Royalty Pharma plc

ladies and gentlemen thank you for standing by welcome to the Royalty Pharma second quarter 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 good morning and good afternoon to everyone on the call thank you for joining us to review Royalty Pharma's second quarter 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 two, 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 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 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. And with that, please advance to slide three. Our speakers on the call today are Pablo Legorreta, Chief Executive Officer and Chairman of the Board, Marshall Urist, EVP, Head of Research and Investment, Chris Hite, Chairman Partnering and Investment, and Terry Coyne, EVP, Chief Financial Officer. Pablo will discuss the key highlights after which Marshall will provide a portfolio update. Chris will then discuss our development stage pipeline and Terry will review the financials. Following concluding remarks from Pablo, we will hold the Q&A session. And with that, I'd like to turn the call over to Pablo.

Thank you, George, and welcome everyone. I am pleased to report another quarter of strong financial performance and disciplined execution. Our 25th consecutive quarter as a public company with strong predictable double-digit growth, and we're achieving this as we continue to deliver on our goal of being the premier capital allocator in life sciences, driving consistent compounding growth. Slide five summarizes our strong business momentum in the second quarter. Starting with the financials, we delivered 6% growth in portfolio receipts, our top line, and 14% growth in total receipts, which are our recurring cash flows. Our top line performance was ahead of our guidance for the quarter and reflects the tremendous momentum of our diversified portfolio. We also maintained attractive returns in our business with return on invested capital of 14.2% and return on invested equity of 20.1%. By consistently delivering strong growth and superior returns, we believe we have a clear path to drive continued shareholder value creation. Turning to capital allocation, we have deployed $1.1 billion of capital on royalty acquisitions so far this year, with an announced value of $1.7 billion. Most importantly, we acquired a royalty on AstraZeneca's Clearamitude, a potential blockbuster therapy for trans Doritin Amyloid Cardiomyopathy. As we look ahead, our deal pipeline remains robust. Under our value-driven capital allocation framework, we also returned around $370 million to shareholders in dividends and share repurchases in the first half of the year. Moving to our portfolio, we continue to see a number of positive updates. Our partner, Revolution Medicines, completed its rolling submission for Dyrexon Rossi and Pancreatic Cancer with accelerated review also underway in Europe. We were also delighted to see key regulatory approvals for Gilead, Fradelvi, GSKs, Gydatro and Amgen Simdeltra. We look forward to these therapies contributing to our top line in the years ahead. Looking ahead, we're increasing our 2026 full year guidance for the second consecutive quarter based on the strong business momentum I just highlighted. Slide 6 is one that I return to each quarter as it demonstrates our consistent double digit growth on average since our IPO. We have delivered this impressive record year in and year out regardless of the market backdrop. This reflects the quality of our asset selection and our unique business model. Slide 7, my final slide, underscores the quality of our diligence process and our deep understanding of the life sciences ecosystem. In short, we've been ahead of the curve in identifying some of the most exciting innovators. Nuvalent and Emalex are just the latest examples of companies whose therapies we acquired royalties on that were subsequently acquired by large pharma companies. This of course validated our internal views of their programs and will also likely increase the value of our royalties as large pharma bring significant clinical resources and commercial scale. With that, I will hand it over to Marshall.

