Royalty Pharma Reports First Quarter 2021 Results
- Double-digit growth in Net cash provided by operating activities (GAAP) and Adjusted Cash Flow(2)
- Announced transactions of up to
$787 million in 2021, including$582 million in upfront payments - Increased Adjusted Cash Receipts(1) guidance for 2021
“Royalty Pharma continued its impressive business momentum,” said
First quarter 2021 GAAP financial results demonstrate strong operating cash flow and top-line growth
- Net cash provided by operating activities increased 12% to
$526 million ; Net cash used in investing activities declined 21% to$599 million ; Net cash (used in)/provided by financing activities declined 142% to($227) million . - Total income and other revenues grew 14% to
$573 million driven by growth from the cystic fibrosis franchise.
First quarter 2021 non-GAAP financial results primarily driven by strong portfolio growth
- Adjusted Cash Receipts(1) increased 37% to
$524 million . - Adjusted Cash Flow(2) grew 37% to
$409 million .
Strong performance from royalty portfolio; three new royalties acquired on innovative therapies
- Total Royalty Receipts increased 19% driven by cystic fibrosis franchise growth of 68% and double-digit increases for Imbruvica, Promacta and Xtandi, which offset royalty expirations for mature products.
- Acquired royalties on Oxlumo, a first-in-class rare disease therapy; Cabometyx/Cometriq, a leading oncology therapy; and seltorexant, a novel investigational therapy for major depressive disorder with insomnia symptoms.
Raising financial guidance for 2021
Royalty Pharma now anticipates full-year 2021 Adjusted Cash Receipts(1) to be between$1,940 million and$1,980 million , excluding new transactions announced subsequent to the date of this release.
Financial Summary | Three months ended |
||
(unaudited) | |||
($ and shares in millions) | 2021 | 2020 | Change |
Net cash provided by operating activities (GAAP) | 526 | 471 | 12% |
Net cash used in investing activities (GAAP) | (599) | (762) | (21)% |
Net cash (used in)/provided by financing activities (GAAP) | (227) | 543 | (142)% |
Total income and other revenues (GAAP) | 573 | 501 | 14% |
Adjusted Cash Receipts (1) (non-GAAP) | 524 | 382 | 37% |
Adjusted Cash Flow (2) (non-GAAP) | 409 | 298 | 37% |
Weighted average Class A shares outstanding - diluted | 607 | n/a | n/a |
First Quarter 2021 Financial Results
Three months ended |
|||||
(unaudited) | |||||
($ in millions) | 2021 | 2020 | Change | ||
Net cash provided by operating activities (GAAP) | 526 | 471 | 12% | ||
Royalty Receipts: | Marketer: | Therapeutic Area: | |||
Cystic fibrosis franchise | Vertex | Rare disease | 167 | 99 | 68% |
Imbruvica | AbbVie/J&J | Cancer | 89 | 78 | 15% |
Tysabri | Biogen | Neurology | 87 | 84 | 4% |
HIV franchise | Gilead, others | Infectious disease | 46 | 84 | (45)% |
Promacta | Novartis | Hematology | 44 | 36 | 23% |
Xtandi | Pfizer, Astellas | Cancer | 41 | 35 | 18% |
Januvia, Janumet, Other DPP-IVs | Merck, others | Diabetes | 36 | 35 | 3% |
Nurtec ODT/Biohaven payment* | Biohaven | Neurology | 17 | — | n/a |
Prevymis | Merck | Infectious disease | 9 | — | n/a |
Farxiga/Onglyza | AstraZeneca | Diabetes | 9 | — | n/a |
Crysvita | Ultragenyx, Kyowa Kirin | Rare disease | 4 | — | n/a |
Emgality | Eli Lilly | Neurology | 3 | 2 | 65% |
Erleada | Johnson & Johnson | Cancer | 3 | 1 | 116% |
IDHIFA | Bristol-Myers Squibb | Cancer | 3 | — | n/a |
Trodelvy | Gilead | Cancer | 3 | — | n/a |
Evrysdi | Roche | Rare disease | 2 | — | n/a |
Tazverik | Epizyme | Cancer | 0 | — | n/a |
Other Products (3) | 88 | 90 | (2)% | ||
Total Royalty Receipts | 649 | 544 | 19% | ||
Distributions to non-controlling interest | (126) | (161) | (22)% | ||
Adjusted Cash Receipts (non-GAAP) (1) | 524 | 382 | 37% |
Amounts shown in the table may not add due to rounding.
