Royalty Pharma plc
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
RPRX$67.30-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001802768-24-000021
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001802768-24-000045
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 196 previous paragraphs and 215 current paragraphs.
120 unchanged; 60 reworded; 29 added; 16 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 13 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
Equity in (earnings)/losses of equity method investees
Current report
Other expenses/(income), net
Current report
Income from financial royalty assets increased by $11.5 million, or 2.3%, in the second quarter of 2024 as compared to the second quarter of 2023, primarily due to increased income from Evrysdi attributable to the incremental royalty that we acquired in the fourth quarter of 2023. The increase was partially offset by the declines in sell-side equity research analysts’ consensus sales forecast for cystic fibrosis franchise and Tysabri.
Current report
Other royalty income and revenues decreased by $5.3 million, or 9.5%, in the first six months of 2024 as compared to the first six months of 2023, primarily related to the decrease in the income from fully amortized financial royalty assets, partially offset by the sales growth of Trodelvy.
Current report
In the second quarter of 2024, we recorded provision expense of $212.4 million, comprised of $181.5 million in provision expense for changes in expected cash flows and $30.9 million in provision expense for current expected credit losses. We recorded provision expense for changes in expected cash flows primarily related to Evrysdi, Trelegy, Promacta and Xtandi due to declines in sell-side equity research analysts’ consensus sales forecasts. This was partially offset by provision income for changes in expected cash flows primarily from the cystic fibrosis franchise due to increases in sales forecasts. The provision expense for credit losses was primarily driven by our contingent obligation to fund the acquisition of Voranigo (vorasidenib).
Current report
In the second quarter of 2023, we recorded provision expense of $241.2 million, comprised of $247.2 million in provision expense for changes in expected cash flows and $5.9 million in provision income for current expected credit losses. We recorded provision expense for changes in expected cash flows primarily related to Trelegy, Tremfya and Xtandi due to declines in sell-side equity research analysts’ consensus sales forecasts. The provision income for credit losses was primarily driven by slight decreases in the values of financial royalty assets with limited protective rights.
Current report
R&D funding expense was relatively flat in the first six months of 2024 as compared to the first six months of 2023.
Current report
G&A expenses increased by $7.1 million, or 14.9% in the second quarter of 2024 as compared to the second quarter of 2023, primarily driven by higher Operating and Personnel Payments due to higher Portfolio Receipts.
Current report
Equity in (earnings)/losses of equity method investees
Current report
Other expenses/(income), net
Current report
Other expense, net of $27.9 million in the second quarter of 2024 was primarily comprised of $47.1 million of losses on equity securities and $13.4 million of interest income.
Current report
Other income, net of $150.2 million in the second quarter of 2023 was primarily comprised of $82.9 million of gains on available for sale debt securities, $41.3 million of gains on equity securities and $25.7 million of interest income. The gains on available for sale debt securities were primarily driven by the changes in fair value of the MorphoSys Development Funding Bonds.
Current report
Other income, net of $99.9 million in the first six months of 2024 was primarily comprised of $46.2 million of gains on available for sale debt securities, $30.6 million of gains on equity securities and $20.8 million of interest income. The gains on available for sale debt securities were primarily driven by the changes in fair value of the MorphoSys Development Funding Bonds.
Current report
Other income, net of $192.7 million in the first six months of 2023 was primarily comprised of $115.2 million of gains on available for sale debt securities, $42.4 million of interest income and $30.5 million of gains on equity securities. The gains on available for sale debt securities were primarily driven by the changes in fair value of the MorphoSys Development Funding Bonds.
Current report
Net income attributable to the Legacy Investors Partnerships increased by $17.2 million in the second quarter of 2024 as compared to the second quarter of 2023, primarily driven by higher net income attributable to Old RPI and RPI ICAV.
Current report
Net income attributable to RPSFT was $4.4 million in the first six months of 2023. In December 2023, RPI 2019 ICAV acquired the remaining interest in RPCT owned by RPSFT and, as such, RPSFT no longer holds a non-controlling interest in RPCT.
Current report
•Voranigo (vorasidenib). In August 2024, Servier announced the FDA approval of Voranigo, a first-in-class targeted therapy for patients with isocitrate dehydrogenase 1 and 2 (IDH1/2) mutant diffuse glioma. Following this approval, we will pay $905 million upfront in exchange for a 15% royalty on annual U.S. net sales of Voranigo up to $1 billion and a 12% royalty on annual U.S. net sales greater than $1 billion.
Current report
•Trodelvy. In May 2024, Gilead announced that the confirmatory Phase 3 TROPiCS-04 study evaluating Trodelvy versus single-agent chemotherapy in patients with locally advanced or metastatic urothelial cancer did not meet the primary endpoint of overall survival. Gilead is continuing to analyze the data and will discuss the results and next steps with the FDA. In the United States, Trodelvy has an accelerated approval in this indication and continued approval may be contingent upon verification and description of clinical benefit in confirmatory trials, including the TROPiCS-04 study.
Current report
•Tremfya. In May 2024, Johnson and Johnson announced the first Phase 3 results for Tremfya in adult patients with moderate to severely active Crohn’s disease, which demonstrated superiority versus placebo and Stelara. Data showed that both maintenance doses of Tremfya met the composite co-primary endpoints compared to placebo in each individual study. In results versus Stelara, both doses of Tremfya demonstrated statistically significant and clinically meaningful differences on all prespecified pooled endoscopic endpoints.
Current report
•BCX10013. In August 2024, BioCryst announced that it plans to discontinue development of its oral Factor D inhibitor, BCX10013, as the level of clinical activity observed was less than other therapies on the market.