Thanks, Pablo. I want to focus today on our recent royalty deal for Chloramatug, which is our second investment in TTR amyloidosis. Beginning on slide nine, we recently acquired a portion of NeurImmune's royalty interest in AstraZeneca's Chloramatug for up to $425 million. The transaction was structured to include $125 million upfront payment to NeurImmune An additional $125 million payment in the first quarter of 2027 and up to $175 million payable on key clinical and regulatory milestones. In return, Royalty Pharma will receive a royalty of 3.75% on worldwide net sales. Goramatug is a highly novel therapy for TTR amyloidosis with cardiomyopathy for ATTR-CM. ATTR-CM is an age-associated progressive disease in which misfolded TTR proteins accumulate in the heart, severely impacting heart function and ultimately survival. There are several approved therapies for this indication, including Ambutra, our first investment in this indication. The approved therapies slow disease progression by preventing ATTR accumulation, but they do not impact the amyloid deposits that have already accumulated in the heart. As a first-in-class TTR fibril depleting antibody, Chloramatug is designed to remove amyloid and potentially reverse the course of the disease, a clearly differentiated role for Chloramatug with significant benefit for patients. The early clinical data for Chloramatug are impressive. Phase 1 demonstrated strong amyloid clearance via biomarkers that correlate with improved cardiovascular outcomes. A Phase 3 outcomes trial is fully enrolled around 1,200 patients and results are expected in 2028. We see clear blockbuster potential for Clarimatug in an expanding market, which was more than $7 billion last year. There are over half a million patients worldwide with ATTRCM, including around 200,000 in the U.S., and of these, around 80% of patients are untreated, underscoring the scale of the unmet need and the scope for market growth. AstraZeneca has provided peak annual sales for Claremont Tug of between three to five billion dollars. Based on this we would expect to generate an internal rate of return in the teens consistent with our development stage target range and peak annual royalties of approximately 110 million to 190 million dollars based on AstraZeneca's peak sales expectations. Moving to slide 10. This latest transaction is a compelling example of how Royalty Pharma builds significant therapeutic expertise over many years Allowing us to invest in the best potentially transformative medicines, often across multiple products in the same class. In the case of ATTR, we've been closely following this therapeutic category over the past decade and have evaluated many of the therapies that are now approved. Our first investment was Ambutra in 2025, which has had a strong launch in cardiomyopathy. With the addition of Plurimatug to our portfolio, we now have two differentiated approaches to this serious rare disease. As you have seen us do this, and many other indications such as prostate cancer, spinal muscular atrophy, immunology and multiple sclerosis. This ability to build a portfolio with multiple therapies in a category is unique to Royalty Pharma. When combined with our proven deep diligence, we are well positioned to invest in the most practice changing and innovative therapeutic categories in the industry for years to come. With that, let me hand over to Chris.

Thanks Marshall. For my section of today's presentation, I want to highlight the significant expansion of our development stage pipeline together with important upcoming events across the portfolio. You can see on slide 12 that we have achieved strong consistent growth in our development stage pipeline since our IPO in June 2020. At that time we had three potential therapies in the pipeline. Today we have 19, a more than six-fold increase. More importantly, The peak royalty potential of our pipeline has increased by more than 30-fold over the period with peak potential royalties from our late stage pipeline now totaling approximately $2 billion. We have also demonstrated an excellent success rate with around 90% for development stage investments ultimately achieving regulatory approval, which provides us confidence that these products will be an important driver of growth in 2030 and beyond. The track record of success is underscored by slide 13, which shows that in addition to Direction RASIB, our portfolio has delivered a number of successful clinical readouts and regulatory events so far in 2026. These include positive clinical trial results for cytokinetics mycorrhizal, Xenacizobaxilumab, and Biogen's Lidofilumab, FDA approvals of GSK's Gydatro, Sonali's Avlea, and Gileads Tredelvi, as well as a number of FDA regulatory submissions. Expanding on this theme, slide 14 shows there is much more to come from our development stage pipeline, with several major pivotal trial readouts expected through 2027. In 2026, we expect to see the results of the outcomes trial for Novartis's pellicarsin We continue to believe that the LP little a class could be the next major class of cardiovascular disease drugs and we're strongly positioned to leverage this with the two lead pipeline products in Pellicarsen and Amgen's Olpatherin. We'll also see phase three data for Biogen's Litofilumab and Systemic Lupus. In 2027, we expect phase three results from Dyraxan Raspib and Lung Cancer and Litofilumab and Cutaneous Lupus. We also expect pivotal data from Sanofi's Frexalamab and MS and from J&J's Siltarexin, a major depressive disorder. Each of these potentially transformative therapies would add significant royalties to our top line. Taking a step back, when looking at these opportunities that we are currently evaluating, we are pleased to see a balanced opportunity set that includes both attractive approved products as well as exciting development stage opportunities across a range of potential partners to finish I want to provide context on the composition of our portfolio which is broadly unchanged and remains well balanced slide 15 illustrates that we currently have around 22 billion of total invested capital at work with around 84 percent of either products which were approved when we invested or were development stage assets which have gone on to receive approval Additionally, while 12% of our current invested capital work is in development stage therapies, roughly a third of that capital at work has been invested in development stage programs that have already had positive pivotal results. This means that despite the expansion of our pipeline, our overall capital work for development stage therapies is relatively small. Furthermore, we have a great track record when investing in development stage therapies which reflects the quality of our diligence and asset selection. With that, I'd like to hand it over to Terry.