* Includes royalty receipts for Nurtec of
Net cash provided by operating activities (GAAP) was
Total Royalty Receipts were $649 million in the first quarter of 2021, an increase of 19% compared to
Drivers of royalty receipts in the first quarter of 2021 are discussed below, based on commentary from the marketers of the products underlying the royalties in the preceding quarter (as royalty receipts generally lag product performance by one calendar quarter).
- Cystic fibrosis franchise: Royalty receipts from Vertex’s cystic fibrosis (CF) franchise, which include Kalydeco, Orkambi, Symdeko/Symkevi and Trikafta/Kaftrio, all approved for patients with certain mutations causing cystic fibrosis, were
$167 million in the first quarter of 2021, an increase of 68% compared to the same period of 2020. The increase was driven by a clawback adjustment related to Vertex’s agreement with the French Authorities around reimbursement for Orkambi that reduced royalty receipts in the three months endedMarch 31, 2020 , as well as growth in sales for the overall cystic fibrosis franchise resulting from continued uptake of Trikafta inthe United States and Kaftrio inEurope . Following our acquisition of the residual interest from theCF Foundation in the three months endedDecember 31, 2020 ,Royalty Pharma is entitled to all royalty receipts on annual worldwide net sales above$5.8 billion .
- 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, were
$89 million in the first quarter of 2021, an increase of 15% compared to the same period of 2020, primarily driven by the continued penetration in patients with chronic lymphocytic leukemia.
- Tysabri: Royalty receipts from Tysabri, which is marketed by Biogen for the treatment of multiple sclerosis, were
$87 million in the first quarter of 2021, an increase of 4% compared to the same period of 2020.
- HIV franchise: Royalty receipts from the HIV franchise, which is based on products marketed by Gilead that contain emtricitabine, including Biktarvy, Genvoya and Truvada, among others, were
$46 million in the first quarter of 2021, a decrease of 45% compared to the same period of 2020. This decrease was driven by a decline in sales volumes of Truvada and Atripla following loss of exclusivity inthe United States inOctober 2020 as well as a lower percentage of combination sales attributable to emtricitabine inthe United States .
- Promacta: Royalty receipts from Promacta, which is marketed by Novartis for the treatment of chronic immune thrombocytopenia purpura (ITP) and aplastic anemia, were
$44 million in the first quarter of 2021, an increase of 23% compared to the same period of 2020. Growth was driven by increased use in ITP and further uptake as first-line treatment for severe aplastic anemia inthe United States .
- Xtandi: Royalty receipts from Xtandi, which is marketed by Pfizer and Astellas for the treatment of prostate cancer, were
$41 million in the first quarter of 2021, an increase of 18% compared to the same period of 2020, driven by demand across various prostate cancer indications.
- Januvia, Janumet, Other DPP-IVs: Royalty receipts from the DPP-IVs for type 2 diabetes, which include Januvia and Janumet, both marketed by Merck & Co., were
$36 million in the first quarter of 2021, an increase of 3% compared to the same period of 2020.
- Nurtec ODT: Royalty receipts from Nurtec ODT, marketed by Biohaven for the acute treatment of migraine, were
$1 million in the first quarter of 2021. In addition, as a result of the approval of Nurtec ODT inFebruary 2020 ,Royalty Pharma received a$16 million fixed payment from Biohaven, the first of 16 consecutive quarterly payments to be received from Biohaven relating to the Series A Preferred Shares.
- Additional highlights:
- Trodelvy: Royalty receipts from Trodelvy, marketed by Gilead for the treatment of metastatic triple negative breast cancer, were
$3 million in the first quarter of 2021. - Evrysdi: Royalty receipts from Evrysdi, marketed by Roche for the treatment of spinal muscular atrophy (SMA) in adults and children two months of age and older, were
$2 million in the first quarter of 2021 with uptake observed across all SMA patient types.
