RPRX 10-K & 10-Q changes, risk factors and insider trading

•risks related to the growth and dynamics of the royalty market;

•uncertainties related to the acquisition ofacquiring interests in development-stage biopharmaceutical product candidates and our strategy to add interests in development-stage product candidates to our product portfolio;

•potential strategic acquisitions of operating biopharmaceutical companies;

•marketers of products that generate our royalties are outside of our control and are responsible for development, pursuit of ongoing regulatory approval, commercialization, manufacturing and marketing;

•theour ability of the Manager or its affiliates to attract and retain highly talented professionals;

•cyber-attackscyber-attacks, data breaches or other failures in telecommunications or information technology systems; and

Biopharmaceutical product sales may be lower than expected due to a number of reasons, including pricing pressures, insufficient demand, product competition, failure of clinical trials, delays or failures in obtaining marketing approval in one or more jurisdictions or for additional product indications, lack of market acceptance, changes in the marketer’s strategic priorities, obsolescence, lack of acceptancecoverage or insufficient reimbursement by healthcare programs or insurance plans, loss of patent protection, government regulations orand other factors,factors. and development-stageDevelopment-stage product candidates may also fail to reach the market. Unexpected side effects, safety or efficacy concerns canmay arise with respect to a product, leading to product recalls, withdrawals, diminishing prescribing by physicians, declining salesreimbursement rates or sales, or litigation. As a result, payments of our royalties may be reducedreduced, delayed or ceased.ceased, Inwhich addition,could theseadversely payments may be delayed, causingaffect our near-term financial performanceperformance, tointernal berates weakerof thanreturn, expected.returns on invested capital and returns on invested equity or long-term outlook.

We have beenhistorically able to growgrown our business over time by primarily acquiring royalties. However, we may not be able to identify and acquire a sufficient number of royalties, or royalties of sufficient scale, to invest the full amount of capital that may be available to us in the future, or at our targeted amount and rate of capital deployment, which could prevent us from executing our growth strategy and negatively impact our business. Changes in the royalty market, including its structure, participants, growth rate, changes in preferred methods of financing and capital raising in the biopharmaceutical industry, or a reduction in the growth of the biopharmaceutical industry, could lead to diminished opportunities for us to acquire royalties, fewer royalties (or fewer royalties of significant scale) being available, or increased competition for royalties. Even if we continue to acquire royalties, they generally will not generate a meaningful return for a period of several years, if at all, due to transaction structures, circumstances relating to the underlying products or other factors. As a result, we may not be able to continue to acquire royalties or otherwise grow our business as we have in the past, or at all.

We may acquire more royalties on development-stage product candidates that have not yet received marketing approval by any regulatory authority or been commercialized. There can be no assurance that the FDA, the Medicines and Healthcare products Regulatory Agency (“MHRA”), the European Medicines Agency (“EMA”),EMA, Pharmaceuticals and Medical Devices Agency (“PMDA”) or other regulatory authorities will approve such products or that such products will be brought to market on a timely basis or at all, the pricing or reimbursement of such products, if approved, or that the market will be receptive to such products. We have previously acquired royalties on development-stage product candidates for which clinical development was stopped for a number of reasons, including clinical trials failing to meet their primary endpoints. These failures have resulted in, and future failures could lead to, non-cash impairment charges or other investment write downs.

If the FDA, MHRA, the EMA, PMDA or other regulatory authority approves a development-stage product candidate that generates our royalties, the labeling, packaging, manufacturing, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. The subsequent discovery of previously unknown problems with the product, including adverse events of unanticipated severity or frequency, may result in marketing restrictions on the marketing of the product and could includeor withdrawal of the product from the market.

Uncertainty relating to development-stage product candidates makes it more difficult to develop accurate assumptions for our internal models, which canmay result in reduced royalties compared to our estimates. There can be no assurance that our assumptions around the likelihood of a development-stage product candidate’s approvalapproval, expected pricing or achieving significantour forecasted sales will prove correct, that regulatory authorities will approve such development-stage product candidates, that such development-stage product candidates will be brought to market on a timely basis or at all, or that such products will achieve commercial success or result in royalties consistent with our estimates.

We may undertake strategic acquisitions of operating biopharmaceutical companies or acquire securities of biopharmaceutical companies. Our failure to realize the expected benefits of such acquisitions could adversely affect our business, financial condition or results of operations.

We may acquire companies with significant royalty assets or where we believe we could create significant synthetic royalties. These acquired or created royalty assets may not perform as we project. Moreover, the acquisition of operating biopharmaceutical companies willmay resultexpose inus the assumption of, or exposure to,to liabilities of the acquired business that are not inherent in our other royalty acquisitions, such as direct exposure to product liability claims, high fixed costs or an expansion of our operations and expense structure, thereby potentially decreasing our profitability. The diversion of our management’s attention and any delay or difficulties encountered in connection with any future acquisitions we may consummate could result in the disruption of our on-going business operations. Despite our business, financial and legal due diligence efforts, we have limited experience in assessing opportunities to acquire operating businesses, and we ultimately may be unsuccessful in ascertaining or evaluating all risks associated with such acquisitions. Moreover, we may need to raise additional funds through public or private debt or equity financing to acquire any businesses or products, which may result in dilution for shareholders or the incurrence of indebtedness. As a result, our acquisitionacquisitions of operating biopharmaceutical companies could adversely affect our business, financial condition or results of operations.

We may seek to expand our market opportunity by acquiringacquire securities issued by biopharmaceutical companies. Where we acquire equity securities as all or part of the consideration for business development activities, the value of those securities will fluctuate, and may depreciate. We will not control the companies in which we acquire securities, and as a result, we will have limited ability to determine management, operational decisions or policies. Further, such transactions may face risks and liabilities that due diligence efforts fail to discover, that are not disclosed to us, or that we inadequately assess. In addition, as a result of our activities, we may receive material non-public information about other companies. Where such information relates to a company whose equity securities we hold, we may be delayed or prevented from selling such securities when we would otherwise choose to do so, and such delay or prohibition may result in a loss or reduced gain on such securities.

