Ladies and gentlemen, thank you for standing by. Welcome to Royalty Pharma Third Quarter 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, sir.

Good morning and good afternoon to everyone on the call. Thank you for joining us to review Royalty Pharma's Third Quarter 2025 results. You can find the press release with our earnings results and slides of this call on the Investors page of our website at royaltypharma.com. On Slide 2, I'd 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. We refer you to our most recent 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 results and the reconciliations of these measures to our GAAP financials is provided in the earnings press release available on our website. And with that, please advance to Slide 3, our speakers on the call today are Pablo Legorreta, Chief Executive Officer and Chairman of the Board; Marshall Urist, EVP, Head of Research and Investments; Chris Hite, EVP, Vice Chairman; and Terry Coyne, EVP, Chief Financial Officer. Pablo will discuss the key highlights, after which Marshall will provide a portfolio update. Chris will then discuss our development-stage pipeline, and Terry will review the financials. 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.

Thank you, George, and welcome to everyone on the call. I am delighted to report another successful quarter of execution on our goal to be the premier capital allocator in life sciences with consistent compounding growth. Slide 5 summarizes our strong business momentum in the third quarter. Starting with the financials, we delivered 11% growth in both portfolio receipts, our top line and royalty receipts, which are recurring cash flow. The sustained momentum was driven by the strength of our diversified portfolio. We're also now starting to report on a quarterly basis, our return on invested capital and return on invested equity. In the third quarter, we maintained strong returns in our business with return on invested capital of 15.7%, and return on invested equity of 22.9% for the last 12 months. Turning to capital allocation. We deployed capital of $1 billion in the quarter on value-creating loyalty transactions. Taking our total to $1.7 billion in the first 9 months, and we repurchased 4 million shares in the quarter, taking the total value of share repurchases to $1.15 billion in the first 9 months. Looking at our portfolio, we remain very active in the growing market for Royalty. We acquired our Royalty interest on Amgen's lung cancer drug, Imdelltra, for up to $950 million. We entered into a funding agreement for up to $300 million with Zenas Biopharma for its development-stage autoimmune drug obexelimab. And since the quarter ended, we acquired a royalty on Alnylam's Amvuttra, a blockbuster therapy for ATTR amyloidosis for $310 million. We're excited by each of these three transactions, and Marshall will take you through the details momentarily. On the back of this busy year, our development-stage pipeline has expanded to 17 therapies. And as Chris will highlight, we're looking forward to multiple pivotal readouts in the relatively near future. Lastly, we're pleased to raise our full year 2025 top line guidance. This is the third time we have raised guidance this year and the 14th since our IPO in 2020. We now expect portfolio receipts to be between $3.2 billion and $3.25 billion, which represents impressive growth of around 14% to 16%, driven by our diversified portfolio. Consistent with our standard practice, our guidance is based on our current portfolio and does not include the benefit of any future transactions. Slide 6 is one I keep coming back to, as it demonstrates our consistent double-digit growth on average since our IPO. As you heard at our Investor Day in September, we have delivered this impressive record year in and year out, regardless of the market backdrop. This reflects our ability to execute successfully and consistently against our strategy. With that, I will hand it over to Marshall.

Thanks, Pablo. We've had a busy last few months, and I want to provide more color on our recent deal activity. The breadth of these transactions totaling approximately $1.6 billion in announced value across three very different disease areas really highlights the power of Royalty Pharma's therapeutic area agnostic investment approach that focuses on innovative important new medicines to drive our diversified, sustainable and attractive growth profile. Slide 8 takes you through our Imdelltra transaction. This is a great example of a large investment in the kind of transformational medicines that are the foundation of our market-leading portfolio. Amgen's Imdelltra was approved in 2024 as a first-in-class targeted immunotherapy for small-cell lung cancer, where median survival is only 1 year after initial therapy. We acquired an existing royalty of about 7% of sales from B1 for up to $950 million, including an upfront of $885 million. B1 has the option to sell an additional portion of the royalty to us for up to $65 million. Imdelltra has strong clinical data in the second-line setting. And looking ahead, we have high conviction for expansion into newly diagnosed patients with the ongoing Phase III trials beginning to read out in 2027. Imdelltra has had a strong launch, currently annualizing at over $700 million with consensus sales reaching $2.7 billion by 2035. Based on this outlook, we expect the transaction to deliver an unlevered return in the low double-digit range, consistent with our target for transactions on approved products. On Slide 9, I want to turn to our most recent transaction in which we acquired Blackstone's 1% royalty on Alnylam's Amvuttra for $310 million. Amvuttra is approved for TTR amyloidosis, a progressive, debilitating and fatal rare disease and is already a blockbuster medicine. The clinical data shows a compelling patient benefit with dosing…