Current report
•Seltorexant. In May 2024, Johnson and Johnson announced positive results from the pivotal Phase 3 MDD3001 clinical trial evaluating the efficacy and safety of seltorexant as an adjunctive treatment in patients with major depressive disorder (MDD) with insomnia symptoms. The study achieved all primary and secondary endpoints, with seltorexant demonstrating both a statistically significant and clinically meaningful improvement in depressive symptoms, and improved sleep disturbance outcomes, in patients who had a prior inadequate response to SSRI/SNRI antidepressants alone.
Current report
•Pelabresib. In May 2024, Novartis announced that it met all tender offer conditions to acquire MorphoSys for €68 per share. The acquisition of MorphoSys by Novartis has been completed.
Current report
•In June 2024, PTC Therapeutics, Inc. (“PTC”) exercised its option to sell half of its retained royalties on Roche’s Evrysdi, an approved product for the treatment of spinal muscular atrophy for approximately $242 million. This option arose from the Evrysdi royalty transaction with PTC that was announced in October 2023, in which we acquired additional royalties on Evrysdi for $1 billion. PTC has an option to sell its remaining 9.5% of the Evrysdi royalty for $250 million less royalties received until December 31, 2025.
Current report
•In May 2024, we announced a transaction to acquire a royalty interest in Voranigo (vorasidenib) from Agios Pharmaceuticals for an upfront payment of $905 million contingent on FDA approval, which occurred in August 2024.
Current report
•In May 2024, we expanded our strategic funding collaboration with Cytokinetics, Incorporated (“Cytokinetics”) to provide up to $575 million, including $250 million in upfront payments, in exchange for royalties and fixed payments. This collaboration includes the following key components: a royalty restructuring on aficamten for hypertrophic cardiomyopathy; amended commercial launch funding with two additional tranches for aficamten of $50 million upfront with the option to draw an additional $175 million following approval of aficamten in oHCM; development funding of $100 million upfront for the confirmatory Phase 3 clinical trial of omecamtiv mecarbil for heart failure with reduced ejection fraction and $50 million upfront for the Phase 2 clinical trial of CK-586 for heart failure with preserved ejection fraction, which includes an option to invest an additional $150 million to fund Phase 3 development of CK-586; and the purchase of $50 million of Cytokinetics’ common stock.
Current report
Cash used in investing activities increased by $357.9 million in the first six months of 2024 as compared to the first six months of 2023, primarily driven by higher use of cash for purchases of financial royalty assets, available for sales debt securities and equity securities. The higher use of cash was partially offset by proceeds from equity securities.
Current report
As part of the expanded funding collaboration we entered into with Cytokinetics in May 2024, we agreed to fund the clinical trial for CK-586. We funded $50 million upfront in May 2024. We have an option to fund up to an additional $150 million which we have not exercised as of June 30, 2024.
Current report
We have a long-term funding arrangement with Cytokinetics which is comprised of seven tranches of up to $525 million in total funding (“Cytokinetics Commercial Launch Funding”). As of June 30, 2024, $350 million remained available under Cytokinetics Commercial Launch Funding of which Cytokinetics is required to draw a minimum of $50 million.
Current report
In May 2024, we entered into an agreement to acquire a royalty interest in Voranigo (vorasidenib)from Agios Pharmaceuticals for an upfront payment of $905 million contingent on FDA approval, which occurred in August 2024.
Removed paragraphs (16)
Previous report
Equity in losses/(earnings) of equity method investees
Previous report
Other income, net
Previous report
Net (loss)/income attributable to non-controlling interests
Previous report
Equity in losses/(earnings) of equity method investees
Previous report
Other income, net
Previous report
Other income, net of $127.9 million in the first quarter of 2024 was primarily comprised of $77.7 million of gains on equity securities and $46.4 million of gains on available for sale debt securities. The gains on available for sale debt securities were primarily driven by the change in fair value of the Development Funding Bonds.
Previous report
Other income, net of $42.5 million in the first quarter of 2023 was primarily comprised of $32.3 million of gains on available for sale debt securities and $16.7 million of interest income earned on cash held in banks. The gains on available for sale debt securities were primarily driven by the change in the fair value of the Development Funding Bonds.
Previous report
Net (loss)/income attributable to non-controlling interests
Previous report
In January 2024, Pfizer announced that the European Commission had approved Talzenna (talazoparib), an oral poly ADP-ribose polymerase inhibitor, in combination with Xtandi, for the treatment of adult patients with metastatic castration-resistant prostate cancer in whom chemotherapy is not clinically indicated.
Previous report
•Trodelvy. In January 2024, Gilead announced that the Phase 3 EVOKE-01 study evaluating Trodelvy compared to docetaxel did not meet its primary endpoint of overall survival in patients with previously treated metastatic non-small cell lung cancer.
Previous report
•KarXT. In March 2024, Bristol Myers Squibb announced that it completed its acquisition of Karuna. Bristol Myers acquired Karuna for $330 per share, for a total equity value of $14.0 billion. The New Drug Application for KarXT for the treatment of schizophrenia in adults was accepted for review by FDA, with a Prescription Drug User Fee Act date of September 26, 2024.
Previous report
•Trontinemab. In March 2024, Roche held a neurology update event in which it announced that in people with Alzheimer’s Disease, trontinemab demonstrated rapid and robust amyloid plaque reduction at relatively low doses compared with standard Aβ monoclonal antibodies. The sustained low Amyloid Related Imaging Abnormalities incidence and overall favorable safety and tolerability profile support further investigation.
Previous report
•Pelabresib. In February 2024, Novartis announced that it had entered into an agreement to make a voluntary public takeover offer to acquire MorphoSys for €68 per share, for a total equity value of €2.7 billion. The closing is expected in the first half of 2024.