We use leverage in connection with our capital deployment, which magnifies the potential for loss if the royalties acquiredwe acquire do not generate sufficient income to us.income.

We use borrowed funds to finance a significant portion of our capital deployment.deployment with borrowed funds. The use of leverage creates an opportunity for an increased return but also increases the risk of loss if our assets do not generate sufficient cash flows to us.flows. Our interest expense has increased in recent years. The interest expense and other costs incurred in connectionassociated with suchour borrowings may not be covered by our cash flow. In addition, leverage may inhibit our operating flexibility and reduce cash flow available for dividends or to make share repurchases.

TheOur level of our indebtedness could limit our ability to respond to changing business conditions. The various agreements relating togoverning our borrowings may impose operating and financial restrictions on us which could affect the number and size of the royalties that we may pursue. Therefore, no assurance can be given that we will be able to take advantage of favorable conditions or opportunities as a result of any restrictive covenants under our indebtedness. There can also be no assurance that additional debt financing, either to replace or increase existing debt financing, will be available when needed or, if available, will be obtainableor on terms that are commercially reasonable.reasonable terms.

The success of our business depends uponon key members of theour Manager’s advisory team who may not continue to work for the Manager.team.

We depend on the expertise, skill and network of business contacts of the key members of the Manager’s advisoryour team, who evaluate, negotiate, structure, execute, monitor and service our assets. Our future success depends to a significant extent on the continued service and coordination of theour advisoryteam. teamAlthough of the Manager, particularly Mr. Legorreta. Pursuant to the Management Agreement,our executives of the Manager must devote substantially all of their business time to managing us, unless otherwise approved by the board of directors. Despite this, Mr. Legorreta and otherdirectors, key members of the Manager’s advisoryour team may have other demands on their time, and we cannot assure you that they will continue to be actively involved in our business. Each of these individuals is an employee of the Manager and is not subject to an employment contract with us, which means we do not direct the composition of the Manager’s advisory team as well as the compensation or professional development of these individuals. The departure of any of these individuals or competing demands on their time could adversely affect our business, financial condition or results of operations.

TheOur key advisory professionals of the Manager have relationships with participants in the biopharmaceutical industry, financial institutions and other advisory professionals, which we rely upon to source potential asset acquisition opportunities. If theour key advisory professionals of the Manager fail to maintain such relationships, or to develop new relationships with other sources, we may not be able to grow our portfolio. In addition, we can offer no assurance that these relationships, even if maintained, will generate royalty acquisition opportunities for us in the future.opportunities.

There can be no assurance that the policies and procedures we have established to mitigate conflicts of interest will be effective in doing so.effective.

There could be conflicts of interest between us and our advisorypersonnel. personnel.Every senior executive is subject to a non-compete agreement that is effective for 18 months following termination of their employment for any reason. In addition, executives must devote substantially all of their time to us, unless otherwise approved by the board of directors. Despite this, the ability of our officers and employees to engage in other business activities may reduce the amount of time they spend working for us. For instance, Mr. Legorreta, our Chief Executive Officer, is also a co-founder of and has significant influence over Pharmakon Advisors, which shares physical premises with the Manager. Pharmakon manages BioPharma Credit PLC (LSE: BPCR) and other investment vehicles that collectively are leading providers of debt capital to the biopharmaceutical industry.industry Mr.and Legorretahe has a substantial investment in BioPharma Credit. In addition, Mr. Legorreta serves as the chairperson of theProKidney Corp.’s board of directors of ProKidney Corp. and he has founded and participates in foundations that receive and provide medical research funding. Even though he is involved with Pharmakon,the BioPharma Credit PLC, ProKidney Corp.companies and the foundations described above, among other organizations, Mr. Legorreta does not have any material constraints on the time he has available to devote to the Manager and thereby to us. While the Manager and Pharmakon may pursue similar investment opportunities, we believe that actual conflicts of interest are rare due to differing investment strategies, and the fact that royalty holders determine the type of transaction they seek. Under arrangements with Pharmakon, the Manager subleases office space to Pharmakon, and the partieswe may provide research, business development, legal, compliance, financial and administrative services to one another. The Manageranother, and Pharmakoneach reimburseparty eachreimburses the other to the extent that one of themit provides materially more services to the other than theyit receive in return. In addition, certain employees of the Manager may receive compensation from Pharmakon.receives.

To service our indebtedness and meet our other ongoing liquidity needs, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. If we cannot generate the required cash, we may not be ableunable to make the required payments under our indebtedness.

As of December 31, 2024,2025, our total principal amount of our senior unsecured notes outstandingand borrowings under our term loan was $7.8$9.2 billion. In addition,addition to this indebtedness, we have up to $1.8 billion of available revolving commitments under our Revolving Credit Facility (as defined below). Furthermore, on August 4, 2025, we entered into an uncommitted credit facility, which provides for borrowing capacity of up to $350 million at the discretion of the lender thereunder. Except for RP Holdings,Holdings and RP Manager, our subsidiaries that do not guarantee theour senior unsecured notesindebtedness will have no obligation, contingent or otherwise, to pay amounts due under theour senior unsecured notesindebtedness or to make any funds available to pay those amounts, whether by dividend, distribution, loan or other payment. We cannot assure you that our business will generate sufficient cash flow from operations to enable us to pay our indebtedness or to fund our other liquidity needs.

Absent sufficient cash flow and the ability to refinance, we could alsomay be forced to sell assets to make up for any shortfall in our payment obligations. However, the terms of the agreements that governgoverning our existing outstanding debtindebtedness limit our and our subsidiaries’ ability to sell assets and also restrict the use of proceeds from such a sale. Accordingly, we may not be ableunable to sell assets quickly enough or for sufficient amounts to enable us to meet our obligations on our indebtedness.

