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Item 1. Business

2025-02-12 compared with 2024-02-15 · 121 added, 122 removed, 291 unchanged (46% of the section changed)

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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 and Gilead’s Trodelvy, among others, and 14 development-stage product candidates.

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 14 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.

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Portfolio Receipts is a key performance metric that represents our ability to generate cash from our portfolio investments, the primary source of capital that we can deploy to make new portfolio investments.

Portfolio Receipts is defined as the sum of royalty receipts and milestones and other contractual receipts.

Portfolio Receipts is defined as the sum of Royalty Receipts (as defined below) and milestones and other contractual receipts.

Please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Portfolio Overview” for additional discussion regarding Portfolio Receipts.

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Capital Deployment represents the total outflows that will drive future Portfolio Receipts.

*Percentage change is not meaningful.

(1) The 2019 Portfolio Receipts and 2020 growth rates are calculated on a pro forma basis, which adjusts certain cash flow line items as if our Reorganization Transactions (as described in our final prospectus filed with the SEC on June 17, 2020) and our initial public offering had taken place on January 1, 2019.

(1) Royalty receipts include variable payments based on sales of products, net of contractual payments to the legacy non-controlling interests, that are attributed to Royalty Pharma (“Royalty Receipts”).

Milestones and other contractual receipts include sales-based or regulatory milestone payments and other fixed contractual receipts, net of contractual payments to the legacy non-controlling interests, that are attributed to Royalty Pharma.

(2) The 2020 growth rate is calculated on a pro forma basis, which adjusts certain cash flow line items as if our Reorganization Transactions (as described in our final prospectus filed with the SEC on June 17, 2020) and our initial public offering had taken place on January 1, 2019.

The most significant difference between the pro forma and reported figures is the non-controlling interest attributable to legacy investors that resulted from the Reorganization Transactions.

(2) Royalty receipts include variable payments based on sales of products, net of contractual payments to the legacy non-controlling interests, that is attributed to Royalty Pharma.

Milestones and other contractual receipts include sales-based or regulatory milestones payments and other fixed contractual receipts, net of contractual payments to the legacy non-controlling interests, that is attributed to Royalty Pharma.

Biopharmaceutical Industry and the Role of Royalties

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Biotechnology companies are also increasingly creating royalties on existing products within their portfolios, known as synthetic royalties, in order to provide a source of non-dilutive capital to fund their businesses.

Given our leadership position within biopharmaceutical royalties, we are able to capitalize on the growing volumes of royalties created as new therapies are developed to address unmet medical needs.

We estimate the market for biopharmaceutical royalties reached $7.4 billion in transaction value in 2023, a greater than three-fold increase compared to 2012.

Given our leadership position within the biopharmaceutical royalty market, we are able to capitalize on the growing volumes of royalties created as new therapies are developed to address unmet medical needs.

We estimate the market for biopharmaceutical royalties reached $6.2 billion in transaction value in 2024.

We have executed transactions with an aggregate announced value of $15.5 billion from 2020 through 2024, which represents an estimated market share of approximately 51% of all royalty transactions during this period.

This compares to our nearest competitor, which we believe has executed $3.7 billion of transactions, and represents an estimated market share of 8%.

In comparison, we believe our nearest competitor has executed $3.9 billion of transactions, representing an estimated market share of 13%.

Given the scale of our business relative to our competitors, we have a particularly strong market share of large transactions within the growing biopharmaceutical royalty market.

Since 2012, there have been 15 royalty transactions with an aggregate value of more than $500 million each.

We have executed 12 of these 15 transactions, for a total transaction value of approximately $17.0 billion of cash and an estimated market share of 85%.

Since 2020, there have been 16 large royalty transactions each with an aggregate value of $500 million or more.

We have executed 11 of these 16 large transactions, for a total transaction value of approximately $10.5 billion of cash and an estimated market share of 75% based on the transaction value.