Previous report
•In October 2023, we acquired additional royalties on Roche’s Evrysdi, an approved product for the treatment of spinal muscular atrophy, from PTC for an upfront payment of $1 billion. Until December 31, 2025, PTC has an option to sell its retained royalties in five equal tranches for $500 million in the aggregate less royalties received by PTC in respect of its retained portion. If PTC exercises its options for fewer than three tranches, we have an option, until March 31, 2026, to acquire up to half of PTC’s retained royalties as of the October 2023 transaction (inclusive of any tranches for which PTC has exercised its options), for $250 million less royalties received by PTC and purchase prices paid for any tranches for which PTC has exercised its options.
Previous report
Cash used in investing activities decreased by $471.9 million in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by a $515.6 million decrease in cash used for acquisitions of financial royalty assets.
Previous report
In January 2022, we entered into a long-term funding agreement, which was amended later in the same year, with Cytokinetics. We agreedto provide funding of up to$300 million (“Cytokinetics Commercial Launch Funding”) in five tranches. The initial tranche of $50 million was funded upon closing. Cytokinetics is required to draw $50 million if a certain contingency is met and has the option to draw the remaining $200 million upon the occurrence of certain regulatory and clinical development milestones (“Cytokinetics Funding Commitments”). Because the regulatory milestones for the second and third tranches were not met, $75 million of the optional funding is no longer available. As of March 31, 2024, $125 million of the optional $200 million remains available under the Cytokinetics Funding Commitments and Cytokinetics is required to draw $50 million if a certain contingency is met.
Reworded paragraphs (60)
Previous wording
We are the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry. Since our founding in 1996, we have been pioneers in the royalty market, collaborating with innovators from academic institutions, research hospitals and not-for-profits through small and mid-cap biotechnology companies to leading global pharmaceutical companies. We have assembled a portfolio of royalties which entitles us to payments based directly on the top-line sales of many of the industry’s leading therapies, which includes royalties on more than 35 commercial products, including Vertex’s Trikafta, GSK’s Trelegy, Roche’s Evrysdi, Johnson & Johnson’s Tremfya, Biogen’s Tysabri and Spinraza, AbbVie and Johnson & Johnson’s Imbruvica, Astellas and Pfizer’s Xtandi, Novartis’ Promacta, Pfizer’s Nurtec ODT, Gilead’s Trodelvy, among others, and 15 development-stage product candidates. We fund innovation in the biopharmaceutical industry both directly and indirectly - directly when we partner with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, and indirectly when we acquire existing royalties from the original innovators.
Current wording
We are the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry. Since our founding in 1996, we have been pioneers in the royalty market, collaborating with innovators from academic institutions, research hospitals and not-for-profits through small and mid-cap biotechnology companies to leading global pharmaceutical companies. We have assembled a portfolio of royalties which entitles us to payments based directly on the top-line sales of many of the industry’s leading therapies, which includes royalties on more than 35 commercial products, including Vertex’s Trikafta, GSK’s Trelegy, Roche’s Evrysdi, Johnson & Johnson’s Tremfya, Biogen’s Tysabri and Spinraza, AbbVie and Johnson & Johnson’s Imbruvica, Astellas and Pfizer’s Xtandi, Novartis’ Promacta, Pfizer’s Nurtec ODT, Gilead’s Trodelvy, among others, and 16 development-stage product candidates. We fund innovation in the biopharmaceutical industry both directly and indirectly - directly when we partner with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, and indirectly when we acquire existing royalties from the original innovators.
Previous wording
The Continuing Investors Partnerships’ ownership in RP Holdings through their ownership of RP Holdings Class B Interests was approximately 25% as of March 31, 2024. RP Holdings Class B Interests are exchangeable into Class A ordinary shares. As the Continuing Investors Partnerships conduct exchanges, the Continuing Investors Partnerships’ ownership in RP Holdings decreases and the value of this non-controlling interest decreases. Additionally, RP Holdings began to retire RP Holdings Class A Interests held by us in connection with our repurchase of Class A ordinary shares. As RP Holdings retires RP Holdings Class A Interests, our ownership in RP Holdings decreases and the value of this non-controlling interest increases.
Current wording
The Continuing Investors Partnerships’ ownership in RP Holdings through their ownership of RP Holdings Class B Interests was approximately 24% as of June 30, 2024. RP Holdings Class B Interests are exchangeable into Class A ordinary shares. As the Continuing Investors Partnerships conduct exchanges, the Continuing Investors Partnerships’ ownership in RP Holdings decreases and the value of this non-controlling interest decreases. Additionally, RP Holdings began to retire RP Holdings Class A Interests held by us in connection with our repurchase of Class A ordinary shares. As RP Holdings retires RP Holdings Class A Interests, our ownership in RP Holdings decreases and the value of this non-controlling interest increases.
Previous wording
EPA Holdings is entitled to receive equity distributions through its RP Holdings Class C Special Interest (“Equity Performance Awards”). Equity Performance Awards owed to EPA Holdings will be recognized as an equity transaction when the obligation becomes due and will impact the income allocated to non-controlling interest related to the RP Holdings Class C Special Interest. The Equity Performance Awards will be payable in RP Holdings Class B Interests that will be exchanged upon issuance for Class A ordinary shares. EPA Holdings may also receive a periodic cash advance in respect of the RP Holdings Class C Special Interest to the extent necessary for EPA Holdings or any of its beneficial owners to pay when due any income tax imposed on it or them as a result of holding such RP Holdings Class C Special Interest. We currently expect Equity Performance Awards to become payable in the next two years when certain performance conditions are projected to be met.
Current wording
EPA Holdings is entitled to receive equity distributions through its RP Holdings Class C Special Interest (“Equity Performance Awards”). Equity Performance Awards owed to EPA Holdings will be recognized as an equity transaction when the obligation becomes due and will impact the income allocated to non-controlling interest related to the RP Holdings Class C Special Interest. The Equity Performance Awards will be payable in RP Holdings Class B Interests that will be exchanged upon issuance for Class A ordinary shares. EPA Holdings may also receive a periodic cash advance in respect of the RP Holdings Class C Special Interest to the extent necessary for EPA Holdings or any of its beneficial owners to pay when due any income tax imposed on it or them as a result of holding such RP Holdings Class C Special Interest. We currently expect Equity Performance Awards to become payable in 2025 when certain performance conditions are projected to be met.
