Royalty Pharma (RPRX) Q2 2026 earnings call transcript

I would like now to turn the conference over to George Grofik, Senior Vice President, Head of Invest 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 second quarter results. You can find the press release with our earnings results and slides to this call on the investors page of our website at royaltypharma. com. On slide two, 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 We refer you to our most recent 10-K on file with the SEC for 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 reconciliation 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 three. Our speakers on the call today are Pablo Legareta, Chief Executive Officer and Chairman of the Board, Marshall Yeris, EVP, Head of Research and Investments, Chris Height, Chairman, Partnering and Investments, 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 everyone. I am pleased to report another quarter of strong financial performance and disciplined execution. Our 25th consecutive quarter as a public company with strong, predictable, double-digit growth, And we're achieving this as we continue to deliver on our goal of being the premier capital allocator in life sciences, driving consistent compounding growth. Slide five summarizes our strong business momentum in the second quarter. Starting with the financials, we delivered 6% growth in portfolio receipts, our top line, and 40% growth in total receipts, which are our recurring cash flows. Our top line performance was ahead of our guidance for the quarter and reflects the tremendous We also maintain attractive returns in our business with return on invested capital of 14.2% and return on invested equity of 20.1%.

By consistently delivering strong growth and superior returns, we believe we have a clear path to drive continued shareholder value creation. Turning to capital allocation, we have deployed $1.1 billion of capital on Royal Depositions so far this year, with an announced value of $1.7 billion. Most importantly, we acquired our royalty on AstraZeneca's Clearamitude, a potential blockbuster therapy for transthoritin amyloid cardiomyopathy. As we look ahead, our deal pipeline remains robust. Under our value-driven capital allocation framework, we also return around $370 million to shareholders in dividends and share repurchases in the first half of the year.

Moving to our portfolio, we continue to see a number of positive updates. Our partner, Revolution Medicines, completed its rolling submission for direct sunrosis in pancreatic cancer, with accelerated review also underway in Europe. We were also delighted to see key regulatory approvals for Gilead's, Prodelby, GSKs, Gidatro, and Amgen's and Deltra. We look forward to This therapy is contributing to our top line in the years ahead.

Looking ahead, we're increasing our 2026 full year guidance for the second consecutive quarter, based on the strong business momentum I just highlighted.

Slide six is one that I return to each quarter, as it demonstrates our consistent double digit growth on average since our IPO. We have delivered this impressive record year in and year out, regardless of the market backdrop. This reflects the quality of our selection and our unique business model. Slide seven, my final slide, underscores the quality of our diligence process and our deep understanding of the life sciences ecosystem. In short, we've been ahead of the curve in identifying some of the most exciting innovators. New Valen and MLX are just the latest examples of companies whose therapies we acquired royalties This, of course, validated our internal views of their programs and will also likely increase the value of our royalties as large pharma brings significant clinical resources and commercial scale.

With that, I will hand it over to Marshall.

Thanks, Pablo. I want to focus today on our recent royalty deal for Chloramatug, which is our second investment in TTR amyloidosis. Beginning on slide 9, we recently acquired a portion of Neuromune's royalty interest in AstraZeneca's Chloramatug for up to $425 million. The transaction was structured to include $125 million upfront payment to NeurImmune, an additional $125 million payment in the first quarter of 2027, and up to $175 million payable on key clinical and regulatory milestones. In return, Royalty Pharma will receive a royalty of 3.75% on worldwide net sales. Gloramatug is a highly novel therapy for TTR amyloidosis with cardiomyopathy for ATTRCM. ATTRCM is an age-associated progressive disease in which misfolded TTR proteins accumulate in the heart, severely impacting heart function and ultimately survival.

There are several approved therapies for this indication, including Ambutra, our first investment in this indication. The approved therapies slow disease progression by preventing ATTR accumulation, but they do not impact the amyloid deposits that have already accumulated in the heart. As a first-in-class TTR fibril depleting antibody, Chloramatug is designed to remove amyloid and potentially reverse the course of the disease, a clearly differentiated role for Chloramatug with significant benefit for patients. The early clinical data for Claremontug are impressive. Phase 1 demonstrated strong amyloid clearance via biomarkers that correlate with improved cardiovascular outcomes. A Phase 3 outcomes trial is fully enrolled around 1,200 patients, and results are expected in 2028.

