Royalty Pharma plc Q2 FY2022 Earnings Call

Good morning and good afternoon to everyone on the call. Thank you for joining us to review Royalty Pharma's second quarter 2022 results. You can find the press release with our earnings results and slides for this call on the Investors page of our website at royaltypharma.com. Moving to Slide 3. I would like to remind you that information presented in this call contains forward-looking statements that involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from these statements. I refer you to our 10-K on file with the SEC for a description of these risks. All forward-looking statements are based on information currently available to Royalty Pharma, and we assume no obligation to update any such forward-looking statements. Non-GAAP financial measures will be used to help you understand our financial performance, and the GAAP to non-GAAP reconciliations are provided in the earnings press release available on our website. With that, please advance to Slide 4. Our speakers on the call today are Pablo Legorreta, Founder and Chief Executive Officer; Marshall Urist, EVP, Head of Research & Investments; and Terry Coyne, EVP, Chief Financial Officer. Pablo will discuss the key highlights after which Marshall will provide a portfolio update and Terry will review the financials. Following concluding remarks from Pablo, we will hold a Q&A session. Chris Hite, our Vice Chairman will also join the Q&A session. And with that, I'd like to turn the call over to Pablo.

Thank you, George, and welcome to everyone on the call. I am delighted to report another quarter of strong execution on our strategy as the leading funder of innovation in life sciences, the partner of choice in the life sciences ecosystem. Slide 6 summarizes our financial and portfolio achievements in the second quarter, which again are of course excellent momentum in our business. First, we delivered 10% growth in adjusted cash receipts reflecting our impressive track record of double-digit growth. Second, we have announced transactions of $2.5 billion year-to-date, including the Trelegy Royalty acquisition, which we completed just after the quarter end. This reflects the strong growth in demand for innovative royalty-based funding solutions. Third, we saw positive progress across our portfolio. Pfizer's proposed acquisition of Biohaven will accelerate value creation to Royalty Pharma. Marshall will walk you through this shortly. In addition, we were pleased to see the FDA acceptance of the regulatory filings of PT027 in asthma as well as intranasal zavegepant in migraine. These important milestones potentially bring this important closer today. Lastly, we raised our full-year guidance for cash receipts based on the strong underlying performance of our existing portfolio and the addition of the Trelegy Royalty. We now expect 7% to 10% top-line growth. This growth reflects a roughly 3% to 4% unfavorable impact from foreign exchange that we expect to face this year, which Terry will talk to you more about in a minute. I would also remind you that our guidance excludes the impact of any investments that we make over the remainder of 2022. On Slide 7, you can see our financials in a little more detail. In the second quarter, we delivered 10% growth in our top-line. We estimate that foreign exchange had a negative 2% to 3% impact in the quarter. The strong double-digit momentum positions us to achieve another year of impressive top-line performance in 2022. Below our top-line, I am also pleased to report that we grew our adjusted EBITDA by 10%. Adjusted EBITDA is an important non-GAAP measure for us, arrived by deducting operating and professional expenses from our top-line. Lastly, our adjusted cash flow, our bottom line grew by 12%. So another quarter of strong double-digit growth across all our key non-GAAP metrics, even with clear foreign exchange headwinds that have been felt across the industry.

Thanks, Pablo. Let's move to Slide 11. Trelegy is a medicine we had been tracking for some time. It's the leading triple combination therapy for chronic obstructive pulmonary disease in asthma and is marketed by GSK, a company with a leading presence in respiratory disease. Our interest in Trelegy reflected its first-in-category status, strong clinical data, high unmet patient need and impressive growth since launch. Last month, we were therefore delighted to execute a highly complex transaction to acquire the royalties on Trelegy. This was no simple task as the acquisition involved multiple parties: Innoviva, Theravance and GSK. Royalty Pharma brought all the parties together, creating a win-win solution for everyone based on our deep industry relationships and ability to creatively restructure the transaction. In this deal, GSK previously paid upward tiering royalties of between 6.5% to 10% on global Trelegy sales, which were split between Theravance and Innoviva. Royalty Pharma agreed to acquire the entire royalty stream for a combined total of $1.31 billion upfront and up to $300 million in potential sales milestones. For Royalty Pharma, this transaction not only adds another blockbuster to our portfolio as Pablo noted, but we expect it to significantly enhance our long-term growth by adding at least $200 million to our adjusted cash receipts in 2025, and deliver returns consistent with our target returns for approved therapies in the high-single to low double-digit range. Slide 12 expands on why we are so excited by the market opportunity for Trelegy and the growth opportunities ahead. Trelegy was the first single device, triple combination inhaled therapy to be approved by the FDA for the maintenance treatment of both COPD and asthma. Both respiratory diseases have a very high incidence in poorly controlled patients. The initial indication, compelling efficacy profile and easy to use single device have helped establish Trelegy as a blockbuster and to grow the penetration of triple therapy. In the last 12 months, GSK reported global Trelegy sales of approximately $2 billion representing year-over-year growth of 50%. Looking forward, we believe there is still very significant scope for sales growth based on increased penetration of triple therapies in the U.S. and expansion in international markets. We note the consensus sell-side forecast projects that Trelegy sales will exceed $3.5 billion by 2025. This would represent an approximate doubling of sales compared with the $1.7 billion reported in 2021.