Thanks, Chris. Let's move to slide 17. This slide shows how our efficient business model generates substantial cash flow to be reinvested. Royalty receipts grew by 14% in the second quarter, reflecting the strength of our diversified portfolio. milestones and other contractual receipts which are more variable declined substantially reflecting a one-time payment in the prior year period as a result portfolio receipts our top line grew six percent in the quarter to 773 million dollars slightly ahead of our expectations as we move down the column operating professional costs equated to 4.8 percent of portfolio receipts in the second quarter This line continues to demonstrate the benefit of the cash savings we are delivering from the internalization transaction which we completed in May of 2025. Net interest paid was de minimis in the quarter. This reflects the semi-annual timing of our interest payment schedule with payments primarily in the first and third quarters together with the interest we received from the cash on our balance sheet. 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 $736 million for the quarter. Our margin of around 95%, again, demonstrates the high underlying level of cash conversion and efficiency in the business. Capital deployment in the quarter of $349 million mainly reflected royalty funding for Dirac's Unracid and R&D funding for J&J 4804 and Litophil and Meth. Lastly, our weighted average share count declined by approximately 5 million shares, or 1%, in the quarter versus the prior year period, reflecting the impact of our share buyback program. Slide 18 provides more detail on the evolution of our top line in the second quarter. Royalty receipts, which we consider our recurring cash inflows, grew by 14%. Key drivers were the strong performances of Tramfaya, Boronigo, Indeltra, and Evrizdi. Importantly, as we saw in the first quarter, we were able to absorb significant headwinds from Promacta and Imbruvica and still deliver double-digit growth in royalty receipts. Moving to portfolio receipts, these grew by 6%. reflecting lower milestones and other contractual receipts given a one-time payment in the prior year period as I already noted. Slide 19 updates our portfolio return metrics for the quarter. Return on invested capital is 14.2% for the last 12 months ending in the second quarter of 2026 and return on invested equity which shows the impact of conservative leverage on our equity returns was 20.1% for the last 12 months. The remarkable stability of these metrics demonstrates that we are continuing to invest at attractive returns that will drive long-term value for our shareholders. Slide 20 shows that we continue to maintain the financial flexibility to execute our strategy and return capital to shareholders. At the end of June 2026, we had cash in equivalence of $812 million. In terms of borrowings, We had investment grade debt outstanding of $9.2 billion with a weighted average duration of around 12 years. Our leverage now stands at 2.8 times total debt to adjusted EBITDA, or 2.6 times on a net basis. We also have access to our $1.8 billion revolver, which was undrawn at the end of the second quarter. Following S&P's rating upgrade in June, I am delighted to say that Royalty Pharma is now triple B rated across all major credit rating agencies. This important milestone reflects the tremendous progress we have made as a company since our IPO, including our consistent strong top line growth, improved diversification, and growing cash flows. For financial capacity, we have access to over $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 $877 million of capital on attractive royalty deals in the first half of 2026. At the same time, we returned approximately $367 million to our shareholders, including share purchases of around $100 million. In total, we have returned about 25% of our portfolio cash flow this year to shareholders. On slide 21, we are again raising our full year 2026 financial guidance. We now expect portfolio receipts to be in the range of $3.4 billion to $3.5 billion, up from $3.325 billion to $3.45 billion previously. This assumes gross and royalty receipts of around 7% to 10%, compared with 4% to 8% previously, which reflects the strong underlying momentum of our diversified portfolio. This 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. It also reflects an expected decrease in milestones and other contractual receipts from $128 million in 2025 to approximately $60 million 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. Turning to expenses, payments for operating and professional costs are still expected to be in the range of 5.5% to 6.5% of portfolio receipts in 2026, reflecting cost savings from the internalization of the manager. We continue to expect interest paid 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 a de minimis amount payable in Q4. This guidance reflects repayment of a $380 million term loan in July, but does not take into account interest received on our cash balance, which was $11 million in the first half. To close, we've had a great first half. We have again raised our guidance. and we expect to continue to deliver another full year of strong financial performance in 2026. With that, I would like to hand the call back to Pablo.

