for our business. And for this whole ecosystem, you know, everything, uh, is based on on data, as, you know, and rails from has been making significant investments in data for many years decades and we had in our investor day, a slide that actually provided a prospective on on what we really mean by. You know, investing in data, we have about 200 million people, uh, change data for 200 million Americans, um, and we have relations with great data providers that um, are feeding us, uh, you know, this data continuously. We have electronic medical records for 44 million Americans, and, uh, and about 9 years of learning juvenile data. And the way we we use, this is

For our own internal purposes to, you know, make better Investments, understand better, what's going on with the products and how we forecast them. But 1 of the very exciting things for royalty Farm is to actually

Pablo Legorreta: In some cases that has led to, you know, to better terms on transactions. We do have case studies. Actually, I'll refer you to our Investor Day deck, a couple of them, where we have through claims data and other source of information, have been able to identify asymmetries of information where, you know, we see drugs that we believe could have much stronger launches or peak sales than what others see based on data. One of those is, for example, VORANIGO, where we realized when we made that investment that in that form of cancer, there were about 1,500 patients, you know, being diagnosed each year.

Use data uh, with our partners and share insights, uh that we gain as we do our analysis and as we follow the ecosystem, um, and we think that is a differentiating, uh, aspect. Um, that, you know, is, is important to us because, you know, we don't see ourselves like others as purely Capital providers. But we see ourselves as partners with the companies that, uh, we're partnering with, um, where we can provide, uh, we, we we add value by sharing data and insights with them, and they appreciate that. And in some cases that's that has led to um, you know, import to to better uh terms on transactions. And and we do have uh, case studies. Actually I'll refer you to our investor day deck. A couple of them where we have to uh claims data and other source of information have been able to identify asymmetries of information. Where, you know, we see

Pablo Legorreta: You know, on the sidelines, about 15,000 patients that were not, you know, recurring to treatment because the options were not attractive, drugs that were, you know, toxic, safety issues, and not that effective. Obviously, when VORANIGO came to market, it gave patients the opportunity to be treated with a drug that was very safe and very efficacious, and it brought into the market this-warehousing of patients that existed and that as a result of that, we were able to forecast a much stronger launch for VORANIGO than I think anybody was seeing and then, you know, higher peak sales. That's our case study.

[Analyst] (TD Cowen): Thanks so much.

Operator: Thank you. The next question comes from Geoffrey Meacham with Citi. Your line's open.

Drugs that we believe could have much stronger launches or Peak sales than what others see, uh, Based on data, uh, 1 of those is, for example, where an ego, where, uh, we realize, um, when we made that investment that, um, in that form of cancer, there were about 15, 1,500 patients, um, you know, being diagnosed each year. But, you know, on the sidelines about 15,000 patients that were not not, um, you know, recurring to treatment because the options were not attractive drugs that were, you know, uh, toxic um, safety issues and not that effective. And obviously, when we're an ego came to Market, um, it it, it gave patients the opportunity to be treated with a drug that was very safe and very efficacious and it brought brought into the market, this warehousing of patients that existed. And that as a result of that, we were able to forecast a much stronger launch for banigo than I think anybody was seeing. And

Pablo Legorreta: I'll finish just by saying that, we're very fortunate, recently to have hired Lucas Glass as Head of AI for Royalty Pharma, and he's gonna be responsible for developing and implementing AI capabilities across our business, including, you know, automating all of our, and, you know, diligence processes, and, you know, strengthening how we evaluate and invest in royalties and also support our partners. Lucas comes from IQVIA, where he was the Head of AI for this, you know, huge company that serves our ecosystem. As you know, it's the biggest CRO with Quintiles and also IMS Health. That part of the business was, you know, one of the biggest data providers in life sciences.

Then, you know, higher Peak sales and, and that's the case study. But 1 of the I'll finish just by saying that uh, we're very fortunate uh, recently to have hired Lucas glass as head of a AI for royalty Pharma and he's going to be responsible for developing and implementing a AI capabilities across our business, including, you know, um, automating all of our, uh, in in, you know, diligence processes. Um, and you know, um,

Pablo Legorreta: Terry and Marshall, do you wanna go ahead?

Pablo Legorreta: We're very excited about where we can take the business now with Lucas and the team that we're building, in addition to the team that we already had. I'll turn it now to Marshall for the other question.

