Royalty Pharma plc

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

Thank you, Operator, and good morning and good afternoon to everyone on the call. Thank you for joining us to review Royalty Pharma's Fourth Quarter and Full Year 2021 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. Moving to slide three, I would 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. I refer you to our 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, and we assume no obligation to update any such forward-looking statements. Non-GAAP financial measures will be used to help you understand our financial performance. The GAAP to non-GAAP reconciliations are provided in the earnings press release available on our website. With that, please advance to slide four. Our speakers on the call today are Pablo Legareta, Founder and Chief Executive Officer, Jim Reddick, EVP, Co-Head of Research and Investments and Chief Scientific Officer, Marshall Uris, EVP, Co-Head of Research and Investments, and Terry Coyne, EVP, Chief Financial Officer. Pablo will discuss the key highlights, after which Jim and Marshall will provide an update on our royalty portfolio and acquisitions. Terry will then review the financials, and after concluding remarks from Pablo, we will hold a Q&A session. Chris Tite, our Vice Chairman, will also join the Q&A session. And with that, I'd like to turn the call over to Pablo.

Thank you, George, and welcome to everyone on the call. I am delighted to report another year of strong financial performance and strategic execution by Royalty Pharma. On slide six, I would like to begin by summarizing our many accomplishments in 2021, which underscore the robust momentum in our business. First, we delivered strong top-line growth of 18%, and bottom line growth of 19% for 2021. In addition, we strengthened our balance sheet through a $1.3 billion bond financing, which included a social bond, which reflects our commitment to corporate social responsibility. During the year, we were active in deploying capital with $3 billion in announced transactions across five deals, and we were well ahead of our target of $7 billion by 2025 that we communicated at the time of our IPO. In total, we have already announced approximately $5.9 billion of transactions since the beginning of 2020. We continue to benefit from the competitive modes we have established over the past 25 years, and our business is as strong as ever. As a result, we remain the leader in the royalty funding market in 2021, with a 50% share of transactions by value, based on our internal estimates. Importantly, we expect deals completed over 2020 and 2021 to contribute greater than $750 million to our top line in 2025, with potential for upside from development stage therapies. We think this is an impressive number and really highlights our unique ability to compound growth as we layer on additional royalties to value-enhancing acquisitions. When we look at our portfolio, we also saw tremendous progress. We more than doubled the number of development stage therapies in a single year, an aspect of our business model which is truly unique in biopharma. In line with our track record of picking winners, especially compared with industry benchmarks, we're encouraged by the recent positive readouts for AstraZeneca's PTO27 for asthma and Biohaven's Savejapan for migraine. are optimistic that many of the positive clinical updates across our portfolio will ultimately lead to approvals and drive patient benefit. On slide seven, you can see our financials in a little more detail. In the fourth quarter, we delivered 12 percent growth in adjusted cash receipts, our top line, and 15 percent growth in adjusted cash flow, our bottom line. For the full year, as noted, we delivered growth of 18 percent at the top line and 19 percent at the bottom line. The strong double-digit momentum puts us in a tremendous position to deliver another year of strong financial performance in 2022, as Terry will speak to when he discusses our guidance. Slide 8 shows our strong growth track record since our IPO in June 2020, which is a testament to the underlying power of our business. By leveraging our deep expertise and leading position at the heart of funding life sciences innovation, we're able to consistently replenish our portfolio and drive compounding returns. This has allowed us to deliver seven consecutive quarters of double-digit bottom line growth and very strong top line growth as well. Importantly, in 2021, we digested the expiring HIV franchise royalties, our fourth largest source of royalties in 2020, which accounted for 13% of total royalty receipts and still delivered high teen stop and bottom line growth. This speaks to the strength and breadth of our existing portfolio and the momentum from our recent royalty transactions. Flight 9 expands on this point. The strong performance of our base business was, by far, the primary driver of growth in 2021 and accounted for around three-quarters of our 18 percent top-line growth. New transactions in 2021 added about 400 basis points to growth, largely from the addition of Trenfalla, Cabometrics, and Oxlumo. Royalty expires mainly on the HIV franchise had a negative impact of 900 basis points, but were easily absorbed by the strength of our diversified portfolio. Of note, we achieved 14% organic growth from our existing portfolio, about double the growth rate we initially guided at the beginning of last year. This is a great illustration of what makes Royalty Pharma a unique player in life sciences. Our proven ability to grow through losses of royalties and constantly diversify the portfolio with value-enhancing royalty acquisitions truly sets us apart from other biopharma companies. With that, I will hand over to Jim to update you on our royalty portfolio.