Cover
Cover | 6 Months Ended |
Jun. 30, 2020 | |
Cover [Abstract] | |
Document Type | S-1 |
Amendment Flag | false |
Entity Registrant Name | Royalty Pharma plc |
Entity Central Index Key | 0001802768 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets | |||
Cash and cash equivalents | $ 2,443,430 | $ 283,682 | $ 1,924,211 |
Marketable securities | 343,679 | 56,972 | |
Financial royalty assets, net | 526,937 | 452,560 | 461,821 |
Accrued royalty receivable | 32,307 | 33,525 | 35,996 |
Other receivables | 150,000 | ||
Available for sale debt securities | 28,500 | 0 | |
Derivative financial instruments | 19,196 | ||
Other royalty income receivable | 3,147 | 5,241 | 12,631 |
Other current assets | 12,789 | 92 | 4,699 |
Total current assets | 3,390,789 | 832,072 | 2,608,554 |
Financial royalty assets, net | 11,169,857 | 10,842,052 | 8,377,231 |
Intangible royalty assets, net | 40,258 | 51,724 | 75,648 |
Equity securities | 477,185 | 380,756 | 146,008 |
Available for sale debt securities | 162,454 | 131,280 | |
Derivative financial instruments | 14,717 | 42,315 | 19,111 |
Investments in non-consolidated affiliates | 430,296 | 124,061 | 143,595 |
Other assets | 0 | 45,635 | |
Total assets | 15,685,556 | 12,449,895 | 11,370,147 |
Current liabilities | |||
Royalty distribution payable to affiliates | 122,771 | 31,041 | 44,259 |
Accounts payable and accrued expenses | 34,366 | 11,177 | 4,477 |
Milestone payable | 250,000 | ||
Accrued purchase obligation | 111,610 | 0 | |
Current portion of long-term debt | 182,226 | 281,984 | 281,436 |
Derivative financial instruments | 0 | 9,215 | |
Total current liabilities | 450,973 | 333,417 | 580,172 |
Long-term debt | 5,729,622 | 5,956,138 | 6,237,896 |
Derivative financial instruments | 0 | 18,902 | |
Other liabilities | 110,000 | 0 | |
Total liabilities | 6,290,595 | 6,308,457 | 6,818,068 |
Commitments and contingencies | |||
Shareholders'/Unitholders' equity | |||
Shareholders'/Unitholders' contributions | 0 | 3,282,516 | 3,282,516 |
Deferred shares | 0 | 0 | |
Additional paid-in capital | 2,557,237 | 0 | |
Retained earnings | 1,571,399 | 2,825,212 | 1,215,953 |
Non-controlling interest | 5,237,829 | 35,883 | 63,865 |
Accumulated other comprehensive income/(loss) | 30,515 | 2,093 | (10,255) |
Treasury interests | (2,119) | (4,266) | |
Total shareholders'/unitholders' equity | 9,394,961 | 6,141,438 | 4,552,079 |
Total liabilities and shareholders'/unitholders' equity | 15,685,556 | 12,449,895 | $ 11,370,147 |
Common Class A | |||
Shareholders'/Unitholders' equity | |||
Common stock | 37 | 0 | |
Common Class B | |||
Shareholders'/Unitholders' equity | |||
Common stock | 0 | 0 | |
Class R Redeemable Stock | |||
Shareholders'/Unitholders' equity | |||
Common stock | $ 63 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) | Jun. 30, 2020$ / sharesshares | Jun. 30, 2020£ / sharesshares | Dec. 31, 2019$ / sharesshares | Dec. 31, 2019£ / sharesshares |
Deferred stock, par value (in dollars per share) | $ / shares | $ 0.000001 | $ 0.000001 | ||
Deferred stock, issued (in shares) | 294,176,000 | 294,176,000 | 0 | 0 |
Deferred stock, outstanding (in shares) | 294,176,000 | 294,176,000 | 0 | 0 |
Common Class A | ||||
Common stock, par value (in dollars/pounds per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||
Common stock, issued (in shares) | 365,899,000 | 365,899,000 | 0 | 0 |
Common stock, outstanding (in shares) | 365,899,235 | 365,899,235 | 0 | 0 |
Common Class B | ||||
Common stock, par value (in dollars/pounds per share) | $ / shares | $ 0.000001 | $ 0.000001 | ||
Common stock, issued (in shares) | 241,207,000 | 241,207,000 | 0 | 0 |
Common stock, outstanding (in shares) | 241,207,425 | 241,207,425 | 0 | 0 |
Class R Redeemable Stock | ||||
Common stock, par value (in dollars/pounds per share) | £ / shares | £ 1 | £ 1 | ||
Common stock, issued (in shares) | 50,000 | 50,000 | 0 | 0 |
Common stock, outstanding (in shares) | 50,000 | 50,000 | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Revenues | $ 510,932 | $ 457,608 | $ 1,011,811 | $ 892,491 | $ 1,814,254 | $ 1,794,894 | $ 1,597,930 | |
Operating expenses | ||||||||
Research and development funding expense | 5,776 | 21,457 | 13,415 | 44,448 | 83,036 | 392,609 | 117,866 | |
Provision for changes in expected cash flows from financial royalty assets | 47,278 | 72,210 | 135,290 | 22,177 | (1,019,321) | (57,334) | 400,665 | |
Amortization of intangible assets | 5,733 | 5,733 | 11,466 | 12,332 | 23,924 | 33,267 | 33,267 | |
General and administrative expenses | 42,799 | 30,349 | 80,864 | 54,775 | 103,439 | 61,906 | 106,440 | |
Total operating expenses, net | 101,586 | 129,749 | 241,035 | 133,732 | (808,922) | 430,448 | 658,238 | |
Operating income | 409,346 | 327,859 | 770,776 | 758,759 | 2,623,176 | 1,364,446 | 939,692 | |
Other (income)/expense | ||||||||
Equity in (earnings)/loss of non-consolidated affiliates | (29,292) | 8,144 | (20,218) | 13,673 | 32,517 | 7,023 | (163,779) | |
Interest expense | 34,189 | 69,168 | 87,773 | 136,434 | 268,573 | 279,956 | 247,339 | |
Realized gain on available for sale debt securities | (419,481) | (412,152) | ||||||
Gain on sale of royalty asset | (52,753) | |||||||
Unrealized (gain)/loss on derivative contracts | (647) | 39,414 | 32,798 | 65,254 | 39,138 | (11,923) | (16,999) | |
Unrealized (gain)/loss on equity securities | (193,895) | 36,800 | (40,729) | (16,944) | (155,749) | 13,939 | ||
Interest income | (2,724) | (4,474) | (5,582) | (14,501) | (22,329) | (24,441) | (6,762) | |
Other non-operating (income)/expense, net | (261) | 37 | 5,662 | (21) | (393) | 1,518 | 1,618 | |
Total other (income)/expense, net | (192,630) | 149,089 | 59,704 | 183,895 | 161,757 | (153,409) | (403,488) | |
Consolidated net income before tax | 601,976 | 178,770 | 711,072 | 574,864 | 2,461,419 | 1,517,855 | 1,343,180 | |
Income tax expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Consolidated net income | 601,976 | 178,770 | 711,072 | 574,864 | 2,461,419 | 1,517,855 | 1,343,180 | |
Less: Net income attributable to non-controlling interest | (159,902) | (27,057) | (197,758) | (55,707) | (112,884) | (140,126) | (133,155) | |
Net income attributable to controlling interest | 442,074 | 151,713 | 513,314 | 519,157 | 2,348,535 | 1,377,729 | 1,210,025 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||
Reclassification of loss on interest rate swaps included in net income | 0 | 1,602 | 4,066 | 3,189 | 6,189 | 8,003 | 8,931 | |
Change in unrealized movement on available for sale debt securities | 6,949 | 2,939 | 59,674 | 2,939 | 6,159 | (402,502) | (341,099) | |
Other comprehensive income | 6,949 | 4,541 | 63,740 | 6,128 | 12,348 | (394,499) | (332,168) | |
Comprehensive income | 449,023 | 156,254 | 577,054 | 525,285 | 2,360,883 | 983,230 | 877,857 | |
Less: Other comprehensive income attributable to non-controlling interest | (1,624) | 0 | (11,296) | 0 | ||||
Comprehensive income attributable to controlling interest | $ 447,399 | 156,254 | $ 565,758 | 525,285 | 2,360,883 | 983,230 | 877,857 | |
Earnings per share of Class A ordinary shares (1): | ||||||||
Basic (in dollars per share) | [1] | $ 0.09 | $ 0.09 | |||||
Diluted (in dollars per share) | [1] | $ 0.09 | $ 0.09 | |||||
Weighted-average shares of Class A shares outstanding (1): | ||||||||
Basic (in shares) | [1] | 353,979 | 353,979 | |||||
Diluted (in shares) | [1] | 353,980 | 353,980 | |||||
Financial Royalty Assets | ||||||||
Revenues | $ 474,177 | 416,945 | $ 937,021 | 799,161 | 1,648,837 | 1,524,816 | 1,539,417 | |
Intangible Royalty Assets | ||||||||
Revenues | 33,445 | 35,476 | 68,428 | 78,722 | 145,775 | 134,118 | 38,090 | |
Royalty Income, Other | ||||||||
Revenues | $ 3,310 | $ 5,187 | $ 6,362 | $ 14,608 | $ 19,642 | $ 135,960 | $ 20,423 | |
[1] | Represents earnings per share of Class A ordinary shares and weighted-average Class A ordinary shares outstanding for the period from June 16, 2020 through June 30, 2020, the period following our initial public offering (see Note 13). |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Prior to IPO | Subsequent to IPO | Common StockCommon Class A | Common StockCommon Class B | Common StockClass R Redeemable Stock | Deferred Shares | Additional Paid-In Capital | Shareholders' Contributions | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Retained EarningsPrior to IPO | Retained EarningsSubsequent to IPO | Accumulated Other Comprehensive Income/(Loss) | Non-Controlling Interest | Non-Controlling InterestPrior to IPO | Non-Controlling InterestSubsequent to IPO | Treasury Interests | Unitholders' Contributions | Accumulated Other Comprehensive Income/(Loss) | Accumulated Other Comprehensive Income/(Loss)Cumulative Effect, Period of Adoption, Adjustment |
Beginning balance at Dec. 31, 2016 | $ 4,445,620 | $ 180,595 | $ 268,960 | $ 3,282,516 | $ 713,549 | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||
Distributions | (996,086) | (735,174) | (260,912) | |||||||||||||||||||
Net income | 1,343,180 | 1,210,025 | 133,155 | |||||||||||||||||||
Change in unrealized movement on available for sale debt securities | (341,099) | (341,099) | ||||||||||||||||||||
Reclassification of loss on interest rate swaps | 8,931 | 8,931 | ||||||||||||||||||||
Ending balance at Dec. 31, 2017 | 4,460,546 | 655,446 | $ (2,863) | 141,203 | 3,282,516 | 381,381 | $ 2,863 | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||
Distributions | (1,031,823) | (814,359) | (217,464) | |||||||||||||||||||
Net income | 1,517,855 | 1,377,729 | 140,126 | |||||||||||||||||||
Change in unrealized movement on available for sale debt securities | (402,502) | (402,502) | ||||||||||||||||||||
Reclassification of loss on interest rate swaps | $ 8,003 | 8,003 | ||||||||||||||||||||
Ending balance (in shares) at Dec. 31, 2018 | 36,705,936 | |||||||||||||||||||||
Ending balance at Dec. 31, 2018 | $ 4,552,079 | 1,215,953 | $ (10,255) | 63,865 | $ 0 | 3,282,516 | (10,255) | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||
Distributions | (475,629) | (396,049) | (79,580) | |||||||||||||||||||
Net income | 574,864 | 519,157 | 55,707 | |||||||||||||||||||
Change in unrealized movement on available for sale debt securities | 2,939 | 2,939 | ||||||||||||||||||||
Reclassification of loss on interest rate swaps | 3,189 | 3,189 | ||||||||||||||||||||
Purchase of treasury interests | (4,228) | (4,228) | ||||||||||||||||||||
Ending balance at Jun. 30, 2019 | $ 4,653,214 | 1,339,061 | (4,127) | 39,992 | (4,228) | 3,282,516 | ||||||||||||||||
Beginning balance (in shares) at Dec. 31, 2018 | 36,705,936 | |||||||||||||||||||||
Beginning balance at Dec. 31, 2018 | $ 4,552,079 | 1,215,953 | (10,255) | 63,865 | 0 | 3,282,516 | (10,255) | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||
Distributions | (880,142) | (739,276) | (140,866) | |||||||||||||||||||
Net income | 2,461,419 | 2,348,535 | 112,884 | |||||||||||||||||||
Change in unrealized movement on available for sale debt securities | 6,159 | 6,159 | ||||||||||||||||||||
Reclassification of loss on interest rate swaps | 6,189 | 6,189 | ||||||||||||||||||||
Purchase of treasury interests | $ (4,266) | (4,266) | ||||||||||||||||||||
Ending balance (in shares) at Dec. 31, 2019 | 36,705,936 | 0 | 0 | 0 | 0 | |||||||||||||||||
Ending balance at Dec. 31, 2019 | $ 6,141,438 | $ (192,705) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 3,282,516 | 2,825,212 | (192,705) | 2,093 | 35,883 | (4,266) | 3,282,516 | 2,093 | |||||||
Beginning balance at Mar. 31, 2019 | 4,705,337 | 1,385,728 | (8,668) | 48,088 | (2,327) | 3,282,516 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||
Distributions | (233,533) | (198,380) | (35,153) | |||||||||||||||||||
Net income | 178,770 | 151,713 | 27,057 | |||||||||||||||||||
Change in unrealized movement on available for sale debt securities | 2,939 | 2,939 | ||||||||||||||||||||
Reclassification of loss on interest rate swaps | 1,602 | 1,602 | ||||||||||||||||||||
Purchase of treasury interests | (1,901) | (1,901) | ||||||||||||||||||||
Ending balance at Jun. 30, 2019 | 4,653,214 | 1,339,061 | (4,127) | 39,992 | (4,228) | 3,282,516 | ||||||||||||||||
Beginning balance at Dec. 31, 2019 | 6,141,438 | $ (192,705) | $ 0 | $ 0 | $ 0 | $ 0 | 0 | 3,282,516 | 2,825,212 | (192,705) | 2,093 | 35,883 | (4,266) | $ 3,282,516 | $ 2,093 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||
Contributions | 1,447,965 | 307,646 | 1,140,319 | |||||||||||||||||||
Transfer of interests | 0 | (1,037,161) | 1,037,161 | |||||||||||||||||||
Distributions | (689,684) | (313,408) | (376,276) | |||||||||||||||||||
Initial share issuance upon registration of plc (in shares) | 50,000 | |||||||||||||||||||||
Net income | 711,072 | $ 624,885 | $ 86,187 | $ 479,842 | $ 33,472 | 52,715 | $ 145,043 | $ 52,715 | ||||||||||||||
Initial share issuance upon registration of plc | 63 | $ 63 | ||||||||||||||||||||
Issuance of Class B shares to Continuing Investor Partnerships (in shares) | 535,383,000 | |||||||||||||||||||||
Issuance of Class B shares to Continuing Investors Partnerships | 1 | $ 1 | ||||||||||||||||||||
Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity (in shares) | 294,176,000 | (294,176,000) | 294,176,000 | |||||||||||||||||||
Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity | (1) | $ 30 | $ (1) | 1,402,762 | (2,553,001) | (1,261,014) | (24,022) | 2,433,098 | 2,147 | |||||||||||||
Issuance of Class A ordinary shares sold in initial public offering, net of offering costs (in shares) | 71,652,000 | |||||||||||||||||||||
Issuance of Class A shares sold in initial public offering, net of offering costs | 1,909,332 | $ 7 | 1,150,735 | 758,590 | ||||||||||||||||||
Share based compensation | 3,740 | 3,740 | ||||||||||||||||||||
Issuance of Class A shares under equity incentive plan (in shares) | 71,000 | |||||||||||||||||||||
Change in unrealized movement on available for sale debt securities | 59,674 | 48,378 | 11,296 | |||||||||||||||||||
Reclassification of loss on interest rate swaps | 4,066 | 4,066 | ||||||||||||||||||||
Ending balance (in shares) at Jun. 30, 2020 | 365,899,000 | 241,207,000 | 50,000 | 294,176,000 | ||||||||||||||||||
Ending balance at Jun. 30, 2020 | 9,394,961 | $ 37 | $ 0 | $ 63 | $ 0 | 2,557,237 | 0 | 1,571,399 | (192,705) | 30,515 | 5,237,829 | (2,119) | ||||||||||
Beginning balance (in shares) at Mar. 31, 2020 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Beginning balance at Mar. 31, 2020 | 7,162,693 | $ 0 | $ 0 | $ 0 | $ 0 | 0 | 2,553,001 | 2,561,971 | 49,212 | 2,002,775 | (4,266) | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||
Contributions | 6,691 | 6,691 | ||||||||||||||||||||
Distributions | (296,483) | (171,632) | (124,851) | |||||||||||||||||||
Initial share issuance upon registration of plc (in shares) | 50,000 | |||||||||||||||||||||
Net income | 601,976 | $ 515,789 | $ 86,187 | $ 408,602 | $ 33,472 | 52,715 | $ 107,187 | $ 52,715 | ||||||||||||||
Initial share issuance upon registration of plc | 63 | $ 63 | ||||||||||||||||||||
Issuance of Class B shares to Continuing Investor Partnerships (in shares) | 535,383,000 | |||||||||||||||||||||
Issuance of Class B shares to Continuing Investors Partnerships | 1 | $ 1 | ||||||||||||||||||||
Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity (in shares) | 294,176,000 | (294,176,000) | 294,176,000 | |||||||||||||||||||
Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity | (1) | $ 30 | $ (1) | 1,402,762 | (2,553,001) | (1,261,014) | (24,022) | 2,433,098 | 2,147 | |||||||||||||
Issuance of Class A ordinary shares sold in initial public offering, net of offering costs (in shares) | 71,652,000 | |||||||||||||||||||||
Issuance of Class A shares sold in initial public offering, net of offering costs | 1,909,332 | $ 7 | 1,150,735 | 758,590 | ||||||||||||||||||
Share based compensation | 3,740 | 3,740 | ||||||||||||||||||||
Issuance of Class A shares under equity incentive plan (in shares) | 71,000 | |||||||||||||||||||||
Change in unrealized movement on available for sale debt securities | 6,949 | 5,325 | 1,624 | |||||||||||||||||||
Reclassification of loss on interest rate swaps | 0 | |||||||||||||||||||||
Ending balance (in shares) at Jun. 30, 2020 | 365,899,000 | 241,207,000 | 50,000 | 294,176,000 | ||||||||||||||||||
Ending balance at Jun. 30, 2020 | $ 9,394,961 | $ 37 | $ 0 | $ 63 | $ 0 | $ 2,557,237 | $ 0 | $ 1,571,399 | $ (192,705) | $ 30,515 | $ 5,237,829 | $ (2,119) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||||
Cash collections from financial royalty assets | $ 1,003,504 | $ 895,150 | $ 1,934,092 | $ 2,052,592 | $ 1,752,996 |
Cash collections from intangible royalty assets | 69,646 | 73,821 | 143,298 | 106,689 | 103,250 |
Other royalty cash collections | 8,548 | 20,456 | 27,448 | 125,162 | 13,014 |
Interest received | 3,597 | 14,458 | 20,136 | 24,441 | 6,754 |
Swap collateral received | 45,252 | 360 | 360 | 3,467 | 900 |
Swap collateral posted | 0 | (26,670) | (45,630) | (510) | (3,850) |
Swap termination payments | (35,448) | 0 | |||
Distributions from non-consolidated affiliates | 31,840 | 14,059 | 14,059 | 39,402 | |
Development-stage funding payments - ongoing | (13,415) | (44,448) | (83,036) | (108,163) | (118,366) |
Development stage funding payments - upfront | (284,446) | ||||
Payments for operating and professional costs | (69,985) | (47,144) | (88,524) | (72,535) | (74,681) |
Payments for rebates | (125) | (26,499) | |||
Interest paid | (83,431) | (130,265) | (254,964) | (267,657) | (235,205) |
Net cash provided by operating activities | 960,108 | 769,777 | 1,667,239 | 1,618,317 | 1,418,313 |
Cash flows from investing activities: | |||||
Distributions from non-consolidated affiliates | 15,084 | 0 | |||
Purchases of available for sale debt securities | 0 | (125,117) | (125,121) | ||
Purchase of equity securities | (50,000) | 0 | (78,999) | (152,810) | (10,000) |
Proceeds from available for sale debt securities | 0 | 150,000 | 150,000 | 750,000 | 600,000 |
Purchase of warrants | (8,840) | ||||
Purchase of marketable securities | (637,235) | 0 | (429,400) | ||
Proceeds from sales and maturities of marketable securities | 353,717 | 0 | 374,551 | ||
Investments in non-consolidated affiliates | (29,262) | (18,684) | (27,042) | (24,173) | (2,000) |
Acquisitions of financial royalty assets | (574,620) | (1,231,736) | (1,721,291) | (269,593) | (2,290,707) |
Proceeds from sale of royalty asset | 115,000 | ||||
Milestone payments | 0 | (250,000) | (250,000) | ||
Net cash (used in)/provided by investing activities | (922,316) | (1,475,537) | (2,116,142) | 303,424 | (1,587,707) |
Cash flows from financing activities: | |||||
Distributions to shareholders/unitholders | (285,355) | (396,049) | (739,276) | (814,359) | (735,174) |
Distributions to non-controlling interest | (284,546) | (77,858) | (154,084) | (268,693) | (278,727) |
Distributions to non-controlling interest- other | (28,055) | 0 | |||
Contributions from non-controlling interest- acquisitions | 17,359 | 0 | |||
Contributions from non-controlling interest- R&D | 5,114 | 0 | |||
Contributions from non-controlling interest- other | 12,625 | 0 | |||
Scheduled repayments of long-term debt | (94,200) | (147,000) | |||
Repayments of long-term debt | (5,170,396) | 0 | (294,000) | (294,000) | (193,000) |
Proceeds from issuance of long-term debt | 6,040,000 | 0 | 1,100,000 | ||
Debt issuance costs and other | (8,819) | 0 | |||
Other | (4,266) | (2,049) | (16,353) | ||
Purchase of treasury interests | 0 | (4,228) | |||
Proceeds from issuance of ordinary shares upon initial public offering, net of offering costs | 1,918,229 | 0 | |||
Net cash provided by/(used in) financing activities | 2,121,956 | (625,135) | (1,191,626) | (1,379,101) | (123,254) |
Net change in cash and cash equivalents | 2,159,748 | (1,330,895) | (1,640,529) | 542,640 | (292,648) |
Cash and cash equivalents, beginning of period | 283,682 | 1,924,211 | 1,924,211 | 1,381,571 | 1,674,219 |
Cash and cash equivalents, end of period | $ 2,443,430 | $ 593,316 | $ 283,682 | $ 1,924,211 | $ 1,381,571 |
Organization and Purpose
Organization and Purpose | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements Abstract | ||
Organization and Purpose | 1. Organization and Purpose Royalty Pharma plc is a newly formed English public limited company incorporated under the laws of England and Wales created for the purpose of consolidating our predecessor entities and facilitating the initial public offering (the “IPO” or the “Offering”) of our Class A ordinary shares that was completed in June 2020 (discussed below). Following our IPO, we operate and control the business affairs of Royalty Pharma Holdings Ltd. (“RP Holdings”), a private limited company incorporated under the laws of England and Wales and U.K. tax resident. Through our controlling ownership of RP Holdings’ Class A ordinary shares (the “RP Holdings Class A Interests”) and RP Holdings’ Class B ordinary shares (the “RP Holdings Class B Interests”), we conduct our business through RP Holdings and its subsidiaries and include RP Holdings and its subsidiaries in our condensed consolidated financial statements. RP Holdings is the sole owner of Royalty Pharma Investments 2019 ICAV, which is an Irish collective asset management entity formed to facilitate our Exchange Offer Transactions (defined below), and is the successor to Royalty Pharma Investments, an Irish Unit Trust (“Old RPI”), for accounting and financial reporting purposes. RP Holdings is owned directly by RPI US Partners 2019, LP, a Delaware limited partnership, RPI International Holdings 2019, LP, (together, the “Continuing Investors Partnerships”), and Royalty Pharma plc. Old RPI is a unit trust established in August 2011 under the laws of Ireland and authorized by the Central Bank of Ireland pursuant to the Unit Trusts Act, 1990. Prior to the Exchange Offer Transactions, Old RPI was owned by various partnerships (the “Legacy Investors Partnerships”). “Royalty Pharma,” “Royalty Pharma Investments,” “RPI,” the “Company,” “we,” “us” and “our” refer to Royalty Pharma plc and its subsidiaries on a consolidated basis. After the consummation of the Reorganization Transactions (defined below) and before the consummation of the Offering, “Royalty Pharma,” the “Company,” “we,” “us” and “our” refer to Royalty Pharma Investments 2019 ICAV. Prior to the Reorganization Transactions, “Royalty Pharma,” the “Company,” “we,” “us” and “our” refer to Old RPI. We are the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry. We fund innovation in the biopharmaceutical industry both directly and indirectly—directly when we partner with companies to co-fund Third-party Royalties top-line Synthetic / Hybrid Royalties top-line R&D Funding Acquisitions of Companies non-strategic RP Management, LLC (the “Manager”), a Delaware limited liability company, is an external adviser which is responsible for the management of Royalty Pharma. RP Management (Ireland) Ltd. (“RP Ireland”), is the manager of Old RPI and equivalent to the board of directors of a company or general partner of a partnership and is responsible for the day to day operations of Old RPI. Its functions can be delegated to third parties. RP Ireland delegated responsibility for investment management of Old RPI to its parent company, the Manager, in accordance with the investment objectives and policies of Old RPI. Reorganization Transactions In connection with our IPO, we consummated an exchange offer on February 11, 2020 (the “Exchange Date”). Through the exchange offer, investors representing 82% of the aggregate limited partnership in the Legacy Investors Partnerships, exchanged their limited partnership interests in the Legacy Investors Partnerships for limited partnership interests in the Continuing Investors Partnerships. The exchange offer transaction together with (i) the concurrent incurrence of indebtedness under our new credit facility and (ii) the issuance of additional interests in Continuing Investors Partnerships to satisfy performance payments payable in respect of assets acquired prior to the date of the IPO are referred to as the “Exchange Offer Transactions.” As a result of the Exchange Offer Transactions, we own, through our wholly-owned subsidiary RPI 2019 Intermediate Finance Trust, a Delaware statutory trust (“RPI Intermediate FT”), an 82% economic interest in Old RPI. Through our 82% indirect ownership of Old RPI, we are legally entitled to 82% of the economics of Old RPI’s wholly-owned subsidiaries, RPI Finance Trust, a Delaware statutory trust (“RPIFT”) and RPI Acquisitions (Ireland), Limited (“RPI Acquisitions”), an Irish private limited company, and 66% of Royalty Pharma Collection Trust, a Delaware statutory trust (“RPCT”). The remaining 34% of RPCT is owned by the Legacy Investors Partnerships and Royalty Pharma Select Finance Trust, a Delaware statutory trust (“RPSFT”), which is wholly owned by Royalty Pharma Select, an Irish Unit trust (“RPS”). From the Exchange Date until the expiration of the Legacy Investors Partnerships’ investment period on June 30, 2020 (the “Legacy Date”), the Legacy Investors Partnerships were offered to participate proportionately in any investment made by Old RPI. Following the Legacy Date, Old RPI has ceased making new investments and each of Old RPI and the Legacy Investors Partnerships became legacy entities. Following the Legacy Date, we will make new investments through our subsidiaries (together with RPI, the “RPI Group”), including RPI Intermediate FT. As part of the Exchange Offer Transactions, the Legacy Investors Partnerships and RPI Intermediate FT entered into new credit facilities in the amount of $1.3 billion and $6.0 billion, respectively, the proceeds of which were used to repay the $6.3 billion outstanding debt of RPIFT and, in the case of RPI Intermediate FT, will also be used to fund future investments. As