Thanks, Pablo. Let's move to Slide 17. Total royalty proceeds grew 8% in the second quarter versus the year ago period. Growth drivers in the quarter included the cystic fibrosis franchise Xtandi, which benefited from a prior period adjustment and the Tremfya royalty, which we acquired in July 2021. We also saw significant growth contributions from Promacta from our Biohaven partnership and though not specifically shown on this slide from Cabometyx, Evrysdi and Orladeyo. These positive factors more than offset the loss of contribution from our legacy HIV franchise, as well as year-over-year declines from Imbruvica related to a slower recovery in the CLL market and competitive pressure. Slide 18 shows how our royalty receipts translated to strong adjusted cash flow in the second quarter. As you're aware, adjusted cash receipts is a key non-GAAP metric for us, which we arrive at after deducting non-controlling interest. This amounted to $524 million in the quarter, growth of 10% compared with last year's second quarter. As mentioned earlier, we estimate this growth was achieved despite a 2% to 3% headwind from FX in the quarter. As we move down the column, operating and professional costs were approximately 8% of adjusted cash receipts. As a consequence, we reported 10% growth in adjusted EBITDA in the quarter, consistent with the growth in our top-line.

We'll now open the call to your questions. Operator, please take the first question.

Good morning and thank you. I appreciate the updated comments and congratulations on continued progress. Two quick questions. One, following the investment that you made with Trelegy, I believe that is one of the more sizable, if not the second largest since the IPO. Can you comment about the impact on your capacity to do further deals during this calendar year? And then, second, Marshall appreciated your proactive mention of comments about U.S. drug pricing reform. Can you help us think about based upon the current proposals, how you think about potential implications on how you're assessing opportunities in particular, the industry team's focus on differences in the timelines of the durability and exposure of small molecules versus biologics? However that may be defined if you could share any further comments on how that changes your investment calculus. Thank you.

Sure. Thanks for the questions. Good to hear you. Maybe just briefly, I'll pass it onto Marshall. But as you know, I have outlined the pillars of our strategy, and I think there's no question that the business that is driving and I think will continue to drive very significant growth going forward is the synthetic royalty opportunity in front of us, which is very, very significant. So the biotech essentially needs very significant amounts of capital to continue to fund innovation. We are the partner of choice of this company and have really figured how to work with them in very creative ways. For example, with our new launch capital and development capital structures that are ideal for this company. So that will give us a core of transactions, maybe half a dozen, maybe more, maybe less per year, that should result in very consistent capital deployment. And in addition to that, there are these larger transactions that take time, a lot of skill, and a lot of skill because one of the things that maybe people don't focus on or is how complex it can be to actually bring together diverse parties like Innoviva, Theravance, and Glaxo with a common purpose and really align all of their different innovations and goals very difficult, but we have been patient and figured how to do this. And that obviously resulted in a fairly attractive, large transaction for a marquee product marketed by the strongest company in that space. So very excited about that. But those kinds of deals will give us additional opportunities to deploy significant capital, rare to get like M&A and that's why we've raised guidance for the next years. This industry is really in its sort of golden age. We are playing this very important role here. But Marshall, I'll pass it on to you.

Sure. Thanks, Pablo. Hi Chris, good morning. So absolutely. So I think it's important to take a step back and think about the potential drug pricing reform legislation in two pieces. I mean, the first is like, as we commented in the script, when you look at our current portfolio, we don't see a significant impact. We just don't have a lot of Medicare D, B and D exposure right now. And I think the power of that is that now we can turn immediately towards beginning to think about that as a frame for our new investments immediately. And we will certainly do that. I think there are, as you mentioned in the script, a number of unknowns and uncertainties as to exactly what it will look like, how it will be implemented, how things might change between now and 2026 and beyond when we would see at least the impact from a negotiation perspective. So we are starting to think about those things. You highlighted the difference between Medicare B and D in terms of duration. And I think on some of the other earnings calls, we've heard lots of perspectives on that. So I think what you'll see though is that we will certainly start to include the potential for that and think through those scenarios in terms of how we value and think about opportunities in the future.