Previous wording
Other royalty income and revenues primarily includes income from financial royalty assets that have been fully amortized and income from synthetic royalties and milestones arising out of R&D funding arrangements. Occasionally, a royalty asset may be amortized on an accelerated basis due to collectability concerns, which, if resolved, may result in future cash collections when no financial royalty asset remains. Similarly, we may continue to collect royalties on a fully amortized financial royalty asset beyond the estimated duration. In each scenario where a financial royalty asset has been fully amortized, income from such royalty is recognized as Other royalty income and revenues. Other royalty income and revenues also includes revenues from intangible royalty assets and income from royalties that are recorded at fair value on our condensed consolidated balance sheets.
Current wording
Other royalty income and revenues primarily includes income from financial royalty assets that have been fully amortized and income from synthetic royalties and milestones arising out of R&D funding arrangements. Occasionally, a royalty asset may be amortized on an accelerated basis due to collectability concerns, which, if resolved, may result in future cash collections when no financial royalty asset remains. Similarly, we may continue to collect royalties on a fully amortized financial royalty asset beyond the estimated duration. In each scenario where a financial royalty asset has been fully amortized, income from such royalty is recognized as Other royalty income and revenues.
Previous wording
Equity in losses/(earnings) of equity method investees primarily includes the results of our share of income or loss from the following non-consolidated affiliates:
Current wording
Equity in (earnings)/losses of equity method investees primarily includes the results of our share of income or loss from the following non-consolidated affiliates:
Previous wording
Other income, net primarily includes the changes in fair market value of our equity securities, derivative instruments and available for sale debt securities, including related forwards and funding commitments, and interest income.
Current wording
Other expenses/(income), net primarily includes the changes in fair market value of our equity securities, derivative instruments and available for sale debt securities, including related forwards and funding commitments, and interest income.
Previous wording
The net (loss)/income attributable to non-controlling interests includes (loss)/income attributable to the legacy non-controlling interests and the continuing non-controlling interests. Following our acquisition of the remaining non-controlling interest in RPCT held by RPSFT in December 2023, and since the Legacy Investors Partnerships no longer participate in investment opportunities, the related net income attributable to the legacy non-controlling interests is expected to decline over time as the assets held by Old RPI and RPI ICAV mature.
Current wording
The net income attributable to non-controlling interests includes income attributable to the legacy non-controlling interests and the continuing non-controlling interests. Following our acquisition of the remaining non-controlling interest in RPCT held by RPSFT in December 2023, and since the Legacy Investors Partnerships no longer participate in investment opportunities, the related net income attributable to the legacy non-controlling interests is expected to continue to decline over time as the assets held by Old RPI and RPI ICAV mature.
Previous wording
Net income attributable to the continuing non-controlling interests includes RP Holdings Class B Interests held by the Continuing Investors Partnerships and will include net income attributable to the RP Holdings Class C Special Interest held by EPA Holdings once certain performance conditions have been met. Future net income attributable to the non-controlling interest related to RP Holdings Class B Interests held by the Continuing Investors Partnerships will decline over time if the investors who indirectly own RP Holdings Class B Interests conduct exchanges for our Class A ordinary shares.
Current wording
Net income attributable to the continuing non-controlling interests includes RP Holdings Class B Interests held by the Continuing Investors Partnerships and will include net income attributable to the RP Holdings Class C Special Interest held by EPA Holdings once certain performance conditions have been met, which is expected to occur in 2025. Future net income attributable to the non-controlling interest related to RP Holdings Class B Interests held by the Continuing Investors Partnerships will decline over time if the investors who indirectly own RP Holdings Class B Interests conduct exchanges for our Class A ordinary shares.
Previous wording
Income from financial royalty assets by top products is as follows, in order of contribution to income for the first quarter of 2024 (in thousands):
Current wording
Income from financial royalty assets by top products is as follows, in order of contribution to income for the first six months of 2024 (in thousands):
Previous wording
Income from financial royalty assets decreased by $123.1 million, or 18.5%, in the first quarter of 2024 compared to the first quarter of 2023, primarily due to the U.S. Food and Drug Administration (“FDA”) approval of Pfizer’s Zavzpret in March 2023. This FDA approval resulted in our receipt of a $475.0 million milestone payment and $153.6 million of interest income recognized in the first quarter of 2023 which were non-recurring. The decrease was partially offset by the increase in income from Evrysdi attributable to the incremental royalty that we acquired in the fourth quarter of 2023.
Current wording
Income from financial royalty assets decreased by $111.6 million, or 9.6%, in the first six months of 2024 as compared to the first six months of 2023, primarily due to the March 2023 U.S. Food and Drug Administration (“FDA”) approval of Pfizer’s Zavzpret. This FDA approval resulted in our receipt of a $475.0 million milestone payment and $153.6 million of interest income recognized in the first quarter of 2023 which were non-recurring. The decrease was partially offset by the increase in income from Evrysdi in 2024 attributable to the incremental royalty that we acquired in the fourth quarter of 2023.
Previous wording
Other royalty income and revenues increased by $7.1 million, or 37.1% in the first quarter of 2024 compared to the first quarter of 2023, primarily related to the sales growth of Trodelvy.
Current wording
Other royalty income and revenues decreased by $12.5 million, or 33.8%, in the second quarter of 2024 as compared to the second quarter of 2023, primarily related to the decrease in the income from fully amortized financial royalty assets, partially offset by the sales growth of Trodelvy.