We see clear blockbuster potential for Claremontug in an expanding market, which was more than $7 billion last year. There are over half a million patients worldwide with ATTRCM, including around I will now turn the call over to management. We will now turn the call over to management, and thank you to the Royalty Polly Poverty and the Clare Matug. We will be seeing that a little bit more detail about the price of the market. We will now turn the call over to management. We will now turn the call over to management, and the need for the market. Annual royalties of approximately $110 million to $190 million, based on AstraZeneca's peak sales expectations.

Moving to slide 10, this latest transaction is a compelling example of how Royalty Pharma builds significant therapeutic expertise over many years, allowing us to invest in the best potentially transformative medicines, often across multiple products in the same class. In the case of ATTR, we've been closely following this therapeutic category over the past decade and have evaluated many of the therapies that are now approved. Our first investment was Ambutra in 2025, which has had a strong launch in cardiomyopathy. With the addition of Plyramatug to our portfolio, we now have two differentiated approaches to this serious rare disease.

As you have seen us do this in many other indications, such as prostate cancer, spinal muscular atrophy, immunology, and multiple sclerosis. This ability to build a portfolio with multiple therapies in a category is unique to Royalty Pharma. When combined with our proven deep diligence, we are well positioned to invest in the most practice-changing and innovative therapeutic categories in the industry for years to come.

With that, let me hand over to Chris. Thanks, Marshall. For my section of today's presentation, I want to highlight the significant expansion of our development stage pipeline, together with important upcoming events across the portfolio. You can see on slide 12 that we have achieved strong consistent growth in our development stage pipeline since our IPO in June 2020. At that time, we had three potential therapies in the pipeline. Today, we have 19, a more than six-fold increase. More importantly, the peak royalty potential of our pipeline has increased by more than 30-fold over the period, with peak potential royalties from our late-stage pipeline now totaling approximately $2 billion.

We have also demonstrated an excellent success rate with around 90% for development-stage investments ultimately achieving regulatory approval, This is a presentation of the Royalty Pharma plc earnings conference, which provides us confidence that these products will be an important driver of growth into 2030 and beyond. The track record of success is underscored by slide 13, which shows that in addition to DRAX and RASIB, our portfolio has delivered a number of successful clinical readouts and regulatory events so far in 2026. These include positive clinical trial results for cytokinetics mycorzo, Xenesis obexilumab, and Biogen's lidafilumab, FDA approvals of GSK's Jidetro, Sonali's Avlea, and Gilead's Tredelvi, as well as a number of FDA regulatory submissions. Expanding on this theme, slide 14 shows there is much more to come from our development stage pipeline, with several major pivotal trial readouts expected through 2027.

In 2026, we expect to see the results of the outcomes trial for Novartis' pellicarsin. We continue to believe that the LP class could be the next major class of cardiovascular disease drugs, We are strongly positioned to leverage this with the two lead pipeline products in Pelicarsin and Amgen's Olpatrin. We will also see Phase III data for Biogen's Litofilumab and systemic lupus. In 2027, we expect Phase III results from Diracin Raspib in lung cancer and Litofilumab in cutaneous lupus. We also expect pivotal data from Sanofi's Frixalumab and MS, and from J&J's Celterexin, a major depressive disorder.

Each of these potentially transformative therapies would add significant royalties to our top line. Taking a step back, when looking at these opportunities that we are currently evaluating, we are pleased to see a balanced opportunity set that includes both attractive, approved products, As well as exciting development stage opportunities across a range of potential partners.

To finish, I want to provide context on the composition of our portfolio, which is broadly unchanged and remains well balanced. Slide 15 illustrates that we currently have around $22 billion of total invested capital at work, with around 84% of either products which were approved when we invested or were development stage assets which have gone on to receive approval. Additionally, while 12% of our current invested capital at work is in development stage therapies, roughly a third of that capital at work has been invested in development stage programs that have already had positive pivotal results.