- Trodelvy: Royalty receipts from Trodelvy, marketed by Gilead for the treatment of metastatic triple negative breast cancer, were
Distributions to non-controlling interest, which reduce royalty receipts to arrive at Adjusted Cash Receipts, were
Adjusted Cash Receipts (non-GAAP)(1) were
Adjusted EBITDA (non-GAAP)(4) is comprised of Adjusted Cash Receipts less payments for operating and professional costs. In the first quarter of 2021, Adjusted EBITDA was
- Adjusted Cash Receipts growth of 37% as compared to the same period in 2020, and;
- Payments for operating and professional costs of
$42 million (representing 8% of Adjusted Cash Receipts) compared to $26 million in the first quarter of 2020 (representing 7% of Adjusted Cash Receipts). The increase was primarily driven by higher operating and personnel payments under Royalty Pharma’s Management Agreement(9) executed in connection with the Reorganization Transactions(9), offset by a decrease in non-recurring payments for professional services and refinancing fees in connection with the Reorganization Transactions.
Adjusted Cash Flow (non-GAAP)(2) is comprised of Adjusted EBITDA less ongoing development-stage funding payments, net interest paid and miscellaneous other items. In the first quarter of 2021, Adjusted Cash Flow was
A more comprehensive discussion of the non-GAAP measures utilized by
Key Developments Relating to the Portfolio
The key developments related to Royalty Pharma’s royalty interests are discussed below:
- Xtandi: In
May 2021 , Astellas and Pfizer announced that theEuropean Commission (EC) approved Xtandi for the treatment of patients with metastatic hormone-sensitive prostate cancer.
- Tysabri: In
April 2021 , Biogen announced that the EC granted marketing authorization for a subcutaneous injection of Tysabri to treat relapsing-remitting multiple sclerosis. Biogen also announced that it had received a Complete Response Letter (CRL) from theFood and Drug Administration (FDA) for its supplemental Biologic License Application (sBLA) for subcutaneous Tysabri. The CRL indicates that the FDA is unable to approve the company’s filing as submitted. Biogen is evaluating the CRL and will determine next steps in theU.S.
- Trodelvy: In
April 2021 , Gilead announced that theU.S. FDA granted full approval to Trodelvy for adult patients with unresectable locally advanced or metastatic triple-negative breast cancer (TNBC) who have received two or more prior systemic therapies, at least one of them for metastatic disease. The approval is supported by data from the Phase 3 ASCENT study.
InApril 2021 , Gilead announced that theU.S. FDA granted an accelerated approval of Trodelvy for use in adult patients with locally advanced or metastatic urothelial cancer who have previously received a platinum-containing chemotherapy and either a programmed death receptor-1 (PD-1) or a programmed death-ligand 1 (PD-L1) inhibitor. The accelerated approval was based on data from the international Phase 2, single-arm TROPHY study.
- Orladeyo: In
April 2021 , BioCryst announced that the EC approved Orladeyo for the prevention of recurrent hereditary angioedema (HAE) attacks in HAE patients 12 years and older. InJanuary 2021 , BioCryst announced that theMinistry of Health, Labor and Welfare (MHLW) inJapan granted marketing and manufacturing approval for Orladeyo for prophylactic treatment of hereditary angioedema (HAE) in adults and pediatric patients 12 years and older.
- Evrysdi: In
March 2021 , Roche announced that the EC approved Evrysdi for the treatment of SMA in patients two months of age and older, with a clinical diagnosis of SMA Type 1, Type 2 or Type 3 or with one to four splicing modifier of motor neuron 2 (SMN2) copies.
- Nurtec ODT: In
March 2021 , Biohaven announced its regulatory filing for rimegepant had been submitted and accepted for review by theEuropean Medicines Agency (EMA) for a dual-acting (acute and prevention) indication of migraine.
- Cystic fibrosis franchise: In
January 2021 , Vertex announced that theU.S. FDA accepted its supplemental New Drug Application (sNDA) to expand the use of Trikafta to include children ages 6 through 11 years old who have at least one F508del mutation in the cystic fibrosis transmembrane conductance regulator (CFTR) gene or a mutation in the CFTR gene that is responsive based on in vitro data. The FDA granted Priority Review of the sNDA and assigned a Prescription Drug User Fee Act target action date ofJune 8, 2021 .