Previous wording
In thefirst quarter of 2024, we recorded provision expenseof $583.6 million, comprised of $584.3 million in provision expense for changes in expected cash flows and $0.7 million in provision income for current expected credit losses. We recorded provision expense for changes in expected cash flows related to the cystic fibrosis franchise, primarily due to the inclusion of consensus estimates for Vertex’s new triple combination therapy following disclosure of the Phase III clinical data and the conservative assumption that royalties are only collected on the tezacaftor component of the new triple combination therapy and not the deuterated ivacaftor component. Although we believe that the deuterated ivacaftor component of Vertex’s new triple combination is the same as ivacaftor and is therefore royalty-bearing, Vertex has made public statements that it believes the deuterated ivacaftor component is not royalty-bearing. If deuterated ivacaftor is determined to be royalty-bearing, we may recognize provision income in our results of operations at that time. Additionally, we recorded provision expense for Crysvita due to declines in sales forecasts.
Current wording
In the first six months of 2024, we recorded provision expense of $796.0 million, comprised of $765.8 million in provision expense for changes in expected cash flows and $30.2 million in provision expense for current expected credit losses. We recorded provision expense for changes in expected cash flows primarily related to Evrysdi due to declines in sell-side equity research analysts’ consensus sales forecasts. We recorded provision expense for changes in expected cash flows related to the cystic fibrosis franchise, primarily due to the inclusion of consensus estimates for Vertex’s new triple combination therapy following disclosure of the Phase 3 clinical data and the conservative assumption that royalties are only collected on the tezacaftor component of the new triple combination therapy and not the deuterated ivacaftor component. Although we believe that the deuterated ivacaftor component of Vertex’s new triple combination is the same as ivacaftor and is therefore royalty-bearing, Vertex has made public statements that it believes the deuterated ivacaftor component is not royalty-bearing. If deuterated ivacaftor is determined to be royalty-bearing, we may recognize provision income in our results of operations at that time. Additionally, we recorded provision expense for Crysvita due to declines in sales forecasts. The provision expense for credit losses was primarily driven by our contingent obligation to fund the acquisition of Voranigo (vorasidenib).
Previous wording
In thefirst quarter of 2023, we recorded provision expense of $118.8 million, comprised of $111.4 million in provision expense for changes in expected cash flows and $7.4 million in provision expense for current expected credit losses. We recorded provision expense for changes in expected cash flows for Imbruvica and Tremfya, primarily due to significant declines in sell-side equity research analysts’ consensus sales forecasts, which was partially offset by provision income recorded for Evrysdi, IDHIFA and Tazverik due to significant increases in sell-side equity research analysts’ consensus forecasts. The provision expense for current expected credit losses was primarily driven by an increase in the financial asset value for Tazverik, which resulted in a corresponding impact to the related provision for current expected credit losses.
Current wording
In the first six months of 2023, we recorded provision expense of $360.0 million, comprised of $358.5 million in provision expense for changes in expected cash flows and $1.5 million in provision expense for current expected credit losses. We recorded provision expense for changes in expected cash flows for Imbruvica, Tremfya and Trelegy primarily due to declines in sell-side equity research analysts’ consensus sales forecasts which was partially offset by provision income recorded for Evrysdi and IDHIFA due to significant increases in sell-side equity research analysts’ consensus forecasts. The provision expense for credit losses was primarily driven by an increase in the financial asset value for Tazverik which was partially offset by provision income for credit losses recorded during the second quarter of 2023 due to slight decreases in the values of certain financial royalty assets with limited protective rights.
Previous wording
R&D funding expense was relatively flat in the first quarter of 2024 compared to the first quarter of 2023.
Current wording
R&D funding expense was relatively flat in the second quarter of 2024 as compared to the second quarter of 2023.
Previous wording
G&A expenses decreased by $28.0 million, or 32.7%, in the first quarter of 2024 compared to the first quarter of 2023, primarily from lower Operating and Personnel Payments in the current period. The higher expense in the first quarter of 2023 was due to higher Portfolio Receipts which included the receipt of a $475.0 million Zavzpret milestone payment in the first quarter 2023, which was non-recurring.
Current wording
G&A expenses decreased by $21.0 million, or 15.7%, in the first six months of 2024 as compared to the first six months of 2023, primarily from lower Operating and Personnel Payments in the current period. The higher expense in 2023 was due to higher Portfolio Receipts, which included the one-time receipt of a $475.0 million Zavzpret milestone payment in the first quarter 2023.
Previous wording
Equity in losses of equity method investees was $14.1 million in the first quarter of 2024 compared to equity in earnings of equity method investees of $34.6 million in the first quarter of 2023, primarily driven by a loss allocation from the Avillion Entities of $4.8 million in the first quarter of 2024 as compared to an income allocation of $32.9 million in the first quarter of 2023. The income allocation in the first quarter of 2023 from the Avillion Entities was primarily driven by an $80 million payment the Avillion Entities received related to AstraZeneca’s election to exercise an option to commercialize Airsupra in the United States.
Current wording
Equity in losses of equity method investees was $12.4 million in the first six months of 2024 as compared to equity in earnings of equity method investees of $33.8 million in the first six months of 2023, primarily driven by a loss allocation from the Avillion Entities of $7.8 million in the first six months of 2024 as compared to an income allocation of $31.0 million in the first six months of 2023. The income allocation in the first six months of 2023 from the Avillion Entities was primarily driven by an $80 million payment the Avillion Entities received related to AstraZeneca’s election to exercise an option to commercialize Airsupra in the United States.
Previous wording
Interest expense decreased by $2.7 million, or 5.8%, in the first quarter of 2024 compared to the first quarter of 2023, primarily due to the repayment of $1.0 billion of senior unsecured notes in September 2023 upon maturity. The weighted average coupon rate on our senior unsecured notes outstanding as of March 31, 2024 and 2023 was 2.48% and 2.24%, respectively.