Thanks, Marshall. It's my pleasure to provide an update on our development-stage pipeline. As a reminder, at our Investor Day, we highlighted that our pipeline is expected to generate over $36 billion in cumulative peak sales, which translates to over $2 billion in peak royalties to Royalty Pharma. So there's really significant potential in this pipeline. Slide 12 illustrates that 3 of our 5 Royalty transactions this year have been on development-stage therapies, namely litifilimab, daraxonrasib and obexelimab. This expands our total pipeline to 17 therapies, most of which have become -- most of which have multi-blockbuster potential. Without going into the details of each deal, there are a few key takeaways. First, all three transactions include a synthetic royalty component. This speaks to the growing recognition of this attractive nondilutive funding paradigm, which we pioneered and allows us to tailor solutions for our partners. At our Investor Day, we presented findings from the Deloitte survey, which highlighted that the biopharma industry is evolving towards a more diversified funding model, in which royalties, and particularly synthetic royalties are becoming a growing part of the capital structure. Our deal activity in 2025 underscores this point. We have, so far, this year, announced synthetic royalty transactions of up to $1.8 billion, which have already far exceeded 2024 as our best year ever. The second point here is about risk mitigation. Each of these three therapies is in Phase III development, which carries a lower risk profile. We only consider development-stage investments if there is a compelling proof-of-concept data in an area of unmet patient need, and if the range of commercial scenarios we model supports returns in the teens or better. Third, the broad spread of indications highlights our therapy area agnostic approach. In fact, since 2020, we have invested in 60…

Thanks, Chris. Let's move to Slide 17. This slide shows how our efficient business model generates substantial cash flow to be reinvested. As you heard from Pablo, royalty receipts grew by 11% in the third quarter, reflecting the excellent momentum of our diversified portfolio. Key drivers were the strong growth of Voranigo, Tremfya and the cystic fibrosis franchise. Milestones and other contractual receipts were modest, both in this quarter and the prior year quarter. As a result, we also delivered 11% growth in portfolio receipts, our top line to $814 million. As we move down the column, operating and professional costs equated to 4.2% of portfolio receipts. This reflected cash savings from the internalization transaction and compares with over 12% in the first 6 months of the year. Net interest paid was $123 million in the quarter, reflecting the semiannual timing of our interest payment schedule with payments primarily in the first and third quarters and the interest we received for our -- the cash on our balance sheet. Moving further down the column. We have consistently stated that when we think of the cash generated by the business to then be redeployed into value-enhancing royalties, we look to portfolio cash flow, which is adjusted EBITDA less net interest paid. This amounted to $657 million in the quarter, equivalent to a margin of around 81%, and reflects a high underlying level of cash conversion and efficiency. Capital deployment in the quarter was just over $1 billion. This primarily included the $885 million upfront for Imdelltra, $75 million upfront for obexelimab and R&D funding for litifilimab. Lastly, our weighted average share count declined by 33 million shares versus the third quarter of 2024, reflecting the impact of our share buyback program. On Slide 18, I am pleased to share our first…