- Cabometyx: In
January 2021 , Exelixis announced that theU.S. FDA approved Cabometyx for patients with advanced renal cell carcinoma (RCC) as a first-line treatment in combination with Bristol Myers Squibb’s Opdivo. The approval was based on the Phase 3 CheckMate -9ER trial, in which the combination of Cabometyx and Opdivo significantly improved overall survival while doubling progression-free survival and objective response rate versus sunitinib as a first-line treatment for patients with advanced RCC. InMarch 2021 , Ipsen announced that the EC approved the combination of Cabometyx and Opdivo for the first-line treatment of advanced RCC.
Summary of Recent Royalty Acquisition Activity
- Oxlumo: In
April 2021 ,Royalty Pharma announced that it acquired a royalty interest in Oxlumo (lumasiran) from Dicerna Pharmaceuticals for an upfront cash payment of$180 million and up to$60 million in contingent sales-based milestone payments. Oxlumo, which has been approved by theU.S. FDA and EMA for the treatment of primary hyperoxaluria (PH) type 1, is marketed by Alnylam Pharmaceuticals.
- Cabometyx/Cometriq: In
April 2021 ,Royalty Pharma announced that it acquired a royalty interest (effectiveMarch 31, 2021 ) in the cabozantinib products Cabometyx and Cometriq from GlaxoSmithKline (GSK) for an upfront payment of$342 million and up to$50 million in additional payments contingent on the achievement of regulatory approvals of cabozantinib for prostate cancer and lung cancer in theU.S. andEurope . Cabometyx, a multi-tyrosine kinase inhibitor, is approved for the treatment of patients with advanced RCC both as monotherapy and in combination with Bristol Myers Squibb’s Opdivo as a first-line treatment. Cabometyx is also approved for hepatocellular carcinoma in patients previously treated with sorafenib. Cometriq is approved for progressive, metastatic medullary thyroid cancer. Cabometyx and Cometriq are marketed by Exelixis inthe United States , and by their partner Ipsen in regions outsidethe United States andJapan . Cabometyx is marketed inJapan by Exelixis’ partner, Takeda.
- Zavegepant: In
March 2021 , Biohaven announced that it enrolled the first patient in a Phase 2/3 clinical trial of oral zavegepant for the preventive treatment of migraine. Accordingly, per the agreement with Biohaven announced inAugust 2020 ,Royalty Pharma paid$100 million to Biohaven for the achievement of this milestone, bringing the total zavegepant funding to$250 million .Royalty Pharma previously announced that it is entitled to success-based milestone payments that could total up to 2.95 times of the zavegepant funded amount depending on the number of regulatory approvals achieved for zavegepant (including 1.9 times for the first zavegepant migraine regulatory approval) which would be paid over a ten-year period.
- Seltorexant: In
January 2021 ,Royalty Pharma announced that it acquired Minerva Neuroscience’s royalty interest in seltorexant for an upfront payment of$60 million and up to$95 million in additional milestone payments. The additional payments to Minerva will be contingent on the achievement of certain clinical, regulatory and commercialization milestones. Seltorexant is currently in Phase 3 development for the treatment of major depressive disorder (MDD) with insomnia symptoms byJanssen Pharmaceutica, N.V. , a subsidiary of Johnson & Johnson.
MSCI Collaboration
In
Liquidity and Capital Resources
- As of
March 31, 2021 ,Royalty Pharma had cash, cash equivalents and marketable securities in the amount of$1.8 billion and long-term debt with principal value of $6 billion.
2021 Financial Outlook
Provided |
|
Adjusted Cash Receipts (non-GAAP) excluding new transactions announced after the date of this release |
(previously |
Financial Results Call
About
Founded in 1996,
Forward-Looking Statements
The information set forth herein does not purport to be complete or to contain all of the information you may desire. Statements contained herein are made as of the date of this document unless stated otherwise, and neither the delivery of this document at any time, nor any sale of securities, shall under any circumstances create an implication that the information contained herein is correct as of any time after such date or that information will be updated or revised to reflect information that subsequently becomes available or changes occurring after the date hereof.