Current wording
Interest expense increase by $2.1 million, or 4.4%, in the second quarter of 2024 as compared to the second quarter of 2023, primarily driven by the issuance of the $1.5 billion of senior unsecured notes in June 2024. The increase was partially offset by the repayment of $1.0 billion of senior unsecured notes in September 2023 upon maturity.
Previous wording
Net income attributable to RPSFT was $1.0 million in the first quarter of 2023. In December 2023, RPI 2019 ICAV acquired the remaining interest in RPCT owned by RPSFT and, as such, RPSFT no longer holds a non-controlling interest in RPCT.
Current wording
Net income attributable to RPSFT was $3.4 million in the second quarter of 2023. In December 2023, RPI 2019 ICAV acquired the remaining interest in RPCT owned by RPSFT and, as such, RPSFT no longer holds a non-controlling interest in RPCT.
Previous wording
Net loss attributable to the Legacy Investors Partnerships was $10.6 million in the first quarter of 2024 compared to net income attributable to the Legacy Investors Partnerships of $44.1 million in the first quarter of 2023. The net loss in the first quarter of 2024 was primarily driven by lower net income attributable to Old RPI as a result of increased provision expense.
Current wording
Net income attributable to the Legacy Investors Partnerships decreased by $37.5 million in the first six months of 2024 as compared to the first six months of 2023, primarily driven by lower income attributable to Old RPI as a result of higher provision expense.
Previous wording
Net income attributable to the Continuing Investors Partnerships decreased by $121.7 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to lower net income attributable to RP Holdings as a result of higher provision expense and lower interest income recognized in the first quarter of 2024. The higher interest income in the first quarter of 2023 was primarily driven by $153.6 million of interest income recognized following the FDA’s approval of Pfizer’s Zavzpret, which was non-recurring. Additionally, the exchanges by investors in the Continuing Investors Partnerships who indirectly own RP Holdings Class B Interests for our Class A ordinary shares resulted in a decline in the Continuing Investors Partnerships’ ownership of RP Holdings.
Current wording
Net income attributable to the Continuing Investors Partnerships decreased by $166.9 million in the first six months of 2024 as compared to the first six months of 2023, primarily due to lower net income attributable to RP Holdings as a result of higher provision expense and lower interest income recognized in 2024. The higher interest income in 2023 was primarily driven by $153.6 million of interest income recognized following the FDA’s approval of Pfizer’s Zavzpret, which was non-recurring. Additionally, the exchanges by investors in the Continuing Investors Partnerships who indirectly own RP Holdings Class B Interests for our Class A ordinary shares resulted in a decline in the Continuing Investors Partnerships’ ownership of RP Holdings.
Previous wording
Our portfolio consists of royalties on more than 35 marketed therapies and 15 development-stage product candidates. The therapies in our portfolio address therapeutic areas such as rare disease, cancer, neuroscience, infectious disease, hematology and diabetes, and are delivered to patients across both primary and specialty care settings. The table below shows Portfolio Receipts, including Royalty Receipts by product and milestones and other contractual receipts, in order of contribution to total Royalty Receipts for the first quarter of 2024 (in thousands):
Current wording
Our portfolio consists of royalties on more than 35 marketed therapies and 16 development-stage product candidates. The therapies in our portfolio address therapeutic areas such as rare disease, cancer, neuroscience, infectious disease, hematology and diabetes, and are delivered to patients across both primary and specialty care settings. The table below shows Portfolio Receipts, including Royalty Receipts by product and milestones and other contractual receipts, in order of contribution to total Royalty Receipts for the first six months of 2024 (in thousands):
Previous wording
(2)Other products primarily include Royalty Receipts on the following products: Cimzia, Crysvita, Emgality, Entyvio, Farxiga/Onglyza, IDHIFA, Letairis, Lexiscan, Mircera, Nesina, Soliqua and distributions from the Legacy SLP Interest, which are presented as Distributions from equity method investeeson the statements of cash flows.
Current wording
(2)Other products primarily include Royalty Receipts on the following products: Cimzia, Crysvita, Emgality, Entyvio, Farxiga/Onglyza, IDHIFA, Lexiscan, Prevymis, Nesina, Soliqua and distributions from the Legacy SLP Interest, which are presented as Distributions from equity method investeeson the statements of cash flows.
Previous wording
Below we discuss the key drivers of Portfolio Receipts:
Current wording
The key drivers of Portfolio Receipts are discussed below:
Previous wording
•Cystic fibrosis franchise – Royalty Receipts from the cystic fibrosis franchise, which includes Kalydeco, Orkambi, Symdeko/Symkevi and Trikafta/Kaftrio, and which are marketed by Vertex for patients with certain mutations causing cystic fibrosis, increased by $21.0 million in the first quarter of 2024 compared to the first quarter of 2023. The increase was primarily driven by the continued U.S. performance of Trikafta and the strong uptake of Kaftrio outside of the United States, including its uptake in younger age groups.
Current wording
•Cystic fibrosis franchise – Royalty Receipts from the cystic fibrosis franchise, which includes Kalydeco, Orkambi, Symdeko/Symkevi and Trikafta/Kaftrio, and is marketed by Vertex for patients with certain mutations causing cystic fibrosis, increased by $45.9 million in the first six months of 2024 as compared to the first six months of 2023. The increase was primarily driven by the continued U.S. performance of Trikafta and the strong uptake of Kaftrio outside of the United States, including its uptake in younger age groups.
Previous wording
•Tysabri – Royalty Receipts from Tysabri, which is marketed by Biogen for the treatment of multiple sclerosis, decreased by $1.7 million in the first quarter of 2024 compared to the first quarter of 2023, primarily attributable to pricing pressure and competition.