This means that despite the expansion of our pipeline, our overall capital at work for development stage therapies is relatively small. Furthermore, we have a great track record when investing in development stage therapies, which reflects the quality of our diligence and asset selection.

With that, I'd like to hand it over to Terry. Thanks Chris Let move to slide 17 This slide shows how our efficient business model generates substantial cash flow to be reinvested Royalty receipts grew by 14 in the second quarter reflecting the strength of our diversified portfolio Milestones and other contractual receipts which are more variable declined substantially reflecting a one payment in the prior year period As a result portfolio receipts our top line grew 6 in the quarter to million slightly ahead of our expectations As we move down the column Operating and professional costs equated to 4.8% of portfolio receipts in the second quarter. This line continues to demonstrate the benefit of the cash savings we are delivering from the internalization transaction, which we completed in May of 2025.

Net interest paid was de minimis in the quarter. This reflects the semiannual timing of our interest payment schedule, with payments primarily in the first and third quarters, together with the interest we received from 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 $736 million for the quarter. Our margin of around 95% again demonstrates the high underlying level of cash conversion and efficiency in the business. Capital deployment in the quarter of $349 million mainly reflected royalty funding for Diracxon RASIV and R&D funding for J&J 4804 and Lidafil and Meth.

Lastly, our weighted average share count declined by approximately 5 million shares, or 1%, in the quarter versus the prior year period, reflecting the impact of our share buyback program. Slide 18 provides more detail on the evolution of our top line in the second quarter. Royalty receipts, which we consider our recurring cash inflows, grew by 14%. Key drivers were the strong performances of Tramfaya, Boronigo, M-Deltra, and M-Evrisdi.

Importantly, as we saw in the first quarter, we were able to absorb significant headwinds from Promacta and Imbruvica and still deliver double-digit growth in loyalty receipts. Moving to portfolio receipts, these grew by 6%, reflecting lower milestones in other contractual receipts given a one-time payment in the prior year period, as I already noted. Slide 19 updates our portfolio return metrics for the quarter. Return on invested capital was 14.2% for the last 12 months, ending in the second quarter of 2026. And return on invested equity, which shows the impact of conservative leverage on our equity returns, was 20.1% for the last 12 months.

The remarkable stability of these metrics demonstrates that we are continuing to invest at attractive returns that will drive long-term value for our shareholders.

Slide 20 shows that we continue to maintain the financial flexibility to execute our strategy and return capital to shareholders. At the end of June 2026, we had cash and equivalents of $812 million. In terms of borrowings, we had investment-grade debt outstanding of $9.2 billion with a weighted average duration of around 12 years. Our leverage now stands at 2.8 times total debt to adjusted EBITDA, or 2.6 times on a net basis. We also have access to our $1.8 billion revolver, which was undrawn at the end of the second quarter.

Following S&P's rating upgrade in June, I am delighted to say that Royalty Pharma is now BBB rated across all major credit rating agencies. This important milestone reflects the tremendous progress we have made as a company since our IPO, including our consistent, strong top-line growth, improved diversification, and growing cash flows. For financial capacity, we have access to over $4 billion of financial flexibility through cash on our balance sheet, the cash our business generates, and access to the debt markets.

Turning to our capital allocation framework, we deployed $877 million of capital on attractive royalty deals in the first half of 2026. At the same time, we returned approximately $367 million to our shareholders, including share repurchases of around $100 million. In total, we have returned about 25% of our portfolio cash flow this year to shareholders. On slide 21, we are again raising our full year 2026 financial guidance. We now expect portfolio receipts to be in the range of $3.4 billion to $3.5 billion, up from $3.325 billion to $3.45 billion previously. This assumes growth in royalty receipts of around 7% to 10%, compared with 4% to 8% previously, which reflects the strong underlying momentum of our diversified portfolio.