Thanks Terry. To conclude, I am delighted with our continued execution against our strategy in the first half of 2026. We have again delivered compelling growth and returns. We further diversified our portfolio of attractive biopharma royalties and we have continued to strengthen Our leadership team and capabilities. On that note, I want to close on slide 23 with a reminder of why we believe we're well positioned to drive continued strong value creation. First, we're the clear leader in the rapidly expanding biopharma royalty market with powerful 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. By expanding our global platform and capabilities, we expect to remain the undisputed leader in our industry. We further strengthened our platform with the addition of Greg Raskin to lead our academic royalty effort. Greg is uniquely qualified to lead worked with academic partners having led the technology transfer group at Memorial Sloan Kettering for 12 years. I continue to be amazed by the level of talent we're able to attract to Royalty Pharma. Third, we expect to deliver strong low volatility top line 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 a 20% plus range. With that, we will be happy to take your questions.

Thanks, Pablo. We will now open up the call to questions. Operator, please take the first question.

Thank you. And to ask a question, please press star 11 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 11 again. The first question comes from Jeff Meacham with Citi. Your line is open.

Hey, guys. Thanks for the question. Got a couple for you, Terry. So we've seen a big step up in pharma to biotech M&A, and maybe there's some pharma to pharma M&A to come. The question is, what is the flexibility to tilt your deal structure with increasing weight on equity? Is there any preference by the companies? And the second question is, does your credit rating, which you've cited as improving, or the direction of rates downward, does that bias you to put more money to work each quarter? It seems like you can be more opportunistic here. Thank you.

Sure, Jeff. So, yeah, I think, look, we highlighted in my section that we have a lot of financial flexibility. To the extent that some of the M&A across the sector creates opportunities, which it certainly could, we feel like we are in a really great position to partner with these companies in any way that they need and add great royalties for Royalty Pharma. So we'll see how that plays out over time. As far as rates, you know i think that the way that we view rates is we're we truly are agnostic to the rate environment um you know rates of rates you know over a couple years were rising we deployed a lot of capital generated great returns uh in excess of our cost of capital to the extent that rates start going down we still feel like we can deploy capital and generate great returns so you know we we really do feel like we're we're agnostic and uh we'll continue to Thank you. And the next question will come from Terrance Flynn with Morgan Stanley. Your line's open. Great. Thanks for taking the question.

This one's probably for Marshall. The recent CardioTransform data created some questions in the TTR market. I recognize you guys have a multi-drug portfolio approach here, but just high-level thoughts on implications for MVUTRA as you think about the forward outlook here. and then again maybe for Chris would just be curious any update in kind of the synthetic royalty opportunity in terms of those the level of discussions or openness for boards to to go down that path I know you guys have talked about the longer term opportunity but just curious to get kind of a mark to market thanks yes thanks Terrence so on your first question on the implications of

CardioTransform at a at a high level um you know we're really happy now with the two investments we have in TTR amyloidosis and you know really you know think that's still a very interesting market and you know we added something highly novel and potentially transformative in chloramatug as I discussed specifically to your question on CardioTransform um we're kind of uniquely positioned here for with a royalty in Ambutra in the sense that um you know we we think there still is a lot of physician interest and potential in that product certainly and excited to see what El Nilem does but it is unique in the sense that it is positioned in some ways to derive at least some benefit from the unfortunate outcome of CardioTransform which we certainly are never never sort of welcome seeing trials fail for patients but specifically with Ambutra certainly does take away a near-term a near-term competitor and you know because our royalty is specific to um to Ambutra and not El Nylon's follow-on if there is any delay or other changes in the expectations for for the follow-on product that would also um uniquely accrue to the benefit of Ambutra. So I think we're really excited about where we stand and you know we'll certainly you know as we talked about today continue to look for opportunities like Gramatug to build our innovative portfolio.