Current wording
•Tysabri – Royalty Receipts from Tysabri, which is marketed by Biogen for the treatment of multiple sclerosis, decreased by $7.4 million in the first six months of 2024 as compared to the first six months of 2023, due to pricing pressure and competition.
Previous wording
•Trelegy – Royalty Receipts from Trelegy, which is marketed by GSK for the maintenance treatment of chronic obstructive pulmonary disease and asthma, increased by $22.3 million in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by increased patient demand, growth of the single inhaler triple therapy market and penetration of the class. Thefirst quarter of 2024 also benefited from favorable returns and rebate adjustments.
Current wording
•Trelegy – Royalty Receipts from Trelegy, which is marketed by GSK for the maintenance treatment of chronic obstructive pulmonary disease and asthma, increased by $34.2 million in the first six months of 2024 as compared to the first six months of 2023, primarily driven by strong patient demand, single inhaler triple therapy class growth and increased market share.
Previous wording
•Imbruvica – Royalty Receipts from Imbruvica, which is marketed by AbbVie and Johnson & Johnson for the treatment of blood cancers and chronic graft versus host disease, decreased by $6.8 million in the first quarter of 2024 compared to the first quarter of 2023. The decrease was largely due to competitive pressures.
Current wording
•Imbruvica – Royalty Receipts from Imbruvica, which is marketed by AbbVie and Johnson & Johnson for the treatment of blood cancers and chronic graft versus host disease, decreased by $9.4 million in the first six months of 2024 as compared to the first six months of 2023, primarily due to competitive pressures.
Previous wording
•Xtandi – Royalty Receipts from Xtandi, which is marketed by Pfizer and Astellas for the treatment of prostate cancer, increased by $4.9 million in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by growth in all regions excluding Greater China.
Current wording
•Xtandi – Royalty Receipts from Xtandi, which is marketed by Pfizer and Astellas for the treatment of prostate cancer, increased by $10.2 million in the first six months of 2024 as compared to the first six months of 2023, primarily driven by growth in all regions.
Previous wording
•Promacta – Royalty Receipts from Promacta, which is marketed by Novartis for the treatment of chronic immune thrombocytopenia purpura (ITP) and aplastic anemia, increased by $1.7 million in the first quarter of 2024 compared to the first quarter of 2023. This growth was primarily in the United States and driven by increased use in chronic ITP and severe aplastic anemia.
Current wording
•Promacta – Royalty Receipts from Promacta, which is marketed by Novartis for the treatment of chronic immune thrombocytopenia purpura (ITP) and aplastic anemia, increased by $0.3 million in the first six months of 2024 as compared to the first six months of 2023. Performance was driven by an increased use of Promacta in chronic ITP and severe aplastic anemia in the United States, partially offset by higher revenue deductions.
Previous wording
•Evrysdi – Royalty Receipts from Evrysdi, which is marketed by Roche for the treatment of spinal muscular atrophy, increased by $27.4 million in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by strong performance in Europe and continued uptake in the United States and Japan, partially offset by lower sales in certain other international markets. We acquired an incremental royalty on Evrysdi in the fourth quarter of 2023, which contributed to Royalty Receipts beginning in the first quarter of 2024.
Current wording
•Evrysdi – Royalty Receipts from Evrysdi, which is marketed by Roche for the treatment of spinal muscular atrophy, increased by $39.3 million in the first six months of 2024 as compared to the first six months of 2023, driven by strong performance in Europe, the United States and Japan, partially offset by lower international sales. Incremental royalties acquired on Evrysdi in the fourth quarter of 2023 yielded royalties beginning in the first quarter of 2024.
Previous wording
•Tremfya– Royalty Receipts from Tremfya, which is marketed by Johnson & Johnson for the treatment of plaque psoriasis and active psoriatic arthritis, increased by $4.6 million in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by favorable patient mix, market growth and market share gains.
Current wording
•Tremfya– Royalty Receipts from Tremfya, which is marketed by Johnson & Johnson for the treatment of plaque psoriasis and active psoriatic arthritis, increased by $12.1 million in the first six months of 2024 as compared to the first six months of 2023, due to market growth, market share gains and favorable patient mix.
Previous wording
•Cabometyx/Cometriq – Royalty Receipts from Cabometyx/Cometriq, which is marketed by Exelixis, Ipsen and Takeda, increased by $2.2 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to the uptake in combination with Opdivo as a first-line treatment for patients with advanced renal cell carcinoma.
Current wording
•Cabometyx/Cometriq – Royalty Receipts from Cabometyx/Cometriq, which is marketed by Exelixis, Ipsen and Takeda, increased by $3.6 million in the first six months of 2024 as compared to the first six months of 2023, primarily due to continued revenue and demand growth in the United States and globally by broad uptake in combination with Opdivo in first-line renal cell carcinoma across clinical risk groups and practice settings.
Previous wording
•Trodelvy – Royalty Receipts from Trodelvy, which is marketed by Gilead for the treatment of adult patients with metastatic triple-negative breast cancer and pre-treated hormone receptor (HR)-positive, human epidermal growth factor receptor 2 (HER2)-negative metastatic breast cancer, increased by $3.7 million in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by strong demand in second-line metastatic triple-negative breast cancer and pretreated HR+/HER2- metastatic breast cancer.
Current wording
•Trodelvy – Royalty Receipts from Trodelvy, which is marketed by Gilead for the treatment of adult patients with metastatic triple-negative breast cancer and pre-treated hormone receptor (HR)-positive, human epidermal growth factor receptor 2 (HER2)-negative metastatic breast cancer, increased by $6.6 million in the first six months of 2024 as compared to the first six months of 2023. The increase was primarily driven by continued demand in second-line metastatic triple-negative breast cancer and pretreated HR+/HER2- metastatic breast cancer.