This guidance takes into account the loss of exclusivity for Promacta, as well as the launch of biosimilar Tysabri in the United States and the potential impact of IRA. It also reflects an expected decrease in milestones and other contractual receipts from $128 million in 2025 to approximately $60 million in 2026. Importantly, and consistent with our standard practice, this guidance is based on our portfolio as of today and does not take into account the benefit of any future royalty acquisitions.

Turning to expenses, payments for operating and professional costs are still expected to be in the range of 5.5% to 6.5% of portfolio receipts in 2026, reflecting cost savings from the internalization of the manager. We continue to expect interest paid to be around $350 million to $360 million in 2026. Based on our semi-annual payment cycle, we anticipate interest paid to be around $175 million in the third quarter, with a de minimis amount payable in Q4. This guidance reflects repayment of a $380 million term loan in July, but does not take into account interest received on our cash balance, which was $11 million in the first half.

To close, we've had a great first half. We have again raised our guidance, and we expect to continue to deliver another full year of strong financial performance in 2026.

With that, I would like to hand the call back to Pablo.

Thanks, Terry. To conclude, I am delighted with our continued execution against our strategy in the first half of 2026. We have again delivered compelling growth and returns. We further diversified a portfolio of attractive biopharma royalties, and we have continued to strengthen our leadership team and capabilities. On that note, I want to close on slide 23 with a reminder of why we believe we're well positioned to drive continued strong value creation.

First, we're the clear leader in the rapidly expanding biopharma royalty market with powerful fundamental tailwinds, reflecting the huge demand for funding life sciences innovation. Second, we have a best-in-class platform for investing in the most transformative and innovative products marketed by premier biopharma companies. By expanding our global platform and capabilities, we expect to remain the undisputed leader in our industry. We further strengthened our platform with the addition of Greg Raskin to lead our academic royalty effort. Greg is uniquely qualified to lead work with academic partners, having led the technology transfer group at Memoros Loan Kettering for 12 years. I continue to be amazed by the level of talent we're able to attract to Royalty Pharma.

Third, we expect to deliver strong, low volatility top-line and bottom-line growth through 2030 and beyond. Lastly, we have an incredible 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 in a 20% plus range.

With that, we will be happy to take your questions.

Sure, Jeff. So, yeah, I think, look, we highlighted in my section that we have a lot of financial flexibility. And so, to the extent that some of the M&A across the sector creates opportunities, which, you know, it certainly could, we feel like we, you know, are in a really great position to, you know, to sort of partner with these companies in any way. We will see how that plays out over time. As far as rates, I think that the way that we view rates is we truly are agnostic to the rate environment. Rates over a couple of years We're rising. We deployed a lot of capital, generated great returns in excess of our cost of capital.

To the extent that rates start going down, we still feel like we can deploy capital and generate great returns. So, you know, we really do feel like we're agnostic and we'll continue to access the debt markets from time to time when we need it with a very strong focus on maintaining that investment grade rating. And we're really happy that we're now triple B rated across all three agencies.

Okay, thanks.

Yes, thanks, Terrence. So, on your first question on the implications of CardioTransform, at a high level, you know, we're really happy now with the two investments we have in TTR amyloidosis. And, you know, really, you know, I think that's still a very interesting market. And, you know, we added something highly novel and potentially transformative in Claramatug, as I discussed. Specifically to your question on Cardio Transform, we're kind of uniquely positioned here for, with the Royalty and Ambutra in the sense that, you know, we think there still is a lot of physician interest and potential in that product, certainly, and excited to see what L-nylam does. But it is unique in the sense that it is positioned in some ways to derive at least some benefit from the unfortunate outcome of cardio transform, which we certainly are never sort of welcome seeing trials fail for patients.

But specifically with Ambutra, it certainly does take away a near-term competitor. And because our Royalty is specific to Mbutra and not El Nylund follow if there is any delay or other changes over to management for the Royalty Pharma plc earnings conference call And then, Terrence, on the question on synthetics, thanks for that question.