Our Business Model

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As a result of our significant scale and highly flexible business model, we believe that we are uniquely positioned to capitalize on multiple compounding growth drivers:

an accelerating understanding of the molecular origins of disease, technological innovation leading to the creation of new treatment modalities, an increasing number of biopharmaceutical industry participants with significant capital needs, competitive industry dynamics which reward companies that can rapidly execute broad clinical development programs, increasing FDA drug approvals, and the potential for multiple royalties to be created from each new drug that reaches the market.

an accelerating understanding of the molecular origins of disease, technological innovation leading to the creation of new treatment modalities, an increasing number of biopharmaceutical industry participants with significant capital needs, competitive industry dynamics which reward companies that can rapidly execute broad clinical development programs, increasing U.S Food and Drug Administration (“FDA”) drug approvals, and the potential for multiple royalties to be created from each new drug that reaches the market.

Our portfolio provides direct exposure to a broad array of blockbuster therapies.

As of December 31, 2023, our portfolio included royalties on 15 therapies that each generated end-market sales of more than $1 billion in 2023, including six therapies that each generated end-market sales of more than $3 billion.

As of December 31, 2024, our portfolio included royalties on 15 therapies that each generated end-market sales of more than $1 billion in 2024, including seven therapies that each generated end-market sales of $3 billion or more.

The therapies within our portfolio are marketed by leading global biopharmaceutical companies for whom these products are important sources of revenue.

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Our team has significant experience identifying, evaluating and acquiring royalties on biopharmaceutical therapies.

Together they have been responsible for $26.4 billion in announced transactions of biopharmaceutical royalties, milestones and other contractual receipts since 2012 through 2023.

Together they have been responsible for $29.2 billion in announced transactions of biopharmaceutical royalties, milestones and other contractual receipts from 2012 through 2024.

Our acquisitions have included many of the industry’s leading therapies such as Trikafta, Tremfya, Imbruvica and Xtandi.

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We also fund ongoing R&D for biopharmaceutical companies in exchange for future royalties and milestones if the product or indication we are funding is approved.

• Launch and Development Capital – Tailored supplemental funding solutions, generally included as a component within a transaction, increasing the scale of our capital.

• Launch and Development Capital – Tailored supplemental funding solutions, generally included as a component within a transaction, increase the scale of our capital.

Launch and development capital is generally provided in exchange for a long-term stream of fixed payments with a predetermined schedule around the launch of a drug.

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As of December 31, 2024, products underlying $6.5 billion of these acquisitions have already been approved, representing a success rate to date of 70%, while products underlying $1.0 billion were not approved and products underlying $1.8 billion are still in development.

(1) Reflects cash deployed for royalty acquisitions from 2012 through 2023.

(2) Not approved includes investments in vosaroxin, palbociclib, Merck KGaA’s anti-IL17 nanobody M1095, BCX9930, gantenerumab, otilimab and omecamtiv mecarbil.

Our approach is to first assess innovative science in areas of significant unmet medical need and then evaluate how to acquire royalties on therapies that we believe are attractive.

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we focus on generating attractive returns on our investments on a risk-adjusted basis.

We evaluate opportunities across the risk spectrum and do not target the same return for all assets.

We evaluate opportunities across approved products as well as development-stage product candidates, primarily post proof of concept, and target returns based on the risk spectrum.

• Long duration cash flows:

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• Growth and scale:

we seek assets that are accretive to our long-term growth profile and additive to our overall scale.

we seek assets that drive value creation and are accretive to our long-term growth profile.

We conduct extensive due diligence when evaluating potential new opportunities.

We have end-to-end capabilities that span clinical and commercial analysis, valuation and transaction structuring.

We have a highly focused and experienced team that conducts proprietary primary market research, forms its own views on the clinical and commercial outlook for the product, and builds its own financial models, allowing us to generate direct insights and allowing us to take significant accountability and ownership for our investments.