Thanks, Terry. To conclude, I'm delighted with our performance in the quarter. We maintained our double-digit momentum, we expanded our portfolio, and we again raised our guidance. We also hosted a successful Investor Day, where we were thrilled to share our plans for shareholder value creation. On that note, I want to close by reiterating some of the key messages from the day. We're the clear leader in an expanding market with strong fundamental tailwinds, reflecting huge demand for funding life sciences innovation in even more creative ways. We have a best-in-class platform for investing in the most exciting and innovative products marketed by premier biopharma companies and expect to remain the undisputed leader. We have announced an outstanding track record of delivering consistent and attractive returns, including an IRR and return on invested capital in the mid-teens and return on invested equity of over 20%. Lastly, we're on track to deliver strong global volatility growth through 2030 and beyond. Together, we think this adds up to a very attractive investment proposition with a potential for annualized total shareholder returns, at least in the mid-teens over the next 5 years. With that, we would be happy to take your questions.

We will now open up the call to your questions. Operator, please take the first question.

[Operator Instructions] The first question comes from Asad Haider with Goldman Sachs.

Congrats on all the progress. Just maybe a couple on the external environment. Recently, we are seeing a bit of an uptick in biotech M&A, and we're also moving into a lower interest rate environment. So could you perhaps speak to the pushes and pulls that these changing -- that this changing backdrop across these external factors presents for Royalty-driven deal activity and how you're thinking about the opportunity set and your target returns? And then just second, just any updated thoughts on how you're thinking about the China opportunity that you discussed at your Investor Day back in September? Any updates or insights around your China strategy as it relates to the types of investments that you're considering there would be helpful, and how, if at all, if the external environment impacts that?

Thank you for the question. Chris, why don't you take this question, both of them?

Thanks for the question. You're right, there has been an uptick in the M&A marketplace. And that really has very little impact on anything that we're doing. What you've seen is, obviously, large pharma is looking to fill some of their pipelines and LOE exposure. And we actually see that as beneficial to what we're doing. I think in the sense of it's just the companies out there need a lot of capital. There's a variety of ways in which they can get capital. We're clearly providing a key source of capital in the sector, which we're super excited about. So increased M&A uptick really doesn't impact the royalty market. In the sense of China, you're right. We're super excited. That's going to be -- and we've seen a lot of growth in the out-licensing out of China to multinationals. We see that as another leg of growth on the existing royalty marketplace. As you know, we spend a lot of time looking at companies and investing companies post proof of concept. I marked -- made some remarks in the prepared remarks about what stage of development. We invest in a lot of those deals out of China have been early-stage development deals. We're going to track those transactions and those molecules as they progress with the companies that in-license them, and there certainly will be opportunities to acquire those royalties as there's more known about the compounds that were out-licensed in multinationals. So we're super excited. We've had multiple teams go to China this year, multiple times, building relationships for that opportunity set. So we're excited about the opportunity. We see it just as another leg of growth on the existing royalty marketplace.

And our next question will come from Chris Parikh (sic) [ Chris Schott ] with JPMorgan.

This is Hardik Parikh in for Chris Schott. Just wondering, I know Merck had recently announced a royalty deal with one of your peers. And you guys have also done a couple of R&D collaborations with Biogen and Merck in the past. Do you think the frequency of these types of collaborations with large pharma will increase as those names head towards their patent cycles? What type of factors drive these deals from pharma's perspective?

Yes. Thank you for the question. And I think, I'll start by just saying that as the largest royalty buyer in the market, you can sort of assume that we look at every deal. This product is also a competitor to Trodelvy, where we have a Royalty, we funded the Phase III. So we're very familiar with the space. And regarding the deal specifically, what I would say is that it's just great to see how this idea of using royalties to fund trials, not only with biotech companies, but also with big pharma, is really becoming mainstream, which speaks to the big opportunity that we have in front of us. And I think this is going to just continue to grow, and it's a really big opportunity if you think of the scale of capital needed required by these companies. So we're very optimistic about these transactions continuing to happen. And I think with respect to the transaction specifically, as I said, we actually looked at it, but decided at the end that it was not for us, and continue to be very active with many big pharmas to talk about this kind of funding.