And then, Chris, on your question on capacity, so we mentioned that pro forma for the Trelegy deal, we would have $1.1 billion of cash. We still feel like we have a lot of financial firepower. The business generates a lot of cash each quarter. And then we have our revolver, which is $1.5 billion. And we actually have a lot of leverage capacity. So we mentioned that we pro forma for the Trelegy deal, we would be at 3.3x and that would represent adjusted EBITDA of around $2.2 billion. And we could put as much as an additional turn if we needed to on our leverage. So plenty of flexibility, feel really good about our ability to capitalize on the opportunities that we see.

Great. Thanks so much for the questions. Just two for me. I guess first on the raising rate environment we're in, I guess we continue to get questions from investors about the impact this has on your business. And I know you talked about your debt, not maturing until post-2030. I know you funded a lot of deals with cash, but can you remind us again how you navigate this higher rate environment and do higher rates change at all the way you think about either the types of deals or sizes of deals you'd consider? I think this is still kind of a question that kind of like overhangs the story as we think about rates moving higher. My second question was on Tysabri and biosimilar competition there. I know that's one of your larger royalties, and I think we've had some movement on that front. But just maybe talk about just remind us how you're thinking about timelines and the potential for biosimilar competition for that product over time. Thanks so much.

Thank you for the questions, Chris. Terry, why don’t you take the question on interest rates and then Marshall the one on Tysabri.

It's a great question and very relevant. We have confidence in our business model in a rising rate environment. Our diversified portfolio of non-cyclical growth is appealing right now. Our low fixed cost structure is also beneficial. Additionally, we secured debt at historically low rates, with about 60% maturing after 2030. We anticipate that any upcoming maturities might require refinancing at higher rates, but we believe the overall impact on the business will be minimal. One advantage of our business is that we continually reinvest, and we expect that the rising rates will also influence the prices we pay for assets, providing a natural hedge. We are confident in our ability to continue delivering attractive, uncorrelated long-term returns as we have in the past.

Yes. And then your question on Tysabri. So first of all, I think just taking a step back on Tysabri, this has been a fantastic investment for Royalty Pharma, and we think it's going to continue to be a contributor into the future. We have been, of course, following the Sandoz Polpharma biosimilar for some time. And so this is the natural evolution of the news that we've seen recently with the acceptance of the filing. So I think the important thing to keep in mind is that when you look at consensus through the end of the decade, it certainly reflects a significant impact on the product from a biosimilar. So I think when you look over this period through 2030, certainly it’s already in expectations. But diving in a little bit deeper on the details here, it’s important to keep in mind that there continue to be patents in the U.S. through 2027, and Biogen has talked very clearly that they'll protect their intellectual property there. And so we'll continue to watch for updates there and the implications for timing of when and how the biosimilar will launch. But there are other important things to keep in mind. First is that Tysabri is, of course, a very unique product with its safety profile and the ramp and Biogen's history in the MS market are important. Also of interest is that we've taken a look at our claims data, which with our strategy and analytics team, and we looked at Tysabri closely, and it's interesting, Tysabri actually is a very sticky product. When you look at 2021, only about 12% of total patients on Tysabri were actually new patients. So it is a really sticky product; patients like this. So when you think about how many patients there are on ongoing therapy, there are a lot of different ways that the biosimilar could play out.

It's difficult to manufacture. And we also met several years ago, four or five years ago, the team that actually developed this and licensed it. So we're quite familiar with the situation.

Thank you. Operator, take the next question.

Great. Thanks for taking the questions. Two from me. I guess I was wondering if you could comment on the top of the funnel in terms of what you're seeing second half of the year versus either first half of this year or second half of last year, just from an opportunity perspective. Given the selloff in Biotech was just wondering if you're seeing a step up in incoming. And then what percentage of those would represent kind of larger transactions, so things similar to MorphoSys and Trelegy? And then, my second question relates to 2022 guidance just for clarification. Terry, I think you said that the Trelegy royalties would contribute to both third quarter and fourth quarter revenues this year, but just wanted to make sure I heard that correctly given I think you announced the deal in July. Thanks so much.