We are subject to interest rate fluctuation exposurefluctuations through any borrowings under our Revolving Credit FacilityFacility, Term Loan and ourthrough investments in money market accounts and marketable securities, the majority of which bear a variable interest rate.rates. To the extent thatIf interest rates generallywere to increase, our borrowing costs may increase and our leverage strategy willmay become more costly, leadingwhich tocould diminishedreduce Portfolio Cash Flow and net profits. If interest rates were to decrease, returns on our investments in money market accounts and marketable securities may decrease.

Certain products pay royalties in currencies other than U.S. dollars, which creates foreign currency risk primarily with respect to the Euro, Canadian dollar, British pound, Swiss franc and Japanese yen, as our functional and reporting currency is the U.S. dollar. In addition, our results of operations are subject to foreign currency exchange risk through transactional exposure resulting from movements in exchange rates between the time we recognize royalty income oron financial royalty revenueassets and the time at which the transaction settles, or we receive the royalty payment. Because we are entitled to royalties on worldwide sales for various products, there is an underlying exposure to foreign currency as the marketer converts payment amounts from local currencies to U.S. dollars using a quarterly average exchange rate. Therefore, cash received may differ from the estimated receivableamount we expected to receive based on fluctuations in currency.

We may have limited information concerning the products generating the royalties we are evaluating for acquisition. Often, the information we have regarding products following our acquisition of a royalty may be limited to the information that is available in the public domain. Therefore, there may be material information that relates to such products that we would like to know but do not have and may not be able to obtain. For example, we domay not alwayshave knowaccess to the results of studies conducted by marketers of the products or others or the nature or amount of any complaints from doctors or users of such products. In addition, the market data that we obtain independently may also prove to be incomplete or incorrect. Due to these and other factors, the actual cash flow from a royalty may be significantly lower than the amounts we estimate, which could negatively impact our estimates.internal rates of return, return on invested capital and return on invested equity.

Our business model is based on multiple-year internal and external forecasts regarding product sales and numerous product-specific assumptions in connection with each royalty acquisition, including where we have limited information regarding the product. There can be no assurance that the assumptions underlying our financial models, including those regarding product salespricing, reimbursement rates or sales, competition, patent expirations, exclusivity terms, license terms or license terminations for the products underlying our portfolio, are accurate. These assumptions involve a significant element of subjective judgment and may be, and in the past have been, adversely affected by post-acquisition changes in market conditions and other factors affecting the underlying product. The risks relating to these assumptions may beare exacerbated for development-stage product candidates due to the uncertainties around their development, labeling, regulatory approval, commercialization timing, anticipated pricing, manufacturing and supply, competing products or related factors. Our assumptions regarding the financial stability or operational or marketing capabilities of the partner obligated to pay us royalties may also prove, and in the past have proven, to be incorrect. Due to these and other factors, the assets in our current portfolio or future assets may not generate expected returns or returns in line with our historical financial performance or in the time periods we expect or at all, which could adversely affect our business, financial condition or results of operation.

As a result of the non-cash charges associated with the application of the effective interest method accounting methodology, our income statement activity in respect of many of our royalties can be volatile and unpredictable. Small declines in sell-side equity research analysts’ consensus sales forecasts over a long time horizon can result in an immediate non-cash income statement expense recognition, even though the applicable cash inflows will not be realized for many years into the future. For example, in late 2014 we acquired our royalty on the cystic fibrosis franchise, which is classified as a financial royalty asset. Beginning in the second quarter of 2015, declines in near-term sales forecasts of sell-side equity research analysts caused us to recognize non-cash provision expense and build up a corresponding cumulative allowance which reduced the gross balance for this financial royalty asset. Over the course of the next 10 quarters, we recognized non-cash provision expense as a result of these changes in forecasts, including a non-cash expense of $743.2 million in 2016, ultimately reaching a peak cumulative allowance of $1.30 billion by September 30, 2017 related to this financial royalty asset. With the approval of the Vertex triple combination therapy, Trikafta, in October 2019, sell-side equity research analysts’ consensus sales forecasts increased to reflect the larger addressable market and the extension of the expected duration of the Trikafta royalty. While small reductions in the cumulative allowance for the cystic fibrosis franchise were recognized as provision income in 2017 and 2018, there remained a $1.10 billion cumulative allowance that was fully reduced by recognizing non-cash provision income of $1.10 billion in 2019 as a result of an increase in sell-side equity research analysts’ consensus sales forecasts associated with the Trikafta approval. Despite the growth in royalty receipts following the approval of Trikafta, the financial statement impact caused by the application of the effective interest accounting methodology could result in a negative perception of our results in a given period. In addition, because of the conservative assumption that royalties will only be collected on the tezacaftor component of Vertex’s Alyftrek and not on the deuterated ivacaftor component, if deuterated ivacaftor is determined to be royalty-bearing, the impact to our 2024 results of operations would be recognition of provision income of approximately $259.4 million.

WhileAlthough our current asset portfolio includes royalties relating to over 35 marketed products, the top five product franchises accounted for 64%61% of our Royalty Receipts in the year ended December 31, 2024.2025. In addition, our asset portfolio may not be fully diversified by geographic region or other criteria.factors. Any significant deterioration in the cash flows from the top products in our asset portfolio could negatively impact our internal rates of return, return on invested capital and return on invested equity, which could, in turn, adversely affect our business, financial condition or results of operations.

There are a limited number of suitable and attractive opportunities to acquire high-quality royalties. Therefore, competitionCompetition to acquire such royalties is intensesignificant and may increase. We compete with othera broad range of potential acquirers for these opportunities,acquirers, including biopharmaceutical companies that market the products on which royalties are paid, investment vehicles and other pools of capital, financial institutions, institutional investorsinvestors, (including sovereign wealth and pension funds)funds, and others.other market participants. These competitors may be able to access lower cost capital, may be larger than us, may have relationships that provide them access to opportunities before us, or may be willing to acquire royalties for lower projected returns than we are.

