- Net cash provided from operating activities (GAAP) of
$470 million ; Adjusted Cash Receipts(1) (non-GAAP) of$587 million and Adjusted Cash Flow(2) (non-GAAP) of$441 million - Announced transactions of up to
$2.8 billion in 2021, including$2.1 billion in upfront payments - Raises 2021 guidance: Adjusted Cash Receipts(1) expected to be
$2,110 to$2,130 million
“We are delighted to report another quarter of impressive growth,” said
Third quarter 2021 GAAP financial results demonstrate robust operating cash flow from royalty portfolio
- Net cash provided by operating activities decreased to
$470 million ; net cash used in investing activities decreased to$845 million ; net cash provided by financing activities increased to$1,034 million . - Total income and other revenues increased 9% to
$586 million .
Third quarter 2021 non-GAAP financial results show strong double-digit growth
- Adjusted Cash Receipts(1) increased 24% to
$587 million , driven by strong portfolio performance, new royalty acquisitions and a one-time payment related to Soliqua. - Adjusted Cash Flow(2) grew 12% to
$441 million , the sixth consecutive quarter of double-digit growth(9).
Positive developments across royalty portfolio
- AstraZeneca announced Phase 3 results for PT027, a potential first-in-class combination treatment for asthma.
- Roche announced gantenerumab was granted Breakthrough Therapy Designation by the FDA for Alzheimer’s.
Raises financial guidance for 2021
Royalty Pharma anticipates 2021 Adjusted Cash Receipts(1) to be between$2,110 million and$2,130 million (17% to 18% growth year/year), excluding new transactions announced subsequent to the date of this release.
Financial Summary | Three months ended | |||||
(unaudited) | ||||||
($ and shares in millions) | 2021 | 2020 | Change | |||
Net cash provided by operating activities (GAAP) | 470 | 509 | (8)% | |||
Net cash used in investing activities (GAAP) | (845) | (920) | (8)% | |||
Net cash provided by/(used in) financing activities (GAAP) | 1,034 | (357) | (389)% | |||
Total income and other revenues (GAAP) | 586 | 538 | 9% | |||
Adjusted Cash Receipts(1) (non-GAAP) | 587 | 472 | 24% | |||
Adjusted Cash Flow(2) (non-GAAP) | 441 | 394 | 12% | |||
Weighted average diluted/fully diluted Class A shares outstanding | 607 | 607 | n/a |
Third Quarter 2021 Financial Results
Three months ended | ||||||||
(unaudited) | ||||||||
($ in millions) | 2021 | 2020 | Change | |||||
Net cash provided by operating activities (GAAP) | 470 | 509 | (8 | )% | ||||
Royalty Receipts: | Marketer: | Therapeutic Area: | ||||||
Cystic fibrosis franchise | Vertex | Rare disease | 183 | 157 | 17 | % | ||
Tysabri | Biogen | Neurology | 96 | 77 | 25 | % | ||
Imbruvica | AbbVie/J&J | Cancer | 88 | 78 | 13 | % | ||
Promacta | Novartis | Hematology | 48 | 40 | 21 | % | ||
Xtandi | Pfizer, Astellas | Cancer | 40 | 38 | 5 | % | ||
Januvia, Janumet, Other DPP-IVs | Merck & Co., others | Diabetes | 38 | 34 | 10 | % | ||
Nurtec ODT/Biohaven payment* | Biohaven | Neurology | 18 | 0 | nm | |||
Tremfya | Johnson & Johnson | Immunology | 17 | — | n/a | |||
Cabometyx/Cometriq | Exelixis, Ipsen, Takeda | Cancer | 12 | — | n/a | |||
Prevymis | Merck & Co. | Infectious disease | 10 | 7 | 46 | % | ||
Farxiga/Onglyza | AstraZeneca | Diabetes | 9 | 8 | 12 | % | ||
Evrysdi | Roche | Rare disease | 6 | — | n/a | |||
Crysvita | Ultragenyx, Kyowa Kirin | Rare disease | 5 | 3 | 35 | % | ||
Emgality | Lilly | Neurology | 5 | 3 | 75 | % | ||
Erleada | Johnson & Johnson | Cancer | 4 | 2 | 78 | % | ||
IDHIFA | Bristol Myers Squibb | Cancer | 3 | 3 | (6 | )% | ||
Trodelvy | Gilead | Cancer | 3 | 1 | 203 | % | ||
Orladeyo | BioCryst | Rare disease | 3 | — | n/a | |||
HIV franchise | Gilead, others | Infectious disease | 2 | 67 | (97 | )% | ||
Tazverik | Epizyme | Cancer | 1 | 0 | nm | |||
Other products(3) | 124 | 70 | 77 | % | ||||
Total royalty receipts | 712 | 588 | 21 | % | ||||
Distributions to non-controlling interest | (125) | (116) | 8 | % | ||||
Adjusted Cash Receipts(1) (non-GAAP) | 587 | 472 | 24 | % | ||||
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
Drivers of royalty receipts in the third 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 franchise, which includes Kalydeco, Orkambi, Symdeko/Symkevi and Trikafta/Kaftrio, all approved for patients with certain mutations causing cystic fibrosis, were