Previous wording
•Erleada– Royalty Receipts from Erleada, which is marketed by Johnson & Johnson for the treatment of patients with prostate cancer, increased by $3.2 million in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by continued share gains and market growth in metastatic castration-sensitive prostate cancer. We acquired an incremental royalty on Erleada in the second quarter of 2023.
Current wording
•Erleada– Royalty Receipts from Erleada, which is marketed by Johnson & Johnson for the treatment of patients with prostate cancer, increased by $7.1 million in the first six months of 2024 as compared to the first six months of 2023, primarily driven by continued share gains and market growth in metastatic castration-sensitive prostate cancer. We acquired incremental royalties on Erleada in the second quarter of 2023 and began receiving these additional royalties in the third quarter of 2023.
Previous wording
•Orladeyo– Royalty Receipts from Orladeyo, which is marketed by BioCryst for the treatment of hereditary angioedema, increased by $1.9 million in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by continued strong patient uptake.
Current wording
•Orladeyo– Royalty Receipts from Orladeyo, which is marketed by BioCryst for the treatment of hereditary angioedema, increased by $3.9 million in the first six months of 2024 as compared to the first six months of 2023, primarily driven by continued strong patient uptake.
Previous wording
•Spinraza – Royalty Receipts from Spinraza, which is marketed by Biogen for the treatment of spinal muscular atrophy, were $6.6 million in the first quarter of 2024. Sales outside the United States were negatively impacted by the timing of shipments in certain markets, competition and pricing pressure, while U.S. sales were relatively consistent. We acquired the Spinraza royalty in the first quarter of 2023 and began receiving royalties in the second quarter of 2023.
Current wording
•Spinraza – Royalty Receipts from Spinraza, which is marketed by Biogen for the treatment of spinal muscular atrophy, increased by $3.7 million in the first six months of 2024 as compared to the first six months of 2023. Sales of Spinraza in the United States were relatively consistent, while performance outside the United States was impacted by the timing of shipments, competition and pricing pressure. We acquired the Spinraza royalty in the first quarter of 2023 and began receiving royalties in the second quarter of 2023.
Previous wording
•Nurtec ODT/Zavzpret– Royalty Receipts from Nurtec ODT, which is marketed by Pfizer for the acute treatment of migraine, increased by $1.8 million in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by volume growth.
Current wording
•Nurtec ODT/Zavzpret– Royalty Receipts from Nurtec ODT, which is marketed by Pfizer for the acute treatment of migraine, increased by $2.1 million in the first six months of 2024 as compared to the first six months of 2023. The increase was primarily driven by strong patient demand in the United States, largely offset by lower net price due to unfavorable changes in channel mix. Recent launches in markets outside the United States also contributed to growth.
Previous wording
•Other products– Royalty Receipts from other products decreased by $4.5 million in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by a decline in Lexiscan due to generic competition.
Current wording
•Other products– Royalty Receipts from other products decreased by $3.5 million in the first six months of 2024 as compared to the first six months of 2023, primarily driven by a decline in Lexiscan due to generic competition.
Previous wording
•Milestones and other contractual receipts decreased by $502.4 million in the first quarter of 2024 compared to the first quarter of 2023 primarily due to a $475.0 million milestone payment received following the FDA’s approval of Zavzpret in March 2023 and a $28.7 million payment from our joint venture investee, Avillion II, for our pro rata portion of the $80 million fee paid by AstraZeneca to exercise the option to commercialize Airsupra in United States in the first quarter of 2023.
Current wording
•Milestones and other contractual receipts decreased by $499.5 million in the first six months of 2024 as compared to the first six months of 2023, primarily due to a $475.0 million milestone payment received following the FDA’s approval of Zavzpret in March 2023 and a $28.7 million payment from our joint venture investee, Avillion II, for our pro rata portion of the $80 million fee paid by AstraZeneca to exercise the option to commercialize Airsupra in United States, both of which occurred in the first quarter of 2023.
Previous wording
•Tremfya. In May 2024, Johnson & Johnson announced positive Phase 3 results for Tremfya in patients with moderately to severely active Crohn’s disease with inadequate response/intolerance to conventional therapies and/or biologics. Johnson & Johnson submitted applications to the European Medicines Agency seeking to expand the Marketing Authorization Application for Tremfya to include ulcerative colitis and Crohn’s disease.
Current wording
In May 2024, Johnson and Johnson announced positive Phase 3 results for Tremfya in patients with moderate to severely active Crohn’s disease with inadequate response/intolerance to conventional therapies and/or biologics. Johnson and Johnson submitted a supplemental Biologics License Application to the FDA seeking approval of Tremfya for Crohn’s disease and an application to the European Medicines Agency for ulcerative colitis and Crohn’s disease.
Showing the first 40 of 60 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Other royalty income and revenues also includes revenues from intangible royalty assets and income from royalties that are recorded at fair value on our condensed consolidated balance sheets.
Current report — wording carried from elsewhere
Net income attributable to non-controlling interests
Current report — wording carried from elsewhere
Equity in earnings of equity method investees was relatively flat in the second quarter of 2024 as compared to the second quarter of 2023.
Current report — wording carried from elsewhere
Interest expense was relatively flat in the first six months of 2024 as compared to the first six months of 2023. The weighted average coupon rate on our senior unsecured notes outstanding as of June 30, 2024 and 2023 was 3.06% and 2.24%, respectively.
Current report — wording carried from elsewhere
Net income attributable to non-controlling interests
Current report — wording carried from elsewhere
Net income attributable to the Continuing Investors Partnerships decreased by $45.1 million in the second quarter of 2024 as compared to the second quarter of 2023, primarily driven by lower net income attributable to RP Holdings in the second quarter of 2024 and a decline in the Continuing Investors Partnerships’ ownership of RP Holdings resulting from the exchanges by investors in the Continuing Investors Partnerships who indirectly own RP Holdings Class B Interests for our Class A ordinary shares.