We have a highly focused and experienced team that conducts proprietary primary market research, forms its own views on the clinical and commercial outlook for the product, and builds its own financial models, allowing us to generate direct insights and to take significant accountability and ownership for our investments.

We invest significant time and resources across all levels of the organization, including senior leadership, in the evaluation of potential opportunities.

Our Portfolio

Our portfolio consists of royalties on more than 35 commercial products and 14 development-stage product candidates.

Approved Products

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The following table provides an overview of our current portfolio of royalties on approved products, including end market sales of the therapies in our portfolio:

Marketer(s) Therapeutic Area Product Detail 2023 Portfolio Receipts

Products Marketer(s) Therapeutic Area Product Detail 2024 Portfolio Receipts

(in millions)

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Vertex Rare disease Cystic fibrosis $857 $11,020

Tysabri Biogen Neuroscience

Relapsing forms of multiple sclerosis 279 1,877

Imbruvica AbbVie, Johnson & Johnson Cancer Hematological malignancies and chronic graft versus host disease 210 4,879

Trelegy GSK Respiratory Chronic obstructive pulmonary disease and asthma 284 3,456

Promacta Novartis Hematology Chronic immune thrombocytopenic purpura and aplastic anemia 161 2,269

Xtandi Pfizer, Astellas Cancer Prostate cancer 146 5,037

Tremfya Johnson & Johnson Immunology Plaque psoriasis and psoriatic arthritis 116 3,147

Tysabri Biogen Neuroscience Relapsing forms of multiple sclerosis 262 1,711

Imbruvica AbbVie, Johnson & Johnson Cancer Hematological malignancies and chronic graft versus host disease 191 4,466

Evrysdi Roche Rare disease Spinal muscular atrophy 174 1,853

Xtandi Pfizer, Astellas Cancer Prostate cancer 169 5,906

Promacta Novartis Hematology Chronic immune thrombocytopenic purpura and aplastic anemia 158 2,216

Tremfya Johnson & Johnson Immunology Plaque psoriasis, psoriatic arthritis and ulcerative colitis

Cabometyx/Cometriq Exelixis, Ipsen, Takeda Cancer Kidney, liver and thyroid cancers 73 2,483

Spinraza Biogen Rare disease

Spinal muscular atrophy 45 1,741

Spinraza Biogen Rare disease Spinal muscular atrophy 45 1,506

Trodelvy Gilead Cancer Breast cancer 43 1,300

Orladeyo BioCryst Rare disease Hereditary angioedema prophylaxis 29 325

Erleada Johnson & Johnson Cancer Prostate cancer 39 2,999

Nurtec ODT/Zavzpret Pfizer Neuroscience

Migraine 18 928 (3)

Orladeyo BioCryst Rare disease Hereditary angioedema prophylaxis 39 437

Nurtec ODT/Zavzpret Pfizer Neuroscience Migraine 26 1,263 (3)

Other products (4)

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Amounts shown in the table may not add due to rounding.

(1) Represents end market sales for 2023 as reported by respective product marketers.

(1) Represents end market sales for 2024 as reported by respective product marketers or, where marketers have not reported end market sales by February 10, 2025 based on Visible Alpha projections as of February 10, 2025.

For the majority of our royalties, Royalty Receipts lag product performance by one quarter and can generally be estimated by applying our publicly disclosed royalty rate to the preceding quarter’s marketer-announced net revenues on a product-by-product basis.

(2) The cystic fibrosis franchise includes the following approved products:

Kalydeco, Orkambi, Symdeko/Symkevi and Trikafta/Kaftrio.

Kalydeco, Orkambi, Symdeko/Symkevi, Trikafta/Kaftrio and Alyftrek, which was approved by the FDA in December 2024.

(3) Reflects 2024 end market sales for Nurtec ODT.

