Royalty Pharma (NASDAQ:RPRX) executives highlighted what they described as a “landmark year” in 2025, pointing to double-digit top-line growth, continued capital deployment into new royalty deals, and a significant strategic change with the internalization of the company’s external manager. Management also laid out 2026 guidance that calls for mid-single-digit growth in recurring royalty receipts while absorbing notable headwinds, including product loss of exclusivity and biosimilar dynamics.
2025 results and strategic milestones
CEO Pablo Legorreta said the company delivered strong double-digit growth in both portfolio receipts (total top line including milestones and other contractual receipts) and royalty receipts (recurring cash flows). The company raised guidance three times during the year and finished “slightly above the top end” of its most recent update. Royalty Pharma reported return on invested capital of 15.8% and return on invested equity of 22.8% for 2025.
Transaction activity and the rise of synthetic royalties
EVP and Vice Chairman Chris Hite described a busy deal environment in 2025. He said the company reviewed more than 480 potential royalty transactions, signed 155 confidentiality agreements, completed 109 in-depth reviews, and submitted 35 proposals. That funnel activity resulted in eight executed transactions covering nine therapies, representing about 2% of initial reviews, with $4.7 billion in announced value and $2.6 billion in capital deployed.
Hite and EVP of Research and Investments Marshall Urista both underscored the growing role of synthetic royalties—Royalty Pharma’s non-dilutive funding structures where royalties are created rather than acquired from an existing stream. Hite said 2025 was the company’s strongest year ever for synthetic royalties, with four synthetic deals totaling more than $2 billion. He also cited a broader market trend, stating that synthetic royalty transaction value reached $4.7 billion in 2025, up about 50% from the prior year, while still representing a small share of overall biopharma funding.
In Q&A, Hite said the company was “super excited” about synthetic royalties and was seeing ongoing demand, while emphasizing that deal selection would remain disciplined and focused on high-quality opportunities.
Portfolio and pipeline catalysts
Urista said capital deployment in 2025 remained balanced, with 67% invested in approved products and 33% in development-stage therapies, consistent with historical averages. He highlighted that the fourth quarter alone included close to $900 million in capital deployment and covered both existing royalties and synthetics. He also pointed to FDA approval and launch of Cytokinetics’ aficamten in obstructive hypertrophic cardiomyopathy as a recent catalyst that should contribute to new royalty-generating launches.
Looking ahead, Urista outlined multiple pivotal readouts expected over the next 24 months across Royalty Pharma’s development-stage portfolio. He highlighted upcoming milestones including:
- First Phase 3 data in 2026 for Revolution Medicines’ RMC-6236 in pancreatic cancer
- Novartis’ pelacarsen outcomes trial in Lp(a) lowering, with results expected in 2026
- Biogen’s litifilimab data in lupus expected late 2026 or early 2027
- Potential 2027 pivotal data for Sanofi’s frexalimab in multiple sclerosis and J&J’s seldorexant in major depressive disorder
- An Lp(a) outcomes readout from Amgen’s olpasiran expected in 2027
Urista added that, across 20 development-stage therapies, the company estimates combined peak sales of more than $43 billion on a non-risk-adjusted basis, translating to more than $2.1 billion in peak annual royalties.
In Q&A, management addressed several product-specific topics. Coyne said Vertex’s patient conversion to Alyftrek had been “gradual but steady” and broadly consistent with Royalty Pharma’s expectations, noting it can be difficult to switch patients from Trikafta due to its strong efficacy. Coyne also reiterated the company’s longer-term view that the cystic fibrosis franchise remains an important contributor, including in a downside scenario regarding ongoing arbitration. Urista discussed aficamten’s ongoing study in non-obstructive HCM, describing it as upside, while noting the company’s original investment thesis was based on the obstructive indication. On Tremfya, Urista said J&J’s oral IL-23 program should be viewed as market-expanding rather than a cannibalization risk, while reiterating enthusiasm for Tremfya’s momentum. He also said the company remained positive on Trelegy’s durability within GSK’s broader respiratory franchise.
Financial performance, balance sheet, and 2026 guidance
Coyne reported royalty receipts grew 17% in the fourth quarter and 13% for 2025, while portfolio receipts grew 18% in the quarter and 16% for the year. Operating and professional costs were 6.7% of portfolio receipts in the fourth quarter and 8.9% for the year, with the fourth quarter reflecting early benefits from the internalization. Portfolio cash flow (adjusted EBITDA less net interest paid) was $815 million in the quarter and $2.7 billion for the year, which Coyne said implied an approximately 84% margin for 2025.
On capital allocation, Legorreta said the company announced $4.7 billion of transactions and deployed $2.6 billion in 2025, while returning $1.7 billion to shareholders through $1.2 billion of buybacks (37 million shares) and more than $500 million in dividends. Coyne described a “dynamic capital allocation framework,” explaining that repurchases accelerated when the stock appeared undervalued and deal activity was slower, then moderated as investment opportunities increased.
Royalty Pharma ended 2025 with $619 million of cash and equivalents, $9.2 billion of investment-grade debt outstanding, and leverage of about 3x total debt to adjusted EBITDA (2.8x net). Coyne said the company had a $1.8 billion undrawn revolver and characterized overall financial capacity as more than $3.5 billion when considering cash, cash generation, and access to debt markets.
For 2026, Coyne guided to portfolio receipts of $3.275 billion to $3.425 billion, and said the outlook implies royalty receipt growth of about 3% to 8%. He said the guidance reflects headwinds including loss of exclusivity for Promacta, the launch of a biosimilar Tysabri in the U.S., and the potential impact of the IRA. The company also expects milestones and other contractual receipts to decline to about $60 million in 2026 from $128 million in 2025. Operating and professional costs are expected at 5.5% to 6.5% of portfolio receipts, and interest paid is expected at roughly $350 million to $360 million, reflecting the impact of $2 billion of notes issued in September 2025.
In closing remarks, Legorreta reiterated confidence in the company’s position as a leader in a growing biopharma royalty market, cited plans to expand the company’s team and platform in China, and said management believes Royalty Pharma can generate annualized total shareholder returns of at least the mid-teens over the next five years.
About Royalty Pharma (NASDAQ:RPRX)
Royalty Pharma plc is a specialty finance company that acquires biopharmaceutical royalty interests and provides non-dilutive financing to drug developers and rights holders. The firm purchases future royalty streams, milestone-contingent payments and other revenue rights linked to approved and late-stage pharmaceutical and biotechnology products. By paying upfront consideration for these rights, Royalty Pharma seeks to generate long-term cash flows tied to the commercial performance of a diversified portfolio of medicines.
The company’s transaction structures include outright royalty purchases, structured financings and milestone arrangements tailored to the needs of innovator companies, academic institutions and investors.