We are still very excited about the synthetic royalty opportunity. You know, last year we announced synthetics for just over $2 billion, including the RevMed deal, which was really one of the largest synthetics ever. So that was a great deal. So the growth rate in the synthetic marketplace is, I think, around 40% since 2015. Last year was the biggest year ever, just under $5 billion for the product itself. And the synthetic royalty opportunity only really represents about 5% of the capital raised by biopharma funding over the last five years, so not even really penetrated into that marketplace of capital formation. And given all the clear advantages of synthetics, non-dilutive, lower cost of capital, program-specific funding, independent valuation, validation, excuse me, there's a lot of advantages to it.

And as our survey of all the biotech CFOs and COs really showed, it's really taking hold, and we're super excited about the opportunity to see it still as a big growth driver for our business.

Thanks for the question. Regarding the split between unapproved and approved, I think that ratio of 65-35 has been consistent over the last 5-10 years.

The way we look at this is not looking at independent years, but looking at what's going on over a rolling two-three-year period. And we think it's going to be maintained at a relatively similar level. Now, when you look at our invested capital, the $22 billion or so that we have of invested capital, the amount invested in unapproved, as you can see, is relatively low. It's about 12%. You know, that number could trend up to mid to high teens, and it would still, you know, be a portfolio that has relatively low risk. So, you know, we, this figure could increase over time, and we would be very, very comfortable with that kind of risk on the overall portfolio in unapproved investments.

Regarding China, it's sort of early days for us in terms of capital deployed. We've been paying attention to that market for several years now, and as you know, we hired a really top, top player in the market. And we have started to get much more active there, participating in many conferences that are being organized in China with teams present. And I'm personally going to be going to China, you know, to meet with biopharma CEOs and really make sure that our model is understood by many and build a market. It takes time, but, you know, we're totally committed to building that market because we believe it's actually pretty attractive and large.

So I think, you know, you should just, you know, we are going to be patient and people should be patient about how this develops. But we think it can be a really large opportunity for us in the long run.

Yeah, maybe I'll take that question first and then turn it over to Terry to, you know, address the other question about the expenses. My point is that when you look at what Royalty Pharma is today, you know, there's a lot of barriers to entry, right? So obviously, scale is unimportant. And you saw, we just talked about the scale of our, you know, sort of capital at work, $22 billion. That's the amount of capital that has been invested in those royalties. The portfolio is worth a lot more than the $22 billion. That's cost. But so scale is one. Cost of capital is another one. The team that we have is superb. And we just added another really great individual to our team that's going to head our, you know, academic initiatives.

And it's a team that we have this incredible culture at Royalty Pharma that gets stronger and stronger. But the comment and the point you made about how difficult it is to replicate Royalty Pharma is more or less the following. And what I say is that if people said to me, can you replicate Royalty Pharma today if someone gave you $20 billion, my answer is absolutely not. It would be impossible for me to replicate Royalty Pharma the way it is today. And it's not only because it takes time to build a team and all of the other things, but there's just one aspect that is really interesting. When you look at the portfolio that Royalty Pharma has today, it's a portfolio that produces $3.2 billion last year of recurring revenue, predictable recurring revenue, from a very well-diversified portfolio of products, and it's top products marketed by top companies.

It took us over a decade to assemble that portfolio. And, you know, as examples, for example, we have a royalty in what is becoming one of the top drugs that J&J markets, Trimfaya. It's a large royalty, or for that matter, Trilogy or cystic fibrosis. And when you look at those assets, we made those investments, you know, five to 10, even 15 years ago, and they're producing cash flow today. And there's only one Trimfaya royalty, and we own it. And there's one Trilogy royalty, and we own it. There's one, there will be one, you know, Daraxan Rasev royalty, you know, the investment we, you know, made last year in this pancreatic cancer drug, and we own it.

So it's impossible. They're sort of, you know, one-of-a-kind assets, and the portfolio is sort of irreproducible. You cannot, you know, find another Trafaya royalty. You cannot find another, you know, Dara royalty. And what I would also say is that when you look at our pipeline today that has this incredible group of products that could be blockbusters, many of them, generating billions of dollars of revenue for us in sort of a five-year timeframe, five to ten-year timeframe, it took us five years, six years, seven years to assemble that portfolio of that pipeline. And again, they're unique. It's hard to see how there's going to be other royalties like that. And those are the assets that are going to be producing revenue and driving the growth in the next decade or so.