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(4) Other products primarily include royalties on the following products:

Cimzia, Crysvita, Emgality, Entyvio, Farxiga/Onglyza, IDHIFA, Letairis, Lexiscan, Mircera, Nesina, Prevymis, Soliqua and distributions from the Legacy SLP Interest, which are presented as Distributions from equity method investees on the Statement of Cash Flows.

(5) Milestones and other contractual receipts include receipts related to Bosulif (a product co-developed by our joint venture investee, Avillion), which are presented as Distributions from equity method investees on the Statements of Cash Flows.

Amount also includes a $475.0 million milestone payment that we received following the U.S.

Food and Drug Administration (“FDA”) approval of Zavzpret in March 2023, a $50.0 million payment from Pfizer related to the oral formulation of zavegepant, a $33.0 million commercial milestone payment related to Soliqua 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 its option to commercialize Airsupra in the United States.

Cimzia, Crysvita, Emgality, Entyvio, Farxiga/Onglyza, IDHIFA, Prevymis, Soliqua and distributions from the Legacy SLP Interest, which are presented as Distributions from equity method investees on the Statements of Cash Flows.

Portfolio Summary

The table below provides a summary of the acquisition year, estimated royalty duration, royalty rates and the ownership percentages attributable to Royalty Pharma, net of legacy non-controlling interests for selected approved products in our portfolio:

Acquisition Year(s)

Products Acquisition Year(s) Estimated

Royalty Rates (2)

2023 % Attributable

to Royalty Pharma (3)

Cystic fibrosis franchise (4)

2037 Blended royalty of slightly over 9%

2014, 2020 2039-2041

Blended royalty of slightly over 9% for Trikafta;

See footnote (4)

2022 2029-2030 Tiered royalty of 6.5% on first $750 million, up to 10% on sales >$2.25 billion 100.0%

Tysabri 2017 Perpetual Tiered payments of 18% on first $2 billion and 25% on sales >$2 billion 82.4%

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2035-2036 Tiered royalty of 7.2% on first $500 million, up to 14.5% on sales >$2 billion

Promacta 2019 2025-2028 Upward tiered 4.7% to 9.4% royalty

Xtandi 2016 2027-2028 Slightly less than 4% royalty 82.4%

Promacta 2019 2025-2028 Upward tiered 4.7% to 9.4% royalty 82.4%

Tremfya 2021 2031-2032 Upward tiered mid-single digit royalty 100.0%

Tiered royalty of 6.5% on first $500 million, up to 13% on sales >$2 billion

Cabometyx/Cometriq (7)

2021 2026-2029

2023 2030-2035

2021 2026-2029 3% royalty 100.0%

2023 2030-2035 Upward tiered 2.8% to 3.8% royalty, increasing to 5% to 6.8% in 2028 100.0%

Trodelvy 2018 Perpetual Tiered royalty of 4.15% on first $2 billion, down to 1.75% on sales >$6 billion 82.4%

Erleada 2019, 2023 2032 Low-single digit royalty 86.7%

2020, 2021 2036-2039 Tiered royalty of 9.5% on first $350 million and 4.5% on sales up to $550 million 100.0%

Erleada 2019, 2023

2032 Low-single digit royalty

Nurtec ODT/Zavzpret

2034-2036 Tiered royalty of ~2.5% on first $1.5 billion and ~1.9% on sales >$1.5 billion

Nurtec ODT/Zavzpret 2018, 2020 2034-2036 Tiered royalty of ~2.5% on first $1.5 billion and ~1.9% on sales >$1.5 billion 86.7%

(1) Durations shown represent our estimates as of the current reporting date of when a royalty will substantially end, which may vary by geography and may depend on clinical trial results, regulatory approvals (including the timing of such approvals), contractual terms, commercial developments, estimates of regulatory exclusivity and patent expiration dates (which may include estimated patent term extensions) or other factors.

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(4) Royalty is perpetual.

year shown represents Trikafta’s expected patent expiration and potential sales decline based on timing of potential generic entry.