Thanks for the question, Terence. Marshall, you should take the question on the funnel, and Terry, the one on guidance.

Hi, Terence, good morning. We've certainly noticed increasing momentum at the beginning of the funnel regarding the number of opportunities we're exploring. It has definitely risen year-on-year, and as we've progressed through this year, things have accelerated. This supports our confidence in the opportunities we see. As we've mentioned previously, our standards and investment process remain unchanged. Our focus will continue to be on opportunities that genuinely excite us and are the most significant. This strategy has been in place for years and will persist even as we observe more opportunities. Regarding large transactions, there are always several that we’re monitoring at various stages. However, predicting the timing and pace of these large transactions is challenging. As seen with MorphoSys and what Pablo discussed regarding Trelegy, these deals involve many moving parts that need to align for them to proceed. We still expect these transactions to occur, as they have since we went public, but it's difficult to state precisely when or how quickly they will happen.

And then on Trelegy yes, that's correct. We will record royalty receipts in the third and fourth quarter of this year for that product.

Thank you and two questions, please. So the first one is Trelegy. Could you just share with us the anticipated duration of the royalties on Trelegy whether it's tied up to particular IP or other timelines such as anticipated generics? The reason I ask is given the complexity of including three active ingredients and how it could be that this product doesn't face any generics for a very, very long time indeed if ever. And therefore that obviously has an impact on your returns dependent on what ties the royalty streams to the terms. Second, also on Trelegy given that dynamic, I'm curious why GSK was not a buyer given it obviously has the best visibility on the commercial outlook of that product. And then second question is for Pablo and Chris, I noticed in your comments on synthetic royalty, the focus was very much on biotech companies, which is not surprising. Previously I know you've spoken to large pharma, and you obviously have the PILOT trial, which Pfizer participated in. It is now knowledge member. Actually Pfizer, that the large company simply are not going to be tempted to use synthetic royalties to hedge risk and there are alternative preferred ways of financing. Thank you.

Yes. I'll address the question about Trelegy and the hiring at Glaxo. Two-party deals are challenging because aligning interests and negotiating acceptable terms can be difficult. A three-party deal adds another layer of complexity, and in this case, it was a four-party deal, which I've never encountered before. However, we successfully navigated it. This process requires patience, interest, and creativity to engage with each party, understand their emotions and goals, and identify common ground that will work for everyone involved, including the market. It's a highly complex situation. Our nimbleness as a smaller company enables us to handle these complexities more effectively than larger companies. I remember a past transaction when we acquired Neupogen from Memorial Sloan-Kettering, where we first obtained the U.S. royalty and then the international royalty with Amgen's partnership. A similar situation occurred with Gilead when we purchased the royalty on decitabine from Emory University. The CFO of Gilead mentioned in a private conversation that they wouldn't have been able to complete the transaction on their own if they had approached the university directly. Throughout the negotiations, we often acted as mediators to address points of contention between parties in the contract, guiding them toward reasonable solutions. Ultimately, the CFO acknowledged that our involvement was crucial for success, which indicates our capability to handle such complex arrangements. Now, I'll hand it over to Marshall to respond to the other part of the question.

Sure. Good morning, Andrew. There are several questions to address, so please let me know if I miss any. The first question is about the duration of Trelegy and its complexity due to its various components and device. We haven't released extensive details from our intellectual property analysis yet. Generally, we expect the duration of Trelegy to be until mid-2029, specifically June 30, 2029, outside the U.S., and the end of 2030 in the U.S. We would be happy to discuss this in more detail later. Overall, those are our expectations for the Trelegy royalty duration. Regarding your question about why large pharma is using synthetic royalties, our focus has largely been on smaller companies, but that doesn’t mean we don’t expect to pursue R&D partnerships with larger firms. The conversation around synthetic royalties pertains to smaller biopharma and emerging companies, reflecting changes in their external funding conditions. We believe synthetic royalties will play a significant role in that funding approach. However, it does not imply that partnerships with larger companies will not be part of our strategy going forward. We remain optimistic about this and believe that we have high standards. The goals of larger companies need to align with ours to create partnership opportunities, but we do see this as a continued aspect of our future business.

During the entire process of this transaction, there was some history with twelve of these other companies, which complicated matters. I remember numerous instances where one party wanted to walk away, but I insisted on continuing the conversation, believing I could persuade them to keep discussing and find a reasonable solution. Ultimately, that's what's necessary in transactions like this. We have considerable experience and can be creative, but I'll leave it at that.