$183 million in the third quarter of 2021, an increase of 17% compared to the same period of 2020. The increase was driven by growth in sales for the overall cystic fibrosis franchise resulting from the continued uptake of Trikafta inthe United States and Kaftrio inEurope . - Tysabri: Royalty receipts from Tysabri, which is marketed by Biogen for the treatment of multiple sclerosis, were
$96 million in the third quarter of 2021, an increase of 25%, compared to the same period of 2020. The increase was driven by global patient growth and beneficial shipping dynamics compared to the prior year period. - 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
$88 million in the third quarter of 2021, an increase of 13% compared to the same period of 2020. The increase was driven by global volume gains, partially offset by modest market share losses inthe United States and lower new patient starts due to COVID-19. - Promacta: Royalty receipts from Promacta, which is marketed by Novartis for the treatment of chronic immune thrombocytopenia purpura (ITP) and aplastic anemia, were
$48 million in the third quarter of 2021, an increase of 21% compared to the same period of 2020. Growth was driven by increased use in ITP and further uptake as a 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
$40 million in the third quarter of 2021, an increase of 5% 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
$38 million in the third quarter of 2021, an increase of 10% compared to the same period of 2020. - Nurtec ODT: Royalty receipts from Nurtec ODT, marketed by Biohaven for the acute and preventative treatment of migraine, were
$2 million in the third 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 in the third quarter of 2021, the third of 16 consecutive quarterly payments to be received relating to the Series A Preferred Shares. - Tremfya: Royalty receipts from Tremfya, which is marketed by Johnson & Johnson for the treatment of plaque psoriasis and active psoriatic arthritis, were
$17 million in the third quarter of 2021, driven by global expansion into new markets and market share gains.Royalty Pharma acquired a royalty interest in Tremfya inJuly 2021 . - Cabometyx/Cometriq: Royalty receipts from Cabometyx/Cometriq, which is marketed by Exelixis, Ipsen and Takeda, were
$12 million in the third quarter of 2021, driven by the uptake of Cabometyx in combination with Opdivo as a first-line treatment for patients with advanced renal cell carcinoma.Royalty Pharma acquired a royalty interest in Cabometyx/Cometriq inMarch 2021 . - 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
$2 million in the third quarter of 2021, a decrease of 97% compared to the same period of 2020. This decrease was driven by the HIV franchise reaching the end of its royalty term. - Additional highlights:
- 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
$6 million in the third quarter of 2021, with uptake driven by both new and previously-treated patients and observed across all SMA patient types.Royalty Pharma acquired a royalty interest in Evrysdi inJuly 2020 . - Orladeyo: Royalty receipts from Orladeyo, marketed by BioCryst for the treatment of hereditary angioedema (HAE), were
$3 million in the third quarter of 2021, with uptake driven by patient switches from other prophylactic therapies and from those receiving acute-only treatment.Royalty Pharma acquired a royalty interest in Orladeyo inDecember 2020 . - Trodelvy: Royalty receipts from Trodelvy, marketed by Gilead for the treatment of metastatic triple negative breast cancer and metastatic urothelial cancer, were
$3 million in the third quarter of 2021. Uptake was driven by demand for two new indications approved inApril 2021 , namely 2L+ metastatic triple-negative breast cancer and urothelial cancer.
- 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
Distributions to non-controlling interest, which reduce royalty receipts to arrive at Adjusted Cash Receipts(1), were
Adjusted Cash Receipts(1) (non-GAAP) were
Adjusted EBITDA(4) (non-GAAP) is comprised of Adjusted Cash Receipts less payments for operating and professional costs. In the third quarter of 2021, Adjusted EBITDA was
- Adjusted Cash Receipts(1) growth of 24% as compared to the same period in 2020 and;
- Payments for operating and professional costs of
$54 million (representing 9% of Adjusted Cash Receipts) compared to$59 million in the third quarter of 2020 (representing 13% of Adjusted Cash Receipts). Payments for operating and professional costs in the third quarter of 2020 reflected expenses for the initial public offering and inaugural bond offering.