We estimate royalty duration of 2039-2041 due to expected Alyftrek patent expiration and potential generic entry thereafter leading to sales decline.

We estimate expected Trikafta patent expiration in 2037 and potential generic entry thereafter leading to sales decline.

For combination therapies, sales are allocated equally to each of the active pharmaceutical ingredients, with tiered royalties ranging from single digit to subteen percentages on sales of ivacaftor, lumacaftor and tezacaftor, and mid-single digit percentages on sales of elexacaftor.

We believe that deuterated ivacaftor (deutivacaftor) is the same as ivacaftor and is therefore royalty-bearing, which would result in a blended royalty of approximately8% for Alyftrek.

Vertex has made public statements that it believes deuterated ivacaftor (deutivacaftor) is not royalty-bearing, which would result in a blended royalty of approximately 4% for Alyftrek.

(5) We will pay Theravance Biopharma, Inc.

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Our royalty rates are expected to be reduced by 8% in the early 2030s.

Royalty entitlement does not reflect either PTC or Royalty Pharma exercising option to sell/purchase additional Evrysdi royalties.

(7) We are entitled to royalties on sales of cabozantinib products in the U.S.

through September 2026 and non-U.S.

Royalty entitlement does not reflect PTC exercising the option to sell its remaining 9.5% of the Evrysdi royalty.

(7) We are entitled to royalties on U.S.

sales of cabozantinib products through September 2026 and non-U.S.

markets through the full term of the royalty.

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Years shown represent estimated U.S.

patent expiration for Orladeyo and potential sales decline based on timing of generic entry.

patent expiration for Orladeyo and potential generic entry thereafter leading to sales decline.

We are also entitled to a tiered percentage of sublicense revenue for Orladeyo in certain territories.

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See “Risk Factors” in Item 1A, Risk Factors for further information.

Other Recent Royalty Acquisition Activities

• In October 2023, we acquired additional royalties on Roche’s Evrysdi for an upfront payment of $1 billion.

Evrysdi is approved for the treatment of spinal muscular atrophy.

We expect to receive additional royalties beginning in the first quarter of 2024.

Other Recent Royalty Acquisitions and Key Developments on Recently Approved Products

• In December 2024, Vertex announced the FDA approval of the new triple-combination modulator Alyftrek (vanzacaftor triple) for treatment of cystic fibrosis in people ages 6 and older with at least one responsive mutation.

• In November 2024, we acquired a synthetic royalty on Rytelo from Geron Corporation for an upfront payment of $125 million.

Rytelo is approved for the treatment of certain adult patients low- to intermediate-1 risk myelodysplastic syndromes with transfusion-dependent anemia.

Following the acquisition, we are entitled to receive royalties on the U.S.

net sales on Rytelo.

• In November 2024, we acquired a synthetic royalty on Niktimvo from Syndax Pharmaceuticals, Inc.

for an upfront payment of $350 million.

Niktimvo is approved for the treatment of chronic graft-versus-host disease and will be co-commercialized by Incyte.

We expect to receive royalties on the U.S.

net sales of Niktimvo beginning in 2025.

• In September 2024, Bristol Myers Squibb announced the FDA approval of Cobenfy (formerly KarXT), a first-in-class muscarinic agonist for the treatment of schizophrenia in adults.

• In September 2024, we acquired a synthetic royalty on Yorvipath from Ascendis Pharma A/S for an upfront payment of $150 million.

Yorvipath is approved for the treatment of hypoparathyroidism in adults.

We expect to receive royalties on Yorvipath beginning in 2025.

• In May 2024, we announced a transaction to acquire a royalty interest in Voranigo from Agios Pharmaceuticals for an upfront payment of $905 million contingent on FDA approval.

In August 2024, we made the upfront payment following the FDA approval on Voranigo.

• In September 2023, we acquired a royalty interest in Skytrofa for an upfront payment of $150 million.