part of the new credit facilities, RPI Intermediate FT repaid $5.2 billion, its pro rata portion of RPIFT’s outstanding debt and accrued interest. RPIFT also terminated all outstanding interest rate swaps in connection with the debt refinancing. Prior to, and as a condition precedent to the closing of the IPO, various reorganization transactions became effective, including the following: • the Exchange Offer Transactions (as described above); and • the execution of a new management agreement with the Manager (the “New Management Agreement”). We refer to these transactions collectively as the “Reorganization Transactions.” As Old RPI is our predecessor for financial reporting purposes, we have recorded Old RPI’s assets and liabilities at the carrying value reflected on Old RPI’s balance sheet as of the Exchange Date. The references in the following notes for the periods prior to the Exchange Date refer to the financial results of Old RPI for the same periods. June 2020 IPO Our IPO was completed on June 18, 2020, whereby we issued 89,333,920 shares of Class A ordinary shares at a price to the public of $28.00 per share, of which 71,652,250 and 17,681,670 shares were offered by the Company and selling shareholders, respectively. The number of Class A ordinary shares issued at closing included the exercise in full of the underwriters’ option to purchase 11,652,250 additional Class A ordinary shares from the Company. The Company received net proceeds of approximately $1.9 billion from the IPO after deducting underwriting discounts and commissions of approximately $86.3 million. The Class A ordinary shares began trading on the Nasdaq Global Select Market under the ticker symbol “RPRX” on June 16, 2020. We used the net proceeds from the IPO to acquire the RP Holdings Class A Interests shortly after completion of the Offering. As a result, we own 100% of RP Holdings Class A Interests. In connection with the IPO, pursuant to agreements with the Continuing Investors Partnerships, certain of the Continuing Investors agreed to exchange, upon consummation of the IPO, interests in the Continuing Investors Partnerships represented by their ownership of 294,175,555 RP Holdings Class B Interests into an aggregate of 294,175,555 Class A ordinary shares of the Company. Following the exchange, Royalty Pharma plc indirectly owns 294,175,555 RP Holdings Class B Interests. The remaining investors in the Continuing Investors Partnerships who did not elect to exchange into Class A ordinary shares hold 241,207,425 newly issued Class B ordinary shares of Royalty Pharma. As a result, the Continuing Investors Partnerships hold a number of our Class B shares equal to the number of RP Holdings Class B Interests indirectly held by them at such time which are exchangeable for Class A ordinary shares of Royalty Pharma plc. Our Class B shares will not be publicly traded and holders of Class B shares only have limited rights to receive a distribution equal to their nominal value upon a liquidation, dissolution or winding up of the Company. However, the RP Holdings Class B Interests will be entitled to dividends and distributions from RP Holdings. Our Class A ordinary and Class B shares will vote together as a single class on all matters submitted to a vote of shareholders, except as otherwise required by applicable law, with each share entitled to one vote. | 1. Organization and Purpose Royalty Pharma Investments and subsidiaries (the “Trust”, “Company”, “Old RPI” or “we”) is a unit trust established in August 2011 under the laws of Ireland and authorized by the Central Bank of Ireland pursuant to the Unit Trusts Act, 1990. Our goal is to participate in royalties generated from the sale of pharmaceutical products through the acquisition of the contractual royalty streams associated with these products and, in some cases, the underlying intellectual property. We do this through directly acquiring royalties held by inventors, universities, research hospitals, foundations or companies; co-funding RP Management (Ireland) Ltd. (“RP Ireland”), is the manager of the Trust and equivalent to the board of directors of a company or general partner of a partnership and is responsible for the day to day operations of the Trust. Its functions can be delegated to third parties. RP Ireland has delegated responsibility for investment management of the Trust to its parent company RP Management, LLC (the “Manager”), in accordance with the investment objectives and policies of the Trust. RP Ireland has delegated responsibility for the administrative functions of the Trust to State Street (Ireland) Limited (the “Administrator”), an unrelated party. The units of the Trust are held exclusively by RPI US Partners, LP; RPI US Partners II, LP; RPI International Partners, LP; and RPI International Partners II, LP (the “Legacy Investors Partnerships”). The RPI Legacy Holders are also managed by the Manager. At the discretion of RP Ireland, the Trust can distribute to its unitholders free cash flow after debt service and covenant requirements. Reorganization Transactions and the U.S. Listing In connection with an anticipated U.S. listing of Class A ordinary shares of Royalty Pharma plc, we consummated an exchange offer on February 11, 2020 (the “Exchange Date”). Through the exchange offer, 82% of investors who invested in Old RPI through the Legacy Investors Partnerships, exchanged their limited partnership interests in the Legacy Investors Partnerships for limited partnership interests in RPI US Partners 2019, LP, a Delaware limited partnership (the “Continuing US Investors Partnership”) or RPI International Holdings 2019, LP, a Cayman Islands exempted limited partnership (the “Continuing International Investors Partnership” and together with the Continuing US Investors Partnership, the “Continuing Investors Partnerships”). The exchange offer transaction together with (i) the concurrent incurrence of indebtedness under our new credit facility and (ii) the issuance of additional interests in Continuing Investors Partnerships to satisfy performance payments payable in respect of assets acquired prior to the date of the U.S. listing are referred to as the “Exchange Offer Transactions.” As a result of the Exchange Offer Transactions, 82% of the portfolio of Old RPI was effectively transferred to our successor, Royalty Pharma Investments 2019 ICAV, an Irish collective asset management entity (“RPI”) on the Exchange Date. RPI, through its wholly-owned subsidiary RPI 2019 Intermediate Finance Trust, a Delaware statutory trust (“RPI Intermediate FT”), owns an 82% economic interest in Old RPI. Through its 82% indirect ownership of Old RPI, RPI is legally entitled to 82% of the economics of Old RPI’s wholly-owned subsidiaries, RPI Finance Trust, a Delaware statutory trust (“RPIFT”) and RPI Acquisitions (Ireland), Limited (“RPI Acquisitions”), an Irish private limited company, and 66% of Royalty Pharma Collection Trust, a Delaware statutory trust (“RPCT”). The remaining 34% of RPCT is owned by the Legacy Investors Partnerships and Royalty Pharma Select Finance Trust, a Delaware statutory trust (“RPSFT”), which is wholly owned by Royalty Pharma Select, an Irish Unit trust (“RPS”). From the Exchange Date until the expiration of the Legacy Investors Partnerships’ investment period on June 30, 2020 (the “Legacy Date”), RPI will participate proportionately with the Legacy Investors Partnerships in any investment made by Old RPI. Following the Legacy Date, Old RPI will cease making new investments and each of Old RPI and the Legacy Investors Partnerships will become legacy entities. Following the Legacy Date, we will make new investments through RPI and its wholly-owned subsidiaries (together with RPI, the “RPI Group”), including RPI Intermediate FT. As part of the Exchange Offer Transactions, the Legacy Investors Partnerships and RPI Intermediate FT have entered into new credit facilities in the amount of $1,260,000,000 and $6,040,000,000, respectively, the proceeds of which were used to repay the $6,273,000,000 outstanding debt of RPIFT and, in the case of RPI Intermediate FT, will also be used to fund future investments. As part of the new credit facilities, RPI Intermediate FT repaid $5,175,884,653, its pro rata portion of RPIFT’s outstanding debt and accrued interest. RPIFT terminated all outstanding interest rate swaps in connection with the debt refinancing. Prior to, and as a condition precedent to the closing of the U.S. listing, various reorganization transactions will be effected, including the following: • the Exchange Offer Transactions (as described above); and • the execution of a new management agreement with the Manager. We refer to these transactions collectively as the “Reorganization Transactions.” After the consummation of the Reorganization Transactions and before the consummation of the offering, “Royalty Pharma plc,” “Royalty Pharma,” the “Company,” “we,” “us” and “our” refer to Royalty Pharma Investments 2019 ICAV. After the consummation of this offering, “Royalty Pharma plc,” the “Company,” “we,” “us” and “our” refer to Royalty Pharma plc, an English public limited company incorporated under the laws of England and Wales, and its subsidiaries on a consolidated basis, as they would exist upon the closing of the U.S. listing. Immediately following this offering, we will be a holding company and our principal asset will be a controlling equity interest in Royalty Pharma Holdings Ltd., (“RP Holdings”), a private limited company incorporated under the laws of England and Wales and U.K. tax resident. RP Holdings will be formed in connection with the Reorganization Transactions, following which it will be the sole equity owner of RPI. The RP Holdings Class B shares will be initially held through a depositary. We refer to the RP Holdings Class B shares or the depositary receipts that represent them as the “RP Holdings Class B Interests.” |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of preparation and use of estimates The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, all adjustments considered necessary to present fairly the results of the interim periods have been included and consist only of normal and recurring adjustments. Certain information and footnote disclosures have been condensed or omitted as permitted under U.S. GAAP. As such, the information included in this Quarterly Report on Form 10-Q The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. The current outbreak of the novel coronavirus, or COVID-19, COVID-19 COVID-19 COVID-19, COVID-19, Basis of consolidation The unaudited condensed consolidated financial statements include the accounts of Royalty Pharma as well as its majority-owned and controlled subsidiaries. We hold interests in variable interest entities where we have assessed that we are not the primary beneficiary and therefore do not consolidate these entities. For consolidated entities where we own or are exposed to less than 100% of the economics, we record net (income)/loss attributable to non-controlling non-controlling Following management’s determination that a high degree of common ownership existed in RPI both before and after the Exchange Date, RPI recognized Old RPI’s assets and liabilities at the carrying value reflected on Old RPI’s balance sheet as of the Exchange Date. Prior to the Exchange Offer Transactions, our only historical non-controlling non-controlling As a result of the IPO in June 2020, two new non-controlling non-controlling non-controlling non-controlling All intercompany transactions and balances have been eliminated in consolidation. Concentrations of credit risk Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, financial royalty assets, receivables, and derivatives. Our cash management and investment policy limits investment instruments to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds are needed for operations. Our cash and cash equivalents, and marketable securities balances at June 30, 2020 and December 31, 2019 were held with State Street Bank and Trust, Deutsche Bank, Merrill Lynch, Pierce, Fenner & Smith, and Bank of America, N.A. Our primary operating accounts significantly exceed the FDIC limits. The majority of our royalty assets and receivables arise from contractual royalty agreements that entitle the Company to royalties on the sales of underlying biopharmaceutical products in the United States, Europe and the rest of the world, with concentrations of credit risk limited due to the broad range of marketers responsible for paying royalties to us and the variety of geographies from which our royalties on product sales are derived. The marketers paying us royalties on these products do not always provide, and are not necessarily required to provide, the breakdown of product sales by geography. The products in which we hold royalties are marketed by leading industry participants, including, among others, Abbott, AbbVie, Amgen, Bristol-Myers Squibb, Celgene, Gilead Sciences, Johnson & Johnson, Lilly, Merck & Co., Pfizer, Novartis, Biogen-Idec, Roche/ Genentech, and Vertex. Vertex, as the marketer and payor of our royalties on the cystic fibrosis franchise products, accounted for 27% and 17% of our current portion of Financial royalty assets Recently adopted and issued accounting standards Upon the January 1, 2020 adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments 2016-13”), Significant Accounting Policies There have been no changes to the Company’s significant accounting policies described in our 2019 audited consolidated financial statements included in the Prospectus that have had a material impact on the Company’s unaudited condensed consolidated financial statements and related notes, other than those noted below. Allowance for current expected credit losses As a result of adopting ASU 2016-13, non-current Refer to Note 7 for further information. Earnings per share Basic earnings per share (“EPS”) is computed by dividing net income attributable to Royalty Pharma plc by the weighted average number of Class A ordinary shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to Royalty Pharma plc, including the impact of potentially dilutive securities, by the weighted average number of Class A ordinary shares outstanding during the period, including the number of Class A ordinary shares that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include the outstanding Class B ordinary shares and restricted stock units (“RSU”) issued under our 2020 Independent Director Equity Incentive Plan. We use the “if-converted” There were no shares of Class A or Class B ordinary shares outstanding prior to June 16, 2020; therefore, no earnings per share information has been presented for any period prior to that date. | 2. Summary of Significant Accounting Policies Basis of preparation and use of estimates The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various market specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. Basis of consolidation The consolidated financial statements include the accounts of Royalty Pharma Investments and its wholly owned subsidiaries RPIFT and RPI Acquisitions, and RPCT. For consolidated entities where we own or are exposed to less than 100% of the economics, such as RPCT, we record net (income)/loss attributable to non-controlling non-controlling As the result of a reorganization transaction that took place in 2011, a non-controlling All intercompany transactions and balances have been eliminated in consolidation. Segment Information We determined that our chief executive officer is the chief operating decision maker (CODM). The CODM reviews financial information presented on a consolidated basis to allocate resources, evaluate financial performance, and make overall operating decisions. As such, we concluded that we operate as one segment primarily focused on acquiring royalty-generating products. Royalty assets An acquisition of a royalty asset provides the buyer with contractual rights to cash flows relating to royalties from the sales of patent-protected biopharmaceutical products. These acquisitions entitle us to receive a portion of income from the sale of patent-protected biopharmaceutical products by unrelated biopharmaceutical companies. For the majority of our royalties , our rights are protective in nature. In other words, we do not own the intellectual property, and we do not have the right to commercialize the underlying products. Acquisitions of contractual cash flow streams with yield components that most closely resemble loans are classified as financial assets. In the limited instances where we possess the rights to exploit the underlying patents, rights to the intellectual property related to the biopharmaceutical products, or the ability to influence the amount or duration of future royalty payments, these royalties are classified as intangible assets. Financial royalty assets, net Although a royalty asset does not have the contractual terms typical of a loan (such as contractual principal and interest), we analogize to the accounting guidance within Accounting Standards Codification 310 (“ASC”), Receivables, as it most closely aligns with the underlying economics of our royalties that are classified as financial assets. Therefore, such royalties are classified similar to loans receivable and are measured at amortized cost using the prospective effective interest method described in ASC 835-30 Imputation of Interest The effective interest rate is calculated by forecasting the expected cash flows to be received over the life of the asset relative to the initial invested amount. The effective interest rate is reviewed and adjusted each reporting period as differences between expected cash flows and actual cash flows are realized and as there are changes to expected future cash flows. Income is calculated by multiplying the carrying value of the royalty asset by the effective interest rate. The carrying value of Financial royalty assets, net Provision for changes in expected future cash flows Financial royalty assets, net The application of the prospective approach to measure royalty assets requires management’s judgment in forecasting the expected future cash flows of the underlying royalties. In addition, income recognition from royalty assets can be impacted by management’s assumptions around (1) product growth rates and sales trends in outer years, (2) the geographical allocation of annual sales data from sell-side equity research analysts’ models, (3) product and pricing mix for franchised products, (4) the strength of patent protection, including anticipated entry of generics, and (5) estimates of the duration of the royalty. The amounts and duration of forecasted expected future cash flows are largely impacted by sell-side equity research analyst coverage, commercial performance of the product, and the royalty duration, each discussed in further detail below. • Analyst coverage. • Commercial performance. • Royalty duration. Management is required to make assumptions around the royalty duration for the recognition of interest income on royalty assets classified as financial assets. In some cases, patent protection may extend to a later period than the expiration date management has estimated. Management may apply a shorter royalty term in this situation if, based on the experience and expertise of the research team, management believes that it is more likely that the associated patents are subject to opposition or infringement, that the market for a particular product may shift based on pipeline approvals and products, or that product sales may be harmed by competition from generics. For products providing perpetual royalties, management applies judgment in establishing the duration over which it forecasts expected future cash flows. Management may assign a 10 year royalty term initially to correspond to the average remaining patent life of a product after approval, which is reviewed and revised as necessary at each reporting period. A shortened royalty term can result in a reduction in the effective interest rate, a decline the carrying value of the royalty asset, a decline in income from royalty assets, significant reductions in royalty payments compared to expectations, or a permanent impairment. Additionally, royalty payments may occasionally continue beyond the royalty term for such reasons we cannot foresee such as excess inventory in the channel or additional scope of patent protection identified after expiry, including royalties we may become entitled to from new indications, new compounds, or for new regulatory jurisdictional approvals. The current portion of Financial royalty assets, net Cumulative allowance and Provision for changes in expected cash flows from financial royalty assets We evaluate royalty assets for impairment on an individual basis at the end of each reporting period by comparing the effective interest rate to that of the prior period. If the current period effective interest rate is lower than the prior period, and the gross cash flows have declined (expected and collected), management records a provision for the change in expected cash flows. The provision is measured as the difference between the royalty asset’s amortized cost basis and the net present value of the expected future cash flows, calculated based on the prior period’s effective interest rate. The amount recognized as provision expense increases the royalty asset’s cumulative allowance, which reduces the net carrying value of the royalty asset. In a subsequent period, if there is an increase in expected future cash flows, or if actual cash flows are greater than cash flows previously expected, we reduce the previously established cumulative allowance for the increase in the present value of cash flows expected to be collected, resulting in a non-cash Movements in the cumulative allowance for changes in expected cash flows, which forms part of the Financial royalty assets, net written-off non-cash true-up Provision for changes in expected cash flows from financial royalty assets Income from financial royalty assets Income from financial royalty assets We recognize income from financial royalty assets when there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The accretable yield is recognized as income at the effective rate of return over the expected life of royalty assets classified as financial assets. After acquisition, if reasonable timing of expected cash flows is not available for a product or if we have not completed the required funding obligations payable over time for an approved product, a royalty asset is placed in non-accrual When royalties continue to be collected for financial assets that have been fully depleted, such income is recognized as Other royalty income Intangible royalty assets, net Currently, the Januvia, Janumet, and Other DPP-IV (“DPP-IV”) DPP-IV Management reviews the performance of royalties classified as intangible assets periodically for impairment as required by ASC 360-10 Property, Plant, and Equipment - Overall DPP-IV Revenue from intangible royalty assets and Accrued royalty receivable We earn royalties on sales by our licensees of DPP-IV DPP-IV Critical estimates that could cause a change in estimated future cash flows include changes in product demand and market growth assumptions, a change in the pricing strategy of the marketer or reimbursement coverage, and changes in country-specific contractual or patent expiry dates. Actual royalty receipts may differ from estimates and any differences between actual and estimated royalty revenues are adjusted for in the period in which they become known, typically on the basis of royalty receipts. Milestone payments Certain acquisition agreements provide for future contingent payments based on the financial performance of the related biopharmaceutical product generally over a multi-year period. For purposes of measuring income from royalty assets classified as financial assets, milestones payable to the royalty seller are typically netted from the cash inflows used to forecast expected future cash flows in the period the milestone trigger is projected to be satisfied. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful completion of the defined milestones. Payments under these agreements generally become due and payable upon achievement of certain commercial milestones, and when the contingency is resolved. Financial Instruments Certain financial instruments reflected in the consolidated balance sheets, (e.g., cash, cash equivalents, certain other assets, accounts payable, and certain other liabilities) are recorded at cost, which approximates fair value due to their short-term nature. The fair values of financial instruments other than Financial royalty assets, net are determined through a combination of management estimates and information obtained from third parties using the latest market data. The fair value of financial instruments is determined utilizing the valuation techniques appropriate to the type of instrument as discussed in Note 3. Cash and cash equivalents and Marketable securities Cash and cash equivalents include cash held at banks and all highly liquid financial instruments with original maturities of 90 days or less. The Company invests in marketable debt securities that are classified as trading securities and reported at fair value. In 2019, we invested our excess cash in marketable securities and money market funds that were held with Deutsche Bank, and Bank of America, N.A. as custodian. Beginning in 2019, we used BlackRock, Inc. to manage and invest our excess cash held with Bank of America, N.A. In 2018, we invested our excess cash primarily in money market funds held with Deutsche Bank. At December 31, 2019, $41.5 million of the total cash and cash equivalents balance was invested in commercial paper and certificates of deposit with maturities of 90 days or less, and $222.3 million was invested in money market funds. At December 31, 2019, our marketable securities total $57.0 million, of which $44.1 million and $12.9 million was invested in certificates of deposit and U.S. government securities with maturities of 12 months or less, respectively. At December 31, 2018, the Company had $1.8 billion of the total cash and cash equivalents balance invested in money market funds and did not hold any marketable securities. Equity securities and Available for sale debt securities Our equity securities are measured and recorded at fair value with unrealized gains and losses recorded in earnings. Prior to January 1, 2018, unrealized gains and losses were included in accumulated other comprehensive income/(loss) (“AOCI”) within equity. Our equity securities represent investments in publicly traded equity securities. Financial assets that can contractually be prepaid or otherwise settled in such a way that the holder would not recover substantially all of its recorded investment are measured like investments in debt securities in accordance with ASC 860, Transfers and Servicing A decline in the market value of any available for sale debt security below its cost that is deemed to be other-than-temporary results in a reduction in carrying amount to fair value and is recognized in earnings. The determination of whether an available for sale debt security is other-than-temporarily impaired requires significant judgment and requires consolidation of available quantitative and qualitative evidence in evaluating the potential impairment. Factors evaluated to determine whether the investment is other-than-temporarily impaired include: significant deterioration in the Company’s earnings performance, credit rating, asset quality, business prospects of the Company, adverse changes in the general market conditions in which the Company operates, length of time that the fair value has been below cost, our expected future cash flows from the security, our intent not to sell, an evaluation as to whether it is more likely than not that we will have to sell before recovery of the cost basis, and issues that raise concerns about the Company’s ability to continue as a going concern. Assumptions associated with these factors are subject to future market and economic conditions, which could differ from management’s assessment. Derivatives All derivatives are measured at fair value on the consolidated balance sheets. Prior to 2017, RPIFT applied hedge accounting to its interest rate swap agreements and foreign currency contracts. Following various refinancings of our senior secured credit facilities in November 2013, May 2015 and October 2016, certain swap contracts no longer qualified for hedge accounting treatment. As a result, all cash flow hedges became ineffective and unrealized gains and losses on interest rate swaps arising since October 2016 are recorded in earnings. Upon the discontinuation of hedge accounting, the accumulated other comprehensive income previously recorded on the cash flow hedges has continued and will continue to be reversed out of other comprehensive income in line with terms of the associated swap contract. This reclassification adjustment is shown on the consolidated statements of comprehensive income as part of unrealized gain/(loss) on interest rate swaps. Realized gains or losses associated with the execution of the respective hedged transactions are included in other expenses. We continually monitor our positions with, and credit quality of, the financial institutions which are counterparties to our derivative contracts. We may be exposed to credit loss in the event of non-performance Investment in non-consolidated We have variable interests in entities formed for the purposes of entering into co-development In circumstances where we are not the primary beneficiary, but where we have the ability to exercise significant influence over the operating and financial policies of an investee, we utilize the equity method of accounting for recording investment activity. In the case of the Avillion entities, we maintain significant influence through our partnership interests. We record our share of any loss or income generated by the Avillion entities, which is recorded on a three-month lag, within the consolidated statement of comprehensive income as a component of Equity in (earnings)/loss of non-consolidated non-consolidated When we have committed to provide further support to the investee through capital call commitments and the investment has been reduced to zero, we provide for additional losses, resulting in a negative equity method investment, which is presented as a liability on the consolidated balance sheets. Research and development funding expense We enter into transactions where we agree to jointly fund the research and development for products undergoing late stage clinical trials in exchange for future royalties if the products are successfully developed and commercialized. In accordance with ASC 730 Research and Development Royalty payments owed to the Company on successfully commercialized products generated from research and development agreements are recognized as Other royalty income Other royalty income Income taxes Under current law and practice, the Trust qualifies as an investment undertaking as defined in Section 739B of the Taxes Consolidation Act, 1997, as amended. On this basis, it is not subject to Irish tax on its income or gains. Certain distributions to Irish residents are subject to an ‘exit’ tax. Consequently, Royalty Pharma does not record a provision for income taxes. Unitholders are required to report their share of the Trust’s income or loss on their tax returns. Concentrations of credit risk Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, royalty assets, receivables, and derivatives. Our cash management and investment policy limits investment instruments to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds are needed for operations. Our cash and cash equivalents, and marketable securities balances at December 31, 2019 were held with State Street Bank and Trust, Deutsche Bank, Merrill Lynch, Pierce, Fenner & Smith, and Bank of America, N.A. . Our primary operating accounts significantly exceed the FDIC limits. The majority of the our royalty assets and receivables arise from contractual royalty agreements that entitle the Company to royalties on the sales of underlying biopharmaceutical products in the United States, Europe and the rest of the world, with concentrations of credit risk limited due to the broad range of marketers responsible for paying royalties to us and the variety of geographies from which our royalties on product sales are derived. The marketers paying us royalties on these products do not always provide, and are not necessarily required to provide, the breakdown of sales occurring by geography. The products in which we hold royalties are marketed by leading industry participants, including, among others, Abbott, AbbVie, Amgen, Bristol-Myers Squibb, Celgene, Gilead Sciences, Johnson & Johnson, Lilly, Merck & Co., Pfizer, Novartis, Biogen-Idec, Roche/Genentech, and Vertex. For the years ended December 31, 2019, 2018 and 2017, Vertex, as the marketer and payor of Royalty Pharma’s royalties on the cystic fibrosis franchise products, accounted for 23%, 22% and 22% of our total income and other revenues for each respective year. We monitor the financial performance and creditworthiness of the counterparties to our royalty agreements and to our derivative contracts so that we can properly assess and respond to changes in their credit profile. To date, we have not experienced any significant losses with respect to the collection of income or revenue on our royalty assets or on the settlement of our derivative contracts. Recently adopted and issued accounting standards In May 2014, the Financial Accounting Standard Board (“FASB”) issued a new revenue standard under ASC Topic 606 (ASU 2014-09). 2014-09 Receivables 2014-09. 2014-09 In January 2016, the FASB issued revised guidance for the accounting and reporting of financial instruments (ASU 2016-01) 2018-03). 2016-01 2018-03 In August 2016, the FASB issued revised guidance which makes eight targeted changes to how royalty receipts and cash payments are presented and classified in the Statement of Cash Flows (ASU 2016-15). Among “nature-of-the-distribution” 2016-15 In June 2016, the FASB issued a new accounting standard that amends the guidance for measuring and recording credit losses on financial assets measured at amortized cost by replacing the incurred-loss model with an expected-loss model (ASU 2016-13). available-for-sale 2016-13 In January 2017, the FASB issued a new accounting standard that changes the definition of a business to assist entities with the evaluation of when a set of assets acquired or disposed of should be considered a business (ASU 2017-01). In August 2018, the FASB issued a new accounting standard that eliminates, adds, and modified certain disclosures requirements for fair value measurements under Topic 820 (ASU 2018-13). 2018-13 |
Fair Value Measurements and Fin
Fair Value Measurements and Financial Instruments | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | ||
Fair Value Measurements and Financial Instruments | 3. Fair Value Measurements and Financial Instruments Fair value measurements The summary below presents information about our assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019, and the valuation techniques we utilized to determine such fair value. • Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Our level 1 assets consist of equity securities with readily determinable fair values and money market funds. • Level 2: Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly. Our level 2 assets generally include marketable securities, warrants, derivatives, available for sale debt securities, and our interest rate swap contracts, which may be in an asset or liability position. • Level 3: Prices or valuation that requires inputs that are both significant to the fair value measurement and unobservable. Our level 3 assets historically consisted of our investment in the Biohaven Preferred Shares. See Note 5 for a description of our investment in the Biohaven Preferred Shares. For financial instruments which are carried at fair value, the level in the fair value hierarchy is based on the lowest level of inputs that is significant to the fair value measurement in its entirety. Fair value hierarchy The following is a summary of the inputs used to value our financial assets and liabilities measured at fair value as of June 30, 2020 and December 31, 2019: As of June 30, 2020 Level 1 Level 2 Level 3 Total (in thousands) Assets: Cash equivalents Money market funds $ 143,859 $ — $ — $ 143,859 Commercial paper — 107,889 — 107,889 Certificates of deposit — 14,010 — 14,010 Marketable securities U.S. government securities — 42,994 — 42,994 Corporate debt securities — 38,698 — 38,698 Certificates of deposit — 261,987 — 261,987 Available for sale debt securities — 28,500 — 28,500 Total current assets $ 143,859 $ 494,078 $ — $ 637,937 Equity securities 477,185 — — 477,185 Available for sale debt securities — 162,454 — 162,454 Warrants (1) — 14,717 — 14,717 Total non-current $ 477,185 $ 177,171 $ — $ 654,356 (1) Related to Epizyme transaction as described in Note 4 and recorded in the non-current Derivative financial instruments As of December 31, 2019 Level 1 Level 2 Level 3 Total (in thousands) Assets: Cash equivalents Money market funds $ 222,296 $ — $ — $ 222,296 Commercial paper — 21,502 — 21,502 Certificates of deposit — 20,011 — 20,011 Marketable securities U.S. government securities — 12,877 — 12,877 Certificates of deposit — 44,095 — 44,095 Total current assets $ 222,296 $ 98,485 $ — $ 320,781 Equity securities 380,756 — — 380,756 Available for sale debt securities — — 131,280 131,280 Warrants (1) — 30,815 — 30,815 Forward purchase contract (1) — 11,500 — 11,500 Total non-current $ 380,756 $ 42,315 $ 131,280 $ 554,351 Liabilities: Interest rate swaps — (9,215 ) — (9,215 ) Total current liabilities $ — $ (9,215 ) $ — $ (9,215 ) Interest rate swaps — (18,902 ) — (18,902 ) Total non-current $ — $ (18,902 ) $ — $ (18,902 ) (1) Related to Epizyme warrants and put option as described in Note 4 and recorded in the non-current Derivative financial instruments The table presented below summarizes the change in the carrying value of level 3 financial instruments, which related entirely to the investment in Biohaven Preferred Shares (discussed below) for the three and six months ended June 30, 2020 and 2019. For the three months ended June 30, 2020 June 30, 2019 (in thousands) Available for sale debt securities Balance at the beginning of the period $ — $ — Purchases — 125,121 Change in unrealized movement — 2,939 Balance at the end of the period $ — $ 128,060 For the six months ended June 30, 2020 June 30, 2019 (in thousands) Available for sale debt securities Balance at the beginning of the period $ 131,280 $ — Purchases — 125,121 Change in unrealized movement 52,725 2,939 Transfer to level 2 (184,005 ) — Balance at the end of the period $ — $ 128,060 Valuation inputs Below is a discussion of the valuation inputs used for financial instruments classified as level 2 and level 3 measurements in the fair value hierarchy. Investment in Biohaven Preferred Shares The fair value of the Biohaven Preferred Shares at June 30, 2020 was based on the defined cash flow from the achievement of certain contractual terms, namely the February 2020 approval by the United States Food and Drug Administration (“FDA”) of Nurtec ODT (rimegepant), which resulted in a payment due to Royalty Pharma of two times (2x) the original purchase price of the Series A Preferred Shares payable in equal quarterly installments following FDA approval and starting one-year The fair value of the Biohaven Preferred Shares at December 31, 2019 was determined based on significant inputs that were not observable in the market, referred to as level 3 inputs. The valuation was performed using a Black-Derman-Troy (“BDT”) lattice model, which takes into account the purchase terms and various probability-weighted redemption and payback scenarios that impact the return on investment. Key inputs to the BDT model included, most notably, the probability (1) of Biohaven’s pipeline product, rimegepant, being approved by the FDA by specific dates, (2) of a Change of Control event by specific dates, and (3) that Biohaven will elect to redeem the Preferred Shares for a lump sum payment as opposed to payback over time. Probabilities for the above considerations were developed by our Research team, who have significant healthcare and finance expertise to make such assessments. The most critical assumption that impacted the valuation of our Biohaven Preferred Shares at December 31, 2019 was the probability that rimegepant would be approved by the FDA. If the probability that such FDA approval occurs were reduced by 20%, the value of our Biohaven Preferred Shares would not change materially at December 31, 2019. Assumptions used in the valuation model as of December 31, 2019 included the following significant unobservable inputs: • Change of Control probability on a quarterly basis (0%) • Likelihood of FDA approval (0%-86%) • Likelihood of FDA approval at the end of any given quarter by December 31, 2024 (Range: 0%-59%). Other financial instruments We use a third party pricing service for level 2 inputs used to value cash equivalents and short term investments, which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application and corroborative information. Warrants are valued using a Black-Scholes option pricing model which considers observable and unobservable inputs. Level 2 derivative instruments are typically valued using counterparty confirmations, LIBOR yield curves and credit valuation adjustments. Financial assets not measured at fair value Financial royalty assets are measured and carried on the condensed consolidated balance sheets at amortized cost using the effective interest method. The current portion of financial royalty assets approximates fair value. The fair value of financial royalty assets is calculated by management using the forecasted royalty payments we expect to receive based on the projected product sales for all royalty bearing products as estimated by sell-side equity research analysts. These projected future royalty payments by asset are then discounted to a present value using appropriate individual discount rates. The fair value of our financial royalty assets is classified as level 3 within the fair value hierarchy since it is determined based upon inputs that are both significant and unobservable. Estimated fair values based on level 3 inputs and related carrying values for the non-current (in thousands) June 30, 2020 December 31, 2019 Fair value Carrying value, net Fair value Carrying value, net Financial royalty assets, net $ 17,024,285 $ 11,169,857 $ 16,501,819 $ 10,842,052 | 3. Fair Value Measurements and Financial Instruments Fair value measurements The summary below presents information about assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2019 and 2018, and the valuation techniques we utilized to determine such fair value. • Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Our level 1 assets consist of equity securities with readily determinable fair values and money market funds. • Level 2: Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly. Our level 2 assets generally include warrants, derivatives, and our interest rate swap contracts, which may be in an asset or liability position. • Level 3: Prices or valuation that requires inputs that are both significant to the fair value measurement and unobservable. Our level 3 assets consisted of our investment in Tecfidera and Biohaven Preferred Shares, which were recorded as available for sale debt securities. See Note 5 for a description of our investment in Tecfidera and Biohaven Preferred Shares. For financial instruments which are carried at fair value, the level in the fair value hierarchy is based on the lowest level of inputs that is significant to the fair value measurements in its entirety. Fair value hierarchy The following is a summary of the inputs used to value our financial assets and liabilities measured at fair value as of December 31, 2019 and 2018: (in thousands) As of December 31, 2019 Level 1 Level 2 Level 3 Total Assets: Cash equivalents Money market funds $ 222,296 $ — $ — $ 222,296 Commercial paper — 21,502 — 21,502 Certificates of deposit — 20,011 — 20,011 Marketable securities U.S. government securities — 12,877 — 12,877 Certificates of deposit — 44,095 — 44,095 Total current assets $ 222,296 $ 98,485 $ — $ 320,781 Available for sale debt securities — — 131,280 131,280 Equity securities 380,756 — — 380,756 Warrants (1) — 30,815 — 30,815 Forward purchase contract (1) — 11,500 — 11,500 Total non-current $ 380,756 $ 42,315 $ 131,280 $ 554,351 Liabilities: Interest rate swaps — (9,215 ) — (9,215 ) Total current liabilities $ — $ (9,215 ) $ — $ (9,215 ) Interest rate swaps — (18,902 ) — (18,902 ) Total non-current $ — $ (18,902 ) $ — $ (18,902 ) (1) Related to Epizyme warrants and put option as described in Note 4 and recorded in the non-current Derivative financial instruments (in thousands) As of December 31, 2018 Level 1 Level 2 Level 3 Total Assets: Cash equivalents Money market funds $ 1,815,717 $ — $ — $ 1,815,717 Interest rate swaps — 19,196 — 19,196 Total current assets $ 1,815,717 $ 19,196 $ — $ 1,834,913 Interest rate swaps — 19,111 — 19,111 Equity securities 146,008 — — 146,008 Total non-current $ 146,008 $ 19,111 $ — $ 165,119 The table presented below summarizes the change in the carrying value of level 3 financial instruments for the years ended December 31, 2019 and December 31, 2018. (in thousands) For the years ended December 31, 2019 2018 Balance at beginning of the year $ — $ 583,021 Purchases 125,121 — Change in unrealized movement 6,159 (402,502 ) Realized gains — 419,481 Proceeds earned — (600,000 ) Balance at end of the year $ 131,280 $ — There were no transfers between levels during the years ended December 31, 2019 and December 31, 2018. Valuation inputs Below is a discussion of the valuation inputs used for financial instruments classified as level 2 and level 3 measurements in the fair value hierarchy. Investment in Biohaven The fair value of the Biohaven Preferred Shares of $131.3 million at December 31, 2019 was determined based on significant inputs that are not observable in the market, referred to as Level 3 inputs. The valuation was performed using a Black-Derman-Troy (“BDT”) lattice model, which takes into account the purchase terms and various probability-weighted redemption and payback scenarios that impact the return on investment. Key inputs to the BDT model include, most notably, the probability (1) that Biohaven’s pipeline product, Nurtec ODT (rimegepant), will be approved by the FDA by specific dates, (2) of a Change of Control event by specific dates, and (3) that Biohaven will elect to redeem the Preferred Shares for a lump sum payment as opposed to payback over time. Probabilities for the above considerations were developed by the Company’s Research team, who have significant healthcare and finance expertise to make such assessments. The most critical assumption that impacts the valuation of the Biohaven Preferred Shares is the probability that Nurtec ODT (rimegepant) will be approved by the FDA. If the probability that such FDA approval occurs is reduced by 20%, the value of the Biohaven Preferred Shares would not change materially. See Note 5 for a description of our investment in Biohaven. Assumptions used in the valuation model as of December 31, 2019 include the following significant unobservable inputs: • Change of Control probability on a quarterly basis (0%) • Likelihood of FDA approval (0%-86%) • Likelihood of FDA approval at the end of any given quarter by December 31, 2024 (Range: 0%-59%). Investment in Tecfidera Our investment in Tecfidera was valued using the discounted cash flow method, with a discount rate of 8% used for valuation at Decemebr 31, 2018. The unobservable inputs used to assess the fair value of Tecfidera primarily included the discount rate and cash flow projections derived from sell-side equity research analysts’ forecasts. See Note 5 for a description of our investment in Tecfidera. Other financial instruments We use a third party pricing service for level 2 inputs used to value cash equivalents and short term investments, which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application and corroborative information. Level 2 derivative instruments are valued using counterparty confirmations, LIBOR yield curves and credit valuation adjustments. Warrants are valued using a Black-Scholes option pricing model which considers observable and unobservable inputs. Financial assets not measured at fair value Royalty assets classified as financial assets are measured and carried on the consolidated balance sheets at amortized cost using the effective interest method (see Note 2). The current portion of royalty assets classified as financial assets approximates its fair value. Estimated fair values based on Level 3 inputs and related carrying values for the non-current (in thousands) December 31, 2019 December 31, 2018 Fair value Carrying value, net Fair value Carrying value, net Financial royalty assets, net $ 16,501,819 $ 10,842,052 $ 12,021,288 $ 8,377,231 |
Derivative Instruments