And then Terrance on the question on synthetics, thanks for that question. We are still very excited about the synthetic royalty opportunity. You know last year we announced synthetics for just over two billion including the RevMed deal which was really one of the largest synthetics ever so that was a great deal. The growth rate in the synthetic marketplace is I think around 40 percent since 2015. Last year was the biggest year ever just under five billion for the product itself and the synthetic royalty opportunity only really represents about five percent of the capital raised by biopharma funding over the last five years so not even really penetrated into that marketplace of capital formation and given all the clear advantages of synthetics non-dilutive lower cost of capital program specific funding independent valuation validation excuse me there's a lot of advantages to it and as our survey of all the biotech CFOs and COs really showed it's really taking hold and we're super excited about the opportunity to see it still is a big growth driver for our business

Thank you. Operator, next question, please. Thank you. And the next question will come from Chris Schott with JPM. Your line is open.

Great. Thanks so much for the question. I think on slide 15, you highlighted invested capital has been split, two-thirds approved, one-third development stage over time. I guess as royalty has grown, you've built out a broader team, you have even more ability to diligence assets. is there any interest in leaning more into the development stage side of the business where returns could be higher or is it kind of two-thirds one-third mix the right balance I guess we think about risk versus return and I made a second question I know you've been building out more of a presence in China just any updates in terms of initial learnings as you've kind of targeted that market what type of opportunities you see for royalty and does that maybe skew towards Thanks for the question. Regarding the split between unapproved and unapproved, I think that ratio of 65-35 has been consistent over the last 5-10 years.

we we you know the way we look at this uh is not looking at independent years but looking at you know what's going on over a sort of rolling two three year period and we think it's gonna you know be maintained at a relatively similar level now when you look at um you know our uh invested capital the 22 billion or so that we have of invested capital the The amount invested in unapproved, as you can see, is relatively low. It's about 12%. That number could trend up to mid to high teens and it would still be a portfolio that has relatively low risk. This figure could increase over time and we would be very, very comfortable with that kind of risk on the overall portfolio in unapproved investments. Regarding China, it's sort of early days for us in terms of capital deployed. We've been paying attention to that market for several years now. And as you know, we hired just a really top, top player in the market. And we have started to get much more active there. Participating in many conferences that are being organized in China with teams present. I'm personally going to be going to China to meet with biotech, biopharma CEOs and really make sure that our model is understood by many and build a market. It takes time, but we're totally committed to building that market because we believe it's actually pretty attractive and large. you know you should just you know we are going to be patient and people should be patient about about how this develops but we we think it can be a really large opportunity for us in the long in the long run.

Thank you. Operator next question please.

Thank you and the next question will come from Michael Natalkovich with TD Cohen. Your line is open.

Hi thanks for the questions. I have two. My first relates to operating costs. Apologies if I missed it, but what was the reason for relatively low operating costs in Q2? And given that guidance was reiterated for this line, what will be the reason for an apparent increase in the second half? That's my first question. My second question is something of a bigger picture question for Pablo. Pablo, in one of our recent meetings, when you received a question about competition, you suggested that if given the opportunity today, even you would not be able to build a new competitor that resembled Royalty Pharma. So could you remind us of your reasons for that view? Why is it that investors should not be concerned about the emergence of a competitor that has the same form, function and scale as Royalty Pharma? Thank you.