Strengthening how we evaluate and invest in royalties and also support our partners. Um, Lucas comes from my cubia, um, where he was a head of AI for this, you know, huge company that serves our ecosystem as you know. Um, it's it's the biggest, uh, cro with quintiles and also IMS Health, that part of the business was, you know, 1 of the biggest data providers in life sciences. Um,

Marshall Urist: Hey, Terence. Thanks for the question on the J&J deal. Maybe just a general comment. I think this is a great example of exactly what Chris was talking about, right? That we get the opportunity to participate at scale in a first-in-class biologic combinations blockbuster market that's backed by, you know, the world-class, one of the premier marketers in that space. You know, those are exactly the kind of opportunities that, you know, we're so excited about the biopharma partnerships creating for us. Specifically on the data, obviously, that was something during diligence that we spent a good amount of time with. I think our view is, you know, we're excited about the biologics combination opportunity broadly.

So we're very excited about where we can take the business now with Lucas and a team that we will build, in addition to the team that we already had an alternative now to Marshall for the other question.

Marshall Urist: JNJ-4804 is, you know, the first of those, and I think you'd see the potential in what was a very refractory, you know, patient population who had been, you know, heavily pretreated. Which, you know, when we look to continue Pablo's comments, when we look into our claims data, you know, is a really rapidly growing part of this market, is patients who have been treated through multiple lines. I think we see that growing and certainly by the time JNJ-4804 makes it to market, you know, is a really substantial opportunity that we're excited about.

A general comment. I think this is a great example of exactly what Chris was talking about, right, that we get the opportunity to participate at scale in a first in-class biologic combination Blockbuster Market that's backed by, you know, the world class 1 of the Premier marketers in in that space. And, you know, those are exactly the kind of opportunities that, you know, that, that we're so excited about the, the biofarma creating the biopharma Partnerships creating for us, specifically on the data. Um, obviously that was something during diligence that that we spent a good amount of time with. And I think our view is, you know, we're excited about the biologics combination opportunity, broadly, um, 40804 is, you know, the first of those and I think you see the potential in what was a very refractory, you know, patient population who had been, you know, heavily heavily pretreated which

Marshall Urist: You know, we think there will be other, certainly other biologic combinations to come that will look at other patient populations and other combinations, excited to see how that continues to expand the market. We're excited to be partners with J&J there. The last part of your question on the tail, you know, I think for our base TREMFYA royalty, just a reminder there is that our royalty there is based on a separate set of IP that we acquired from MorphoSys. We've communicated that that IP will expire in the early 2030s, 2031, 2032 timeframe.

You know, when we look to, you know, to to um, continue Pablo's comments, when we look into our claims data, you know, is a really rapidly growing. Part of this Market is patients, who have been treated through multiple lines, and I think we see that growing and certainly, by the time 404 makes it to Market, you know, will it is a really substantial opportunity that we're excited about um, and you know, we think there will be other certainly other biologic combinations to come. That will look at other patient populations and other combinations and

So excited to see how that continues to continues to expand the market. Um,

Geoffrey Meacham: Thank you.

Operator: Thank you. Our next question's gonna come from Jason Gerberry with Bank of America. Your line's open.

Marshall Urist: You know, given the likely timelines for JNJ-4804, probably won't have a significant benefit to the TREMFYA royalty, but I think we've created a whole new royalty on this product and will continue to be able to participate in it through JNJ-4804. Thanks for the question.

And we're excited to to to to be partners with with J&J there. The last part of your question on the tail. Um you know I think for our for our base, trim fire royalty just a reminder there that our um, our royalty there is based on a separate set of Ip that we acquired from morphosis. And so we've communicated that that IP um, will expire in the early 2030s 2031 2032 time frame. So, you know, given the likely time lines for 404 probably won't have a significant benefit to the Trump fire royalty but I think we've created a whole new royalty on this on on this product and will continue to be able to participate um for participate, in it through 404. So thanks for the question.

Operator 2: Thank you. The next question will come from Umer Raffat with Evercore. Your line's open.

Umer Raffat: Hi, guys. Thanks for taking my question. I feel like there's been a good amount of discussion today on a lot of the effort Chris has been leading on R&D funding side. I guess, a question I have maybe first for you, Pablo, how are you thinking about the split going forward for your capital deployment between R&D co-funding versus the traditional royalty investments? To what extent is that driven by your heavier emphasis on doing larger checks? Maybe a quick follow-up to that also. My understanding, or at least the feedback I've heard from some of the big pharmas on their late-stage pipeline programs, is that when they go into these R&D co-funding conversations, they're really talking high single-digit IRRs type of thing. Could you maybe speak to your experience working on the JNJ-4804?

Thank you. And the next question will come from Umar rafit, with evercore your lines open.