Derivative Instruments | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative Instruments | 4. Derivative Instruments We have historically managed the impact of foreign currency exchange rate and interest rate risk through various financial instruments, including derivative instruments such as interest rate swap contracts and foreign currency forward contracts. Our policy is to use derivatives strategically to hedge existing interest rate exposure and to minimize volatility in cash flow arising from our exposure to interest rate risk and foreign currency risk. We may also acquire other financial instruments that are classified as derivatives. We do not enter into derivative instruments for trading or speculative purposes. Interest rate swaps As of June 30, 2020, we do not hold any interest rate swap contracts. In connection with the Exchange Offer Transactions described in Note 1, RPIFT terminated all outstanding interest rate swaps in February 2020. We paid $35.4 million to terminate our swaps and reclaimed $45.3 million of collateral that was held by the respective counterparties. As of December 31, 2019, RPIFT held interest rate swap contracts to effectively convert a portion of its floating-rate debt to a fixed basis. The notional values and fixed rates payable on the swap contracts are shown in the table below. Notional Value (in millions) Fixed Rate Maturity Date $600 2.019 % November 9, 2020 $250 2.094 % March 27, 2023 $500 2.029 % March 27, 2023 $250 2.113 % March 27, 2023 $500 2.129 % March 27, 2023 We do not apply hedge accounting and recognize all movement in fair value through earnings. All outstanding interest rate swaps were terminated in February 2020; therefore, there were no related unrealized gains or losses during the three months ended June 30, 2020. During the three months ended June 30, 2019 we recorded in earnings unrealized losses of $39.4 million on interest rate swaps in the condensed consolidated statements of comprehensive income. During the six months ended June 30, 2020 and 2019 we recorded in earnings unrealized losses of $10.9 million and $65.3 million, respectively, on interest rate swaps in the condensed consolidated statements of comprehensive income. The fair value of the swaps at December 31, 2019 was a net liability of $28.1 million (a current liability of $9.2 million and a non-current RPIFT had master International Swaps and Derivatives Association (“ISDA”) agreements in place with its derivative instrument counterparties which provide for final close out netting with counterparties for all positions in the case of default or termination of the ISDA agreement. Under these agreements, RPIFT has set-off RPIFT generally had executed a Credit Support Annex (“CSA”) under the ISDA it maintains with each of its over-the-counter “out-of-the-money” Only the swaps maturing in 2023 had collateral requirements. At December 31, 2019, RPIFT had a receivable of $45.6 million in cash collateral previously posted to trade counterparties, which was recorded in Other assets on the condensed consolidated balance sheets. At December 31, 2019, RPIFT did not have the obligation to return any cash collateral to counterparties, as it did not hold any cash collateral at that date. Epizyme put option and warrant In November 2019, RPIFT made an equity investment in Epizyme Inc. (“Epizyme”) of $100.0 million. Under the terms of its agreement with Epizyme, RPIFT made an upfront payment of $100.0 million for (1) shares of Epizyme common stock, (2) a warrant to purchase an additional 2.5 million shares of Epizyme common stock at $20 per share over a three-year term, and (3) Epizyme’s royalty on sales of Tazemetostat in Japan payable by Eisai Co., Ltd (“Eisai”). In addition, Epizyme had an 18 month put option to sell an additional $50.0 million of its common stock to RPIFT at then prevailing prices, not to exceed $20 per share. Epizyme notified the Company of its intention to exercise the put option on December 31, 2019. As a result, we recorded a forward purchase contract equal to the difference between the market value and exercise price of $11.5 million in the non-current The warrant was recognized at fair value of $14.7 million and $30.8 million within the non-current Biohaven written put option We determined there was a derivative associated with the Second Tranche of the Biohaven Preferred Share Agreement that was entered into in April 2019. The derivative related to Biohaven’s option, exercisable within 12 months from when the NDA for Nurtec ODT was accepted by the FDA for Priority Review, to require Royalty Pharma to purchase up to an additional $75.0 million of Preferred Shares (the “Second Tranche”) at the same price and on the same terms as the First Tranche, in one or more transactions of no less than $25.0 million. As of June 30, 2020 and December 31, 2019, management determined that the value of the Second Tranche written put option was immaterial, and therefore no liability has been recognized on the condensed consolidated balance sheets at this time. See Note 5 for a description of our investment in the Biohaven Preferred Shares. Summary of derivatives and reclassifications The tables below summarize the change in fair value of the derivatives for the three and six months ended June 30, 2020 and 2019, and the line items within the condensed consolidated statements of comprehensive income where the gains/(losses) on these derivatives are recorded. For the three months ended Condensed Consolidated Statement of June 30, 2020 June 30, 2019 (in thousands) Derivatives in hedging relationships (1) Interest Rate Swaps: Amount of loss reclassified from AOCI into income $ — $ (1,602 ) Unrealized gain/loss on derivative contracts Change in fair value of interest rate swaps — (8,011 ) Unrealized gain/loss on derivative contracts Interest income — 3,115 Interest expense Derivatives not designated as hedging instruments Interest Rate Swaps: Change in fair value of interest rate swaps — (29,801 ) Unrealized gain/loss on derivative contracts Interest income — 1,479 Interest expense Warrant: Change in fair value of warrant 647 — Unrealized gain/loss on derivative contracts For the six months ended Condensed Consolidated Statement of June 30, 2020 June 30, 2019 (in thousands) Derivatives in hedging relationships (1) Interest Rate Swaps: Amount of loss reclassified from AOCI into income $ (4,066 ) $ (3,189 ) Unrealized gain/loss on derivative contracts Change in fair value of interest rate swaps 73 (14,307 ) Unrealized gain/loss on derivative contracts Interest (expense)/income (114 ) 6,888 Interest expense Derivatives not designated as hedging instruments Interest Rate Swaps: Change in fair value of interest rate swaps (6,908 ) (47,758 ) Unrealized gain/loss on derivative contracts Interest (expense)/income (408 ) 3,032 Interest expense Warrant: Change in fair value of warrant (16,097 ) — Unrealized gain/loss on derivative contracts Forward purchase contract: Change in fair value of forward purchase contract (5,800 ) — Unrealized gain/loss on derivative contracts (1) Certain older interest rate swaps were previously designated as cash flow hedges. These swaps became ineffective as debt refinancings occurred between 2013 and 2016. As a result of the termination of interest rate swaps in February 2020, all amounts associated with interest rate swaps previously designated as cash flow hedges and recorded in AOCI have been released into earnings. | 4. Derivative Instruments We have historically managed the impact of foreign currency exchange rate and interest rate risk through various financial instruments, including derivative instruments such as interest rate swap contracts and foreign currency forward contracts. Our policy is to use derivatives strategically to hedge existing interest rate exposure and to minimize volatility in cash flow arising from our exposure to interest rate risk and foreign currency risk. We may also acquire other financial instruments that are classified as derivatives. We do not enter into derivative instruments for trading or speculative purposes. Interest rate swaps As of December 31, 2019 and 2018, RPIFT held interest rate swap contracts to effectively convert a portion of its floating-rate debt to a fixed basis. The notional values and fixed rates paid on the swap contracts are shown in the table below. Notional Value Fixed Rate Maturity Date $ 450 1.310 % May 9, 2018 $ 325 1.795 % May 9, 2018 $ 325 1.787 % May 9, 2018 $ 300 1.775 % November 9, 2018 $ 200 1.585 % November 9, 2018 $ 385 1.250 % November 9, 2019 $ 385 1.358 % November 9, 2019 $ 600 2.019 % November 9, 2020 $ 250 2.094 % March 27, 2023 $ 500 2.029 % March 27, 2023 $ 250 2.113 % March 27, 2023 $ 500 2.129 % March 27, 2023 Prior to 2017, management had designated the swap contracts with maturity dates through 2020 as cash flow hedges at inception, with the effective portion of the gain or loss on the swap reported as a component of other comprehensive income/(loss). Following various refinancings of RPIFT’s senior secured credit facilities in November 2013, May 2015 and October 2016, certain swap contracts no longer qualified for hedge accounting treatment. With each refinancing, the “highly effective” criterion was no longer met in respect of the individual swaps and, as a result, after October 2016, all changes in fair value related to these swaps have subsequently been recorded in earnings as part of unrealized gain/(loss) on interest rate swaps. For the years ended December 31, 2019, 2018 and 2017, we did not have any swaps that were treated as effective cash flow hedges for accounting purposes. In the fourth quarter of 2017, RPIFT entered into four new swaps maturing in 2023, which were not designated as cash flow hedges, and are recorded at fair value through earnings. During the years ended December 31, 2019, 2018 and 2017, we recorded in earnings unrealized losses of $72.6 million, unrealized gains of $11.9 million and unrealized gains of $17.0 million, respectively, on interest rate swaps in the consolidated statements of comprehensive income. The fair value of the swaps at December 31, 2019 and December 31, 2018 was a net liability of $28.1 million (a current liability of $9.2 million and a non-current non-current RPIFT has master International Swaps and Derivatives Association (“ISDA”) agreements in place with its derivative instrument counterparties which provide for final close out netting with counterparties for all positions in the case of default or termination of the ISDA agreement. Under these agreements, we have set-off RPIFT generally has executed a Credit Support Annex (“CSA”) under the ISDA it maintains with each of its over-the-counter “out-of-the-money” Only the swaps maturing in 2023 have collateral requirements. At December 31, 2019, RPIFT had a receivable of $45.6 million in cash collateral previously posted to trade counterparties, which was recorded in Other long-term assets In connection with the Exchange Offer Transactions described in Note 1, RPIFT terminated all outstanding swaps in February 2020. Epizyme put option and warrant In November 2019, RPIFT made an equity investment in Epizyme Inc. (“Epizyme”) of $100.0 million. Under the terms of its agreement with Epizyme, RPIFT made an upfront payment of $100.0 million for (1) shares of Epizyme common stock, (2) a warrant to purchase an additional 2.5 million shares of Epizyme common stock at $20 per share over a three-year term, and (3) Epizyme’s royalty on sales of Tazemetostat in Japan payable by Eisai Co., Ltd (“Eisai”). In connection with this transaction, Pablo Legorreta, Royalty Pharma’s CEO, was appointed as a director of Epizyme, for which he will receive compensation in cash and shares, all of which will be contributed to RPM and used to reduce costs and expenses which would otherwise be billed to the Company or its affiliates. In addition, Epizyme has an 18 month put option to sell an additional $50.0 million of its common stock to RPIFT at then prevailing prices, not to exceed $20 per share. The warrant was recognized at fair value of $30.8 million within the non-current Derivative financial instruments non-current Derivative financial instruments Biohaven written put option The Company determined there was a derivative associated with the Second Tranche of the Biohaven Preferred Share Agreement. The derivative relates to Biohaven’s option, exercisable within 12 months after the NDA for Nurtec ODT (rimegepant) is accepted by the FDA for Priority Review, to require the Company to purchase up to an additional $75.0 million of Preferred Shares (the “Second Tranche”) at the same price and on the same terms as the First Tranche, in one or more transactions of no less than $25.0 million. As of December 31, 2019, management determined that the value of the Second Tranche written put option was immaterial, and therefore no liability has been recognized on the consolidated balance sheets at this time. See Note 5 for a description of our investment in Biohaven. Summary of derivatives and reclassifications All interest rate swaps were ineffective during the years ended December 31, 2019, 2018, and 2017. The table below summarizes the change in fair value of the recognized derivatives held by RPIFT for the years ended December 31, 2019, 2018, and 2017 and the line item within the consolidated statements of comprehensive income where the gains/(losses) on these derivatives are recorded. (in thousands) For the years ended December 31, 2019 2018 2017 Consolidated Statement of Income location Derivatives in hedging relationships (1) Interest Rate Swaps: Amount of loss reclassified from AOCI into income $ (6,189 ) $ (8,003 ) $ (8,931 ) Unrealized gain/loss on interest rate swaps (1) Change in fair value of interest rate swaps (16,954 ) 3,357 18,948 Unrealized gain/loss on interest rate swaps (1) Interest income/(expense), net 9,565 9,758 (13,734 ) Interest expense Derivatives not designated as hedging instruments Interest Rate Swaps: Change in fair value of interest rate swaps (49,472 ) 16,569 6,982 Unrealized gain/loss on derivatives Interest income/(expense), net (2,681 ) 440 — Interest expense Warrant: Change in fair value of warrant 21,977 — — Unrealized gain/loss on derivatives Forward purchase contract: Change in fair value of forward purchase contract 11,500 — — Unrealized gain/loss on derivatives (1) Certain older interest rate swaps were previously designated as cash flow hedges. These swaps became ineffective as debt refinancings occurred between 2013-2015. Interest rate swaps to be reclassified from AOCI into income expire at various dates up until 2020, at which point all associated amounts initially recorded in AOCI will have been released. The portion of loss to be reclassified from AOCI into income within the next twelve months is $4.1 million. |
Available for Sale Debt Securit
Available for Sale Debt Securities | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | ||
Available for Sale Debt Securities | 5. Available for Sale Debt Securities A summary of our available for sale debt securities recorded at fair value is shown below as of June 30, 2020 and December 31, 2019: Cost Unrealized gains Fair Value (1) As of June 30, 2020 (in thousands) Biohaven preferred shares $ 125,121 $ 65,833 $ 190,954 Total available for sale debt securities $ 125,121 $ 65,833 $ 190,954 As of December 31, 2019 Biohaven preferred shares $ 125,121 $ 6,159 $ 131,280 Total available for sale debt securities $ 125,121 $ 6,159 $ 131,280 (1) As of June 30, 2020, $28.5 million and $162.5 million are recorded as the current and non-current Available for sale debt securities non-current Available for sale debt securities (Biohaven Preferred Shares) On April 5, 2019, RPIFT funded the purchase of 2,495 Series A Preferred Shares from Biohaven Pharmaceutical Holding Company Ltd (“Biohaven”) at a price of $50,100.00 per preferred share, for a total of $125.0 million, pursuant to the Preferred Share Agreement. Pursuant to the Preferred Share Agreement, Biohaven may issue and sell to RPIFT, and RPIFT will purchase from Biohaven, the Second Tranche of up to $75.0 million in the aggregate (and no less than $25.0 million at each additional closing) of additional Series A Preferred Shares subject to the acceptance by the FDA of both New Drug Applications (“NDAs”) with respect to the tablet formulation of rimegepant and the orally disintegrating tablet formulation of rimegepant. As a condition for the issuance of the Second Tranche, one NDA must be accepted under the priority review designation pathway. The issuance of the Second Tranche is subject to customary closing conditions and is entirely at Biohaven’s option. The Series A Preferred Shares provided RPIFT with the right to require Biohaven to redeem its shares under the following circumstances: • If a Change of Control is announced on or before October 5, 2019, Biohaven has the option to redeem the Series A Preferred Shares for one point five times (1.5 x) the original purchase price of the Series A Preferred Shares upon the closing of the Change of Control. If Biohaven does not elect to redeem the Series A Preferred Shares for 1.5x the original purchase price at the closing of Change of Control, then Biohaven is required to redeem the Series A Preferred Shares for two times (2x) the original purchase price, payable in equal quarterly installments following closing of the Change of Control through December 31, 2024. • If a Change of Control is announced after October 5, 2019 and the Series A Preferred Shares have not previously been redeemed, Biohaven must redeem the Series A Preferred Shares for two times (2x) the original purchase price of the Series A Preferred Shares payable in a lump sum at the closing of the Change of Control or in equal quarterly installments following the closing of the Change of Control through December 31, 2024. • If an NDA for rimegepant is not approved by December 31, 2021, RPIFT has the option at any time thereafter to require Biohaven to redeem the Series A Preferred Shares for one point two times (1.2x) the original purchase price of the Series A Preferred Shares. • If no Change of Control has been announced, the Series A Preferred Shares have not previously been redeemed and (i) rimegepant is approved on or before December 31, 2024, following approval and starting one-year • Biohaven may redeem the Series A Preferred Shares at its option at any time for two times (2x) the original purchase price, which redemption price may be paid in a lump sum or in equal quarterly installments through December 31, 2024. In the event that Biohaven defaults on any obligation to redeem Series A Preferred Shares when required, the redemption amount shall accrue interest at the rate of eighteen percent (18%) per annum. If any such default continues for at least one year, RPIFT will be entitled to convert, subject to certain limitations, such Series A Preferred Shares into common shares, with no waiver of its redemption rights. • Under all circumstances, the Series A Preferred Shares are required to be redeemed by Biohaven by December 31, 2024. Nurtec ODT (rimegepant) was approved by the FDA in February 2020, which results in a payment due to Royalty Pharma of two times (2x) the original purchase price of the Series A Preferred Shares payable in equal quarterly installments following approval and starting one-year | 5. Available for Sale Debt Securities and Equity Securities A summary of our available for sale debt securities recorded at fair value is shown below as of December 31, 2019: Cost Unrealized gains Fair Value (in thousands) Biohaven preferred shares $ 125,121 $ 6,159 $ 131,280 Total available for sale debt securities $ 125,121 $ 6,159 $ 131,280 Biohaven available for sale debt securities In April 2019, RPIFT funded the purchase of 2,495 Series A Preferred Shares from Biohaven Pharmaceutical Holding Company Ltd (“Biohaven”) at a price of $50,100.00 per preferred share, for a total of $125.0 million, pursuant to the Preferred Share Agreement. Pursuant to the Preferred Share Agreement, Biohaven may issue and sell to RPIFT, and RPIFT will purchase from Biohaven, the Second Tranche of up to $75.0 million in the aggregate (and no less than $25.0 million at each additional closing) of additional Series A Preferred Shares at the same price and on the same terms as the First Tranche subject to the acceptance by the United States Food and Drug Administration (“FDA”) of both New Drug Applications (“NDAs”) with respect to the tablet formulation of Nurtec ODT (rimegepant) and the orally disintegrating tablet formulation of Nurtec ODT (rimegepant). As a condition for the issuance of the Second Tranche, one NDA must be accepted under the priority review designation pathway. The issuance of the Second Tranche is subject to customary closing conditions and is entirely at Biohaven’s option. The Series A Preferred Shares provide RPIFT with the right to require Biohaven to redeem its shares under the following circumstances: • If a Change of Control is announced after October 5, 2019 and the Series A Preferred Shares have not previously been redeemed, Biohaven must redeem the Series A Preferred Shares for two times (2x) the original purchase price of the Series A Preferred Shares payable in a lump sum at the closing of the Change of Control or in equal quarterly installments following the closing of the Change of Control through December 31, 2024. • If an NDA for Nurtec ODT (rimegepant) is not approved by December 31, 2021, RPIFT has the option at any time thereafter to require Biohaven to redeem the Series A Preferred Shares for one point two times (1.2x) the original purchase price of the Series A Preferred Shares. If no Change of Control has been announced, the Series A Preferred Shares have not previously been redeemed and (i) Nurtec ODT (rimegepant) is approved on or before December 31, 2024, following approval and starting one-year • Biohaven may redeem the Series A Preferred Shares at its option at any time for two times (2x) the original purchase price, which redemption price may be paid in a lump sum or in equal quarterly installments through December 31, 2024. In the event that Biohaven defaults on any obligation to redeem Series A Preferred Shares when required, the redemption amount shall accrue interest at the rate of eighteen percent (18%) per annum. If any such default continues for at least one year, RPIFT will be entitled to convert, subject to certain limitations, such Series A Preferred Shares into common shares, with no waiver of its redemption rights. • Under all circumstances, the Series A Preferred Shares are required to be redeemed by Biohaven by December 31, 2024. • In February 2020, Biohaven announced that the FDA approved Nurtec ODT (rimegepant) for the acute treatment of migraine in adults. Tecfidera available for sale debt securities In May 2012 and December 2013, RPIFT acquired interests in the earn-out earn-out earn-out This investment was structured in the form of 22 potential milestone payments, of which all were earned as of December 31, 2018. The allocated cost of each milestone was derived using a third party analysis based on projected sales over time, the future competitive landscape, the strength of the patents underlying the product, and the prevailing interest rate environment. Once cumulative sales of Tecfidera reached certain agreed upon levels, an estimated accrual was recorded for the milestone payment to be received based on the sales of Fumaderm products as reported by Biogen Idec. The allocated cost of that particular milestone reduced the available for sale security recorded on the consolidated balance sheets. The excess of the payments received over the allocated cost was recognized as a realized gain on available for sale securities in the consolidated statements of comprehensive income. The accumulated other comprehensive income balance was unwound in line with the natural decline in the fair value of the asset, as the individual milestones were met. The $600.0 million milestone payments that RPIFT was entitled to receive based on sales during the year ended December 31, 2018 were recorded as a $419.5 million realized gain in the consolidated statements of comprehensive income and a $180.5 million reduction of the investment in Tecfidera recorded as available for sale securities in the consolidated balance sheets. At December 31, 2018, milestone payments receivable of $150.0 million were recorded as other receivables on the consolidated balance sheets and was collected during the first quarter of 2019. We did not have an available for sale debt securities balance recorded for Tecfidera as of December 31, 2018. Equity securities We own equity securities in publicly traded companies, which were recorded at fair value through accumulated other comprehensive income prior to January 1, 2018. Beginning on January 1, 2018, unrealized gains and losses on equity securities are recognized through earnings. |
Financial Royalty Assets, Net
Financial Royalty Assets, Net | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Receivables [Abstract] | ||