Adjusted Cash Flow(2) (non-GAAP) is comprised of Adjusted EBITDA(4) less ongoing development-stage funding payments, net interest paid and miscellaneous other items. In the third 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 based on disclosures from the marketers of the products.
- Biohaven: In
November 2021 , Biohaven announced a strategic collaboration with Pfizer for the commercialization of rimegepant outsidethe United States . Pfizer also gains rights outside theU.S. to zavegepant, which is being studied in an intranasal delivery and an oral formulation in Phase 3 clinical trials for migraine indications.Royalty Pharma is entitled to royalties on annual worldwide net sales of rimegepant (commercialized as Nurtec ODT in theU.S. ) and zavegepant. - Trodelvy: In
October 2021 , Gilead announced that theEuropean Medicines Agency (EMA) adopted a positive opinion for Trodelvy as a monotherapy indicated for adult patients with unresectable or metastatic triple-negative breast cancer (TNBC) who have received two or more prior systemic therapies, at least one of them for advanced disease. The finalEuropean Commission decision on the Marketing Authorization Application for Trodelvy is anticipated later in 2021. - Gantenerumab: In
October 2021 , Roche announced that gantenerumab, an anti-amyloid beta antibody developed for subcutaneous administration, has been granted Breakthrough Therapy Designation by the FDA for the treatment of people living with Alzheimer’s disease. This designation is based on data showing that gantenerumab significantly reduced brain amyloid plaque, a pathological hallmark of Alzheimer’s disease, in the ongoing SCarlet RoAD and Marguerite RoAD open-label extension trials, as well as other studies. As a reminder, the gantenerumab royalty rate is tiered between 5.5% and 7.0% of whichRoyalty Pharma owns a 60% interest. - PT027: In
September 2021 , AstraZeneca and Avillion announced positive results from MANDALA and DENALI, two Phase 3 trials evaluating PT027 (albuterol/budesonide) in patients with asthma. PT027 is a potential first-in-class inhaled, fixed-dose combination of albuterol, a short-acting beta2-agonist, and budesonide, an inhaled corticosteroid. In MANDALA, PT027 demonstrated a statistically significant and clinically meaningful reduction in the risk of severe exacerbations compared to albuterol, when used as a rescue medicine in response to symptoms. In DENALI, PT027 showed a statistically significant improvement in lung function measured by forced expiratory volume in one second, compared to the individual components albuterol and budesonide, and compared to placebo. The safety and tolerability of PT027 in both trials was consistent with the known profiles of the components. As a reminder,Royalty Pharma is entitled to tiered royalties in the low-single digits on annual worldwide net sales, a series of success-based milestones and other potential payments. - Cabometyx: In
September 2021 , Exelixis announced that the FDA had approved Cabometyx for patients with previously treated radioactive iodine-refractory differentiated thyroid cancer. The approval was based on the Phase 3 COSMIC-311 pivotal trial.
InSeptember 2021 , Exelixis announced detailed results from the expanded Cohort 6 of the Phase 1b COSMIC-021 trial of Cabometyx in combination with atezolizumab in patients with metastatic castration-resistant prostate cancer (CRPC), which included patients with metastatic CRPC who had been previously treated with novel hormone therapies enzalutamide and/or abiraterone acetate used along with prednisone. Following discussions with FDA, Exelixis will not pursue a regulatory submission for the combination regimen based on cohort 6 of COSMIC-021. CONTACT-02, a global Phase 3 pivotal trial that initiated enrollment inJune 2020 may serve as a basis for future regulatory applications.
InAugust 2021 , Exelixis announced that its partners Takeda and Ono received approval inJapan for Cabometyx in combination with Opdivo for the treatment of unresectable or metastatic renal cell carcinoma. Approval is based on the CheckMate -9ER trial of Cabometyx in combination with Opdivo, which demonstrated superior overall survival and doubled mean progression-free survival and objective response rate versus sunitinib, with a favorable safety profile.