Thank you. Operator, take the next question.

Thank you. Couple of questions. First, there's no shortage of changes underway at GSK. Its priorities are changing. They've de-emphasized respiratory research and its recent respiratory launches, Breo, Anoro, Nucala, have been mixed some successful, some less so. I'm just wondering, how did you become comfortable that Trelegy will ultimately attain its full potential? So that's the first question. Second question is I'm curious if the drug price reform bill, if passed, and companies decide to pair back on some R&D programs and areas, whether that's an opportunity for Royalty Pharma to step in and fund programs, whether for the innovator or maybe an acquire. In other words, double down on small molecules and Part D drugs on attractive terms when others vacate the area. Thank you.

Thank you. Maybe Marshall and Chris should take this question, but my own personal comments to the question about Trelegy. I mean, one thing to look at is the very significant sales and marketing effort behind this product, the amount of TV advertising, for example, that you see on Trelegy; it's just amazing. So I think this is just a great drug with amazing support from the leading company in the space. But Chris, Marshall, do you want to add more to my answer? Chris, you want to go ahead?

Sure. I mean, yes, sure. It's Chris. We're very confident in GSK's commitment to Trelegy and the respiratory franchise. Obviously, they've gone through a very large transformation themselves, spinning off their consumer health business, most recently in focusing on their pharma and vaccine business. Trelegy is going to be a super important part of that standalone company GSK going forward. So we're very confident in their commitment to Trelegy. As it relates to maybe supporting R&D at pharma or biotech given the potential pricing reform, obviously there's a lot to still that could happen around pricing. We're not sure what the ultimate legislation will be, if any. But as Marshall said, I think the backing of R&D at both large pharma and small cap biotech and the creation of synthetic royalties is going to be an ongoing part of our business. We're engaged in the conversations today with both large pharma and small cap biotech to help them on the R&D front. We think that'll be a big part of our business going forward.

Thank you. Operator, take the next question.

Good morning. Thank you for the question. Terry, you have consistently raised both top and bottom line guidance due to the strength of the business. I understand the goal is to reinvest, but has your payout policy changed as well? I'm not clear on where dividends fit into your capital priorities. Additionally, I have a follow-up regarding the synthetic royalty structure. You discuss this frequently at your analyst events, yet it hasn't played a significant role in major deals. Is it that sellers are hesitant about the synthetic carve-out, or could you provide us with some more insight on this? Thank you.

Terry and Marshall, you should take those questions. The payout, Terry, and then the other one on synthetic, Marshall.

Yes, of course. Regarding the payout, there are no changes. Earlier this year, we raised our quarterly dividend by over 10%. We remain committed to paying dividends, but our main priority for capital allocation is to invest in new royalty streams, where we believe we can generate the most long-term value for our shareholders. Additionally, as we mentioned during our Investor Day, we may consider share repurchases in the future as another method to return capital to shareholders, but our primary focus remains on acquiring new royalties.

Great. Good morning, Geoff. Regarding your second question on synthetic royalties, I appreciate it. Overall, I want to emphasize that our approach to synthetic royalties is important to our business. One key aspect of our strategy in building the portfolio has been to remain patient and disciplined while waiting for the right opportunities. We engage in numerous discussions, and there is significant interest, but locating later-stage development programs or those that are launched or commercialized, which meet our standards for the portfolio, is something we are committed to doing the right way. We've successfully done this with various products over time, including Biohaven, BioCryst, Immunomedics, and Cytokinetics. As we continue to develop our portfolio and expand the market for synthetics, we will maintain the discipline and approach that everyone expects from us.

If I may add, regardless of companies' opinions on synthetics, it doesn't matter to us. We are open to various deal structures, whether that's a royalty deal, a royalty and equity deal, or including launch and development capital. We are flexible and do not insist on a single approach. Flexibility is the best way to engage with potential partners, and offering a variety of solutions contributes to our success and partnership quality. For instance, during our Investor Day, we shared statistics showing that companies like Biohaven raised $3.2 billion between May 2017 and now, with us contributing 26% of that, around $800 million. Cytokinetics raised $2 billion, where we held a 20% stake. BioCryst raised $1.3 billion from 2012, and we were 25% involved. Most companies recognize the advantages of the diverse structures we can offer, and they appreciate and embrace them. Educating the market is essential for them to understand how our model can assist in the successful development of their programs. We are experiencing a lot of positive interest from many companies, especially now as the market presents challenges. Management teams are eager to learn what makes us unique, and we are optimistic about the direction things are heading.