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We expect to receive royalties on Skytrofa beginning in 2025.

• In August 2023, we acquired a royalty interest in Adstiladrin for an upfront payment of $300 million and a $200 million additional milestone payment contingent on certain manufacturing goals.

Adstiladrin is approved for the treatment of adult patients with high-risk Bacillus Calmette-Guérin unresponsive non-muscle invasive bladder cancer with carcinoma in situ with or without papillary tumors.

We began receiving royalties in the fourth quarter of 2023.

Development-Stage Product Candidates

The table below provides a summary of our portfolio of development-stage product candidates, which have not been approved and therefore have not generated any royalties (and we have not collected any related Royalty Receipts) to date :

Product Candidates

Therapeutic Area Status (1)

Product Candidates Marketer(s) Therapeutic Area Status (1)

Product Description

Aficamten Cytokinetics Cardiology NDA filing expected 2024

Small molecule cardiac myosin inhibitor for obstructive hypertrophic cardiomyopathy

Ampreloxetine Theravance Neuroscience

Phase 3 data expected 2025

Investigational once-daily norepinephrine reuptake inhibitor for symptomatic neurogenic orthostatic hypotension in patients with multiple system atrophy

BCX10013 BioCryst Rare disease Phase 1

Oral Factor D inhibitor for complement-mediated diseases

Phase 3 data expected 2024

Aficamten Cytokinetics Cardiology PDUFA date Q3 2025

Cardiac myosin inhibitor for obstructive hypertrophic cardiomyopathy

Ampreloxetine Theravance Neuroscience Phase 3 data expected 2026

Once-daily norepinephrine reuptake inhibitor for symptomatic neurogenic orthostatic hypotension in patients with multiple system atrophy

CK-586 Cytokinetics Cardiology Phase 2

Cardiac myosin inhibitor to reduce the hypercontractility associated with heart failure with preserved ejection fraction

Deucrictibant

Rare disease Phase 3 data expected 2026

Novel, oral bradykinin B2 receptor antagonist for preventing and treating hereditary angioedema attacks

Ecopipam Emalex Neuroscience Phase 3 data expected 2025

Oral dopamine-1 receptor antagonist for Tourette’s Syndrome

KarXT Karuna (3)

PDUFA date Q3 2024

Oral M1/M4 muscarinic agonist for schizophrenia

MK-8189 Merck Neuroscience

Phase 2b data expected 2024

Oral PDE10A inhibitor for schizophrenia

Olpasiran Amgen Cardiology Phase 3 data expected 2027

Small interfering ribonucleic acid for elevated lipoprotein(a), a genetically determined independent risk factor for cardiovascular disease

Pelabresib MorphoSys (4)

NDA filing expected 2024

Frexalimab Sanofi Immunology

Phase 3 data expected 2027

Anti-CD40 ligand monoclonal antibody

Olpasiran Amgen Cardiology Phase 3 data expected 2027 Small interfering ribonucleic acid for elevated lipoprotein(a), a genetically determined independent risk factor for cardiovascular disease

Omecamtiv mecarbil Cytokinetics Cardiology Phase 3 data expected 2027

Cardiac myosin activator for the treatment of heart failure with severely reduced ejection fraction

Pelabresib Novartis Cancer Phase 3

Bromodomain and extra-terminal inhibitor for myelofibrosis

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Antisense oligonucleotide for elevated lipoprotein(a), a genetically determined independent risk factor for cardiovascular disease

Seltorexant Johnson & Johnson Neuroscience

Phase 3 data expected 2024

Seltorexant Johnson & Johnson Neuroscience Phase 3 data expected 2027

Selective orexin 2 receptor antagonist for major depressive disorder with insomnia symptoms

TEV-'749 Teva

Phase 3 data expected 2024

TEV-'749 Teva Neuroscience Phase 3 data expected 2025

Long-acting subcutaneous injection of olanzapine for schizophrenia

Roche Neuroscience

A novel Brainshuttle Aβ antibody for the treatment of Alzheimer’s disease

Tulmimetostat MorphoSys (4)

Cancer Phase 2

Second-generation enhancer of zeste homolog 2 inhibitor for hematological malignancies and solid tumors

Vanzacaftor/tezacaftor/deutivacaftor

NDA filing expected 2024

Once-daily triple combination therapy for the treatment of cystic fibrosis

New Drug Application.