And the next question will come from Geoff Meacham with Citi.

I guess, Terry or maybe Pablo, on the IRR, I'm assuming that that's likely to tick up. And by the way, thanks for presenting that data. It's likely to tick up as you hit a tipping point of new launches. I guess the bigger picture is, does that change royalty's willingness to look to maybe moderately earlier programs, or maybe just take bigger risks? I know you're not obviously going to materially change the model, but the question is more of a tilt going forward on the risk side.

Sure. Why don't you take that question, Terry? But I think just one very top-level comment about it. You can imagine that we've been actually tracking this for three decades. And it really doesn't change much our behavior. If we see an attractive transaction in an approved product or an attractive transaction in a product that is in development, we will do it. And the fact that this calculation, these returns are going to move up and down a little bit, will not really impact our behavior in terms of us looking at transactions and deploying capital. But go ahead, Terry.

Yes. Pablo, that's exactly the point. And I would say on the specifics on the return on invested capital and return on invested equity metrics that we started to highlight, I think the thing that we're most proud of really is the stability and the consistency. And so as we've continued to scale our investments, it's remained remarkably stable. And we think that it's going to bounce around a little bit, quarter in and quarter out, but it should remain for return on invested capital in that mid-teens range for the foreseeable future, which we think really speaks to the value creation of our business model.

And our next question will come from Umer Raffat with Evercore.

This is Mike DiFiore in for Umer. Two for me. I want to drill down on the Amvuttra deal. You mentioned significant competition from nucresiran potentially, but could you provide any color on the range of scenarios that factor in significant -- this significant competition from this asset. And in the scenario where it does get approved and launches in 2030, how quickly might you see Amvuttra eroding? And quickly, separately, any updates on the market for synthetic royalties in the obesity space?

Marshall, why don't you take both questions?

Sure. Mike, thanks for the question. So specifically, on how we thought about Amvuttra over its whole product life cycle. As we highlighted at the beginning of the call, we are really excited about this product. It's completely consistent with the kind of products that we've invested in, in the past. And I think the strong launch in Alnylam's strong execution behind it are all examples of that. Specifically to your question, as we always do, we looked at a pretty broad range of scenarios for both timing and the slope of how nucresiran might enter the market. We obviously have a case study, a very recent case study of the Onpattro to Amvuttra transition to sort of to help us and guide us as one scenario. But we certainly looked at a lot of sensitivities around that as well, with the message being and why we talked about that, that we're confident in an IRR of low double digits or better when we look across that range of scenarios, even baking in that range of nucresiran scenarios. Second, on the obesity market. So it continues to be, I think, message very consistently with what we said in the past, certainly on our radar looking for the right opportunities there. We don't just want to have a royalty on an obesity product for the sake of it, we want it to be an important product that differentiates itself in this space, and we'll be disciplined in waiting to find the right thing that creates value for our shareholders.

And the next question will come from Terence Flynn with Morgan Stanley.

Two for me. First, congrats on the Amvuttra deal. I think Blackstone originally signed a deal with Alnylam back in 2020. And Pablo, given your comments that you guys look at everything, I'm assuming you had a look at it back then. So I'm just wondering what's different now versus that 2020 deal? And then on the LP(a) front, probably a question for Marshall. Amgen, as I'm sure you guys heard last night talked about the olpasiran Phase III event rate tracking slower than expected. Just any thoughts there on your views on implications for probability of success here for this study?