Financial Royalty Assets, Net | 6. Financial Royalty Assets, Net Financial royalty assets, net consist of contractual rights to cash flows relating to royalty payments derived from the sales of patent-protected biopharmaceutical products that entitle the Company and its subsidiaries to receive a portion of income from the sale of those products by unrelated companies. The gross carrying value, cumulative allowance for changes in expected cash flows, exclusive of the allowance for credit losses, and net carrying value for the current and non-current June 30, 2020 Estimated royalty Gross carrying Cumulative allowance Net carrying value (d) (in thousands) Cystic fibrosis franchise (b) $ 4,692,567 $ (98,381 ) $ 4,594,186 Tysabri (c) 2,065,179 (34,353 ) 2,030,826 Imbruvica 2029 1,368,322 (31,543 ) 1,336,779 Xtandi 2028 1,174,247 (219,405 ) 954,842 Promacta 2026 740,543 (8,924 ) 731,619 Tazverik 2036 346,902 — 346,902 Other 2019-2036 2,502,483 (499,455 ) 2,003,028 Total $ 12,890,243 $ (892,061 ) $ 11,998,182 Less: Cumulative allowance for credit losses (Note 7) (301,388 ) Total financial royalty assets, net $ 11,696,794 a) Dates shown are based on the patent duration or management’s best estimate of the date through which the Company will be entitled to royalties. Royalty durations can change due to the grant of additional patents, the invalidation of patents, and other reasons. b) The estimated duration for the cystic fibrosis franchise is based on the patent expiration date for Trikafta, a franchise product which was approved in the US in October 2019. Management estimates that the most material patents provide protection through 2037. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term. d) The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 7 for additional information. December 31, 2019 Estimated royalty Gross carrying Cumulative allowance Net carrying value (in thousands) Cystic fibrosis franchise (d) (b) $ 4,639,045 $ — $ 4,639,045 Tysabri (c) 2,131,272 (71,789 ) 2,059,483 Imbruvica 2029 1,332,077 — 1,332,077 Xtandi 2028 1,193,918 (332,624 ) 861,294 Promacta 2026 776,555 — 776,555 Crysvita 2032 321,234 — 321,234 Other 2019-2036 1,768,929 (464,005 ) 1,304,924 Total $ 12,163,030 $ (868,418 ) $ 11,294,612 a) Dates shown are based on the patent duration or management’s best estimate of the date through which the Company will be entitled to royalties. Royalty duration can change due to the grant of additional patents, the invalidation of patents, and other reasons. b) The estimated duration for the cystic fibrosis franchise is based on the patent expiration date for Trikafta, a franchise product which was approved in the US in October 2019. Management estimates that the most material patents provide protection through 2037. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term which is periodically reviewed by the management. d) The Vertex triple combination therapy, Trikafta, was approved by the FDA in October 2019. Sell-side equity research analysts’ consensus forecasts increased due to expected sales of the newly approved cystic fibrosis franchise product and resulted in a reversal of the entire cumulative allowance for changes in expected cash flows in the fourth quarter of 2019 related to this royalty asset. Cystic fibrosis franchise clawback In November 2019, Vertex announced that it reached an agreement with the French Authorities for a national reimbursement deal for Orkambi. As a result, management expected a reduction to royalty receipts in 2020 of approximately $35.0 million to $45.0 million, to reflect a true up related to prior periods where we collected royalties on French sales of Orkambi at a higher selling price. We recognized a reduction to the current portion of Royalty assets, net—financial asset of $41.0 million as of December 31, 2019. Upon receipt of the royalty payment in the first quarter of 2020, we did not recognize any material adjustments related to our clawback estimate. | 6. Financial Royalty Assets, Net Financial royalty assets, net consist of contractual rights to cash flows relating to royalty payments derived from the sales of patent-protected biopharmaceutical products that entitle the Company and its subsidiaries to receive a portion of income from the sale of those products by unrelated companies. The gross carrying value, cumulative allowance for changes in expected cash flows, and net carrying value for the current and non-current (in thousands) Estimated Gross carrying value Cumulative Net carrying value Cystic fibrosis franchise (d) (b) $ 4,639,045 $ — $ 4,639,045 Tysabri (c) 2,131,272 (71,789 ) 2,059,483 Imbruvica 2029 1,332,077 — 1,332,077 Xtandi 2028 1,193,918 (332,624 ) 861,294 Promacta 2026 776,555 — 776,555 Crysvita 2032 321,234 — 321,234 Other 2019-2036 1,768,929 (464,005 ) 1,304,924 Total $ 12,163,030 $ (868,418 ) $ 11,294,612 a) Dates shown are based on the patent expiry date or management’s estimate of the date through which the Company will be entitled to royalties. Royalty expiration dates can change due to the grant of additional patents, the invalidation of patents, and other reasons. b) The expiration date for the Cystic fibrosis franchise is based on the patent expiration date for Trikafta, a franchise product which was approved in the US in October 2019. Management estimates that the most material patents provide protection through 2037. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term. d) The Vertex triple combination therapy, Trikafta, was approved by the FDA in October 2019. Sell-side equity research analysts’ consensus forecasts increased due to expected sales of the newly approved Cystic fibrosis franchise product and resulted in a reversal of the entire cumulative allowance for changes in expected cash flows in the fourth quarter of 2019 related to this royalty asset. The gross carrying value, cumulative allowance for changes in expected cash flows, and net carrying value for the current and non-current (in thousands) Estimated Gross carrying value Cumulative Net carrying value Cystic fibrosis franchise (b) $ 4,641,167 $ (1,101,675 ) $ 3,539,492 Tysabri (c) 2,237,534 (138,240 ) 2,099,294 Imbruvica 2029 1,253,425 — 1,253,425 Xtandi 2028 1,214,081 (256,056 ) 958,025 Soliqua 2025 210,413 — 210,413 Lexiscan 2022 214,572 (46,890 ) 167,682 Other 2019-2028 1,050,757 (440,036 ) 610,721 Total $ 10,821,949 $ (1,982,897 ) $ 8,839,052 a) Dates shown are based on the patent expiry date or management’s best estimate of the date through which we will be entitled to royalties. Royalty expiration dates can change due to the grant of additional patents, the invalidation of patents, and other reasons. b) Kalydeco monotherapy patents begin expiring in 2027, while other patents in the franchise are expected to provide protection for combination use of Kalydeco through 2029 to 2031. Management estimates that the most material patents provide protection through 2030. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term. The one-year Gain on sale of royalty asset In February 2017, we sold a royalty asset back to the marketer for cash proceeds of $115.0 million. At the date of sale, the net carrying value of the royalty asset was $62.2 million and we recognized a gain on the sale as shown on the consolidated statements of comprehensive income for the year ended December 31, 2017. Tysabri milestone Tysabri royalty payments due to the Company exceeded $333.0 million for the year ended December 2018, as evidenced by marketer provided sales reports, and triggered a milestone payment of $250.0 million payable to the royalty seller Perrigo Company PLC (“Perrigo”). Under the terms of the Purchase and Sale Agreement for Tysabri, this milestone payment was treated as additional purchase price. We recognized a $250.0 million increase to the gross carrying value of our Tysabri royalty asset and a corresponding milestone payable on the consolidated balance sheets as of December 31, 2018, which was subsequently paid in the first quarter of 2019. Cystic fibrosis franchise clawback In November 2019, Vertex announced that it reached an agreement with the French Authorities for a national reimbursement deal for Orkambi. As a result, management expects a reduction to royalty receipts in 2020 by approximately $35.0 million to $45.0 million, to reflect a true up related to prior periods where we collected royalties on French sales of Orkambi at a higher selling price. We recognized a reduction to the current portion of Royalty assets, net - financial asset |
Cumulative Allowance for Change
Cumulative Allowance for Changes in Expected Cash Flows from Financial Royalty Assets | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Credit Loss [Abstract] | ||
Cumulative Allowance for Changes in Expected Cash Flows from Financial Royalty Assets | 7. Cumulative Allowance for Changes in Expected Cash Flows from Financial Royalty Assets The Cumulative allowance and the Provision for changes in expected future cash flows from financial royalty assets includes the following activities: • the movement in the Cumulative allowance for changes in expected future cash flows, and • the movement in the allowance for current expected credit losses; both are presented net within the non-current Upon the January 1, 2020 adoption of ASU 2016-13, The following table sets forth the activity in the cumulative allowance for changes in expected cash flows from financial royalty assets, inclusive of the allowance for credit losses, as of the dates indicated: (in thousands) Activity for the period Balance at December 31, 2019 $ (868,418 ) Cumulative adjustment for adoption of ASU 2016-13 (192,705 ) Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets (289,587 ) Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets 262,980 Reversal of cumulative allowance (a) 2,964 Current period provision for credit losses (108,683 ) Balance at June 30, 2020 $ (1,193,449 ) (a) Relates to amounts reversed out of the allowance at the end of a royalty asset’s life to bring the account balance to zero. Reversals solely impact the asset account and allowance account, there is no impact on the condensed consolidated statements of comprehensive income. | 7. Cumulative Allowance for Changes in Expected Cash Flows from Financial Royalty Assets The following table sets forth the activity in the cumulative allowance for changes in expected cash flows from financial royalty assets classified as financial assets during 2019, 2018, and 2017: Activity for the year (in thousands) Balance at December 31, 2016 $ (1,838,766 ) Increases to the Cumulative allowance for changes in expected cash flows from financial royalty assets (641,956 ) Decreases to the Cumulative allowance for changes in expected cash flows from financial royalty assets 241,291 Sale of royalty asset 85,550 Reversal of cumulative allowance (a) 108,013 Balance at December 31, 2017 $ (2,045,868 ) Increases to the Cumulative allowance for changes in expected cash flows from financial royalty assets (284,214 ) Decreases to the Cumulative allowance for changes in expected cash flows from financial royalty assets 341,548 Reversal of cumulative allowance (a) 5,637 Balance at December 31, 2018 $ (1,982,897 ) Increases to the C umulative allowance for changes in expected cash flows from financial royalty assets (322,717 ) Decreases to the Cumulative allowance for changes in expected cash flows from financial royalty assets 1,342,038 Reversal of cumulative allowance (a) 95,158 Balance at December 31, 2019 $ (868,418 ) (a) Relates to amounts reversed out of the cumulative allowance at the end of a royalty asset’s life to bring the account balance to zero. Reversals solely impact the gross asset and cumulative allowance balances; there is no impact to the consolidated statements of comprehensive income. |
Intangible Royalty Assets, Net
Intangible Royalty Assets, Net | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible Royalty Assets, Net | 8. Intangible Royalty Assets, Net The following schedules of the intangible royalty interests present the cost, accumulated amortization and net carrying value as of June 30, 2020 and December 31, 2019. As of June 30, 2020 Cost Accumulated Net carrying (in thousands) DPP-IV $ 606,216 $ 565,958 $ 40,258 Total intangible royalty assets $ 606,216 $ 565,958 $ 40,258 As of December 31, 2019 Cost Accumulated Net carrying (in thousands) DPP-IV $ 606,216 $ 554,492 $ 51,724 Total intangible royalty assets $ 606,216 $ 554,492 $ 51,724 The patents associated with the royalty interests classified as intangible assets terminate at various dates up to 2022. The weighted average remaining life of the royalty interests classified as intangible assets is 1.75 years. The projected amortization expense is $11.6 million, $23.0 million, and $5.7 million in the remainder of 2020, 2021 and 2022, respectively. Our revenue is tied to underlying patent protected sales of other DPP-IV | 8. Intangible Royalty Assets, Net The following are schedules of the royalty assets classified as intangible assets showing cost, accumulated amortization and net carrying value at December 31, 2019 and 2018. (in thousands) As of December 31, 2019 Cost Accumulated Net carrying DPP-IV $ 606,216 $ 554,492 $ 51,724 (in thousands) As of December 31, 2018 Cost Accumulated Net carrying DPP-IV $ 606,216 $ 530,568 $ 75,648 The patents associated with our royalty assets classified as intangible assets terminate at various dates up to 2022. The weighted average remaining royalty duration of the royalty assets classified as intangible assets is 2.2 years. The projected amortization charge for each of the next three years is $23.0 million in 2020, $23.0 million in 2021, and $5.7 million in 2022. The company’s revenue is tied to underlying patent protected sales of other DPP-IV In August 2015, Merck & Co., Inc. (“Merck”) sued to invalidate all of our patents covering the DPP-IV DPP-IV During the years ended December 31, 2018 and 2017, we made payments to Merck in connection with charge-backs for over-payments of royalties received for DPP-IV |
Non-Consolidated Affiliates
Non-Consolidated Affiliates | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | ||
Non-Consolidated Affiliates | 9. Non-Consolidated The Legacy SLP Interest In connection with the Exchange Offer, we acquired a special limited partnership interest in the Legacy Investors Partnerships (the “Legacy SLP Interest”) valued at $303.7 million in exchange for issuing shares in the Company. As a result, we became a special limited partner in the Legacy Investors Partnerships. The Legacy SLP Interest entitles us to the equivalent of performance distribution payments that would have been paid to the general partner of the Legacy Investors Partnerships and an income allocation on a similar basis. Our income allocation is equal to the general partner’s former contractual rights to the income of the Legacy Investors Partnerships. The Legacy SLP Interest is treated as an equity method investment as our Manager is also the Manager of the Legacy Investors Partnerships and has the ability to exercise significant influence. As the Legacy Investors Partnerships are no longer participating in investment opportunities after June 30, 2020, the value of the Legacy SLP Interest is expected to decline over time. The Legacy Investors Partnerships own a non-controlling The income allocation from the Legacy SLP Interest is based on an estimate as the Legacy Investors Partnerships are private partnerships that report on a lag. Management’s estimate of equity in earnings from the Legacy SLP Interest for the current period will be updated for actuals in the subsequent period. During the three months ended June 30, 2020, we received cash distributions of $5.3 million from the Legacy Investors Partnerships and recorded an income allocation of $20.2 million within Equity in (earnings)/loss of non-consolidated Equity in (earnings)/loss of non-consolidated The Avillion Entities We account for our partnership interests in Avillion Financing I, LP (“Avillion I”) and BAv Financing II, LP (“Avillion II”, or, together, the “Avillion Entities”) as equity method investments because RPIFT has the ability to exercise significant influence over the entities. On December 19, 2017, the Avillion Entities announced that the FDA approved a supplemental New Drug Application for Pfizer’s BOSULIF ® co-development In March 2017 RPIFT entered into an agreement to invest approximately $15.0 million to fund approximately 50% of the costs of a phase II clinical trial for the use of Merck KGaA’s anti-IL PT-027 In December 2019, the Avillion II agreement was amended to increase RPIFT’s funding commitment by an additional $4.0 million in respect of the Merck Asset, for a total funding cap of $19.0 million. We received a distribution of $21.3 million from Avillion II in respect of the Merck Asset, for which development has ceased, during the three months ended June 30, 2020. RPIFT had $41.5 million and $70.8 million of unfunded commitments related to the Avillion Entities as of June 30, 2020 and December 31, 2019, respectively. Our maximum exposure to loss at any particular reporting date is limited to the current carrying value of the investment plus the unfunded commitments. | 9. Non-Consolidated In 2014, RPIFT entered into an agreement to invest up to $46.0 million to fund approximately 40% of the costs of a clinical trial for the use of Bosulif in first line treatment of chronic myeloids leukemia. RPIFT’s investment in the entity that is funding the clinical trials, Avillion Financing I, LP (“Avillion” or “Avillion I”) was made through multiple capital calls. RPIFT met its total funding commitment of $46.0 million in December of 2016. We account for our partnership interests in the Avillion entities as equity method investments because RPIFT has the ability to exercise significant influence over the entity. On December 19, 2017, Avillion announced that the FDA approved a supplemental New Drug Application for Pfizer’s BOSULIF ® in-process non-recurring co-development In March 2017 RPIFT entered into an agreement to invest approximately $15.0 million to fund approximately 50% of the costs of a phase II clinical trial for the use of Merck KGaA’s anti-IL In May 2018 RPIFT entered into an additional agreement to invest up to $105.0 million over multiple years to fund approximately 44% of the costs of Phase II and III clinical trials of Avillion II. Avillion II simultaneously entered into a co-development PT-027 RPIFT had $70.8 million and $93.8 million of unfunded commitments related to the Avillion entities as of December 31, 2019 and 2018, respectively. Our maximum exposure to loss at any particular reporting date is limited to the current carrying value of the investment plus the unfunded commitments. |
Research and Development Fundin
Research and Development Funding Expense | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Research and Development [Abstract] | ||
Research and Development Funding Expense | 10. Research and Development Funding Expense During the six months ended June 30, 2020 we did not enter into any new R&D funding arrangements. R&D funding expense incurred in the first six months of 2020 related to ongoing development stage funding payments, primarily under our Sanofi agreement. R&D funding expense in 2019 primarily related to funding agreements with both Sanofi and Pfizer. We completed our funding commitments in the fourth quarter of 2019 under our agreement with Pfizer. We recognized $5.3 million and $12.4 million of R&D funding expense for the three and six months ended June 30, 2020, respectively under our Sanofi agreement. We recognized $21.5 million of R&D funding expense during the three months ended June 30, 2019, of which $3.1 million and $17.8 million related to our funding agreements with Sanofi and Pfizer, respectively. We recognized $44.4 million of R&D funding expense during the six months ended June 30, 2019, of which $7.1 million and $36.3 million related to our funding agreements with Sanofi and Pfizer, respectively. As of June 30, 2020 we have a remaining commitment of $21.0 million related to an R&D funding agreement with Sanofi. | 10. Research and Development Funding Expense Biohaven In June 2018, RPIFT entered into a funding agreement with Biohaven Pharmaceutical Holding Company Ltd. (“Biohaven”), in which we agreed to provide funding of $100.0 million and to acquire $50.0 million in common stock of Biohaven at a premium in exchange for a revenue participation right in relation to the development and commercialization of Nurtec ODT (rimegepant) and vazegepant for the treatment of migraines. The $100.0 million upfront payment and the premium paid over market value in connection with the $50.0 million stock purchase were recorded as research and development funding expense on the consolidated statements of comprehensive income for the year ended December 31, 2018. In February 2020, Biohaven announced that the FDA approved Nurtec ODT (rimegepant) for the acute treatment of migraine in adults. See Note 5 for a description of a separate investment in Biohaven that is unrelated to our R&D funding arrangement. Immunomedics In January 2018, RPIFT entered into a funding agreement with Immunomedics, Inc. (“Immunomedics”), in which RPIFT agreed to provide funding of $175.0 million and to acquire $75.0 million in common stock of Immunomedics at a premium in exchange for a revenue participation right in relation to the development and commercialization of Trodelvy (sacituzumab govitecan-hziy), an antibody drug conjugate for multiple cancer types. The $175.0 million upfront payment and the premium paid over market value in connection with the $75.0 million stock purchase were recorded as research and development funding expense on the consolidated statements of comprehensive income for the year ended December 31, 2018. Pfizer In January 2016, RPIFT entered into an agreement with Pfizer, under which RPIFT will fund up to $300.0 million in development costs related to certain Phase III clinical trials of Pfizer’s Ibrance product primarily for adjuvant treatment of hormone receptor positive early breast cancer, all of which has been funded through December 31, 2019. If successful, and upon approval of Ibrance in certain geographies, RPIFT will be eligible to receive royalties on certain sales over approximately seven years, as well as a combination of fixed milestone payments of up to $250.0 million dependent upon results of the clinical trials. During the years ended December 31, 2019, 2018 and 2017, we recorded $62.8 million, $99.3 million, and $80.1 million, respectively, as research and development funding expense on the consolidated statements of comprehensive income in connection with this agreement. As of December 31, 2018, we had a remaining commitment of $62.8 million related to the research and development funding agreement with Pfizer. We completed our funding commitments during 2019. Sanofi In December 2014, RPIFT entered into an agreement with Sanofi in which RPIFT agreed to fund up to €294.0 million of the total development costs incurred by Sanofi for the development of three Phase III studies, of which €264.0 million has been funded through December 31, 2019. In exchange for this funding, RPIFT obtained the right to receive royalty payments on future sales of the specified products when approved for sale in certain geographies in the future. RPIFT records funding made to Sanofi as research and development funding expense on the consolidated statements of comprehensive income. During the years ended December 31, 2019, 2018, and 2017, we recorded $18.2 million, $6.9 million and $35.8 million, respectively, as research and development funding expense on the consolidated statements of comprehensive income in relation to this agreement. In November 2016, Sanofi’s product received FDA approval. Commercial sales began in the United States in January 2017. During the years ended December 31, 2019, 2018 and 2017, we recognized royalty income of $8.7 million, $5.5 million and $3.5 million, respectively, related to this product, which is recorded in Other royalty income As of December 31, 2019 and 2018, we had a remaining commitment of $32.5 million and $50.7 million, respectively, related to the research and development funding agreement with Sanofi. |
Borrowings
Borrowings | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Debt Disclosure [Abstract] | ||
Borrowings | 11. Borrowings New Senior Secured Credit Facilities On February 11, 2020, in connection with the Exchange Offer Transactions (as discussed in Note 1) and using funds contributed by RPI Intermediate FT and the Legacy Investors Partnerships, RPIFT repaid its outstanding debt and accrued interest, and terminated all outstanding interest rate swaps. RPI Intermediate FT, as borrower, entered into a term loan credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, the lenders party thereto from time to time and the other parties thereto. The new senior secured credit facilities contained in the Credit Agreement consist of a term loan A (“Tranche A-1”) B-1”) A-1 B-1 The Credit Agreement contains covenants that, among other things, restrict our ability to make certain distributions, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates or make investments. The Credit Agreement also contains customary events of default. We may voluntarily prepay in whole or in part the outstanding principal amounts of term loans under our Credit Agreement at any time prior to the maturity dates, with certain voluntary prepayments that may be subject to a customary prepayment premium governed by the Credit Agreement. Financial Covenants The Credit Agreement contains financial covenants requiring us to maintain (i) a Consolidated Leverage Ratio at or below 4.00 to 1.00 (or at or below 4.50 to 1:00 following a Qualifying Material Acquisition) of Consolidated Funded Debt to Consolidated EBITDA (each as defined and calculated with the ratio level calculated with further adjustments as set forth in the Credit Agreement) and (ii) a Consolidated Coverage Ratio at or above 2.50 to 1.00 of Consolidated EBITDA minus Consolidated Capital Expenditures to Consolidated Charges (each as defined and calculated with further adjustments as set forth in the Credit Agreement). RPI Intermediate FT was in compliance with these covenants at June 30, 2020. Our borrowings at June 30, 2020 and December 31, 2019 consisted of the following: (in thousands) Maturity Spread over June 30, December 31, New RPI Intermediate FT Senior Secured Credit Facilities: Term Loan A Facility Tranche A-1 2/2025 150 bps $ 3,120,000 $ — Term Loan B Facility Tranche B-1 2/2027 175 bps 2,825,800 — RPIFT Senior Secured Credit Facilities: Term Loan B Facility Tranche B-6 3/2023 200 bps — 4,123,000 Term Loan A Facility Tranche A-4 5/2022 150 bps — 2,150,000 Loan issuance costs (3,929 ) (1,691 ) Original issue discount (30,023 ) (33,187 ) Total value of senior secured debt (2) 5,911,848 6,238,122 Less: Current portion of long-term debt (182,226 ) (281,984 ) Total long-term debt $ 5,729,622 $ 5,956,138 (1) Borrowings under our senior secured credit facilities bear interest at a rate equal to LIBOR plus an applicable margin. (2) The carrying value of our long term debt, including the current portion, approximates its fair value. Amortization of Term Loans As of June 30, 2020, we are required to repay the term loans under the Credit Agreement over the next five years and thereafter as follows: (in thousands) Term loan amortization Year Tranche A-1 Tranche B-1 Total Remainder of 2020 $ 80,000 $ 14,200 $ 94,200 2021 160,000 28,400 188,400 2022 160,000 28,400 188,400 2023 160,000 28,400 188,400 2024 160,000 28,400 188,400 Thereafter 2,400,000 2,698,000 5,098,000 Total (1) $ 3,120,000 $ 2,825,800 $ 5,945,800 (1) Excludes discount on long-term debt of $30.0 million and loan issuance costs of $3.9 million, which are amortized through interest expense over the life of the underlying debt obligations. RPIFT Senior Secured Credit Facilities (the “Old Credit Facility”) The Old Credit Facility was repaid in full in February 2020 in connection with the Exchange Offer. As of December 31, 2019, RPIFT’s Loan Facility included two term loans, Term Loan A and Term Loan B. Tranche A-4 B-6 The Old Credit Facility contained the following covenants measured quarterly: (i) maximum