This document contains statements that constitute “forward-looking statements” as that term is defined in
Certain information contained in this document relates to or is based on studies, publications, surveys and other data obtained from third-party sources and the company's own internal estimates and research. While the company believes these third-party sources to be reliable as of the date of this document, it has not independently verified, and makes no representation as to the adequacy, fairness, accuracy or completeness of, any information obtained from third-party sources. In addition, all of the market data included in this document involves a number of assumptions and limitations, and there can be no guarantee as to the accuracy or reliability of such assumptions. Finally, while the company believes its own internal research is reliable, such research has not been verified by any independent source.
For further information, please reference
Use of Non-GAAP Measures
Adjusted Cash Receipts, Adjusted EBITDA and Adjusted Cash Flow are non-GAAP measures presented as supplemental measures to
In addition,
Management believes that Adjusted EBITDA is an important non-GAAP measure in analyzing liquidity and is a key component of certain material covenants contained within the company’s credit agreement. Noncompliance with the interest coverage ratio and leverage ratio covenants under the credit agreement could result in lenders requiring the company to immediately repay all amounts borrowed. If
Management uses Adjusted Cash Flow to evaluate its ability to generate cash and performance of the business and to evaluate the company’s performance as compared to its peer group. Management also uses Adjusted Cash Flow to compare its performance against non-GAAP adjusted net income measures used by many companies in the biopharmaceutical industry, even though each company may customize its own calculation and therefore one company’s metric may not be directly comparable to another’s.
The non-GAAP financial measures used in this press release have limitations as analytical tools, and you should not consider them in isolation or as a substitute for the analysis of
Condensed Consolidated Income Statement (unaudited)
Table 1
Three months ended |
||
($ in millions) | 2021 | 2020 |
Income and other revenues: | ||
Income from financial royalty assets | 530 | 463 |
Revenue from intangible royalty assets | 36 | 35 |
Other royalty income | 7 | 3 |
Total income and other revenues | 573 | 501 |
Operating expenses: | ||
Provision for changes in expected cash flows from financial royalty assets | 292 | 88 |
Research and development funding expense | 3 | 8 |
Amortization of intangible royalty assets | 6 | 6 |
General and administrative expenses | 43 | 38 |
Total operating expenses | 344 | 139 |
Operating income | 229 | 361 |
Other expense: | ||
Equity in loss of non-consolidated affiliates | 2 | 9 |
Interest expense | 37 | 54 |
Other expense, net | 31 | 190 |
Total other expenses, net | 70 | 252 |
Consolidated net income before tax | 159 | 109 |
Income tax expense | — | — |
Consolidated net income | 159 | 109 |
Less: Net income attributable to non-controlling interest | (90) | (38) |
Net income attributable to controlling interest | 69 | 71 |
Amounts may not add due to rounding.
Selected Balance Sheet Data (unaudited)
Table 2
($ in millions) | As of |
As of |
Cash and cash equivalents | 709 | 1,009 |
Marketable securities | 1,069 | 983 |
Total financial royalty assets, net | 13,121 | 12,955 |
Total assets | 15,914 | 16,020 |
Long-term debt | 5,821 | 5,817 |
Total liabilities | 6,077 | 6,124 |
Total shareholders’ equity | 9,837 | 9,896 |
Condensed Consolidated Statements of Cash Flows (unaudited)
Table 3
Three months ended |
||
($ in millions) | 2021 | 2020 |
Cash flows from operating activities: | ||
Cash collections from financial royalty assets | 574 | 488 |
Cash collections from intangible royalty assets | 36 | 35 |
Other royalty cash collections | 7 | 1 |
Distributions from non-consolidated affiliates | 17 | 20 |
Interest received | 2 | 2 |
Swap collateral received | — | 45 |
Swap termination payments | — | (35) |
Ongoing development-stage funding payments | (3) | (8 |
Payments for operating and professional costs | (42) | (26) |
Interest paid | (65 | (51) |
Net cash provided by operating activities | 526 | 471 |
Cash flows from investing activities: | ||
Investments in non-consolidated affiliates | (9) | (13) |
Purchases of equity securities | — | (50) |
Purchases of available for sale debt securities | (18) | — |
Proceeds from available for sale debt securities | 16 | — |
Purchases of marketable securities | (505) | (704) |
Proceeds from sales and maturities of marketable securities | 420 | 105 |
Acquisitions of financial royalty assets | (503) | (99) |
Net cash used in investing activities | (599) | (762) |
Cash flows from financing activities: | ||
Distributions to shareholders/unitholders | — | (142) |
Distributions to non-controlling interest | (126) | (161) |
Distributions to non-controlling interest- other | (37) | — |
Dividends to shareholders | (66) | — |
Contributions from non-controlling interest- R&D | 2 | 1 |
Contributions from non-controlling interest- other | 0 | 30 |
Scheduled repayments of long-term debt | — | (47) |
Repayments of long-term debt | — | (5,170) |
Proceeds from issuance of long-term debt | — | 6,040 |
Debt issuance costs and other | — | (8) |
Net cash (used in)/provided by financing activities | (227) | 543 |
Net change in cash and cash equivalents | (300) | 252 |
Cash and cash equivalents, beginning of period | 1,009 | 246 |
Cash and cash equivalents, end of period | 709 | 498 |
Amounts may not add due to rounding.