- Imbruvica: In
August 2021 , AbbVie announced that theU.S. District Court for the District of Delaware had issued a decision holding patent rights relating to Imbruvica were valid and infringed by a generic product from Alvogen and Natco. The decision, which is subject to appeal, prohibits regulatory approval of that generic product until the last AbbVie patent expires. Previously, AbbVie entered into several settlement and license agreements with other generic companies. Consequently, Abbvie does not expect any generic product entry prior toMarch 30, 2032 , assuming pediatric exclusivity is granted. - Oxlumo: In
July 2021 , Alnylam announced results from ILLUMINATE-C, a Phase 3 open-label study of lumasiran in patients of all ages with advanced primary hyperoxaluria type 1 (PH1) associated with progressive decline in renal function. Results from the primary analysis at six months demonstrated a substantial reduction in plasma oxalate from baseline in patients with advanced disease, including those on hemodialysis. The safety and tolerability profile of lumasiran following six months of treatment was encouraging across all ages, with no drug related serious adverse events and injection site reactions as the most common adverse event.
Summary of Recent Royalty Acquisition Activity
- MorphoSys: On
July 15, 2021 ,Royalty Pharma closed a long-term strategic funding partnership with MorphoSys AG (“MorphoSys”) to enable MorphoSys’ acquisition ofConstellation Pharmaceuticals .Royalty Pharma agreed to provide funding to MorphoSys of up to$2.025 billion comprised of an upfront payment of$1.425 billion , additional milestone payments of up to$150 million , access to capital of up to$350 million (“Development Funding Bonds’’), with the flexibility to draw over a one year period from the close of the acquisition with a minimum draw of$150 million , and purchased$100 million of ordinary shares. The funding partnership is anchored by Royalty Pharma’s acquisition of MorphoSys’ rights to receive future royalties on Janssen’s Tremfya (guselkumab). In addition,Royalty Pharma acquired the rights to receive royalties and certain milestone payments on four development-stage therapies (gantenerumab, otilimab, pelabresib and CPI-0209).
Liquidity and Capital Resources
- As of
September 30, 2021 ,Royalty Pharma had cash, cash equivalents and marketable securities in the amount of$2.0 billion and long-term debt with principal value of$7.3 billion . - In
July 2021 ,Royalty Pharma completed a$1.3 billion issuance of senior unsecured notes (the “2021 Notes”), including its first ever social bond. The 2021 Notes are comprised of$600 million principal amount of notes dueSeptember 2031 (which are the social bond) and$700 million principal amount of notes dueSeptember 2051 at a weighted-average coupon of 2.8% and pay interest semi-annually, with the first initial interest payment occurring inMarch 2022 . This transaction extended Royalty Pharma’s weighted-average maturity to 13.3 years as ofJuly 26, 2021 and resulted in an attractive total weighted-average cost of debt of 2.24%. - In
July 2021 , as discussed above,Royalty Pharma closed a funding partnership with MorphoSys to enable MorphoSys’ acquisition ofConstellation Pharmaceuticals . This transaction resulted in a cash outflow of$1.525 billion comprised of a$1.425 billion upfront payment and the purchase of$100 million of MorphoSys ordinary shares.
2021 Financial Outlook
Provided | |
Adjusted Cash Receipts(1) (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
Royalty Pharma Investor Relations and Communications
+1 (212) 883-6772
ir@royaltypharma.com
Condensed Consolidated Income Statement (unaudited)
Table 1
Three months ended | ||||
($ in millions) | 2021 | 2020 | ||
Income and other revenues: | ||||
Income from financial royalty assets | 506 | 499 | ||
Revenue from intangible royalty assets | 63 | 35 | ||
Other royalty income | 17 | 5 | ||
Total income and other revenues | 586 | 538 | ||
Operating expenses: | ||||
Provision for changes in expected cash flows from financial royalty assets | 138 | (34) | ||
Research and development funding expense | 91 | 5 | ||
Amortization of intangible royalty assets | 6 | 6 | ||
General and administrative expenses | 49 | 51 | ||
Total operating expenses, net | 283 | 28 | ||
Operating income | 303 | 511 | ||
Other (income)/expense: | ||||
Equity in earnings of non-consolidated affiliates | (3) | (14) | ||
Interest expense | 44 | 31 | ||
Other expense/(income), net | 40 | (131) | ||
Total other expense/(income), net | 81 | (114) | ||
Consolidated net income before tax | 222 | 624 | ||
Income tax expense | — | — | ||
Consolidated net income | 222 | 624 | ||
Net income attributable to non-controlling interest | 120 | 334 | ||
Net income attributable to controlling interest | 102 | 291 |
Amounts may not add due to rounding.