Yeah, maybe I'll take that question first and then turn it over to Terry to address the other question about the expenses. My point is that when you look at what Royalty Pharma is today, there's a lot of barriers to answer, right? So obviously, scale is unimportant and you saw, we just talked about the scale of our capital work 22 billion that's the amount of capital that has been invested in those royalties the portfolio is worth a lot more than the 22 billion that's cost but so scale is one cost of capital is another one the team that we have is superb and we just added another really great individual to our team that's going to head our you know academic initiatives and it's a team that we have this incredible culture at Royal Pharma that gets stronger and stronger but there's the comment and the point you made about how difficult it is to replicate Royal Pharma is more or less the following and what I say is that if people said to me can you replicate Royal Pharma today if someone gave you 20 billion dollars my answer is absolutely not it would be impossible for me to replicate Royal Pharma the way it is today and it's not only because you know takes time to build a team and all of the other things but there's just one aspect that is really interesting when you look at the portfolio that Royalty Pharma has today it's a portfolio that produces you know 3.2 billion dollars last year of recurring revenue predictable recurring revenue from a very well diversified portfolio of products and it's top products marketed by top companies it took us over a decade to assemble that portfolio and you know as as examples for example we have a royalty in what is becoming one of the top drugs that J&J markets trim fire it's a large royalty or for that matter trilogy or cystic fibrosis and when you look at those assets we made those investments you know five to ten even 15 years ago and they're producing cash flow today and there's only one trim fire royalty and we own it and there's one trilogy royalty and we own it there's one There will be one, you know, Dara-Xanracif royalty, you know, the investment we, you know, made last year in this pancreatic cancer drug, and we own it. So it's impossible. They're sort of, you know, one of a kind assets, and the portfolio is sort of irreproducible. You cannot, you know, find another Triphaya royalty. You cannot find another, you know, Dara royalty. And what I would also say is that when you look at our pipeline today, that has this incredible you know group of products that have you know it could be you know blockbusters many of them generating you know billions of dollars of revenue for us um in in sort of a five-year time frame five to ten year time frame you know it it took us five years six years seven years to assemble that portfolio of um uh that pipeline um and again they're unique you know it it's hard to see how there's going to be other royalties like that and those are the assets that are going to be producing revenue and driving the growth in the next decade or so and again so I think that is what is so difficult to replicate it would be impossible to do it spontaneously even if you had 20-30 billion dollars of capital it's the work of decades so that's my answer to your question and I hope you appreciate the huge moat and barrier to entry that that provides us

and then Mike on operating costs we are very happy to see that we're realizing the synergies of the internalization transaction but as specifically as it relates to first half versus second half I think it was just some seasonality to it and since this is completely cash based the second half is going to tend to be a little bit higher than the first half so that's what's going on there.

Thank you. And the next question comes from Ash Verma with UBS. Your line is open.

Thanks for taking our questions and congrats on the quarter. Maybe just the first one, just going back to slide 15, the investor capital work, can you remind us what type of IRR are you able to drive with the development state assets versus the approved? I know you've given these numbers before just where you are at the latest. and then secondly on the LPEA readout for Pelicarsin, just latest thoughts if you can provide on what level of risk reduction would be clinically meaningful. Seems like a lot of debate on this and then if your answer changes in the high baseline LPEA subgroup, would love to know that. Thanks.

Marshall, why don't you take the two questions?

Sure. Thanks, Ash. So your first question on our return expectations, so just to level set for everyone so what we've communicated is that for approved products are or on market products are unlevered IRR expectations or are in the high single to low double digit range and we've indicated we're really you know more typically very typically investing these days at the higher end of of that range for things that are unapproved um are IRR expectations are above that, so in the teens, and that can range depending on the specifics of the product, the stage, the risk profile, the counterparty, all of those things. But as we talked about on Investor Day, I think it's important to remember that those are unlevered IRR expectations. And so to reference back to what Pablo said, something very unique about Realty Pharma, because of our capital structure our ability to use leverage in our capital structure you know the levered returns that we see which are the returns that our shareholders actually enjoy are significantly are significantly higher than that so um thanks for that question and we remain very comfortable with those with with those ranges for our for our new investments for our new investments today Your question on Pella Carson. Yes, there has been a lot of discussion these days about what our about expectations and what would be clinically relevant. And I think we're very excited after waiting for several years for these results to be on the doorstep here of seeing the first trial readout. you know I think Novartis has been pretty explicit about their expectations for what is clinically relevant so we would certainly we would certainly defer to them but I think you bring up a really important point which is you know this is the first outcome study where the world is going to see for LPLA so there's certainly a lot we will learn in terms of benefit what To your question specifically, you know, what is the higher, you know, what does higher baseline levels of LP little a mean for mean for patients and their ability to benefit from these therapies? So, you know, we are, we are eagerly awaiting the results with everyone else and look forward to discussing them once we have some data to talk about.