total leverage ratio of 4:00 to 1:00; (ii) debt coverage ratio of greater than 3.50 to 1.00. RPIFT was in compliance with these covenants at December 31, 2019. | 11. Borrowings RPIFT’s borrowings at December 31, 2019 and 2018 consisted of the following: (In thousands) Maturity Spread over (1) As of December 31, 2019 2018 RPIFT Senior Secured Credit Facilities: Term Loan B Facility Tranche B-6 3/2023 200 bps $ 4,123,000 $ 4,267,000 Term Loan A Facility Tranche A-4 5/2022 150 bps 2,150,000 2,300,000 Loan issuance costs (1,691 ) (2,284 ) Original issue discount (33,187 ) (45,384 ) Total carrying value of senior secured debt (2) 6,238,122 6,519,332 Less: Current portion of long-term debt (281,984 ) (281,436 ) Total long-term debt $ 5,956,138 $ 6,237,896 (1) Borrowings under RPIFT’s senior secured credit facilities bear interest at a rate equal to LIBOR plus an applicable margin. (2) The carrying value of our long term debt, including the current portion, approximates its fair value. RPIFT Senior Secured Credit Facilities (the “Credit Facility”) As of December 31, 2019 and 2018, RPIFT’s Credit Facility consisted of two term loans, Term Loan A and Term Loan B. Tranche A-4 B-6 In connection with our acquisition of the Tysabri royalty asset in March 2017, RPIFT issued an incremental $1.1 billion of debt under tranche B-6 B-5 In May 2017, RPIFT repaid the outstanding balance of tranche A-2 A-3. A-2 In May of 2018, RPIFT repaid the $2.4 billion outstanding balance of term loan tranche A-3 A-4 A-3 The covenants contained in the Credit Facility and measured quarterly included the following: (i) maximum total leverage ratio of 4:00 to 1:00; (ii) debt coverage ratio of greater than 3.50 to 1.00. RPIFT was in compliance with these covenants at December 31, 2019 and 2018. New Senior Secured Credit Facilities On February 11, 2020, in connection with the Exchange Offer Transactions (as discussed in Note 1) and using funds contributed RPI Intermediate FT and the Legacy Investors Partnerships, RPIFT repaid its outstanding debt and accrued interest, and terminated all outstanding interest rate swaps. RPI Intermediate FT, as borrower, entered into a term loan credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, the lenders party thereto from time to time and the other parties thereto. The new senior secured credit facilities contained in the Credit Agreement consist of a term loan A (“Tranche A-1”) B-1”) A-1 B-1 The Credit Agreement contains covenants that, among other things, restrict our ability to make certain distributions, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates or make investments. The Credit Agreement also contains customary events of default. We may voluntarily prepay in whole or in part the outstanding principal amounts of term loans under our Credit Agreement at any time prior to the maturity dates, with certain voluntary prepayments that may be subject to a customary prepayment premium governed by the Credit Agreement. Financial Covenants The Credit Agreement contains financial covenants requiring us to maintain (i) a Consolidated Leverage Ratio at or below 4.00 to 1.00 (or at or below 4.50 to 1:00 following a Qualifying Material Acquisition) of Consolidated Funded Debt to Consolidated EBITDA (each as defined and calculated with the ratio level calculated with further adjustments as set forth in the Credit Agreement) and (ii) a Consolidated Coverage Ratio at or above 2.50 to 1.00 of Consolidated EBITDA minus Consolidated Capital Expenditures to Consolidated Charges (each as defined and calculated with further adjustments as set forth in the Credit Agreement). Amortization of Term Loans As of February 2020, we are required to repay the term loans under RPI Intermediate FT’s new senior secured credit facilities over the next five years and thereafter as follows: (in thousands) Term loan amortization Year Tranche A-1 Tranche B-1 Total 2020 $ 160,000 $ 28,400 $ 188,400 2021 160,000 28,400 188,400 2022 160,000 28,400 188,400 2023 160,000 28,400 188,400 2024 160,000 28,400 188,400 Thereafter 2,400,000 2,698,000 5,098,000 Total (1) $ 3,200,000 $ 2,840,000 $ 6,040,000 (1) Excludes discount on long-term debt of $32.6 million and loan issuance costs of $4.1 million, which are amortized through interest expense over the life of the underlying debt obligations. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
Shareholders' Equity | 12. Shareholders’ Equity Capital structure Following the completion of our IPO as discussed in Note 1, there have been no changes in our capital structure. As of June 30, 2020, we have outstanding 365,899,235 Class A ordinary shares and 241,207,425 Class B ordinary shares. In addition, we have in issue 50,000 Class R redeemable shares, which do not entitle the holder to voting or dividend rights. The purpose of the Class R redeemable shares was to ensure Royalty Pharma Limited had sufficient sterling denominated share capital at the time it was re-registered RP Holdings Class B Interests are exchangeable on a one-for-one re-designation Non-controlling In the prior year periods, the only non-controlling non-controlling (in thousands) RPSFT Legacy Continuing EPA Total March 31, 2020 $ 31,563 $ 1,971,212 $ — $ — $ 2,002,775 Contributions — 6,691 — — 6,691 Distributions (25,270 ) (99,581 ) — — (124,851 ) Net income prior to IPO 17,225 89,962 — — 107,187 Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity — (750 ) 2,433,848 — 2,433,098 Issuance of Class A shares sold in initial public offering, net of offering costs — — 758,590 — 758,590 Net income subsequent to IPO 3,400 17,755 31,560 — 52,715 Other comprehensive income: Change in unrealized movement on available for sale debt securities — 1,222 402 — 1,624 June 30, 2020 $ 26,918 $ 1,986,511 $ 3,224,400 $ — $ 5,237,829 (1) Related to the Continuing Investors Partnerships’ ownership of approximately 40% in RP Holdings through their ownership of the RP Holdings Class B Interests. (in thousands) RPSFT Legacy Continuing EPA Total December 31, 2019 $ 35,883 $ — $ — $ — $ 35,883 Contributions — 1,140,319 — — 1,140,319 Transfer of interests — 1,037,161 — — 1,037,161 Distributions (54,516 ) (321,760 ) — — (376,276 ) Net income prior to IPO 42,151 102,892 — — 145,043 Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity — (750 ) 2,433,848 — 2,433,098 Issuance of Class A shares sold in initial public offering, net of offering costs — — 758,590 — 758,590 Net income subsequent to IPO 3,400 17,755 31,560 — 52,715 Other comprehensive income: Change in unrealized movement on available for sale debt securities — 10,894 402 — 11,296 June 30, 2020 $ 26,918 $ 1,986,511 $ 3,224,400 $ — $ 5,237,829 (1) Related to the Continuing Investors Partnerships’ ownership of approximately 40% in RP Holdings through their ownership of the RP Holdings Class B Interests. 2020 Independent Director Equity Incentive Plan In June 2020, our 2020 Independent Director Equity Incentive Plan (“2020 Equity Incentive Plan”) was approved and became effective on June 15, 2020. Under the 2020 Equity Incentive Plan, 800,000 shares of our Class A ordinary shares have been reserved for future issuance. Restricted Stock Units Activity In connection with the IPO, we granted a total of 71,430 fully-vested shares with a grant date fair value of $50.90 per share under the provisions of our 2020 Equity Incentive Plan to two directors in recognition of their extensive past services to the Old RPI board and continued service on our board. Additionally, we granted a total of approximately 39,000 RSUs to independent directors that will vest in the second quarter of 2021. Compensation expense is amortized on a straight-line basis over the requisite service period. There were no share based awards in periods prior to the IPO. Share based compensation We recognized share based compensation of approximately $3.7 million which is recorded as part of the General and administrative expenses in the condensed consolidated statement of comprehensive income for the three and six months ended June 30, 2020. There was no share based compensation in periods prior to the IPO. | 14. Equity As of December 31, 2019 and 2018, the Trust had 36,705,936 units outstanding. (a) Subscriptions The first issue of units took place on August 10, 2011. At the absolute discretion of RP Ireland, additional units may be issued at the net asset value per unit, as defined in the trust deed and in accordance with the provisions of the trust deed of the Trust. (b) Redemptions To the extent that there is surplus cash available, RP Ireland may, in its sole discretion, permit redemptions of units to be effected on a valuation day, as defined in the trust deed. Unitholders will be given at least ten business days’ notice of any valuation day upon which redemptions of units will be offered. The offer will be made to all unitholders on a pro rata basis based on the number of units held by such unitholders. Units will be redeemed at the net asset value per unit on the relevant valuation day. Subject to the foregoing, RP Ireland may refuse to accept any request for redemption of units. (c) Distribution policy Distributions may be made by the Trust at the sole discretion of RP Ireland. The nature of the assets acquired by Royalty Pharma is such that they provide cash flow on a quarterly, semi-annual or annual basis. Distributions to unitholders for the years ended December 31, 2019, 2018, and 2017 totaled $739.3 million, $814.4 million, and $735.2 million, respectively. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share | 13. Earnings per Share Basic earnings per share (“EPS”) is computed by dividing net income attributable to Royalty Pharma plc by the weighted average number of Class A shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to Royalty Pharma plc, including the impact of potentially dilutive securities, by the weighted average number of Class A ordinary shares outstanding during the period, including the number of Class A ordinary shares that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include the outstanding Class B ordinary shares and unvested RSUs issued under our 2020 Independent Director Equity Incentive Plan. We use the “if-converted” Prior to the IPO, our capital structure included unitholder interests and shareholder interests. We analyzed the calculation of earnings per interest unit for periods prior to the IPO and determined that the resultant values would not be meaningful to the users of these unaudited condensed consolidated financial statements. Therefore, earnings per share information has not been presented for the three and six months ended June 30, 2019. Our Class B ordinary shares. Class R redeemable shares and deferred shares do not share in the earnings or losses attributable to Royalty Pharma plc and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B ordinary shares, Class R redeemable shares and deferred shares under the two-class one-for-one if-converted The basic and diluted earnings per share period for the three and six months ended June 30, 2020, represents only the period from June 16, 2020 to June 30, 2020, which represents the period wherein we had outstanding Class A ordinary shares. We have 607.1 million fully diluted Class A share outstanding as of June 30, 2020. The following table sets forth reconciliations used to compute basic and diluted earnings per share of Class A ordinary shares. (in thousands, except per share amounts) Three months Six months Basic net income per share: Numerator Consolidated net income $ 601,976 $ 711,072 Less: net income attributable to Continuing Investors Partnerships prior to the offering (1) 408,602 479,842 Less: net income attributable to non-controlling 31,560 31,560 Less: net income attributable to non-controlling 128,342 166,198 Net income attributable to Royalty Pharma plc $ 33,472 $ 33,472 Denominator Weighted-average shares of Class A ordinary outstanding—basic 353,979 353,979 Earnings per share of Class A common stock—basic $ 0.09 $ 0.09 Diluted net income per share: Numerator Net income attributable to Royalty Pharma plc $ 33,472 $ 33,472 Denominator Weighted-average shares of Class A ordinary outstanding—basic 353,979 353,979 Dilutive effect of unvested restricted units 1 1 Weighted-average shares of Class A ordinary shares outstanding—diluted 353,980 353,980 Earnings per share of Class A ordinary shares—diluted $ 0.09 $ 0.09 (1) Reflected as net income attributable to controlling interest on the unaudited condensed consolidated statement of comprehensive income |
Indirect Cash Flow
Indirect Cash Flow | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Supplemental Cash Flow Elements [Abstract] | ||
Indirect Cash Flow | 14. Indirect Cash Flow Adjustments to reconcile consolidated net income to net cash provided by operating activities are summarized below. (in thousands) For the six months ended June 30, 2020 2019 Cash flow from operating activities: Consolidated net income $ 711,072 $ 574,864 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Provision for changes in expected cash flows from financial royalty assets 135,290 22,177 Amortization of intangible assets 11,466 12,332 Amortization of loan issuance and discount on long-term debt 4,340 5,964 Unrealized loss on derivative contracts 32,798 65,254 Unrealized gain on equity securities (40,729 ) (16,944 ) Equity in (earnings)/loss of non-consolidated (20,218 ) 13,673 Distributions from non-consolidated 31,840 14,059 Loss on extinguishment of debt 5,405 — Share based compensation 3,740 — Other 3,398 289 (Increase)/decrease in operating assets: Financial royalty assets (937,021 ) (799,161 ) Cash collected on financial royalty assets 1,003,504 895,150 Available for sale debt securities — (150,000 ) Accrued royalty receivable 1,218 (600 ) Other receivables — 150,000 Other royalty income receivable 2,094 5,670 Other current assets (12,634 ) 4,171 Other assets 45,635 (26,352 ) Increase/(decrease) in operating liabilities: Accounts payable and accrued expenses 13,862 (769 ) Derivative financial instruments (34,952 ) — Net cash provided by operating activities $ 960,108 $ 769,777 Non-cash (in thousands) For the six months ended June 30 2020 2019 Supplemental schedule of non-cash Contribution of investment in Legacy Investors Partnerships (1) $ 303,679 $ — Settlement of Epizyme forward purchase contract (2) 5,700 — Accrued purchase obligation—Tazverik (3) 220,000 — Repayments of long-term debt by contributions from non-controlling 1,103,774 — Accrued purchase obligation 1,610 — Accrued capitalized offering costs (5) 8,897 — (1) See Note 9 (2) See Note 4 (3) See Note 17 (4) Related to the pro rata portion of RPIFT’s outstanding debt repaid by the Legacy Investors Partnerships (5) Related to capitalized offering costs incurred in connection with our IPO that have not been paid | 12. Indirect Cash Flow Adjustments to reconcile consolidated net income to net cash provided by operating activities are summarized below. For the years ended December 31, 2019 2018 2017 Cash flows from operating activities: Consolidated net income $ 2,461,419 $ 1,517,855 $ 1,343,180 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Provision for changes in expected cash flows from financial royalty assets (1,019,321 ) (57,334 ) 400,665 Amortization of intangible assets 23,924 33,267 33,267 Amortization of loan issuance and discount on long-term debt 12,790 13,127 12,910 Realized gain on available for sale debt securities — (419,481 ) (412,152 ) Unrealized loss/(gain) on derivative contracts 39,138 (11,923 ) (16,999 ) Distributions from non-consolidated 14,059 39,402 — Equity in loss/(earnings) of non-consolidated 32,517 7,023 (163,779 ) Unrealized (gain)/loss on equity securities (155,749 ) 13,939 — Gain on sale of royalty asset — — (52,753 ) Other (2,122 ) (7,771 ) 583 (Increase)/decrease in operating assets: Financial royalty assets (1,648,837 ) (1,524,816 ) (1,539,417 ) Cash collected on financial royalty assets 1,934,092 2,052,592 1,749,010 Available for sale debt securities (150,000 ) (150,000 ) 150,000 Accrued royalty receivable 2,471 (27,372 ) 66,739 Other receivables 150,000 150,000 (150,000 ) Other royalty income receivable 7,390 (11,099 ) (1,219 ) Other current assets 4,607 (442 ) (2,239 ) Other assets (45,635 ) — — Increase in operating liabilities: Accounts payable and accrued expenses 6,496 1,350 517 Net cash provided by operating activities $ 1,667,239 $ 1,618,317 $ 1,418,313 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
Accumulated Other Comprehensive Income (Loss) | 15. Accumulated Other Comprehensive Income (Loss) Comprehensive income is comprised of net income and other comprehensive income/(loss). We include unrealized gains and losses on available for sale debt securities and unrealized gains/(losses) on the interest rate swaps that were designated as cash flow hedges in other comprehensive income/(loss). Changes in accumulated other comprehensive income/(loss) by component are as follows: Unrealized gain/(loss) Unrealized gain/(loss) on Total Accumulated (in thousands) Balance at December 31, 2019 $ 6,159 $ (4,066 ) $ 2,093 Reclassifications to income — 4,066 4,066 Activity for the period 48,378 — 48,378 Reclassifications to NCI (24,022 ) — (24,022 ) Balance at June 30, 2020 $ 30,515 $ — $ 30,515 | 13. Other Comprehensive Income / (Loss) Comprehensive income is comprised of net income and other comprehensive income/(loss). We include unrealized gains and losses on available for sale securities and unrealized gains/(losses) on the interest rate swaps that were designated as cash flow hedges in other comprehensive income/(loss). Prior to January 1, 2018, unrealized gains and losses on available for sale equity securities were included in accumulated other comprehensive income/(loss). Beginning on January 1, 2018, unrealized gains and losses on equity securities are recognized through earnings. Change in accumulated other comprehensive income/(loss) by component are as follows: (In thousands) Unrealized gain/(loss) Unrealized gain/(loss) Unrealized Total Accumulated Balance at December 31, 2017 $ (2,863 ) $ 402,502 $ (18,258 ) $ 381,381 Activity for the year — (402,502 ) — (402,502 ) Cumulative adjustment for adoption of ASU 2016-01 2,863 — — 2,863 Reclassifications — — 8,003 8,003 Balance at December 31, 2018 $ — $ — $ (10,255 ) $ (10,255 ) Activity for the year — 6,159 — 6,159 Reclassifications — — 6,189 6,189 Balance at December 31, 2019 $ — $ 6,159 $ (4,066 ) $ 2,093 |
Related Party Transactions
Related Party Transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | 16. Related Party Transactions The Manager The Manager is an affiliate of RP Ireland, is the Administrator of RPIFT and RPI 2019 Intermediate Finance Trust (“RPI Intermediate FT”) and is the investment manager for RPI. The sole member of the Manager holds an interest in the Company and serves as the Company’s Chief Executive Officer and Chairman of the Board, and as a director on the board of RP Holdings. Historically, the Manager received Operating and Personnel Payments payable in equal quarterly installments and increasing by 5% annually on a compounded basis under the terms of its management agreement with Old RPI and the Legacy Investors Partnerships. RP Ireland receives an annual management fee payable in advance by Old RPI in equal quarterly installments under terms of the Limited Partnership Agreements of the Legacy Investors Partnerships. Operating and Personnel Payments incurred during the three and six months ended June 30, 2019 were $15.0 million and $30.0 million, respectively and were recognized within General and administrative expenses on the condensed consolidated statements of comprehensive income. In connection with the Exchange Offer Transactions (discussed in Note 1), the Manager has entered into new management agreements with RPI and its subsidiaries, the Continuing Investors Partnerships, and with the Legacy Investors Partnerships. Pursuant to the new management agreements, RPI pays quarterly Operating and Personnel Payments in respect of operating and personnel expenses to the Manager or its affiliates equal to 6.5% of the Adjusted Cash Receipts (as defined therein) for such quarter and 0.25% of the GAAP value of our security investments as of the end of such quarter. The Operating and Personnel Payment for Old RPI, an obligation of the Legacy Investors Partnerships as a non-controlling Royalty Distribution Payable The Royalty distribution payable to affiliates of $122.8 million at June 30, 2020 includes the following: (1) $96.2 million of royalty receipts due from Old RPI to RPI Intermediate FT in connection with the Legacy Investors Partnerships’ non-controlling non-controlling non-controlling Acquisition from Epizyme Inc. In November 2019, in connection with an equity investment in Epizyme Inc. of $100.0 million made by RPIFT, Pablo Legorreta, Royalty Pharma’s CEO, was appointed as a director of Epizyme, for which he will receive compensation in cash and shares, all of which will be contributed to the Manager and used to reduce costs and expenses which would otherwise be billed to the Company or its affiliates. Acquisition from Bristol-Myers Squibb In November 2017, RPI Acquisition entered into a Purchase Agreement with Bristol-Myers Squibb (“BMS”) to acquire from BMS a percentage of its future royalties on worldwide sales of Onglyza, Farxiga, and related diabetes products marketed by AstraZeneca. We agreed to make payments to BMS based on sales of the products over the eight quarters beginning with the first quarter of 2018 in exchange for a high single-digit royalty on worldwide sales of the products from 2020 through 2025. On December 8, 2017, RPI Acquisitions entered into a purchase, sale and assignment agreement with a wholly owned subsidiary of BioPharma Credit PLC (LSE: BPCR, “BPCR”), an affiliate of RPI. BPCR is a related entity due to the sole member of the investment manager having significant influence over both entities. Under the terms of the Assignment Agreement, RPI Acquisitions assigned the benefit of 50% of the payment stream acquired from BMS to BPCR in consideration for BPCR meeting 50% of the funding obligations owed to BMS under the Purchase Agreement. We began making installment payments to BMS during the second quarter of 2018. Upon transfer of funds from BPCR to RPI Acquisitions to meet the quarterly funding obligation to BMS, RPI Acquisitions derecognizes 50% of the financial royalty asset. Cash received from BPCR in respect of each funding obligation equals the carrying amount of the assigned transfer of interest, therefore no gain or loss is recognized upon the transfer. The financial royalty asset of $159.6 million and $150.3 million included in financial royalty assets, net on the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively, represents only the Company’s right to the future payment streams acquired from BMS. Our funding was completed in the first quarter of 2020. We have funded a cumulative amount of $162.4 million, net of the assignment. We began to recognize income from the BMS asset when our installment funding obligation was completed and we received our first royalty payment on the BMS asset in the second quarter of 2020. Other transactions During the three and six months ended June 30, 2020, the Company reimbursed Pablo Legorreta, Royalty Pharma’s CEO, approximately $1.0 million for the cost of purchasing and donating ventilators to hospitals on behalf of Royalty Pharma. During the year ended December 31, 2019, RPIFT acquired 27,210 limited partnership interests in an affiliate of, and an equity method investor in, Old RPI and RPIFT, whose only substantive operations are its investment in Old RPI. The total investment of $4.3 million is recorded as treasury interests, of which $2.1 million is held by non-controlling Based on its ownership percentage of Royalty Pharma Investments 2019 ICAV relative to the Company, each Continuing Investor Partnership pays a pro rata portion of any costs and expenses in connection with the contemplation of, formation of, listing and ongoing operation of the Company and any subsidiary of the Company, including any third-party expenses of managing the Company and any subsidiary of the Company, such as accounting, audit, legal, reporting, compliance, administration (including directors’ fees), financial advisory, consulting, investor relations, and insurance expenses relating to the affairs of the Company and any subsidiary of the Company. | 15. Related Party Transactions The Manager An affiliate of RP Ireland, the Manager, is the administrator of RPIFT, and also the investment manager for Royalty Pharma Investments. The sole member of the Manager holds an indirect interest in Royalty Pharma and serves on the investment committee of the Manager. Historically, the Manager received Operating and Personnel Payments payable in equal quarterly installments and increasing by 5% annually on a compounded basis under the terms of its Management Agreement with Royalty Pharma and the Legacy Investors Partnerships. RP Ireland receives an annual management fee payable in advance by Royalty Pharma in equal quarterly installments under terms of the Limited Partnership Agreements of the Legacy Investors Partnerships. Operating and Personnel Payments incurred during the years ended December 31, 2019, 2018 and 2017 were $60.0 million, $57.2 million and $54.4 million, respectively, and were recognized within General and administrative expenses In connection with the Exchange Offer Transactions (discussed in Note 1), the Manager has entered into new management agreements with RPI and the Continuing Investors Partnerships. Pursuant to the new management agreements, RPI will pay quarterly Operating and Personnel Payments