Selected Balance Sheet Data (unaudited)
Table 2
($ in millions) | As of | As of |
Cash and cash equivalents | 1,801 | 1,009 |
Marketable securities | 246 | 983 |
Total financial royalty assets, net | 14,594 | 12,955 |
Total assets | 17,732 | 16,020 |
Long-term debt | 7,091 | 5,817 |
Total liabilities | 7,346 | 6,124 |
Total shareholders’ equity | 10,387 | 9,896 |
Condensed Consolidated Statements of Cash Flows (unaudited)
Table 3
Three months ended | Nine months ended | |||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||
Cash flows from operating activities: | ||||||||
Cash collections from financial royalty assets | 639 | 546 | 1,733 | 1,549 | ||||
Cash collections from intangible royalty assets | 38 | 34 | 113 | 104 | ||||
Other royalty cash collections | 13 | 4 | 27 | 13 | ||||
Distributions from non-consolidated affiliates | 6 | 4 | 28 | 36 | ||||
Interest received | 1 | 4 | 3 | 7 | ||||
Derivative collateral received | 23 | — | 35 | 45 | ||||
Derivative collateral posted | (25) | — | (35) | — | ||||
Termination payments on derivative instruments | (16) | — | (16) | (35) | ||||
Ongoing development-stage funding payments | (1) | (5) | (6) | (19) | ||||
Upfront development-stage funding payments | (90) | — | (90) | — | ||||
Payments for operating and professional costs | (54) | (59) | (135) | (129) | ||||
Interest paid | (65) | (19) | (130) | (102) | ||||
Net cash provided by operating activities | 470 | 509 | 1,528 | 1,469 | ||||
Cash flows from investing activities: | ||||||||
Distributions from non-consolidated affiliates | — | — | 1 | 15 | ||||
Investments in non-consolidated affiliates | (11) | — | (28) | (29) | ||||
Purchases of equity securities | (100) | — | (100) | (50) | ||||
Proceeds from equity securities | 7 | — | 116 | — | ||||
Purchases of available for sale debt securities | (18) | — | (53) | — | ||||
Proceeds from available for sale debt securities | 16 | — | 47 | — | ||||
Purchases of marketable securities | (28) | (391) | (756) | (1,095) | ||||
Proceeds from sales and maturities of marketable securities | 624 | 274 | 1,493 | 610 | ||||
Acquisitions of financial royalty assets | (1,336) | (802) | (2,020) | (1,377) | ||||
Milestone payments | — | — | (19) | — | ||||
Net cash used in investing activities | (845) | (920) | (1,319) | (1,927) | ||||
Cash flows from financing activities: | ||||||||
Distributions to shareholders/unitholders | — | — | — | (285) | ||||
Distributions to non-controlling interest | (125) | (116) | (364) | (401) | ||||
Distributions to non-controlling interest- other | (33) | (46) | (120) | (74) | ||||
Dividends to shareholders | (73) | (55) | (212) | (55) | ||||
Contributions from non-controlling interest- R&D | 2 | 1 | 6 | 6 | ||||
Contributions from non-controlling interest- other | 3 | — | 12 | 30 | ||||
Scheduled repayments of long-term debt | — | — | — | (94) | ||||
Repayments of long-term debt | — | (5,946) | — | (11,116) | ||||
Proceeds from issuance of long-term debt | 1,273 | 5,851 | 1,273 | 11,891 | ||||
Debt issuance costs and other | (12) | (38) | (12) | (47) | ||||
Proceeds from issuance of Class A ordinary shares upon IPO, net of offering costs | — | (9) | — | 1,910 | ||||
Net cash provided by/(used in) financing activities | 1,034 | (357) | 583 | 1,765 | ||||
Net change in cash and cash equivalents | 659 | (769) | 792 | 1,307 | ||||
Cash and cash equivalents, beginning of period | 1,142 | 2,322 | 1,009 | 246 | ||||
Cash and cash equivalents, end of period | 1,801 | 1,553 | 1,801 | 1,553 |
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) | 470 | 509 | (8 | )% | ||
Products: | ||||||
Cystic fibrosis franchise | 183 | 157 | 17 | % | ||
Tysabri | 96 | 77 | 25 | % | ||
Imbruvica | 88 | 78 | 13 | % | ||
Promacta | 48 | 40 | 21 | % | ||
Xtandi | 40 | 38 | 5 | % | ||
Januvia, Janumet, Other DPP-IVs | 38 | 34 | 10 | % | ||
Nurtec ODT / Biohaven payment* | 18 | 0 | nm | |||
Tremfya | 17 | — | n/a | |||
Cabomeytx/Cometriq | 12 | — | n/a | |||
Prevymis | 10 | 7 | 46 | % | ||