Non-GAAP Financial Measures (unaudited)
Table 4
Three months ended |
|||
($ in millions) | 2021 | 2020 | Change |
Net cash provided by operating activities (GAAP) | 526 | 471 | 12% |
Products: | |||
Cystic fibrosis franchise | 167 | 99 | 68% |
Imbruvica | 89 | 78 | 15% |
Tysabri | 87 | 84 | 4% |
HIV franchise | 46 | 84 | (45)% |
Promacta | 44 | 36 | 23% |
Xtandi | 41 | 35 | 18% |
Januvia, Janumet, Other DPP-IVs | 36 | 35 | 3% |
Nurtec ODT / Biohaven payment* | 17 | — | n/a |
Prevymis | 9 | — | n/a |
Farxiga/Onglyza | 9 | — | n/a |
Crysvita | 4 | — | n/a |
Emgality | 3 | 2 | 65% |
Erleada | 3 | 1 | 116% |
IDHIFA | 3 | — | n/a |
Trodelvy | 3 | — | n/a |
Evrysdi | 2 | — | n/a |
Tazverik | 0 | — | n/a |
Other Products(3) | 88 | 90 | (2)% |
Total Royalty Receipts | 649 | 544 | 19% |
Distributions to non-controlling interest | (126) | (161) | (22)% |
Adjusted Cash Receipts (non-GAAP)(1) | 524 | 382 | 37% |
Payments for operating and professional costs | (42) | (26) | 63% |
Adjusted EBITDA (non-GAAP)(4) | 482 | 356 | 35% |
Ongoing development-stage funding payments | (3) | (8) | (65)% |
Interest paid, net | (63) | (49) | 29% |
Swap collateral received | — | 45 | (100)% |
Swap termination payments | — | (35) | (100)% |
Investment in non-consolidated affiliates | (9) | (13) | (34)% |
Contributions from non-controlling interest- R&D | 2 | 1 | 58% |
Adjusted Cash Flow (non-GAAP)(2) | 409 | 298 | 37% |
Amounts may not add due to rounding.
* Includes royalty receipts for Nurtec of
GAAP to Non-GAAP Reconciliation (unaudited)
Table 5
Three months ended |
||
($ in millions) | 2021 | 2020 |
Net cash provided by operating activities (GAAP) | 526 | 471 |
Adjustments: | ||
Proceeds from available for sale debt securities(5)(6) | 16 | — |
Interest paid, net(6) | 63 | 49 |
Ongoing development-stage funding payments(7) | 3 | 8 |
Payments for operating and professional costs | 42 | 26 |
Swap termination payments | — | 35 |
Distributions to non-controlling interest(6) | (126) | (161) |
Swap collateral received | — | (45) |
Adjusted Cash Receipts (non-GAAP)(1) | 524 | 382 |
Net cash provided by operating activities (GAAP) | 526 | 471 |
Adjustments: | ||
Proceeds from available for sale debt securities(5)(6) | 16 | — |
Interest paid, net(6) | 63 | 49 |
Ongoing development-stage funding payments(7) | 3 | 8 |
Swap termination payments | — | 35 |
Distributions to non-controlling interest(6) | (126) | (161) |
Swap collateral received | — | (45) |
Adjusted EBITDA (non-GAAP)(4) | 482 | 356 |
Net cash provided by operating activities (GAAP) | 526 | 471 |
Adjustments: | ||
Proceeds from available for sale debt securities(5)(6) | 16 | — |
Distributions to non-controlling interest(6) | (126) | (161) |
Investment in non-consolidated affiliates(6)(8) | (9) | (13) |
Contribution from non-controlling interest- R&D(6) | 2 | 1 |
Adjusted Cash Flow (non-GAAP)(2) | 409 | 298 |
Amounts may not add due to rounding.