Pablo Legorreta: Sure, Jason. Marshall, I think both questions are for you, the one on OUS launches and also on co-funding.

Hi guys, thanks for taking my question. Um I I I feel like there's been a good amount of discussion today. On a lot of the effort, Chris has been leading on R&D funding side and I guess, um, a question I have maybe first for you. Pablo, how are you thinking about the split going forward for your Capital deployment between R&D co-funding versus the traditional royalty Investments and to what extent is that driven by your heavier emphasis on doing?

Umer Raffat: I don't wanna comp the Teva vitiligo in there 'cause it's much earlier stage. I think the 4804 is a good example of the type of IRR you guys got, and maybe you can expand on that. Thank you.

Pablo Legorreta: Umer, thanks for the question on allocation of capital. In reality, the way we approach things is with, you know, a significant amount of flexibility because, you know, our business, you know, has the capacity to invest a huge amount of money. I think, again, during our investor day, we actually had a slide, interesting slide that showed that from now until 2030, we have the capability of investing something like $30 billion, of which $12 billion or so is what we've guided to, you know, the $2 to 2.5 billion per year. Then when you add to that, you know, the share repurchases and dividends, you know, it takes us to a higher level.

Larger checks um and then maybe a quick follow-up to that also um my understanding or at least the feedback I've heard from some of the big farmers on their late stage pipeline programs. Is that when they go into these R&D Co funding conversations, they're really talking High single-digit, irrs type of thing. Um, could you maybe speak to your experience working on the J&J 4804? I don't want to comp the Teva Vitiligo in there because it's much earlier stage. So I think the 48 or 4 is a good example of the type of irr, you guys got and you can expand on that. Thank you.

Omar. So thanks for the question on allocation of capital, and in reality, the way we, we approach things is with, you know, a significant amount of flexibility because, um, you know, our business. Um, you know, has the capacity to invest a huge amount of money and I think, again, during our investor day, we actually had a slide interesting slide that showed that from now until 2030, we have the capability of investing, something like 30 billion dollars, um, of which, uh, 12 billion or so. Uh, are going to be

Pablo Legorreta: There is an additional sort of $10 billion of capacity that the business has, you know, that we might, if the opportunities are there, just increase the investments every year. It gives us, you know, as I said, a capability of deploying more like $20 billion over the next 5 years in royalty acquisitions. I think at the end of the day, as we've said in the past, the critical thing for us is the product. You know, that's really what drives our excitement for investments.

Is what was guided to, you know, the the 2 to 2 and a half billion per year. And then when you add to that, um, you know, the Sherry purchases and dividends, um, you know, it it takes us to a higher level, but there is an additional sort of 10 billion of capacity that the business has, um, that we might, you know, if the opportunities are there just increase

Pablo Legorreta: If we find really attractive differentiated products that we think are gonna do really well in the long term and whether we end up making the investment because it's a royalty that, you know, sort of already exists, there's a license and a royalty holder, and we just acquire that royalty, like in the case of Imdelltra with BeOne, or whether we create the royalty by, you know, funding a clinical trial, for us it doesn't matter really where it comes from. Now, I would point out just to finish that, when we put together our guidance and our business plan, there were several things that were really not included in a major way in our, in our sort of, you know, $10 to 12 billion capital deployment guidance.

Jason Gerberry: Great. Thanks, guys.

Operator: Thank you. The next question will come from Ashwani Verma with UBS. Your line's open.

[Company Representative] (UBS): Hi, good morning. This is the asking question on behalf of Ash. Congrats on the quarter. I have two questions. The first one, can you update us on your view on thoughts about like potential royalty stream from Myqorzo? I guess with the positive result now, on nonobstructive, do you believe there's a halo effect on their ongoing launch in the obstructive side? My second question is, what are your thoughts on the consolidation among the smaller royalty players like Ligand and XOMA Royalty recently? Does this scale up in any way increase the competition for you in the smaller royalty transaction space? Thanks.

Pablo Legorreta: Those things are China. It was not in our minds, and we didn't see that as an important driver of capital deployment and growth. That is definitely now a real market and one that we're very excited about. The second one is deals with big pharma. Again, we were super conservative and didn't really include in our forecast, our business plan, and our guidance, you know, much of any capital deployment with big pharma. That is definitely becoming a big opportunity for us and one that we're very excited. I think as more deals like this get done, and you talked about the J&J one, and also Teva, and there's others. We did a deal with Merck several years ago.