Farxiga/Onglyza | 9 | 8 | 12 | % | ||
Evrysdi | 6 | — | n/a | |||
Crysvita | 5 | 3 | 35 | % | ||
Emgality | 5 | 3 | 75 | % | ||
Erleada | 4 | 2 | 78 | % | ||
IDHIFA | 3 | 3 | (6 | )% | ||
Trodelvy | 3 | 1 | 203 | % | ||
Orladeyo | 3 | — | n/a | |||
HIV franchise | 2 | 67 | (97 | )% | ||
Tazverik | 1 | 0 | nm | |||
Other products(3) | 124 | 70 | 77 | % | ||
Total royalty receipts | 712 | 588 | 21 | % | ||
Distributions to non-controlling interest | (125) | (116) | 8 | % | ||
Adjusted Cash Receipts (non-GAAP)(1) | 587 | 472 | 24 | % | ||
Payments for operating and professional costs | (54) | (59) | (10 | )% | ||
Adjusted EBITDA (non-GAAP)(4) | 533 | 413 | 29 | % | ||
Interest paid, net | (65) | (15) | 327 | % | ||
Investments in non-consolidated affiliates | (11) | — | n/a | |||
Ongoing development-stage funding payments | (1) | (5) | (90 | )% | ||
Other | (18) | — | n/a | |||
Contributions from non-controlling interest- R&D | 2 | 1 | 81 | % | ||
Adjusted Cash Flow (non-GAAP)(2) | 441 | 394 | 12 | % |
Amounts may not add due to rounding.
*Includes royalty receipts for Nurtec ODT of
GAAP to Non-GAAP Reconciliation (unaudited)
Table 5
Three months ended | ||||
($ in millions) | 2021 | 2020 | ||
Net cash provided by operating activities (GAAP) | 470 | 509 | ||
Adjustments: | ||||
Proceeds from available for sale debt securities(5)(6) | 16 | — | ||
Interest paid, net(6) | 65 | 15 | ||
Ongoing development-stage funding payments(7) | 1 | 5 | ||
Upfront development-stage funding payments(7) | 90 | — | ||
Payments for operating and professional costs | 54 | 59 | ||
Termination payments on derivative instruments | 16 | — | ||
Distributions to non-controlling interest(6) | (125) | (116) | ||
Derivative collateral received, net(6) | 2 | — | ||
Adjusted Cash Receipts (non-GAAP)(1) | 587 | 472 | ||
Net cash provided by operating activities (GAAP) | 470 | 509 | ||
Adjustments: | ||||
Proceeds from available for sale debt securities(5)(6) | 16 | — | ||
Interest paid, net(6) | 65 | 15 | ||
Ongoing development-stage funding payments(7) | 1 | 5 | ||
Upfront development-stage funding payments(7) | 90 | — | ||
Termination payments on derivative instruments | 16 | — | ||
Distributions to non-controlling interests(6) | (125) | (116) | ||
Derivative collateral received, net(6) | 2 | — | ||
Adjusted EBITDA (non-GAAP)(4) | 533 | 413 | ||
Net cash provided by operating activities (GAAP) | 470 | 509 | ||
Adjustments: | ||||
Proceeds from available for sale debt securities(5)(6) | 16 | — | ||
Upfront development-stage funding payments(7) | 90 | — | ||
Distributions to non-controlling interests(6) | (125) | (116) | ||
Investment in non-consolidated affiliates(6)(8) | (11) | — | ||
Contribution from non-controlling interest- R&D(6) | 2 | 1 | ||
Adjusted Cash Flow (non-GAAP)(2) | 441 | 394 |
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 of interest received, (3) other (including Derivative collateral posted, net of Derivative collateral received and Termination payments on derivative instruments) and (4) Investments 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 primarily include royalties on the following products: Letairis, Lyrica, Cimzia, Entyvio, Lexiscan, Myozyme, Mircera, Nesina, Soliqua and contributions from the Legacy SLP Interest. In the three month period ended
(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 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) |
Derivative collateral received, net | Operating activities (Derivative collateral received less Derivative collateral posted) |
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) To aid in comparability in the calculation of year/year growth, reported Adjusted Cash Flow for each quarterly period in 2020 is compared against pro forma Adjusted Cash Flow for the corresponding quarter in 2019, which adjusts certain cash flow line items as if Royalty Pharma’s Reorganization Transactions (as described in the Company’s final prospectus filed with the
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