The biopharmaceutical industry is a highly competitive and rapidly evolving industry. The length of any product’s commercial life cannot be predicted with certainty. One or more products on which we are entitled to a royalty may be rendered obsolete or non-competitive by new or alternate products or improvements made to existing products on which we are not entitled to a royalty, either by the current marketer of such products or by another marketer. Current marketers of products may undertake these development efforts in order to improve their products or to avoid paying our royalty. Adverse competition,Competition, obsolescence or governmental and regulatory action or healthcare policy changes could significantly affect the revenues, including royalty-related revenues, of the products which generate our royalties.

•governmental regulation,regulation and policy, including price caps;

•availability of lower-cost generics or biosimilars or alternative treatments;

Unsuccessful attempts to acquire new royalties could result in significant costscosts, divert management attention and negativelyadversely impactaffect subsequentour attemptsability to locate and acquirepursue other assets.investment opportunities.

The investigationevaluation of each specific targetpotential royalty acquisition and the negotiation, drafting and execution of relevant agreements requires substantial management time and attention and results in substantial costs for accountants, attorneys, consultants and other advisors. If a decision is made not to complete a specific acquisition, the costs incurred for the proposed transaction would not be recoverable from a third party. Furthermore, even if an agreement is reached relating to a specific target asset, we may fail to consummate the acquisition for any number of reasons, including, in the case of an acquisition of a royalty through a business combination with a public company, approval by the target company’s public shareholders. Unsuccessful attempts to acquire new royalties could hurt our reputation, result in significant costs and ancosts, inefficient use of management’s time.time and potential reputational harm. The opportunity costdiversion of divertingmanagement managementattention and financial resources could negativelyadversely impactaffect our ability to locateevaluate andor acquirecomplete other assets.investments.

In the United States, pharmaceutical product pricing is subject to enhancedincreasing government regulation, public scrutiny and callspolicy for reforms.initiatives. For example, initiatives toward “most favored nation” (MFN) drug pricing in the United States could lead to decreased drug pricing or the drug pricing provisions of the Inflation Reduction Act (“IRA”) requireswhich require manufacturers of select drugs to engage in a process with the U.S. Federal government to setestablish newnegotiated Medicare prices (which becomes effective in January 2026 for 10 prescription drugs).prices. It is unknown what form any future changes or any law would take under the Trump administration. In addition, the U.S. Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (the “ACA”) established a major expansion of healthcare coverage, financed in part by several new rebates, discounts and taxes that had a significant effect on the expenses and profitability on the companies that manufacture the products that generate our royalties.

The procedures to approve biopharmaceutical products for commercialization vary among countries and can involve additional testing and time. Such procedures may include on-site inspections by regulatory authorities at clinical trial sites or manufacturing facilities, which inspections may be delayed by travel restrictions imposed in response to pandemics or other infectious diseases.delayed. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval and many include additional risks, such as pricing approval.

Our board of directors is under no obligation to pay dividends, make distributions or repurchase our ordinary shares and it may decide to use cash to fund asset acquisitions or operations in lieu of paying dividends, making distributions or repurchasing our ordinary shares. We will pay Equity Performance Awards to anMr. affiliateLegorreta ofand thecertain Manageremployees based on our Net Economic Profit regardless of whether any dividends are paid to our shareholders or any ordinary shares are repurchased. Our board of directors’ decisions with respect to our cash may result in our not paying dividends or not repurchasing our ordinary shares. Our board of directors’ decisions with respect to dividends or repurchases of ordinary shares may adversely affect the market price of our Class A ordinary shares. If we generate positive income, but pay limited or no dividends, holders of Class A ordinary shares may have tax liability on their income in excess of the actual cash dividends received by such holders.

We have discretion as to the types of assets that we may acquire. While we expect the Manager to acquire assets that primarily fall within the biopharmaceutical industry, we are not obligated to do so and may acquire other types of assets that are peripheral to or outside of the biopharmaceutical industry. Consequently, our asset acquisitions in the future, and the cash flows from such assets, may not resemble those of the assets in our current portfolio. We and the Manager may have limited experience acquiring assets that are peripheral to or outside of the biopharmaceutical industry. There can be no assurance that assets acquired in the future will have returns similar to the returns expected of the assets in our current portfolio or be profitable at all.

We are a holding company with no operations and rely on cash generated by our subsidiaries to provide us with the funds necessary to meet our financial obligations and to pay dividends.obligations.

Royalty Pharma plc is a public limited company that was incorporated under the laws of England and Wales to facilitate our initial public offering (“IPO”) in 2020.Wales. “Royalty Pharma,” the “Company,” “we,” “us” and “our” refer to Royalty Pharma plc and its subsidiaries on a consolidated basis. Our principal asset is a controlling equity interest in Royalty Pharma Holdings Ltd (“RP Holdings”), a private limited company incorporated under the laws of England and Wales. We conduct our business through RP Holdings and its subsidiaries.

We are the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry. 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,Trikafta and Alyftrek, GSK’s Trelegy, Biogen’s Tysabri and Spinraza, Roche’s Evrysdi, Astellas and Pfizer’s Xtandi, Johnson & Johnson’s Tremfya, Biogen’s Tysabri and Spinraza, AbbVie and Johnson & Johnson’s Imbruvica, AstellasServier’s and Pfizer’s Xtandi, Novartis’ Promacta, Pfizer’s Nurtec ODT,Voranigo, Gilead’s Trodelvy, Amgen’s Imdelltra and Alnylam’s Amvuttra, among others, and 1420 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.