And again, so I think that is what is so difficult to replicate. It would be impossible to do it spontaneously, even if you had $20, $30 billion of capital. It's the work of decades. So that's my answer to your question, and I hope you appreciate the huge moat and barrier to entry that that provides us.

And then, Mike, on operating costs, we are very happy to see that we're realizing the synergies of the internalization transaction. But specifically as it relates to the first half versus the second half, I think there's just some seasonality to it. And since this is completely cash-based, the second half is going to tend to be a little bit higher than the first half. So that's what's going on there.

Sure. Thanks, Ash. So your first question on our return expectations. So just to level set for everyone. So what we've communicated is that for approved products or on-market products, our unlevered IRR expectations are in the high single to low double-digit range, and we've indicated we're really more typically, very typically investing these days at the higher end of that range. For things that are unapproved, our IRR expectations are above that, so in the teens, and that can range depending on the specifics of the product, the stage, the risk profile, the counterparty, all of those things. But as we talked about on our investor day, I think it's important to remember that those are unlevered IRR expectations.

And so to reference back to what Pablo said, something very unique about Royalty Pharma, because of our capital structure, our ability to use leverage on our capital structure, the levered returns that we see, which are the returns that our shareholders actually enjoy, are significantly higher than that. So, thanks for that question, and we remain very comfortable with those ranges for our new investments today. Your question on Pella Carson, yes, there has been a lot of discussion these days about expectations and what would be clinically relevant, and I think we're very excited after waiting for several years for these results to be on the doorstep here of seeing the first trial. I think Novartis has been pretty explicit about their expectations for what is clinically relevant, so we would certainly defer to them.

But I think you bring up a really important point which is this is the first outcome study the world is going to see for LPULA So there certainly a lot we will learn in terms of benefit To your question specifically what does higher baseline levels of LP little A mean for patients and their ability to benefit from these therapies So we are eagerly awaiting the results with everyone else and look forward to discussing them once we have some data to talk about.

Thanks, Mike. So we were really happy to add Clermatug to our portfolio. And what underlies our enthusiasm for this, I would talk about in a couple different areas. You know, first is there are some really intriguing biomarker data across from the earlier studies across imaging data of the heart to show that you are actually removing amyloid, other, you know, important biomarkers like NT-proBNP, which is a marker of heart wall stress, And many others in the data that are consistent with clarimabatug doing what we think it does, which is remove amyloid from the heart. And just to remind everyone, CTR amyloidosis is a disease where every product has gone into a phase three outcome study based on biomarker data.

And as we've seen with the two oral therapies that are out there and with Ambutra, which is in our portfolio, you've certainly seen that biomarker data translate into positive CV benefit in an outcome study. And then, you know, maybe a little bit further, you know, a little bit less direct is, you know, just really interesting data that we've seen with amyloid depletion in other amyloid-driven diseases like Alzheimer's disease where we're learning, you know, we're increasingly learning that removal of amyloid can drive clinical benefit. And then in an unrelated amyloidosis condition called AL amyloidosis, AstraZeneca has recently shown some very interesting data with another amyloid depleter product in that disease, which suggests a benefit on, which suggests a cardiovascular benefit from depleting that form of amyloid.

So, you know, certainly we put all those together to really inform our confidence and excitement about this.

And then on your second question, Mike, on adverse selection and co-funding of pharma R&D, it's a good question, and it's something that we emphasize on every initial call we have with pharma. Some of the opportunities we look at with pharma co-funding, we're going to them and saying this is what we want to fund. Some of those conversations are initiated by pharma and them saying what they want to fund. I just want to remind you that our bar is extraordinarily high when we make these investments. We're putting lots of capital, deploying lots of capital on those transactions as evidenced by the two transactions we did this year with Teva and J&J. And we really emphasize in every situation that we want to fund their most exciting assets.