in respect of operating and personnel expenses to the Manager or its affiliates equal to 6.5% of the Adjusted Cash Receipts (as defined therein) for such quarter and 0.25% of the GAAP value of our security investments, including equity securities and derivative financial instruments, as of the end of such quarter. Royalty Distribution Payable The Royalty distribution payable to affiliates non-controlling Acquisition from Epizyme Inc. In November 2019, RPIFT made an equity investment in Epizyme Inc. of $100.0 million, with options to invest up to an additional $100.0 million in Epizyme common stock. Refer to Note 4 for additional discussion of this transaction. In connection with this transaction, Pablo Legorreta, Royalty Pharma’s CEO, was appointed as a director of Epizyme, for which he will receive compensation in cash and shares, all of which will be contributed to the Manager and used to reduce costs and expenses which would otherwise be billed to the Company or its affiliates. Acquisition from Bristol-Myers Squibb In November 2017, a wholly owned subsidiary of the Company, RPI Acquisitions, entered into a purchase agreement with Bristol-Myers Squibb (“BMS”) to acquire from BMS a percentage of its future royalties on worldwide sales of Onglyza, Farxiga, and related diabetes products marketed by AstraZeneca. We agreed to make payments to BMS based on sales of the products over the eight quarters beginning with the first quarter of 2018 in exchange for a high single-digit royalty on worldwide sales of the products from 2020 through 2025. Management estimated that the total payments to BMS will be in the range of $280 million to $320 million. On December 8, 2017, RPI Acquisitions entered into a purchase, sale and assignment agreement with a wholly owned subsidiary of BioPharma Credit PLC (LSE: BPCR, “BPCR”), an affiliate of the Company. BPCR is a related entity of the Company due to the sole member of the investment manager having significant influence over both entities. Under the terms of the Assignment Agreement, RPI Acquisitions assigned the benefit of 50% of the payment stream acquired from BMS to BPCR in consideration for BPCR meeting 50% of the funding obligations owed to BMS under the Purchase Agreement. Our estimated funding commitment after this assignment is between $140 million to $160 million. RPI Acquisitions only retains servicing responsibilities under the Assignment Agreement. To determine whether this transfer of financial assets should be accounted for as a sale or a secured borrowing under ASC 860-10, Installment payments made to BMS during the year ended December 31, 2019 and 2018 totaled $171.0 million and $128.8 million, respectively, of which RPI Acquisitions funded $85.5 million and $64.4 million, respectively. Upon transfer of funds from BPCR to RPI Acquisitions to meet the quarterly funding obligation to BMS, RPI Acquisitions derecognizes 50% of the financial asset. Cash received from BPCR in respect of each funding obligation equals the carrying amount of the assigned transfer of interest. Therefore no gain or loss is recognized upon the transfer. The financial asset of $150.3 million and $64.8 million included in Financial royalty assets, net on the consolidated balance sheets as of December 31, 2019 and 2018, respectively, only represents our right to the future payment streams acquired from BMS. We will not recognize any income from the BMS royalty asset until we have completed our installment funding obligation in the first quarter of 2020. Other transactions During the year ended December 31, 2019, RPIFT acquired 27,210 limited partnership interests in an affiliate of, and an equity method investor in, Royalty Pharma Investments and RPIFT, whose only substantive operations are its investment in Royalty Pharma Investments. The total investment of $4.3 million is recorded as Treasury interests |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | 17. Commitments and Contingencies In the ordinary course of its business, we may enter into contracts or agreements that contain customary indemnifications relating to such things as confidentiality agreements and representations as to corporate existence and authority to enter into contracts. The maximum exposure under such agreements is indeterminable until a claim, if any, is made. However, no such claims have been made against Royalty Pharma to date and we believe that the likelihood of such proceedings taking place in the future is remote. In November 2019, RPIFT agreed to pay $330.0 million to purchase Eisai’s royalties on future worldwide sales of Tazverik (tazemetostat), a novel targeted therapy in late-stage clinical development that was approved by the FDA in January 2020 for epithelioid sarcoma, and with the potential to be approved in several cancer indications. Under the terms of its agreement with Eisai, RPIFT acquired Eisai’s future worldwide royalties on net sales by Epizyme of Tazverik outside of Japan, for an upfront payment of $110.0 million plus up to an additional $220.0 million for the remainder of the royalty upon FDA approval of Tazverik for certain indications. The FDA approval of Tazverik in January 2020 triggered our obligation to fund the second $110.0 million tranche in November 2020. In June 2020, the FDA approval of additional indications of Tazverik triggered our obligation to fund the final $110.0 million tranche in November 2021. The second and the final $110.0 million tranches are recorded in the current and long-term liabilities on the condensed consolidated balance sheet at June 30, 2020, respectively. We have commitments to advance funds to counterparties through our contingent funding of the Second Tranche of Biohaven Preferred Shares, our investment in the Avillion Entities, and research and development arrangements. Please refer to Notes 4, 9, and 10, respectively, for details of these arrangements. We also have requirements to make Operating and Personnel Payments over the life of the management agreement as described in Note 16, which are variable and based on projected cash receipts. Legal Proceedings We are a party to various legal actions. The most significant of these are described below. Unless otherwise noted, it is not possible to determine the outcome of these matters, and we cannot reasonably estimate the maximum potential exposure or the range of possible loss. We did not have any material accruals for the matter described below in our condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019. In December 2015, Boehringer Ingelheim International GmBH (“BI”) notified Royalty Pharma that (a) BI had revised its interpretation of the license agreement between BI and Royalty Pharma, (b) as a result BI believed that it had overpaid royalties on sales of Tradjenta, Jentadueto and Glyxambi, the DPP-IVs, | 16. Commitments and Contingencies In the ordinary course of business, we may enter into contracts or agreements that contain customary indemnifications relating to such things as confidentiality agreements and representations as to corporate existence and authority to enter into contracts. The maximum exposure under such agreements is indeterminable until a claim, if any, is made. However, no such claims have been made against Royalty Pharma to date and management believes that the likelihood of such proceedings taking place in the future is remote. In November 2019, RPIFT agreed to pay $330.0 million to purchase Eisai’s royalties on future worldwide sales of Tazverik (tazemetostat), a novel targeted therapy in late-stage clinical development that was approved by the FDA in January 2020 epithelioid sarcoma and with the potential to be approved in several cancer indications. Under the terms of its agreement with Eisai, RPIFT acquired Eisai’s future worldwide royalties on net sales by Epizyme of Tazverik outside of Japan, for an upfront payment of $110.0 million plus up to an additional $220.0 million for the remainder of the royalty upon FDA approval of Tazverik for certain indications. The FDA approved Tazverik in January 2020 for epithelioid sarcoma, triggering our obligation to fund the next $110.0 million tranche in November 2020 and our right to the increased royalty. The remaining funding commitment of up to $110.0 million will be recognized upon resolution of the remaining associated contingency. We have commitments to advance funds to counterparties through our contingent funding of the Second Tranche of Biohaven Preferred Shares, investments in non-consolidated On April 15, 2016, AbbVie Inc. and AbbVie Biotechnology Ltd. filed a complaint against MedImmune LLC seeking to invalidate U.S. Patent No. 6,248,516 (the “’516 Patent”). The license agreement relating to the Humira royalty asset provides that the royalty is payable until the expiration of the last to expire patent listed in the license agreement. The last to expire patent on this list was the ’516 Patent, which expired in June 2018. MedImmune LLC is the owner of the ’516 Patent and the successor to the party that sold the Humira royalty to Royalty Pharma. As such, MedImmune LLC had agreed to defend the ’516 patent against AbbVie’s challenge. If AbbVie was successful in invalidating the ’516 Patent, Abbvie contended that its obligation to pay royalties would end in January 2018 rather than in June 2018. In January 2017, a federal district court dismissed AbbVie’s claims and in February 2018 the Court of Appeals for the Federal Circuit affirmed that dismissal without prejudice. As such, AbbVie had the right to file a new action alleging new grounds for avoiding its obligation to pay royalties for the first six months of 2018. No such action was filed, and we received a royalty payment from AbbVie for the final royalty term covering January 2018 to June 2018 in the amount of $243.5 million. We are entitled to royalties on Remicade from Janssen Biotech (“Janssen”) on U.S. sales of Remicade based on a U.S. Patent No. 6,284,471 (the “’471 Patent”), which is co-owned Other royalty income In December 2015, Boehringer Ingelheim International GmBH (“BI”) notified Royalty Pharma that (a) BI had revised its interpretation of the license agreement between BI and Royalty Pharma, (b) as a result BI believed that it had overpaid royalties on sales of Tradjenta, Jentadueto and Glyxambi, the DPP-IVs, |
Subsequent Events
Subsequent Events | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Subsequent Events [Abstract] | ||
Subsequent Events | 18. Subsequent Events In July 2020, we acquired a royalty on risdiplam, a development-stage product candidate for the treatment of spinal muscular atrophy (SMA) from PTC Therapeutics, Inc., in exchange for an upfront payment of $650 million. In August 2020, we entered into an expanded agreement with Biohaven Pharmaceuticals for up to $450 million to fund the development of zavegepant and the commercialization of Nurtec ODT. Biohaven will receive a $150 million upfront payment and an additional $100 million payment upon the start of the oral zavegepant phase 3 program in exchange for a royalty on Nurtec ODT and zavegepant and success-based milestone payments based on zavegepant regulatory approvals. We will also provide further support for the ongoing launch of Nurtec ODT through the purchase of committed, non-contingent | 17. Subsequent Events Exchange Offer Transactions Refer to additional discussion in Note 1 for details of the Exchange Offer Transactions that closed on February 11, 2020 and the anticipated U.S. Listing. During the first quarter of 2020, we acquired a royalty on Entyvio, an approved product for the treatment of ulcerative colitis and Crohn’s disease, from The General Hospital Corporation in exchange for an upfront payment of $86.6 million. Coronavirus Outbreak The current outbreak of the novel coronavirus, or COVID-19, could materially and adversely affect our results of operations, financial condition and cash flows. Further, the spread of the COVID-19 outbreak has caused severe disruptions in the U.S. and global economy and financial markets and could potentially create widespread business continuity issues of an as yet unknown magnitude and duration. Given the uncertainty around the extent and timing of the potential future spread or mitigation efforts related to the current outbreak of COVID-19, the financial impact cannot be reasonably estimated at this time. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Basis of preparation | The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, all adjustments considered necessary to present fairly the results of the interim periods have been included and consist only of normal and recurring adjustments. Certain information and footnote disclosures have been condensed or omitted as permitted under U.S. GAAP. As such, the information included in this Quarterly Report on Form 10-Q | |
Use of estimates | The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. The current outbreak of the novel coronavirus, or COVID-19, COVID-19 COVID-19 COVID-19, COVID-19, | |
Basis of consolidation | Basis of consolidation The unaudited condensed consolidated financial statements include the accounts of Royalty Pharma as well as its majority-owned and controlled subsidiaries. We hold interests in variable interest entities where we have assessed that we are not the primary beneficiary and therefore do not consolidate these entities. For consolidated entities where we own or are exposed to less than 100% of the economics, we record net (income)/loss attributable to non-controlling non-controlling Following management’s determination that a high degree of common ownership existed in RPI both before and after the Exchange Date, RPI recognized Old RPI’s assets and liabilities at the carrying value reflected on Old RPI’s balance sheet as of the Exchange Date. Prior to the Exchange Offer Transactions, our only historical non-controlling non-controlling As a result of the IPO in June 2020, two new non-controlling non-controlling non-controlling non-controlling All intercompany transactions and balances have been eliminated in consolidation. | Basis of consolidation The consolidated financial statements include the accounts of Royalty Pharma Investments and its wholly owned subsidiaries RPIFT and RPI Acquisitions, and RPCT. For consolidated entities where we own or are exposed to less than 100% of the economics, such as RPCT, we record net (income)/loss attributable to non-controlling non-controlling As the result of a reorganization transaction that took place in 2011, a non-controlling All intercompany transactions and balances have been eliminated in consolidation. |
Concentrations of credit risk | Concentrations of credit risk Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, financial royalty assets, receivables, and derivatives. Our cash management and investment policy limits investment instruments to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds are needed for operations. Our cash and cash equivalents, and marketable securities balances at June 30, 2020 and December 31, 2019 were held with State Street Bank and Trust, Deutsche Bank, Merrill Lynch, Pierce, Fenner & Smith, and Bank of America, N.A. Our primary operating accounts significantly exceed the FDIC limits. The majority of our royalty assets and receivables arise from contractual royalty agreements that entitle the Company to royalties on the sales of underlying biopharmaceutical products in the United States, Europe and the rest of the world, with concentrations of credit risk limited due to the broad range of marketers responsible for paying royalties to us and the variety of geographies from which our royalties on product sales are derived. The marketers paying us royalties on these products do not always provide, and are not necessarily required to provide, the breakdown of product sales by geography. The products in which we hold royalties are marketed by leading industry participants, including, among others, Abbott, AbbVie, Amgen, Bristol-Myers Squibb, Celgene, Gilead Sciences, Johnson & Johnson, Lilly, Merck & Co., Pfizer, Novartis, Biogen-Idec, Roche/ Genentech, and Vertex. Vertex, as the marketer and payor of our royalties on the cystic fibrosis franchise products, accounted for 27% and 17% of our current portion of Financial royalty assets | Concentrations of credit risk Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, royalty assets, receivables, and derivatives. Our cash management and investment policy limits investment instruments to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds are needed for operations. Our cash and cash equivalents, and marketable securities balances at December 31, 2019 were held with State Street Bank and Trust, Deutsche Bank, Merrill Lynch, Pierce, Fenner & Smith, and Bank of America, N.A. . Our primary operating accounts significantly exceed the FDIC limits. The majority of the our royalty assets and receivables arise from contractual royalty agreements that entitle the Company to royalties on the sales of underlying biopharmaceutical products in the United States, Europe and the rest of the world, with concentrations of credit risk limited due to the broad range of marketers responsible for paying royalties to us and the variety of geographies from which our royalties on product sales are derived. The marketers paying us royalties on these products do not always provide, and are not necessarily required to provide, the breakdown of sales occurring by geography. The products in which we hold royalties are marketed by leading industry participants, including, among others, Abbott, AbbVie, Amgen, Bristol-Myers Squibb, Celgene, Gilead Sciences, Johnson & Johnson, Lilly, Merck & Co., Pfizer, Novartis, Biogen-Idec, Roche/Genentech, and Vertex. For the years ended December 31, 2019, 2018 and 2017, Vertex, as the marketer and payor of Royalty Pharma’s royalties on the cystic fibrosis franchise products, accounted for 23%, 22% and 22% of our total income and other revenues for each respective year. We monitor the financial performance and creditworthiness of the counterparties to our royalty agreements and to our derivative contracts so that we can properly assess and respond to changes in their credit profile. To date, we have not experienced any significant losses with respect to the collection of income or revenue on our royalty assets or on the settlement of our derivative contracts. |
Recently adopted and issued accounting standards | Recently adopted and issued accounting standards Upon the January 1, 2020 adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments 2016-13”), | Recently adopted and issued accounting standards In May 2014, the Financial Accounting Standard Board (“FASB”) issued a new revenue standard under ASC Topic 606 (ASU 2014-09). 2014-09 Receivables 2014-09. 2014-09 In January 2016, the FASB issued revised guidance for the accounting and reporting of financial instruments (ASU 2016-01) 2018-03). 2016-01 2018-03 In August 2016, the FASB issued revised guidance which makes eight targeted changes to how royalty receipts and cash payments are presented and classified in the Statement of Cash Flows (ASU 2016-15). Among “nature-of-the-distribution” 2016-15 In June 2016, the FASB issued a new accounting standard that amends the guidance for measuring and recording credit losses on financial assets measured at amortized cost by replacing the incurred-loss model with an expected-loss model (ASU 2016-13). available-for-sale 2016-13 In January 2017, the FASB issued a new accounting standard that changes the definition of a business to assist entities with the evaluation of when a set of assets acquired or disposed of should be considered a business (ASU 2017-01). In August 2018, the FASB issued a new accounting standard that eliminates, adds, and modified certain disclosures requirements for fair value measurements under Topic 820 (ASU 2018-13). 2018-13 |
Allowance for current expected credit losses | Allowance for current expected credit losses As a result of adopting ASU 2016-13, non-current Refer to Note 7 for further information. | |
Earnings per share | Earnings per share Basic earnings per share (“EPS”) is computed by dividing net income attributable to Royalty Pharma plc by the weighted average number of Class A ordinary shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to Royalty Pharma plc, including the impact of potentially dilutive securities, by the weighted average number of Class A ordinary shares outstanding during the period, including the number of Class A ordinary shares that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include the outstanding Class B ordinary shares and restricted stock units (“RSU”) issued under our 2020 Independent Director Equity Incentive Plan. We use the “if-converted” There were no shares of Class A or Class B ordinary shares outstanding prior to June 16, 2020; therefore, no earnings per share information has been presented for any period prior to that date. | |
Fair value measurements | The summary below presents information about our assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019, and the valuation techniques we utilized to determine such fair value. • Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Our level 1 assets consist of equity securities with readily determinable fair values and money market funds. • Level 2: Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly. Our level 2 assets generally include marketable securities, warrants, derivatives, available for sale debt securities, and our interest rate swap contracts, which may be in an asset or liability position. • Level 3: Prices or valuation that requires inputs that are both significant to the fair value measurement and unobservable. Our level 3 assets historically consisted of our investment in the Biohaven Preferred Shares. See Note 5 for a description of our investment in the Biohaven Preferred Shares. For financial instruments which are carried at fair value, the level in the fair value hierarchy is based on the lowest level of inputs that is significant to the fair value measurement in its entirety. | The summary below presents information about assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2019 and 2018, and the valuation techniques we utilized to determine such fair value. • Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Our level 1 assets consist of equity securities with readily determinable fair values and money market funds. • Level 2: Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly. Our level 2 assets generally include warrants, derivatives, and our interest rate swap contracts, which may be in an asset or liability position. • Level 3: Prices or valuation that requires inputs that are both significant to the fair value measurement and unobservable. Our level 3 assets consisted of our investment in Tecfidera and Biohaven Preferred Shares, which were recorded as available for sale debt securities. See Note 5 for a description of our investment in Tecfidera and Biohaven Preferred Shares. For financial instruments which are carried at fair value, the level in the fair value hierarchy is based on the lowest level of inputs that is significant to the fair value measurements in its entirety. |
Basis of preparation and use of estimates | Basis of preparation and use of estimates The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various market specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. | |
Segment Information | Segment Information We determined that our chief executive officer is the chief operating decision maker (CODM). The CODM reviews financial information presented on a consolidated basis to allocate resources, evaluate financial performance, and make overall operating decisions. As such, we concluded that we operate as one segment primarily focused on acquiring royalty-generating products. | |
Royalty assets | Royalty assets An acquisition of a royalty asset provides the buyer with contractual rights to cash flows relating to royalties from the sales of patent-protected biopharmaceutical products. These acquisitions entitle us to receive a portion of income from the sale of patent-protected biopharmaceutical products by unrelated biopharmaceutical companies. For the majority of our royalties , our rights are protective in nature. In other words, we do not own the intellectual property, and we do not have the right to commercialize the underlying products. Acquisitions of contractual cash flow streams with yield components that most closely resemble loans are classified as financial assets. In the limited instances where we possess the rights to exploit the underlying patents, rights to the intellectual property related to the biopharmaceutical products, or the ability to influence the amount or duration of future royalty payments, these royalties are classified as intangible assets. | |