If we find really attractive differentiated products, um, that we think are going to do really well in the long term, and whether we end up making the investment, because it's a loyalty that, you know, sort of already exists, there's a license and, and a royalty holder. And we just acquire that royalty, like, in the case of of, in Delta with, um, B1 or whether we create the royalty, um, by you know, funding, uh, a clinical trial, uh, for us. It doesn't matter really, uh, where it comes from. Now, I would point out just to finish that, um, when we put together our guidance and our business plan, there were several things that were really uh not uh included in a major way, in our in our sort of, you know, 10 to 12 billion, dollar, Capital deployment guidance, and those things are uh, China. Um, it was not in our minds and we we didn't see that as as a as an important driver of the capital employment and growth and that is definitely now

A a real market and 1 that we're very excited about. And then the second 1 is deals with big Pharma. Again, we were super conservative and, and didn't didn't really include in our in our forecast. Our business plan guidance, uh, you know, much of of any Capital deployment with big Pharma, but that is definitely becoming a big opportunity for us and 1. That we're very, very excited. And I think, uh, as more deals like this, get done and you talked about the J&J 1, um, and also

Pablo Legorreta: It actually is really starting to open that market. We have noticed very significant excitement from many big pharmas that are now really looking at funding their trials with structures that we've developed, R&D funding structures. Also what's helped there is the fact that we've been, you know, for years, working with, you know, the accounting firms to make sure that we have the right accounting treatment for those transactions, that they can be accounted for as contra-R&D. We have been proactive. There was a bad, you know, decision made years ago with one company going to the SEC and, you know, with an accounting firm that actually set back, you know, the field.

Pablo Legorreta: You know, because it's important to us, we decided to hire an expert on accounting, and with him we have completely turned the tide. Now, it is something that is When you look at the accounting, it's accounted for correctly. I'll stop there. The reality, Umer, is that we're super excited about the opportunities, the universe of opportunities, which is clearly expanding.

Turbine. There's others we didn't do with Mercury, several years ago. Um, it actually is really starting to open that market. And we have noticed, very significant excitement from many, uh, big farmers, um, that are not really looking at, uh, funding their trials, uh, with structures that we've developed R&D funding structures. And also, what's helped, there is the fact that we've been, you know, for years working with um you know, the accounting firms to make sure that we have the right, uh, accounting treatment for those transactions that they can be accounted for as Contra R&D. But we have been proactive. Um, there was a bad, you know, decision made years ago, um, with 1 company, um, going to to the SEC and, and you know, with an accounting firm that actually set back, you know, the the field. But, you know, because it's important to us, uh, we decided to hire an expert on accounting, and with him, we have completely turned

The tide and now um, it is uh, something that is is is when you look at the accounting, it's accounted for correctly, so I'll stop there. Um, but, uh, the reality tumors that were super excited about the, the opportunities, the universal opportunities, which is purely expanding,

Umer Raffat: Thank you.

Operator 2: Thank you. There are no further questions in the queue. I will now turn the call back over to Pablo for closing remarks.

Pablo Legorreta: Thank you, operator. Thanks to everyone on the call. I'll just remind you that if there's any further questions or discussions you want to have, you should reach out to George Grofik and Dana, our IR team, then we can get involved if it's appropriate. Thank you, everyone.

Thank you. There are no further questions in the queue, so I will now turn the call back over to Pablo for closing remarks.

Pablo Legorreta: I'll turn it back to Marshall now for the question on Myqorzo.

Operator 2: This concludes today's conference call. Thank you for participating, and you may now disconnect.

Thank you, operator. And thanks to everyone on the call, um, and I'll just remind you that, if there's any further, uh, questions or discussions, you want to have, you should reach out to George grofik and and Dana our IR team and then, uh, we can get involved. If it's appropriate. Thank you, everyone.

this concludes today's conference call, thank you for participating and you may now disconnect

[Company Representative] (UBS): Awesome. Thank you.

Operator: Thank you. The next question will come from Nicholas Jennings with Goldman Sachs. Your line is open.

Pablo Legorreta: Sure. Chris, why don't you take both questions?

Christopher Hite: Okay, great. Thanks for the question.

Operator: Thank you. Our next question is gonna come from Terence Flynn with Morgan Stanley. Your line is open.

Operator: Thank you. The next question will come from Umer Raffat with Evercore. Your line's open.

Umer Raffat: Thank you.

Operator: Thank you. There are no further questions in the queue. I will now turn the call back over to Pablo for closing remarks.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.

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Q1 2026 Royalty Pharma PLC Earnings Call

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Q1 2026 Royalty Pharma PLC Earnings Call

Wednesday, May 6th, 2026 at 12:00 PM

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