Thank you. One moment for questions. Our next question comes from Mike DiFiore with Evercore. You may proceed.

Hi, thank you for taking my question, and congratulations on your continued progress. I have two quick questions. First, regarding the internal rate of return on the Trelegy deal, it seems to address a royalty gap in the second half of the decade due to the CF loss of exclusivity, but my calculations indicate that the IRR appears somewhat mediocre. How should we consider the discount rate in our assessments? You mentioned a mid-single-digit rate at your Investor Day, but could you provide any further insights on this? Secondly, what are your expectations for ampreloxetine? It seems like the market isn't giving it much credit, especially after the previous Phase 3 failure, and I would like to hear your thoughts on this. Thank you.

Yes. So just, I think the IRR is not mid-single-digit; it's more like high-single-digit. I think one of the things that is important is that you're looking at it from the perspective of maybe either the analyst consensus or your own forecast. But we actually take a very deep dive and really try to understand the growth dynamics of products and like what we've seen happen over and over again like it's happened over the many, many times that the bigger products marketed by companies where they're so important to them. Our assets tend to outperform our expectations, analyst expectations, so I think this is an asset that has the potential to do really well. We're excited about it. So that's the answer related to the IRR. Obviously, this is one that is very leverageable because of the very strong cash flow that it produces. So it actually balances really well. The other part of our business, where we're taking more risk and investing in things that are not producing cash flow in the near-term, but maybe I'll pass it on to Terry to talk about the IP exploration of CF, because I think our view is that CF goes well beyond the decade into the next decade.

Yes. Can you please repeat the question? I might have understood something differently than Pablo. Sorry about that.

Yes, no, I was just saying that, that the deal itself seems very good and because it definitely seems to kind of close the royalty receipt shortfall due to any possible CF LOE in the back half of the decade. That's all I was saying.

Right. Okay.

Got it. Yes.

I think Pablo touched on that, but we're really excited about it. We believe that the internal rate of return is very much in line with our targets, which we have indicated are in the high-single to low-double digits for these approved products. This is right within that range, and we believe there may be some upside potential as well. I think you also had a question about our expectations for ampreloxetine. Maybe Marshall wants to take that?

Sure. On ampreloxetine, it's important to note a couple of key points. First, as we have discussed, we strive to be good partners in our transactions and aim to be constructive and flexible. This is why it was particularly interesting to include ampreloxetine in the substantial Trelegy deal with Theravance. While it's an intriguing product, it represents a more modest component of a much larger agreement. That said, the data we've seen related to orthostatic hypertension and in certain patients with multiple system atrophy, as mentioned by Theravance, is promising. We are eager to see how this program progresses and believe it could provide some interesting opportunities as the deal unfolds.

Thank you, Operator, we'll take the last question.

Hi, thanks for taking my question. I just had one on Trelegy. So just curious what drove the upfront percentage amount in this deal? Does that represent a template for commercial safety or the upfront more than what you would typically say?

Sure. Ash, thanks for the question. So the way to think about it on how we structured it is each deal is certainly a blank sheet of paper. We do, as we outlined at our Analyst Day, a very careful analysis of the commercial opportunity. We work a lot with our partners to find a deal and a structure and evaluation that's a win-win for both of us. I think that was the approach that yielded the Trelegy deal. So I don't think you should necessarily take this as a template or anything like that. As we've said, every deal is different. Every deal has its specific dynamic. Here, there was an upfront and some additional milestones based on future commercial performance; what's the right structure? I'm sure we'll use a structure like that again in the future, but always, we're trying to find the right structure for our partner and for that specific royalty.

Thank you, operator, and thanks to everyone on the call for your continuing interest in Royalty Pharma. I'll just close by saying that we had recently our Investor Day, and we spent a lot of time outlining Royalty Pharma, its uniqueness, our business strategy, how we do things, why companies want to partner with us, what we bring of value to companies, and also the very, very significant size of the opportunity we have in front of us funding this incredible ecosystem that is in its sort of golden age of innovation. We laid out, outlined also goals in terms of capital deployment and growth. What you are seeing this year as the year has gone by is us delivering against those goals. We're up to $2.5 billion of capital deployed, and we're halfway through the year. So we're super excited. I think Royalty Pharma is clearly becoming the partner of choice of all the other innovators in life sciences. We're excited to continue the relationship with all of you over time, and we're here to answer questions. Reach out to George and anyone in the team, but thank you all for listening today.

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