Royalty Pharma PLC (NASDAQ:RPRX) Q4 2023 Earnings Conference Call February 15, 2024 8:00 AM ET

Company Participants

Pablo Legorreta - Founder, Chairman & CEO

Chris Hite - Vice Chairman & EVP

Terrance Coyne - EVP & CFO

Marshall Urist - EVP & Head, Research & Investments

George Grofik - SVP & Head of IR & Communications

Conference Call Participants

Geoff Meacham - Bank of America

Chris Schott - J.P. Morgan

Terence Flynn - Morgan Stanley

Chris Shibutani - Goldman Sachs

Steve Scala - TD Cowen

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Royalty Pharma Q4 2023 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.

George Grofik

Thank you. Good morning, and good afternoon to everyone on the call. Thank you for joining us to review Royalty Pharma's Fourth Quarter and Full-Year 2023 results. You can find the press release with our earnings results and slides of the call on the Investors page of our website at Royaltypharma.com.

Moving to Slide 3, I would like to remind you that information presented in this call contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from these statements. I refer you to our 10-K on file with the SEC for a description of these risks. All forward-looking statements are based on information currently available to Royalty Pharma, and we assume no obligation to update any such forward-looking statements. Non-GAAP liquidity measures will be used to help you understand our financial performance. The reconciliation of these measures to our GAP financials are provided in the earnings press release available on our website.

And with that, please advance to Slide 4. Our speakers on the call today are Pablo Legorreta, Founder and Chief Executive Officer; Chris Hite, EVP, Vice Chairman; Marshall Urist, EVP, Head of Research and Investments; and Terry Coyne, EVP, Chief Financial Officer. Pablo will discuss key highlights. Chris will then provide more detail on our transaction pipeline, after which Marshall will give a portfolio update. Next, Terry will review the financials, and 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.

Pablo Legorreta

Thank you, George, and welcome to everyone on the call. I am delighted to report another successful year of execution against our vision to be the leading partner funding innovation in life sciences. I am very proud of our achievements in 2023, which are summarized on Slide 6. We maintained our track record of strong business momentum, with excellent financial performance and significant enhancements of our portfolio. In terms of the financials, we delivered 9% growth in portfolio receipts, our top line, with royalty receipts up 8%. As Terrance will discuss later, we have refined and simplified the presentation of our non-GAAP measures to improve analysis and tracking our financial performance. In addition, in what we view as a big step towards further simplifying the analysis of Royalty Pharma for current and future investors, we're also posting supplemental financial information to our website, which brings together in one place all of the relevant financial data for our business, including a detailed product build and consensus forecast. During the year, we added royalties on eight therapies, including incremental royalties on the exciting blockbuster therapy, Evrysdi. We also saw a number of positive clinical and regulatory events for portfolio assets. In terms of capital allocation, 2023 was very strong, with $4 billion in announced transactions and $2.2 billion in actual cash deployed. Notably, it was our highest ever year for synthetic royalty transactions. We also announced a $1 billion buyback program earlier in the year because of the disconnect we see in the share price from our strong fundamental outlook. Lastly, we're reflecting the strong momentum in our business in our 2024 full-year guidance. We expect portfolio receipts to be between $2.6 billion and $2.7 billion based on expected underlying growth from our portfolio of between 5% and 9%. Consistent with our standard practice, our guidance is based on our current portfolio and does not include the benefit of any future transactions.