And that is a key criteria for us, and we're very disciplined about that. And I think if you look at the two deals we did this year with Teva and J&J, you can see that, you know, that is exactly what's happening.

Sure. So, on our long-term guidance of $4.7 billion or more on the top line by 2030, we feel really good about where we're tracking. I think we really focused on that guidance at our Investor Day in September, so it's probably still early to be thinking about any changes there, but we feel like we're tracking really well. We're really happy with how the portfolio is performing and feel really good about the opportunities to deploy capital in new royalties as well. So overall, we're in a really good place there.

And aside on your second question, thanks for that question, and it's a good one. And without being specific, I think it does – I think what's informative maybe is how we think about it and how we approach it. I think as Pablo mentioned, you know, we couldn't be prouder of the team that – the team that we have built, our culture around investing, the discipline that we've shown in terms of how we approach investing. And the way we have set up the team, to get to your question, is we want to have the ability to be as broad as we possibly can be, to be generalists in the sense that we are open and ready to analyze any therapeutic area, any product, really anywhere in the world now that we see that could be interesting.

So, you know, like we've always said, we don't necessarily think about the portfolio from a top-down perspective. We want to be open to great products in whatever TA and whatever form they come to us and make sure our team is ready to set up and execute and for us to be a great partner.

Yeah, so I'm just going to make a very quick comment about China, but Chris is going to add, and then Marshall will pick up the other question. You know, China is a really interesting opportunity, and I've talked in the past about why. And, you know, if you think about it, the innovation is really extraordinary, and there's so many companies there with attractive assets, but they all need U. S. and European partners to actually run the clinical trials that are necessary in this market to get approval by FDA and EMA. And they also need a commercial partner. So what's going to happen, and it's been happening, is that they're going to out-license their product, and that creates royalties.

And what also happens is that, for the most part, the IP is put into an offshore entity. It's not left in a Chinese entity, and the transaction is entered into between a Cayman company or an offshore entity, It's owned, obviously, by the Chinese company and a Western, you know, U. S. or European pharma company. And the contract is not a Chinese contract, but it's a contract based on, you know, U. S. or European laws.

So, and if you look at the deal we did last year with Amgen, where we bought in Delta, it's like no different than the typical royalty transactions we do where we're getting, you know, paid by Amgen. And it was a contract, you know, again, in the jurisdictions where we are very, very, you know, comfortable and experienced. So it's a very similar business to what we do today. I think the other last comment I would make is that royalties are different than equity. And you can see how sometimes, you know, it's more complicated, equity is more complicated, more visible. And, you know, it's easier for governments actually to put restrictions on equity investments. But a royalty is a contract and that, you know, gives rise to payments.

So, very different, you know, sort of more under the radar, but Chris, do you want to add anything?

Yeah, just to add, I mean, we're obviously monitoring, you know, what's going on with the COINS Act and the proposed amendments and the VINs Act and whatnot. And, you know, it's really sort of, you know, too early to comment on the specifics and, you know, but we are obviously following that closely. You know, the bottom line is we're very committed to the opportunity there. We've hired Ken's son, super excited about that hire and building out that opportunity. We'll continue to monitor the situation here in Washington, but it's important to have the local presence there and the opportunity. I would note that the opportunity already exists because the last five or six years of all the out-licensing the Western multinationals, there's a substantial number of royalty agreements that already are in place, regardless of what happens in Washington.

So that's a pretty big opportunity already.

And then, Jason, your question on milestones, just to reiterate what we said previously, we continue to expect milestones and other contractual receipts to be around $60 million for the year.

Thank you, operator, and thanks to everyone on the call for your continued interest in Royalty Pharma. I just want to finish with one quick comment, which is that looking back to this business that we've been building over 30 years and also then our public offering in 2020, it's just remarkable to me how this business has performed with incredible, very, very high consistency in growth and profitability. I mentioned at the beginning of the call that this is our 25th quarter after our IPO in 2020. So more than six years of being a public company and with this extraordinary record of predictable strong growth. So anyway, I just thought I would mention that. And again, you know, if anybody has any questions, please feel free to reach out to George Grofid and his team.

But thank you very much.