We consummated an exchange offer on February 11, 2020 (the “Exchange Offer”) to facilitate our IPO.initial public offering (“IPO”). Prior to the Exchange Offer, Royalty Pharma Investments was owned by various partnerships (the “Legacy Investors Partnerships”). Through the Exchange Offer, investors which represented 82% of the aggregate limited partnership interests in the various partnerships (the “Legacy Investors Partnerships”) that owned Royalty Pharma Investments, an Irish unit trust (“Old RPI”), exchanged their limited partnership interests in the Legacy Investors Partnerships for limited partnership interests in RPI US Partners 2019, LP,LP a Delaware limited partnership, orand RPI International Holdings 2019, LP, awhich Caymanare Islandspart exempted limited partnership (together,of the “Continuing Investors PartnershipsPartnerships. Following the Exchange Offer, we became the indirect owner of an 82% economic interest in Royalty Pharma Investments which entitled us to 82% of the economics of its wholly-owned subsidiary RPI Finance Trust, a Delaware statutory trust (“RPIFT”) and 66% of Royalty Pharma Collection Trust, a Delaware statutory trust (“RPCT”). In December 2023, we acquired the remaining 34% interest in RPCT owned by Royalty Pharma Select Finance Trust, a Delaware statutory trust (“RPSFT”).

Prior to Internalization, we were externally managed by RP Management, LLC (the “Manager”),LLC, a Delaware limited liability company,company is(the responsible“Legacy forManager” ouror management, including our day-to-day operations,“RPM”), pursuant to advisory and management agreements (collectively, the “Legacy Management Agreement”).

1. The Legacy Investors Partnerships’ ownership of approximately 18% ofin Old RPIRPI, andwhich RPIis ICAV.the only remaining historical non-controlling interest that existed prior to our IPO. The value of this non-controlling interest will continue to decline over time as the assets in Old RPI andexpire. RPIThe ICAVLegacy expire.Investors Partnerships are referred to as the “legacy non-controlling interests.”

3.2. The Continuing Investors Partnerships’ indirect ownership in RP Holdings through their indirect ownership of RP Holdings’ Class B ordinary shares (the “RP Holdings Class B Interests was approximately 24% as of December 31, 2024.”). RP Holdings Class B Interests are exchangeable into our Class A ordinary shares. As the Continuing Investors Partnerships conduct exchanges, the Continuing Investors Partnerships’ indirect ownership in RP Holdings decreases and the value of this non-controlling interest decreases. Additionally, RP Holdings began to retire RP Holdings Class A Interests held by us in connection with our repurchase of our Class A ordinary shares. As RP Holdings retires RP Holdings Class A Interests, our ownership in RP Holdings decreases and the value of this non-controlling interest increases.

4.3. RPIPablo EPALegorreta’s Vehicle LLC’s (“EPA Vehicle”)ultimate ownership of the RP Holdings’ Class C ordinary share (the “RP Holdings Class C Special Interest”) which entitles him to receive Equity Performance Awards (“Founder’s Equity”).

Total income and other revenues is primarily comprised of interest income from our financial royalty assets and royalty income generally arising from successful commercialization of products developed through research and development (“R&D”) funding arrangements. Most of our royalties are classified as financial assets as our ownership rights are generally protective and passive in nature. In certain instances, we may acquire a royalty that includes more substantial rights or ownership of the underlying intellectual property, we classify such royalties as intangible assets and recognize revenue from these intangible royalty assets.

R&D funding expense consists of certain development-stage funding payments that we have made to counterparties to acquire royalties or milestones on product candidates. It includes development-stage fundingThe payments tocan counterparties that arebe made on an upfront orbasis, upon pre-approval milestones,milestones and development-stage funding payments that are made to counterpartiesor over time as the related product candidates undergo clinical trials with our counterparties.trials.

Prior to the Internalization, the most significant component of general and administrative (“G&A”) expenses was the Management Fees (as defined below). Under the Legacy Management Agreement, we paypaid a quarterly operating and personnel payment to the ManagerRPM or its affiliates (“Operating and Personnel Payments”) equal to 6.5% of the cash receipts from Royalty Investments (as defined in the Legacy Management Agreement), or Portfolio Receipts for such quarter, and 0.25% of the value of our security investments under GAAP as of the end of such quarter.quarter (“Management Fees”).

Equity in (earnings)/losses of equity method investees

Equity in (earnings)/losses of equity method investees primarily includes the results of our share of income or loss from the following non-consolidated affiliates:

Other income, net primarily includes the changes in fair market value of our equity securities, derivative instrumentssecurities and available for sale debt securities, including related forwards and funding commitments, and interest income.

The net income attributable to non-controlling interests includes income attributable to the legacy non-controlling interests and the continuing non-controlling interests. Following our acquisition of the remaining non-controlling interest in RPCT held by RPSFT in December 2023, and since the Legacy Investors Partnerships no longer participate in investment opportunities, the related net income attributable to the legacy non-controlling interests is expected to continue to decline over time as the assets held by Old RPI and RPI ICAV mature. The net income attributable to the continuing non-controlling interests includes RP Holdings Class B Interests held by the Continuing Investors Partnerships for which the related future net income will decline over time if the investors who indirectly own RP Holdings Class B Interests conduct exchanges for our Class A ordinary shares.

In 2023,2025, we recorded provision expenseincome of $560.7$295.8 million, comprised of $538.4$269.7 million in provision expenseincome for changes in expected cash flows and $22.3$26.2 million in provision expenseincome for current expected credit losses. We recorded provision expenseincome for changes in expected cash flows forprimarily Tysabri,related Imbruvicato the cystic fibrosis franchise, Tremfya, and TremfyaXtandi primarilydue to increases in sell-side equity research analysts’ consensus sales forecasts, partially offset by provision expense related to Evrysdi due to declines in sell-side equity research analysts’ consensus sales forecasts. The provision expenseincome for credit losses was primarily drivenrelated to Niktimvo as a result of changes in sell-side equity research analysts’ consensus sales forecasts, partially offset by the additionsaddition of Skytrofa and AdstiladrinImdelltra to our portfolio.

R&D funding expense decreasedincreased by $50.0$450.0 million, or 96.2%,million in 20242025 as compared to 2023.2024 Indue 2023, we recognizedto R&D funding expensearrangements ofentered $50.0into millionin 2025 related to adaraxonrasib clinicaland milestonelitifilimab paymentof for$250.0 aficamten.million and $200.0 million, respectively.