Sure. Marshall will take the second part of the question, but maybe to provide some color on the first one regarding Amvuttra? Yes, it is part of a larger deal that was done in 2020, which was about $1 billion. That actually related much more to nucresiran. And this small royalty 1% on Amvuttra was sort of an add-on to the transaction. It was sort of a $70 million part of the overall transaction. And we did look at that -- the whole deal at the time, but again, we decided it was not for us. And I think, one thing I will comment on because obviously, I think this provides some color regarding this question that we've had for -- since we went public 5 years ago about competition. And obviously, regarding the motivations of why Blackstone sold, you should ask them, but they've been in this investment for 5 years, and it's an attractive return given the investment they made specifically on this. But I think one thing to comment on, as we highlighted in our Investor Day is that we do have a very unique structure as a company now, ongoing business. Perpetual versus many of our competitors that are structured as close-in funds where they have investment horizons that are much shorter than ours. And as you know, royalties are very, very long. It can be 10, 15 years. So what's very unique about Royalty Pharma is that were structured to actually invest in assets that are very long and hold them to maturity. And I think this really speaks to the differences in the business models, where we are really set up to own royalties that are going to cash flow for 10, 15 or longer than that. And so we have sort of different investment horizons. And I think the last thing I would say is that this transaction also highlights something unique about Royalty Pharma, which is that given our diligence process that has been honed over decades, we were able to develop a differentiated view about the sales trajectory and importantly, the persistence and duration of the Amvuttra royalties that maybe differs from other people's perspectives. And that's why we think this is a very attractive investment that will deliver attractive returns for us. But the other question for you, Marshall.

Sure. Thanks for the question on LP(a). So specifically, Amgen did talk about a slower event rate in that study last night. I think that probably shouldn't come necessarily as a surprise, given our other -- given Novartis where we also have an investment in their LP(a) product, had a similar observation from their trial. I think when we did the initial diligence, when you're running a first-in-class outcome study for a target in a population where there's not a lot of precedent, I think we were eyes open about the fact that there ultimately would be some uncertainty around timing and the exact event rate. So what that means to us, to your question is it doesn't change our view of the probability of success. And we continue to be really excited about having two royalties in the two leading therapies in this class that we think could be a very large, many multibillion-dollar class in the future, and we're really excited to be a part of it.

And our next question will come from Mike Nedelcovych with TD Cowen.

I have two. My first is also on the LP(a) space. And specifically, I'm wondering if the Horizon trial fails in 2026, to what extent do you think differences in trial design could ride to the rescue as it relates to olpasiran's prospects in 2027? And my second question is on obexelimab. This agent posted some very interesting Phase II MS data right after Royalty Pharma announced this deal, so I'm just curious if that has changed your thinking at all around peak potential? Or was MS upside already taken into account?

Sure. Thanks for the question. Again, this is for you, Marshall.

Sure. Mike, thank you for the question. So specifically, your question on LP(a), just for everyone very quickly who might not be familiar with all the details here. So Mike, your question is if the first outcomes trial that will read out Horizon from Novartis were not to be positive, what would the implications be for the second one coming, which is Amgen's trial for olpasiran. And I think, there are certainly some differences in trial design. There are some differences in depth of LP(a) lowering. So we are optimistic about both trials. But certainly, there are differences in the trial design, which could differentiate the olpasiran outcome from the -- from Horizon and pelacarsen. Hard to comment really specifically on that right now until we see -- until we see the details in what happens. So are certainly optimistic and excited to see the first one next year. Your second question on obexelimab. So yes, we were the MS data that Zenas is reported looked great. And I think as we highlighted in the prepared remarks, it really kind of validates the underlying kind of scientific and clinical question here, which is if you have a non B-cell depleting but B cell activity modulating antibody, what would be -- what would that mean for activity in various autoimmune diseases. And I think the MS data and really showing very strong suppression of disease activity is very validating of the view that this is a new and different way of treating autoimmune disease, which is exciting. The near-term launch, and I think what we were really working with Zenas on funding, is certainly focused on IgG4-related disease. And so that was really the -- that was the focus of the deal because I think in a lot of ways, from a commercial perspective, that drives the near-term capital need, but they have a great team over there at Zenas and excited to see what they do, with obexelimab in addition to IgG4-related disease.

I show no further questions in the queue at this time. I would now like to turn the call back over to Pablo for closing remarks.

Thank you, operator, and thanks to everyone on the call for your continued interest in Royalty Pharma. If you have any follow-up questions, please feel free to reach out to George Grofik. Thanks.

This concludes today's conference call. Thank you for participating, and you may now disconnect.