Notes
(1) Adjusted Cash Receipts is a measure calculated with inputs directly from the Statement of Cash Flows and includes (1) royalty receipts: (i) cash collections from royalty assets (financial assets and intangible assets), (ii) other royalty cash collections, (iii) distributions from non-consolidated affiliates, plus (2) proceeds from available for sale debt securities, and less (3) distributions to non-controlling interest, which represents contractual distributions to historical non-controlling interest attributable to a de minimis interest in RPCT held by certain legacy investors and to a new non-controlling interest that was created as a result of the Exchange Offer Transactions in
(2) Adjusted Cash Flow is defined as Adjusted EBITDA less (1) ongoing development-stage funding payments, (2) interest paid, net, (3) swap collateral (posted) or received, net, (4) swap termination payments and (5) investment in non-consolidated affiliates, and plus (1) contributions from non-controlling interest- R&D, all directly reconcilable to the Statement of Cash Flows. See GAAP to Non-GAAP reconciliation at Table 5.
(3) Other Products include royalties on the following products: Bosulif (a product co-developed by Royalty Pharma’s joint venture investee, Avillion, for which receipts are presented as Distributions from non-consolidated affiliates on the Statement of Cash Flows), Letairis, Lyrica, Cimzia, Conbriza/Fablyn/Viviant, Entyvio, IDHIFA, Lexiscan, Mircera, Myozyme, Nesina, Priligy, Soliqua, Orladeyo, Thalomid and contributions from the Legacy SLP Interest.
(4) Adjusted EBITDA is important to lenders and is defined under the credit agreement as Adjusted Cash Receipts less payments for operating and professional costs. Operating and professional costs are comprised of Payments for operating and professional costs and Payments for rebates from the Statement of Cash Flows. See GAAP to Non-GAAP reconciliation at Table 5.
(5) Receipts from the redemption of Royalty Pharma’s Series A Biohaven Preferred Shares are presented as Proceeds from available for sale debt securities on the Statement of Cash Flows.
(6) The table below shows the line item for each adjustment and the direct location for such line item on the Statement of Cash Flows.
Reconciling adjustment | Statement of Cash Flows classification |
Proceeds from available for sale debt securities | Investing activities |
Investments in non-consolidated affiliates | Investing activities |
Distributions to non-controlling interest | Financing activities |
Interest paid, net | Operating activities (Interest paid less Interest received) |
Contributions from non-controlling interest- R&D | Financing activities |
(7) Royalty Pharma’s lenders consider all payments made to support R&D activities for products undergoing late-stage development similar to asset acquisitions as these funds are expected to generate operational returns in the future. All ongoing and upfront development-stage funding payments are reported in R&D funding expense in net income and are added back in aggregate to Net cash provided by operating activities to arrive at Adjusted EBITDA. As a result, Adjusted EBITDA captures the full add-back for R&D funding payments while Adjusted Cash Flow only reflects the add-back for the upfront portion of development-stage funding payments due to the fact that ongoing development-stage funding payments are considered an ongoing business expense.
(8) Royalty Pharma considers all payments to fund its operating joint ventures that are performing R&D activities for products undergoing late stage development similar to asset acquisitions as these funds are expected to generate operational returns in the future. As a result, amounts funded through capital calls by Royalty Pharma’s equity method investees, the Avillion entities, are deducted to arrive at Adjusted Cash Flow, but are not deducted in Adjusted EBITDA.
(9) In connection with its IPO,
Prior to, and as a condition precedent to the closing of the IPO, various reorganization transactions became effective, including the following:
- the Exchange Offer Transactions (as described above); and
- the execution of a new management agreement with the Manager (the “Management Agreement”).
See Royalty Pharma’s Annual Report on Form 10-K filed with the
Royalty Pharma Investor Relations and Communications
+1 (212) 883-6772
ir@royaltypharma.com
Source: RP Management, LLC