Equity in earnings of equity method investees waswere relatively flat in 20242025 as compared to 2023.2024. In 2025, we recorded income allocations from the Legacy SLP Interest of $17.0 million and $12.1 million from the Avillion Entities, primarily driven by a gain related to the FDA approval of Airsupra’s supplemental new drug application which triggered a milestone payable from AstraZeneca to the Avillion Entities. In 2024, we recorded an income allocationallocations from the Legacy SLP Interest of $10.4 million and $19.2 million from the Avillion EntitiesEntities, primarily driven by a gain related to the positive result of Airsupra’s Phase III clinical trial which triggered a milestone payment from AstraZeneca to the Avillion Entities. In 2023, we recorded an income allocation of $24.6 million from the Avillion Entities primarily driven by a gain related to AstraZeneca’s election to exercise the option to commercialize Airsupra in the United States.

Interest expense increased by $38.3$82.2 million, or 20.5%36.4% in 20242025 as compared to 2023,2024, primarily driven by the issuance of the $1.5 billion ofand senior unsecured notes in June 2024. The increase was partially offset by the repayment of $1.0$2.0 billion of senior unsecured notes in June 2024 and September 20232025, uponrespectively, maturity.and the $380 million term loan that we assumed as part of the Internalization. The weighted average coupon rate on our senior unsecured notes outstanding as of December 31, 20242025 and 20232024 was 3.06%3.75% and 2.48%,3.06%, respectively.

As of MarchJune 31,30, 2026, our total principal amount of our senior unsecured notes and borrowings under our term loan was $9.2 billion. In addition to this indebtedness, we have up to $1.8 billion of available revolving commitments under our unsecured revolving credit facility (“Revolving Credit Facility (as defined below”). Furthermore, on August 4, 2025, we entered into an uncommitted credit facility, which provides for borrowing capacity of up to $350 million at the discretion of the lender thereunder. Except for RP Holdings and RP Manager, our subsidiaries that do not guarantee our indebtedness will have no obligation, contingent or otherwise, to pay amounts due under our indebtedness or to make any funds available to pay those amounts, whether by dividend, distribution, loan or other payment. We cannot assure you that our business will generate sufficient cash flow from operations to enable us to pay our indebtedness or to fund our other liquidity needs.

Although our current asset portfolio includes royalties relating to over 35 marketed products, the top five product franchises accounted for 62%59% of our Royalty Receipts in the first threesix months of 2026. In addition, our asset portfolio may not be fully diversified by geographic region or other factors. Any significant deterioration in the cash flows from the top products in our asset portfolio could negatively impact our internal rates of return, return on invested capital and return on invested equity, which could, in turn, adversely affect our business, financial condition or results of operations.

We are a public limited company incorporated under the laws of England and Wales. English law provides that a board of directors may only allot shares (or rights to subscribe for or convert into shares) with the prior authorization of shareholders, such authorization stating the aggregate nominal amount of shares that it covers and valid for a maximum period of five years, each as specified in the articles of association or relevant shareholder resolution. We obtained shareholder authority to allot additional shares until the end of the next annual general meeting of the Company or, if earlier, AugustSeptember 12,4, 2026,2027, the date that is 15 months after MayJune 12,4, 2025.2026. We intend to seek renewal of this authorization at each year’s annual general meeting of shareholders.

English law also generally provides shareholders with preemptive rights when new shares are issued for cash. However, it is possible for the articles of association, or for shareholders to pass a special resolution at a general meeting, being a resolution passed by at least 75% of the votes cast, to disapply preemptive rights. Such a disapplication of preemptive rights may be for a maximum period of up to five years from the date of adoption of the articles of association, if the disapplication is contained in the articles of association, or from the date of the shareholder special resolution, if the disapplication is by shareholder special resolution. In either case, this disapplication would need to be renewed by our shareholders upon its expiration (i.e., at least every five years). We have obtained authority from our shareholders to disapply preemptive rights until the end of the next annual general meeting of the Company or, if earlier, AugustSeptember 12,4, 2026,2027, which is the date that is 15 months after MayJune 12,4, 2025,2026, which disapplication will need to be renewed upon expiration to remain effective, but may be sought more frequently for additional five-year terms (or any shorter period). We intend to seek renewal of this authorization at each year’s annual general meeting of shareholders.

Our shareholders approved the authorization of certain “off market purchases” that will expire five years from MayJune 12,4, 20252026 unless renewed by our shareholders prior to the expiration date. We cannot assure shareholders that situations will not arise where such shareholder approval requirements for any of these actions would deprive our shareholders of substantial capital management benefits.

Total income and other revenues is primarily comprised of interest income from our financial royalty assets and royalty income generally arising from successful commercialization of products developed through research and development (“R&D”) funding arrangements.agreements. Most of our royalties are classified as financial assets as our ownership rights are generally passive in nature.

The provision for credit losses on unfunded commitments, a non-cash item, represents the current expected credit losses on the unfunded portions of oura two part funding arrangementsarrangement we entered into with Revolution Medicines, Inc. (“Revolution Medicines”). in the second quarter of 2025. As of June 30, 2026, the unfunded commitments include the potential purchase of additional royalty interests on daraxonrasib, which, if funded, will be accounted for as financial royalty assets, and funding of senior secured term loans. Because we have limited protective rights with respect to each unfunded portion once the committed funding is provided, we are required to recognize an allowance for current expected credit losses based on our estimate of probability of future funding. We estimate this allowance using the probability of default and loss given default method. We are required to reassess our estimate of current expected credit losses as of each reporting date and any subsequent change to such allowance, which can be income or expense, is reflected within Provision for credit losses on unfunded commitments in the condensed consolidated statements of operations.

We enter into R&D funding expenseagreements consists of certain development-stage funding payments that we have made towith counterparties to acquire royalties or milestones on product candidates. TheR&D paymentsfunding canexpense consists of development-stage funding costs recognized under these agreements, which may be made onupfront, anas upfront basis,milestones upon pre-approvalachievement milestonesof certain predefined criteria, or over time as the related product candidates undergo clinical trials.

