Royalty Pharma (RPRX) Goldman Sachs 45th Annual Global Healthcare Conference summary

Business model and positioning

• Operates as a unique, therapeutically agnostic compounder, investing efficiently across diverse areas for long-term value creation.

• Focuses on drugs addressing unmet needs with blockbuster potential, leveraging a flexible, efficient cost structure.

• Maintains a healthy mix of approved (60%) and late-stage unapproved (40%) assets, balancing risk and return.

• Competitive advantages include low cost of capital, scale, and strong industry relationships, enabling large, diversified deals.

• Main competition comes from capital markets and alternative funding structures, not direct royalty peers.

Investment strategy and recent deals

• Prioritizes value-enhancing investments, often identifying under-the-radar assets before they become mainstream.

• Recent investments include frexalimab (MS, potential $400M+ royalties) and vorasidenib (low-grade glioma, $150M+ royalties).

• KarXT deal secured a 3% royalty up to $2.2B in sales, then 1% above that, with $100M upfront.

• Consistently achieves high-teen returns on investments, even as interest rates rise.

• Maintains a robust pipeline of de-risked unapproved products, such as KarXT, aficamten, and seltorexant.

Market environment and financial resilience

• Business is largely rate agnostic, with spreads above cost of capital maintained despite rising rates.

• Opportunity set for royalty financing is expanding, providing a strong tailwind.

• Recent $1.5B investment-grade debt raised at 5.5% coupon, supporting ongoing investments.

• Portfolio and debt durations are well matched, supporting financial stability.

• Execution and reinvestment drive intrinsic value growth year after year.