Thank you. Thank you. And the next question is going to come from Umar Raffert with Evercore. Your line is open.

Hi guys, this is Mike DeFury in for Oomer. Thanks so much for taking my question. Two for me, for the Clarimato transaction, the royalty is ultimately dependent on the phase three cardiovascular outcomes trial. Perhaps walk us through how you handicap phase three based on the phase one biomarker effects as well as the existing correlation data given the unproven mechanism. And then more general, my second question is regarding R&D co-funding funding. It's a very large under penetrated opportunity. So my question is, as R&D co-funding scales, how do you prevent adverse selection where partner companies retain the program for the best internal risk-adjusted returns and offer you those with perhaps less favorable hidden biology or commercial optionality? Thank you.

Thanks. Marshall will take your first question on clear AMI tag, and then Chris will take the question on this other huge opportunity of R&D funding.

Thanks, Mike. So we were really happy to add Claramatug to our portfolio. And what underlies our enthusiasm for this, I would talk about in a couple of different areas. First is there are some really intriguing biomarker data across from the earlier studies across imaging data of the heart to show that you are actually removing amyloid. other you know important biomarkers like NT-ProMB, NT-ProBNP which is a marker of heart wall stress and many others in the data that are consistent with uh clarin betug doing what we think it does which is remove amyloid from the heart and just to remind everyone ctr amyloidosis is a disease where every product um you know has gone into a phase three outcome study based on biomarker data and as we've seen with the two oral therapies that are out there with the um and and with ambutra which is in our portfolio you've certainly seen that biomarker data translate into positive um and a positive uh cv benefit in an outcome study and then you know maybe a little bit further you know a little bit less direct is you know just really interesting data that we've seen with amyloid depletion in other amyloid driven diseases like Alzheimer's disease where we're learning you know we're increasingly learning that removal of amyloid can drive clinical benefit and then in an unrelated amyloidosis condition called AL amyloidosis AstraZeneca has recently shown some very interesting data with another amyloid depleter product in that disease which suggests a benefit on which suggests a cardiovascular benefit from depleting that form of amyloid so you know certainly we put all those together to really inform our confidence and excitement about this and then on your second question Mike on adverse selection and co-funding of Pharma R&D

It's a good question, and it's something that we emphasize on every initial call we have with Pharma. Some of the opportunities we look at with Pharma co-funding, we're going to them and saying, this is what we want to fund. Some of those conversations are initiated by Pharma and them saying what they want to fund. you know I just want to remind you that our our bar is extraordinarily high when we make these investments right we're putting a lot lots of capital deploying lots of capital on those transactions as evidenced by the two transactions we did this year with Teva and J&J and we really emphasize in every in every situation that we want to fund their most exciting assets and that is a key criteria for us and we're very disciplined about that And I think if you look at the two deals we did this year with Teva and J&J, you can see that, you know, that is that is exactly what's happening.

Great. Thanks so much.

Thank you. And our next question will come from Nick Jennings with Goldman Sachs. Your line is open.

Hey, it's Asad. Sorry about that. Congrats on the performance. One for Terry. First, just in light of the continued strong results over the past few quarters, just curious as to how you're tracking towards the 4.7 billion portfolio receipts in 2030 and if and when you're thinking of potentially updating that. And then for Marshall, you noted in the slides that there are several therapeutic areas where you've built expertise and have conviction in, oftentimes placing multiple bets in the same space. So just maybe looking across the landscape, What are some of the emerging TAs that are catching your interest today and that we could see you moving into over time? Thank you.