Trontinemab Roche Neuroscience Phase 1a/2b Novel Brainshuttle Aβ antibody for the treatment of Alzheimer’s disease

Tulmimetostat Novartis Cancer Phase 2 Second-generation enhancer of zeste homolog 2 inhibitor for hematological malignancies and solid tumors

Prescription Drug User Fee Act.

(1) Based on information disclosed by marketer of the underlying product and information available on clinicaltrials.gov as of January 31, 2024.

(2) We acquired an interest in ecopipam in January 2024.

(3) In December 2023, Bristol Myers Squibb announced it has agreed to acquire Karuna.

(4) In February 2024, Novartis announced it has entered into an agreement to acquire MorphoSys.

(1) Based on information disclosed by marketer of the underlying product and information available on clinicaltrials.gov as of February 10, 2025.

Other Significant Funding Arrangements

The table below provides a summary of our significant contractual funding arrangements:

Funding Arrangement Therapeutic Area Key Terms (1)

MorphoSys Development Funding Bonds

Not applicable

• Payments to us of 2.2 times the $300.0 million funded amount.

• Expected payments in 36 consecutive quarterly payments from the fourth quarter of 2024.

The table below provides a summary of our significant contractual funding arrangements and related funding status as of December 31, 2024 (in thousands, unless otherwise stated):

Funded Required Future Draw

Potential Future Draw

Total Total Repayments Based on Amounts Funded

Payments Received to Date

Cytokinetics Commercial Launch Funding (1)

Cardiology • Tranche one $50.0 million funded.

• Tranches four and five have a required draw of $50.0 million and an optional draw of up to $125.0 million within a 12-month draw period if certain clinical and regulatory milestones are met.

• Payments to us of 1.9 times the amount drawn for tranches one, four and five.

• 34 consecutive quarterly payments to us on the last business day of the seventh quarter following the quarter of the funding date for each tranche.

Cytokinetics Development Funding (3)

100,000 — — 100,000 Refer to footnote (3)

Refer to footnote (3)

MorphoSys Development Funding Bonds

300,000 — — 300,000 Refer to footnote (4)

Refer to footnote (4)

Teva Development Co-Funding Arrangement (5)

• Provide up to $100.0 million over the course of the trial with the mutual option to increase to $125.0 million to co-fund the development of TEV-‘749.

• Payments to us equal to the total funded amount over 20 consecutive quarters commencing upon FDA approval in addition to tiered royalty payments based on worldwide sales.

• Payment to us of 1.25 times the funded amount if Teva chooses not to file a New Drug Application with the FDA following positive Phase 3 study results of TEV-‘749.

(1) Our fixed payment arrangements are subject to the underlying contractual agreements and legal instruments from which they arise and may be subject to reductions, accelerations, and other adjustments in accordance with the respective terms of such agreements and instruments.

100,000 — — 100,000 $100 million or $125 million

(1) Comprised of seven tranches of which tranches one and six, each of $50 million, were funded.

Quarterly payments on tranche one began in the fourth quarter of 2023 and continue through the first quarter of 2032.

Quarterly payments on tranche six will begin in the first quarter of 2026 and continue through the second quarter of 2034.

(2) Potential future draw of $250 million assumes that no more than $25 million will be drawn under tranche 4.

Up to $75 million is available to be drawn under tranche 4 until April 2025 and up to $100 million is available to be drawn under tranche 5 until December 2025.