1.Approximately 22.8 million RP Holdings Class E Interests with an aggregate fair value of approximately $755.4 million, which are expensed over vesting periods on a straight-line basis of generally five to nine years. As of MarchJune 31,30, 2026, we had $609.8$570.9 million of unrecognized compensation expense related to 18.417.2 million RP Holdings Class E Interests that are expected to vest over a weighted average period of 5.35.0 years.

2.The vesting of the Employee EPAs over their remaining service periods and the subsequent change in their fair value. The fair value of the Employee EPAs is driven by the projected performance of the investments within the Portfolio and will fluctuate based on the timing and amount of investments made during the investment period as well as the actual and expected returns on the investments.

Additionally, as each new Portfolio commences after the Internalization, any related Employee EPAs will also be recognized as share-based compensation expense over the required service periods of generally four years and included within General and administrative expenses in the condensed consolidated statementstatements of operations. Lastly, G&A expenses include rent, legal fees and other expenses for professional services.

Other (income)/expense, net

Other (income)/expense, net primarily includes the changes in fair value of our equity securities and available for sale debt securities, including related forwards and funding commitments, and interest income.

Income from financial royalty assets by top products is as follows, in order of contribution to income for the first quartersix months of 2026 (in thousands):

Income from financial royalty assets increased by $55.5$87.6 million, or 10.3%,15.9%, in the firstsecond quarter of 2026 as compared to the firstsecond quarter of 2025, primarily duedriven toby $19.3an increase in interest income from Tremfya and the cystic fibrosis franchise, as well as $27.6 million of interest income from Imdelltra, which was acquired in the third quarter of 2025 and is reflected within other products in the abovetable table,above. asThe well as increasesincrease in interest income from theTremfya cysticwas fibrosisprimarily franchisedriven andby Voranigo.an increase in sell-side equity research analysts’ consensus sales forecasts. The increase in income from the cystic fibrosis franchise was primarily driven by higher interest income following the reversal of the allowance for changes in expected cash flows related to the FDA approval of Alyftrek in the fourth quarter of 2024. The increase from Voranigo reflects the asset’s strong performance since its FDA approval in August 2024.

Other royalty income and revenues increased by $6.8$7.9 million,million or 23.7%,27.9% in the firstsecond quarter of 2026 as compared to the firstsecond quarter of 2025, primarily driven by incomethe fromgrowth fullyin amortizedTrodelvy financial royalty assets.sales.

In the firstsecond quarter of 2026,2025, we recorded provision income of $197.5$203.9 million, comprised of $190.4$196.0 million in provision income for changes in expected cash flows and $7.1$7.9 million in provision income for current expected credit losses. We recorded provision income for changes in expected cash flows primarily related to Evrysdi, TysabriEvrysdi and Xtandi due to increases in sell-side equity research analysts’ consensus sales forecasts, partially offset by provision expense related to Adstiladrin due to changes in sales forecasts.

In the first quartersix months of 2025,2026, we recorded provision incomeexpense of $127.1$70.7 million, comprised of $113.6$69.8 million in provision incomeexpense for changes in expected cash flows and $13.5$0.9 million in provision incomeexpense for current expected credit losses. We recorded provision incomeexpense for changes in expected cash flows primarily related to cystic fibrosis franchiseAdstiladrin due to decline in its sales forecast. In addition, we recorded provision expenses related to the cystic fibrosis franchise, due to an increase in the estimated sales forecast attributable to Alyftrek based on consensus estimates and the conservative assumption that royalties will only be collected on the tezacaftor component of Alyftrek and not on the deuterated ivacaftor component. Although we believe that the deuterated ivacaftor component of Alyftrek is the same as ivacaftor and is therefore royalty-bearing, beginning in the second quarter of 2025, we did not receive from Vertex the full amount of royalty receipts on Alyftrek net sales to which we believe that we are contractually entitled. If deuterated ivacaftor is determined to be royalty-bearing, we may recognize provision income in our results of operations at that time. The provision expense was partially offset by provision income related to Tysabri and Evrysdi due to increases in sell-side equity research analysts’ consensus sales forecasts. The provision income for changes in expected cash flows was partially offset by provision expense related to Evrysdi due to declines in sell-side equity research analysts’ consensus sales forecasts.

R&D funding expense decreased by $10.7$202.6 million, or 21.2%67.4%, in the firstsecond quarter of 2026 as compared to the firstsecond quarter of 2025, primarily duedriven to lowerby R&D funding forof litifilimab,$250.0 partiallymillion offsetrelated byto R&Ddaraxonrasib expenserecorded forin TEV-’408.the second quarter of 2025.

G&A expenses increased by $48.8$30.9 million, or 44.1%,10.6%, in the first quartersix months of 2026 as compared to the first quartersix months of 2025, primarily driven by additionalhigher share-based compensation expensesexpense recognized following the InternalizationInternalization, which was completed onin May 16,2025. 2025.The increase in period-over-period G&A expenses was partially offset by the absence of $28.7 million of acquisition-related costs for the Internalization in the firstprior quarterperiod ofand 2025the primarily consistedelimination of Management Fees,Fees including a $33.0 million payment related tofollowing the sale of the MorphoSys Development Funding Bonds.Internalization.

We recognized a financial royalty asset impairment charge of $69.4 million in the first quartersix months of 2026 related to Tazverik following announcements by Ipsen and Eisai in March 2026 of the voluntary withdrawal of Tazverik across all indications and markets. We did not recognize impairment charges in the first quartersix months of 2025.

Equity in earnings of equity method investees increased by $15.3$16.7 million, or 237.7%,182.8%, in the first quartersix months of 2026 as compared to the first quartersix months of 2025. Equity in earnings of equity method investees in the first quartersix months of 2026 was primarily driven by a $15.2 million gain related to our portion of the Airsupra sales-based milestone that the Avillion Entities received from AstraZeneca. Equity in earnings of equity method investees in the first quartersix months of 2025 was primarily driven by an income allocation from the Legacy SLP Interest of $8.2$10.6 million.