Sure, so on our long-term guidance of $4.7 billion or more on the top line by 2030, we feel really good about where we're tracking. I think it's, you know, we really focused on that guidance at our investor day in September, so it's probably still, you know, Thank you for that question and it's a it's a good one and

Without being specific, I think what's informative maybe is how we think about it and how we approach it. I think as Pablo mentioned, we couldn't be prouder of the team that we have built, our culture around investing, the discipline that we've shown in terms of how we approach investing. and the way we have set up the team to get to your question is we want to have the ability to be as broad as we possibly can be to be generalist in the sense that we are open and ready to open and ready to analyze you know any therapeutic area any product really anywhere in the world now that we see that that could be interesting so you know like we've always said we don't Think about the portfolio from a top-down perspective. We want to be open to great products in whatever TA and whatever form they come to us and make sure our team is ready to set up and execute and for us to be a great partner.

Thank you and our next question will come from Jason Gerberry with Bank of America. Your line is now open.

Hey guys, thanks for taking my questions. Just to follow up on China and the commentary about taking a patient approach with respect to that market and leveraging innovation coming out of Chinese biotech companies, just thoughts on U.S. policy risk and any proposed license restrictions. I know Pharma and Bio are both opposed to these measures, but do you view this as a risk? Is this something, you know, when you think about taking a patient approach, just take taking a wait to see how the dust settles sort of thought there and then appreciate the commentary on milestone dynamics first half 26 versus prior year as we look to the second half I know there's a couple padufas including like Zahara so wondering if it's realistic to be realistic to be thinking about milestones being a more meaningful contributor in second half thanks yeah so

I'm just going to make a very quick comment about China but Chris is going to add and then Marshall will pick up the other question. You know China is a really interesting opportunity and I've talked in the past about why and you know if you think about it the innovation is really extraordinary and there's so many companies there with attractive assets but they all need US and European partners to actually run the clinical trials that are necessary in this market to get approval by FDA and EMA and they also need a commercial partner so what's going to happen and it's been happening is that they're going to out license their product and that creates royalties and you know what also happens is that you know for the most part the IP is put into an offshore entity it's not left in a Chinese entity and the transaction is entered into between you know Cayman company or an offshore entity owned obviously by the Chinese company and a western you know us or european pharma company and the contract is not a chinese contract but it's a contract based on you know us or european laws so and so and if you look at the deal we did last year with amgen where we bought in delta it's like no different than the typical royalties transactions we do where we're getting you know paid by amgen and it was a contract you know again in the jurisdictions where we are very very you know comfortable and experienced So it's a very similar business to what we do today. I think the other last comment I would make is that royalties are different than equity. And you can see how sometimes, you know, it's more complicated. Equity is more complicated, more visible. And, you know, it's easier for governments actually to put restrictions on equity investments. But a royalty is a contract and that, you know, gives rise to payments.

um so very different you know sort of more under the radar but Chris do you want to add anything yeah just just to add i mean we're obviously monitoring the you know what's going on with the coins act and the the proposed amendments and the bins act and whatnot and you know it's it's really sort of you know too early to comment on the specifics and and and you know but we are obviously falling that closely you know the bottom line is we're we're very committed to the the the opportunity there we've hired ken's son Super excited about that hire and building out that opportunity. We'll continue to monitor the situation here in Washington, but it's important to have the local presence there and the opportunity. I would note that the opportunity already exists because, you know, the last five or six years of all the out licensing the Western multinationals, there's a substantial number of royalty royalty agreements that already are in place regardless of what happens in Washington. So that's a pretty big opportunity already.

And then Jason, your question on milestones, just to sort of reiterate what we said previously, we continue to expect milestones and other contractual receipts to be around $60 million for the year.

Thank you. I am showing no further questions at this time. I will now turn the call back to Pablo for closing remarks.

Thank you operator and thanks to everyone on the call for your continued interest in Royalty Pharma. I just want to finish with one quick comment which is that you know looking back to this business that you know we've been building over 30 years and also then our public offering in 2020 it's just remarkable to me how this business has performed with incredible you know very very high consistency Thank you very much. Please feel free to reach out to George Grofik and his team but thank you very much.

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