A minimum of $50 million is required to be drawn under either tranche 4 or tranche 5.

The condition for $175 million to become available to be drawn under tranche 7 has not yet been satisfied.

(3) If a Phase 3 trial of omecamtiv mecarbil is positive and FDA approval is received within a specific timeframe, we will receive payments of $100 million and the greater of an incremental 2% royalty on omecamtiv mecarbil, or quarterly fixed payments ranging from $5 million to $8 million per quarter for 18 quarters and an incremental 2% royalty thereafter.

Alternatively, if FDA approval is not received within a specific timeframe, we will receive 18 quarterly fixed payments totaling $240 million.

Alternatively, if a Phase 3 clinical trial is not positive within a specific timeframe, we will receive 22 quarterly fixed payments totaling $230 million.

(4) In January 2025, the MorphoSys Development Funding Bonds were sold for approximately $511 million.

The $511 million will be treated as an asset sale and will not be included as Portfolio Receipts.

Prior to the sale, we received two quarterly payments of $19.4 million in total.

(5) If TEV-'749 is approved by the FDA, we will receive payments of $100 million in addition to tiered royalty payments based on worldwide sales of TEV-'749.

If Teva chooses not to file a New Drug Application with the FDA following positive Phase 3 study results of TEV-‘749, we will receive a payment of $125 million.

We face competition from other entities that acquire biopharmaceutical royalties, including competitors of the Manager that are in the similar business of acquiring biopharmaceutical royalties.

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Our Board believes that its independence from and oversight of management are maintained effectively through its leadership structure, composition and sound corporate governance policies and practices.

We support expanding patient access to health care and medicine by providing funding to organizations

addressing unmet patient needs through innovation and engaging in philanthropic activities.

We support expanding patient access to health care and medicine by providing funding to organizations addressing unmet patient needs through innovation and engaging in philanthropic activities.

We incorporate material corporate responsibility, regulatory, geopolitical and reputational considerations, including access to health and medicine, research and development, ethical clinical trials, therapeutic area profile, ethical conduct and product quality and safety into our investment decision-making and management practices.

This includes considering key risks and opportunities during the due diligence process and, where we believe we can have a material impact, engaging on these matters with our partners.

We are committed to implementing key sustainability practices across our operations and taking steps to

measure, manage and minimize our environmental impact where possible.

We believe that sustainability

is critical to addressing related risks and opportunities for our business.

We are committed to implementing key sustainability practices across our operations and taking steps to measure, manage and minimize our environmental impact where possible.

We believe that sustainability is critical to addressing related risks and opportunities for our business.

We are focused on tracking our carbon footprint, mitigating our impact through energy efficiency and identifying ways to reduce our environmental impact.

15 unchanged sentences

as of December 31, 2024, 48% of the workforce of our Manager are women and approximately 33% of the workforce of our Manager are ethnically diverse.

In January 2025, we agreed to acquire the Manager for approximately $1.1 billion in total consideration (the “Internalization”).

The Internalization is expected to close in the second quarter of 2025 subject to shareholder approval.

Following the Internalization, we would cease to be externally managed and would operate as an integrated company with all employees of the Manager becoming employees of the Company.

We expect the Internalization would enhance corporate governance and employee retention with a significant equity component of the consideration.

Governmental Regulation and Environmental Matters

2 unchanged sentences

See “Risk Factors” in Item 1A, Risk Factors for further information.

Our compliance with these laws and regulations has not had a material impact on our capital expenditures, earnings, financial condition or competitive position in excess of those affecting

others in our industry.

Our compliance with these laws and regulations has not had a material impact on our capital expenditures, earnings, financial condition or competitive position in excess of those affecting others in our industry.

We believe that there are no compliance issues with laws and regulations that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, that have adversely affected, or are reasonably expected to adversely affect, our business, financial condition or results of operations, and we do not currently anticipate material capital expenditures arising from environmental regulation.

46 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business