Interest expense increased by $28.5$24.9 million, or 43.6%,36.3%, in the firstsecond quarter of 2026 as compared to the firstsecond quarter of 2025, primarily driven by the issuance of $2.0 billion of senior unsecured notes in September 2025 and the $380 million term loan that we assumed as part of the Internalization. The weighted average coupon rate on our senior unsecured notes outstanding as of March 31, 2026 and 2025 was 3.75% and 3.06%, respectively.2025.

Other (income)/expense, net

Other expense,income, net of $22.8$37.9 million in the firstsecond quarter of 2026 was primarily comprised of $20.2$69.2 million of lossesgains on equity securities and $6.7$5.1 million of interest income earned on cash and cash equivalents, partially offset by $34.9 million of losses on available for sale debt securities primarilydue driven by theto changes in fair value of the Cytokinetics Funding Arrangements, partially offset by $6.2 million of interest income earned on cash and cash equivalents.Arrangements.

Other expense, net of $40.9$51.2 million in the firstsecond quarter of 2025 was primarily comprised of $45.9$30.6 million of losses on equity securities and $27.4 million of losses on available for sale debt securities due to changes in fair value of the Cytokinetics Funding Arrangements, partially offset by $11.3$8.3 million of interest income earned on cash and cash equivalents.

Net income attributable to ContinuingLegacy Investors Partnerships was relatively flat in the firstsecond quarter of 2026 as compared to firstthe second quarter of 2025.

Net income attributable to Founder’sContinuing EquityInvestors Partnerships decreased by $25.6$5.5 millionmillion, or 56.4% in the firstsecond quarter of 2026 as compared to firstthe second quarter of 2025, primarily driven by the Internalization completed in May 2025. In the first quarter of 2025,lower net income attributable to Founder’sRP EquityHoldings includedas botha Mr.result Legorreta’sof retainedprovision EPAsexpense and employee participationrecognized in the2026 EPAs.as Incompared theto firstprovision quarterincome ofrecognized 2026,in Founder’s Equity includes only Mr. Legorreta’s retained EPAs.2025.

Net income attributable to RPFounder’s HoldingsEquity Classincreased Eby Interests was $16.4$7.0 million in the firstsecond quarter of 2026.2026 Theas RPcompared Holdingsto Classthe Esecond Interestsquarter wereof issued2025, driven by an increase in connectionEPAs withattributable theto Internalization.Founder’s Equity as a result of higher Net Economic Profit, reflecting higher cash receipts from portfolio investments.

Our portfolio consists of royalties on more than 35 marketed therapies and 19 development-stage product candidates. The therapies in our portfolio address therapeutic areas such as rare diseases, neuroscience, oncology, hematology, immunology, respiratory and diabetes, and are delivered to patients across both primary and specialty care settings. The table below shows Portfolio Receipts, including Royalty Receipts by product and milestones and other contractual receipts, in order of contribution to total Royalty Receipts for the first quartersix months of 2026 (in thousands):

(2)Other products primarily include Royalty Receipts on the following products: Crysvita, Emgality, Erleada, Farxiga/Onglyza, IDHIFA, Nesina, Niktimvo, Nurtec ODT, Orladeyo, Skytrofa,Prevymis, Soliqua, YorvipathSoliqua and distributions from the Legacy SLP Interest, which are presented as Distributions from equity method investees on the condensed consolidated statements of cash flows.

•Cystic fibrosis franchise – Royalty Receipts from the cystic fibrosis franchise, including Kalydeco, Orkambi, Symdeko/Symkevi, Trikafta/Kaftrio and Alyftrek, which is marketed by Vertex for the treatment of cystic fibrosis, increased by $3.5$3.6 million in the first quartersix months of 2026 as compared to the first quartersix months of 2025. The increasePerformance was primarilyrelatively dueconsistent toversus strongthe prior year period, as growth in overall cystic fibrosis patientfranchise demand,sales reflected a modestmix benefitshift fromtoward channelAlyftrek, inventory and higher net pricesresulting in thea Unitedlower States,blended whileroyalty ex-U.S. saw solid performance across multiple geographies.rate.

•Trelegy – Royalty Receipts from Trelegy, which is marketed by GSK for the maintenance treatment of chronic obstructive pulmonary disease and asthma, increased by $12.4$14.1 million in the first quartersix months of 2026 as compared to the first quartersix months of 2025, primarily driven by continued strong volume growth across all regions, reflecting patient demand, single inhaler triple therapy class growth,growth and increased market share.

•Evrysdi – Royalty Receipts from Evrysdi, which is marketed by Roche for the treatment of spinal muscular atrophy, increased by $27.0$40.8 million in the first quartersix months of 2026 as compared to the first quartersix months of 2025, attributable to continued growth in Europe and tender-related buying in international markets due to tender-related buying and strong performance in Europe.markets. Additionally, Royalty Receipts benefited from the incremental royalties we acquired in the fourth quarter of 2025.

•Tysabri – Royalty Receipts from Tysabri, which is marketed by Biogen for the treatment of multiple sclerosis, decreasedincreased by $1.7$9.0 million in the first quartersix months of 2026 as compared to the first quartersix months of 2025, dueprimarily todriven by favorable channel dynamics globally and pricing adjustments in the United States, partially offset by increased competition in the rest of world, partially offset by continued resilience in the United States.world.

•ImbruvicaTremfya – Royalty Receipts from Imbruvica,Tremfya, which is marketed by AbbVie and Johnson & Johnson for the treatment of bloodplaque cancerspsoriasis, active psoriatic arthritis and chronicinflammatory graft versus hostbowel disease, decreasedincreased by $7.9$48.0 million in the first quartersix months of 2026 as compared to the first quartersix months of 2025, primarilydriven dueby tomarket continuedshare competitive dynamicsgains and Medicaremarket Partgrowth, Dincluding redesign.strong uptake across recently launched inflammatory bowel disease indications.