Financial royalty assets, net | Financial royalty assets, net Although a royalty asset does not have the contractual terms typical of a loan (such as contractual principal and interest), we analogize to the accounting guidance within Accounting Standards Codification 310 (“ASC”), Receivables, as it most closely aligns with the underlying economics of our royalties that are classified as financial assets. Therefore, such royalties are classified similar to loans receivable and are measured at amortized cost using the prospective effective interest method described in ASC 835-30 Imputation of Interest The effective interest rate is calculated by forecasting the expected cash flows to be received over the life of the asset relative to the initial invested amount. The effective interest rate is reviewed and adjusted each reporting period as differences between expected cash flows and actual cash flows are realized and as there are changes to expected future cash flows. Income is calculated by multiplying the carrying value of the royalty asset by the effective interest rate. The carrying value of Financial royalty assets, net Provision for changes in expected future cash flows Financial royalty assets, net The application of the prospective approach to measure royalty assets requires management’s judgment in forecasting the expected future cash flows of the underlying royalties. In addition, income recognition from royalty assets can be impacted by management’s assumptions around (1) product growth rates and sales trends in outer years, (2) the geographical allocation of annual sales data from sell-side equity research analysts’ models, (3) product and pricing mix for franchised products, (4) the strength of patent protection, including anticipated entry of generics, and (5) estimates of the duration of the royalty. The amounts and duration of forecasted expected future cash flows are largely impacted by sell-side equity research analyst coverage, commercial performance of the product, and the royalty duration, each discussed in further detail below. • Analyst coverage. • Commercial performance. • Royalty duration. Management is required to make assumptions around the royalty duration for the recognition of interest income on royalty assets classified as financial assets. In some cases, patent protection may extend to a later period than the expiration date management has estimated. Management may apply a shorter royalty term in this situation if, based on the experience and expertise of the research team, management believes that it is more likely that the associated patents are subject to opposition or infringement, that the market for a particular product may shift based on pipeline approvals and products, or that product sales may be harmed by competition from generics. For products providing perpetual royalties, management applies judgment in establishing the duration over which it forecasts expected future cash flows. Management may assign a 10 year royalty term initially to correspond to the average remaining patent life of a product after approval, which is reviewed and revised as necessary at each reporting period. A shortened royalty term can result in a reduction in the effective interest rate, a decline the carrying value of the royalty asset, a decline in income from royalty assets, significant reductions in royalty payments compared to expectations, or a permanent impairment. Additionally, royalty payments may occasionally continue beyond the royalty term for such reasons we cannot foresee such as excess inventory in the channel or additional scope of patent protection identified after expiry, including royalties we may become entitled to from new indications, new compounds, or for new regulatory jurisdictional approvals. The current portion of Financial royalty assets, net | |
Cumulative allowance and Provision for changes in expected cash flows from financial royalty assets | Cumulative allowance and Provision for changes in expected cash flows from financial royalty assets We evaluate royalty assets for impairment on an individual basis at the end of each reporting period by comparing the effective interest rate to that of the prior period. If the current period effective interest rate is lower than the prior period, and the gross cash flows have declined (expected and collected), management records a provision for the change in expected cash flows. The provision is measured as the difference between the royalty asset’s amortized cost basis and the net present value of the expected future cash flows, calculated based on the prior period’s effective interest rate. The amount recognized as provision expense increases the royalty asset’s cumulative allowance, which reduces the net carrying value of the royalty asset. In a subsequent period, if there is an increase in expected future cash flows, or if actual cash flows are greater than cash flows previously expected, we reduce the previously established cumulative allowance for the increase in the present value of cash flows expected to be collected, resulting in a non-cash Movements in the cumulative allowance for changes in expected cash flows, which forms part of the Financial royalty assets, net written-off non-cash true-up Provision for changes in expected cash flows from financial royalty assets Income from financial royalty assets | |
Income from financial royalty assets | Income from financial royalty assets We recognize income from financial royalty assets when there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The accretable yield is recognized as income at the effective rate of return over the expected life of royalty assets classified as financial assets. After acquisition, if reasonable timing of expected cash flows is not available for a product or if we have not completed the required funding obligations payable over time for an approved product, a royalty asset is placed in non-accrual When royalties continue to be collected for financial assets that have been fully depleted, such income is recognized as Other royalty income | |
Intangible royalty assets, net | Intangible royalty assets, net Currently, the Januvia, Janumet, and Other DPP-IV (“DPP-IV”) DPP-IV Management reviews the performance of royalties classified as intangible assets periodically for impairment as required by ASC 360-10 Property, Plant, and Equipment - Overall DPP-IV | |
Revenue from intangible royalty assets and Accrued royalty receivable | Revenue from intangible royalty assets and Accrued royalty receivable We earn royalties on sales by our licensees of DPP-IV DPP-IV Critical estimates that could cause a change in estimated future cash flows include changes in product demand and market growth assumptions, a change in the pricing strategy of the marketer or reimbursement coverage, and changes in country-specific contractual or patent expiry dates. Actual royalty receipts may differ from estimates and any differences between actual and estimated royalty revenues are adjusted for in the period in which they become known, typically on the basis of royalty receipts. | |
Milestone payments | Milestone payments Certain acquisition agreements provide for future contingent payments based on the financial performance of the related biopharmaceutical product generally over a multi-year period. For purposes of measuring income from royalty assets classified as financial assets, milestones payable to the royalty seller are typically netted from the cash inflows used to forecast expected future cash flows in the period the milestone trigger is projected to be satisfied. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful completion of the defined milestones. Payments under these agreements generally become due and payable upon achievement of certain commercial milestones, and when the contingency is resolved. | |
Financial Instruments | Financial Instruments Certain financial instruments reflected in the consolidated balance sheets, (e.g., cash, cash equivalents, certain other assets, accounts payable, and certain other liabilities) are recorded at cost, which approximates fair value due to their short-term nature. The fair values of financial instruments other than Financial royalty assets, net are determined through a combination of management estimates and information obtained from third parties using the latest market data. The fair value of financial instruments is determined utilizing the valuation techniques appropriate to the type of instrument as discussed in Note 3. | |
Cash and cash equivalents and Marketable securities | Cash and cash equivalents and Marketable securities Cash and cash equivalents include cash held at banks and all highly liquid financial instruments with original maturities of 90 days or less. The Company invests in marketable debt securities that are classified as trading securities and reported at fair value. In 2019, we invested our excess cash in marketable securities and money market funds that were held with Deutsche Bank, and Bank of America, N.A. as custodian. Beginning in 2019, we used BlackRock, Inc. to manage and invest our excess cash held with Bank of America, N.A. In 2018, we invested our excess cash primarily in money market funds held with Deutsche Bank. At December 31, 2019, $41.5 million of the total cash and cash equivalents balance was invested in commercial paper and certificates of deposit with maturities of 90 days or less, and $222.3 million was invested in money market funds. At December 31, 2019, our marketable securities total $57.0 million, of which $44.1 million and $12.9 million was invested in certificates of deposit and U.S. government securities with maturities of 12 months or less, respectively. At December 31, 2018, the Company had $1.8 billion of the total cash and cash equivalents balance invested in money market funds and did not hold any marketable securities. | |
Equity securities and Available for sale debt securities | Equity securities and Available for sale debt securities Our equity securities are measured and recorded at fair value with unrealized gains and losses recorded in earnings. Prior to January 1, 2018, unrealized gains and losses were included in accumulated other comprehensive income/(loss) (“AOCI”) within equity. Our equity securities represent investments in publicly traded equity securities. Financial assets that can contractually be prepaid or otherwise settled in such a way that the holder would not recover substantially all of its recorded investment are measured like investments in debt securities in accordance with ASC 860, Transfers and Servicing A decline in the market value of any available for sale debt security below its cost that is deemed to be other-than-temporary results in a reduction in carrying amount to fair value and is recognized in earnings. The determination of whether an available for sale debt security is other-than-temporarily impaired requires significant judgment and requires consolidation of available quantitative and qualitative evidence in evaluating the potential impairment. Factors evaluated to determine whether the investment is other-than-temporarily impaired include: significant deterioration in the Company’s earnings performance, credit rating, asset quality, business prospects of the Company, adverse changes in the general market conditions in which the Company operates, length of time that the fair value has been below cost, our expected future cash flows from the security, our intent not to sell, an evaluation as to whether it is more likely than not that we will have to sell before recovery of the cost basis, and issues that raise concerns about the Company’s ability to continue as a going concern. Assumptions associated with these factors are subject to future market and economic conditions, which could differ from management’s assessment. | |
Derivatives | Derivatives All derivatives are measured at fair value on the consolidated balance sheets. Prior to 2017, RPIFT applied hedge accounting to its interest rate swap agreements and foreign currency contracts. Following various refinancings of our senior secured credit facilities in November 2013, May 2015 and October 2016, certain swap contracts no longer qualified for hedge accounting treatment. As a result, all cash flow hedges became ineffective and unrealized gains and losses on interest rate swaps arising since October 2016 are recorded in earnings. Upon the discontinuation of hedge accounting, the accumulated other comprehensive income previously recorded on the cash flow hedges has continued and will continue to be reversed out of other comprehensive income in line with terms of the associated swap contract. This reclassification adjustment is shown on the consolidated statements of comprehensive income as part of unrealized gain/(loss) on interest rate swaps. Realized gains or losses associated with the execution of the respective hedged transactions are included in other expenses. We continually monitor our positions with, and credit quality of, the financial institutions which are counterparties to our derivative contracts. We may be exposed to credit loss in the event of non-performance | |
Investment in non-consolidated affiliates | Investment in non-consolidated We have variable interests in entities formed for the purposes of entering into co-development In circumstances where we are not the primary beneficiary, but where we have the ability to exercise significant influence over the operating and financial policies of an investee, we utilize the equity method of accounting for recording investment activity. In the case of the Avillion entities, we maintain significant influence through our partnership interests. We record our share of any loss or income generated by the Avillion entities, which is recorded on a three-month lag, within the consolidated statement of comprehensive income as a component of Equity in (earnings)/loss of non-consolidated non-consolidated When we have committed to provide further support to the investee through capital call commitments and the investment has been reduced to zero, we provide for additional losses, resulting in a negative equity method investment, which is presented as a liability on the consolidated balance sheets. | |
Research and development funding expense | Research and development funding expense We enter into transactions where we agree to jointly fund the research and development for products undergoing late stage clinical trials in exchange for future royalties if the products are successfully developed and commercialized. In accordance with ASC 730 Research and Development Royalty payments owed to the Company on successfully commercialized products generated from research and development agreements are recognized as Other royalty income Other royalty income | |
Income taxes | Income taxes Under current law and practice, the Trust qualifies as an investment undertaking as defined in Section 739B of the Taxes Consolidation Act, 1997, as amended. On this basis, it is not subject to Irish tax on its income or gains. Certain distributions to Irish residents are subject to an ‘exit’ tax. Consequently, Royalty Pharma does not record a provision for income taxes. Unitholders are required to report their share of the Trust’s income or loss on their tax returns. |
Fair Value Measurements and F_2
Fair Value Measurements and Financial Instruments (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | ||
Schedule of Fair Value Hierarchy | The following is a summary of the inputs used to value our financial assets and liabilities measured at fair value as of June 30, 2020 and December 31, 2019: As of June 30, 2020 Level 1 Level 2 Level 3 Total (in thousands) Assets: Cash equivalents Money market funds $ 143,859 $ — $ — $ 143,859 Commercial paper — 107,889 — 107,889 Certificates of deposit — 14,010 — 14,010 Marketable securities U.S. government securities — 42,994 — 42,994 Corporate debt securities — 38,698 — 38,698 Certificates of deposit — 261,987 — 261,987 Available for sale debt securities — 28,500 — 28,500 Total current assets $ 143,859 $ 494,078 $ — $ 637,937 Equity securities 477,185 — — 477,185 Available for sale debt securities — 162,454 — 162,454 Warrants (1) — 14,717 — 14,717 Total non-current $ 477,185 $ 177,171 $ — $ 654,356 (1) Related to Epizyme transaction as described in Note 4 and recorded in the non-current Derivative financial instruments As of December 31, 2019 Level 1 Level 2 Level 3 Total (in thousands) Assets: Cash equivalents Money market funds $ 222,296 $ — $ — $ 222,296 Commercial paper — 21,502 — 21,502 Certificates of deposit — 20,011 — 20,011 Marketable securities U.S. government securities — 12,877 — 12,877 Certificates of deposit — 44,095 — 44,095 Total current assets $ 222,296 $ 98,485 $ — $ 320,781 Equity securities 380,756 — — 380,756 Available for sale debt securities — — 131,280 131,280 Warrants (1) — 30,815 — 30,815 Forward purchase contract (1) — 11,500 — 11,500 Total non-current $ 380,756 $ 42,315 $ 131,280 $ 554,351 Liabilities: Interest rate swaps — (9,215 ) — (9,215 ) Total current liabilities $ — $ (9,215 ) $ — $ (9,215 ) Interest rate swaps — (18,902 ) — (18,902 ) Total non-current $ — $ (18,902 ) $ — $ (18,902 ) (1) Related to Epizyme warrants and put option as described in Note 4 and recorded in the non-current Derivative financial instruments | The following is a summary of the inputs used to value our financial assets and liabilities measured at fair value as of December 31, 2019 and 2018: (in thousands) As of December 31, 2019 Level 1 Level 2 Level 3 Total Assets: Cash equivalents Money market funds $ 222,296 $ — $ — $ 222,296 Commercial paper — 21,502 — 21,502 Certificates of deposit — 20,011 — 20,011 Marketable securities U.S. government securities — 12,877 — 12,877 Certificates of deposit — 44,095 — 44,095 Total current assets $ 222,296 $ 98,485 $ — $ 320,781 Available for sale debt securities — — 131,280 131,280 Equity securities 380,756 — — 380,756 Warrants (1) — 30,815 — 30,815 Forward purchase contract (1) — 11,500 — 11,500 Total non-current $ 380,756 $ 42,315 $ 131,280 $ 554,351 Liabilities: Interest rate swaps — (9,215 ) — (9,215 ) Total current liabilities $ — $ (9,215 ) $ — $ (9,215 ) Interest rate swaps — (18,902 ) — (18,902 ) Total non-current $ — $ (18,902 ) $ — $ (18,902 ) (1) Related to Epizyme warrants and put option as described in Note 4 and recorded in the non-current Derivative financial instruments (in thousands) As of December 31, 2018 Level 1 Level 2 Level 3 Total Assets: Cash equivalents Money market funds $ 1,815,717 $ — $ — $ 1,815,717 Interest rate swaps — 19,196 — 19,196 Total current assets $ 1,815,717 $ 19,196 $ — $ 1,834,913 Interest rate swaps — 19,111 — 19,111 Equity securities 146,008 — — 146,008 Total non-current $ 146,008 $ 19,111 $ — $ 165,119 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The table presented below summarizes the change in the carrying value of level 3 financial instruments, which related entirely to the investment in Biohaven Preferred Shares (discussed below) for the three and six months ended June 30, 2020 and 2019. For the three months ended June 30, 2020 June 30, 2019 (in thousands) Available for sale debt securities Balance at the beginning of the period $ — $ — Purchases — 125,121 Change in unrealized movement — 2,939 Balance at the end of the period $ — $ 128,060 For the six months ended June 30, 2020 June 30, 2019 (in thousands) Available for sale debt securities Balance at the beginning of the period $ 131,280 $ — Purchases — 125,121 Change in unrealized movement 52,725 2,939 Transfer to level 2 (184,005 ) — Balance at the end of the period $ — $ 128,060 | The table presented below summarizes the change in the carrying value of level 3 financial instruments for the years ended December 31, 2019 and December 31, 2018. (in thousands) For the years ended December 31, 2019 2018 Balance at beginning of the year $ — $ 583,021 Purchases 125,121 — Change in unrealized movement 6,159 (402,502 ) Realized gains — 419,481 Proceeds earned — (600,000 ) Balance at end of the year $ 131,280 $ — |
Fair Value Disclosure of Asset and Liability Not Measured at Fair Value | Estimated fair values based on level 3 inputs and related carrying values for the non-current (in thousands) June 30, 2020 December 31, 2019 Fair value Carrying value, net Fair value Carrying value, net Financial royalty assets, net $ 17,024,285 $ 11,169,857 $ 16,501,819 $ 10,842,052 | Estimated fair values based on Level 3 inputs and related carrying values for the non-current (in thousands) December 31, 2019 December 31, 2018 Fair value Carrying value, net Fair value Carrying value, net Financial royalty assets, net $ 16,501,819 $ 10,842,052 $ 12,021,288 $ 8,377,231 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Schedule of Notional Values and Fixed Rates | The notional values and fixed rates payable on the swap contracts are shown in the table below. Notional Value (in millions) Fixed Rate Maturity Date $600 2.019 % November 9, 2020 $250 2.094 % March 27, 2023 $500 2.029 % March 27, 2023 $250 2.113 % March 27, 2023 $500 2.129 % March 27, 2023 | The notional values and fixed rates paid on the swap contracts are shown in the table below. Notional Value Fixed Rate Maturity Date $ 450 1.310 % May 9, 2018 $ 325 1.795 % May 9, 2018 $ 325 1.787 % May 9, 2018 $ 300 1.775 % November 9, 2018 $ 200 1.585 % November 9, 2018 $ 385 1.250 % November 9, 2019 $ 385 1.358 % November 9, 2019 $ 600 2.019 % November 9, 2020 $ 250 2.094 % March 27, 2023 $ 500 2.029 % March 27, 2023 $ 250 2.113 % March 27, 2023 $ 500 2.129 % March 27, 2023 |
Summary of Derivatives and Reclassifications | The tables below summarize the change in fair value of the derivatives for the three and six months ended June 30, 2020 and 2019, and the line items within the condensed consolidated statements of comprehensive income where the gains/(losses) on these derivatives are recorded. For the three months ended Condensed Consolidated Statement of June 30, 2020 June 30, 2019 (in thousands) Derivatives in hedging relationships (1) Interest Rate Swaps: Amount of loss reclassified from AOCI into income $ — $ (1,602 ) Unrealized gain/loss on derivative contracts Change in fair value of interest rate swaps — (8,011 ) Unrealized gain/loss on derivative contracts Interest income — 3,115 Interest expense Derivatives not designated as hedging instruments Interest Rate Swaps: Change in fair value of interest rate swaps — (29,801 ) Unrealized gain/loss on derivative contracts Interest income — 1,479 Interest expense Warrant: Change in fair value of warrant 647 — Unrealized gain/loss on derivative contracts For the six months ended Condensed Consolidated Statement of June 30, 2020 June 30, 2019 (in thousands) Derivatives in hedging relationships (1) Interest Rate Swaps: Amount of loss reclassified from AOCI into income $ (4,066 ) $ (3,189 ) Unrealized gain/loss on derivative contracts Change in fair value of interest rate swaps 73 (14,307 ) Unrealized gain/loss on derivative contracts Interest (expense)/income (114 ) 6,888 Interest expense Derivatives not designated as hedging instruments Interest Rate Swaps: Change in fair value of interest rate swaps (6,908 ) (47,758 ) Unrealized gain/loss on derivative contracts Interest (expense)/income (408 ) 3,032 Interest expense Warrant: Change in fair value of warrant (16,097 ) — Unrealized gain/loss on derivative contracts Forward purchase contract: Change in fair value of forward purchase contract (5,800 ) — Unrealized gain/loss on derivative contracts (1) Certain older interest rate swaps were previously designated as cash flow hedges. These swaps became ineffective as debt refinancings occurred between 2013 and 2016. As a result of the termination of interest rate swaps in February 2020, all amounts associated with interest rate swaps previously designated as cash flow hedges and recorded in AOCI have been released into earnings. | The table below summarizes the change in fair value of the recognized derivatives held by RPIFT for the years ended December 31, 2019, 2018, and 2017 and the line item within the consolidated statements of comprehensive income where the gains/(losses) on these derivatives are recorded. (in thousands) For the years ended December 31, 2019 2018 2017 Consolidated Statement of Income location Derivatives in hedging relationships (1) Interest Rate Swaps: Amount of loss reclassified from AOCI into income $ (6,189 ) $ (8,003 ) $ (8,931 ) Unrealized gain/loss on interest rate swaps (1) Change in fair value of interest rate swaps (16,954 ) 3,357 18,948 Unrealized gain/loss on interest rate swaps (1) Interest income/(expense), net 9,565 9,758 (13,734 ) Interest expense Derivatives not designated as hedging instruments Interest Rate Swaps: Change in fair value of interest rate swaps (49,472 ) 16,569 6,982 Unrealized gain/loss on derivatives Interest income/(expense), net (2,681 ) 440 — Interest expense Warrant: Change in fair value of warrant 21,977 — — Unrealized gain/loss on derivatives Forward purchase contract: Change in fair value of forward purchase contract 11,500 — — Unrealized gain/loss on derivatives (1) Certain older interest rate swaps were previously designated as cash flow hedges. These swaps became ineffective as debt refinancings occurred between 2013-2015. Interest rate swaps to be reclassified from AOCI into income expire at various dates up until 2020, at which point all associated amounts initially recorded in AOCI will have been released. The portion of loss to be reclassified from AOCI into income within the next twelve months is $4.1 million. |
Available for Sale Debt Secur_2
Available for Sale Debt Securities (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | ||
Summary of Available for Sale Debt Securities | A summary of our available for sale debt securities recorded at fair value is shown below as of June 30, 2020 and December 31, 2019: Cost Unrealized gains Fair Value (1) As of June 30, 2020 (in thousands) Biohaven preferred shares $ 125,121 $ 65,833 $ 190,954 Total available for sale debt securities $ 125,121 $ 65,833 $ 190,954 As of December 31, 2019 Biohaven preferred shares $ 125,121 $ 6,159 $ 131,280 Total available for sale debt securities $ 125,121 $ 6,159 $ 131,280 (1) As of June 30, 2020, $28.5 million and $162.5 million are recorded as the current and non-current Available for sale debt securities non-current | A summary of our available for sale debt securities recorded at fair value is shown below as of December 31, 2019: Cost Unrealized gains Fair Value (in thousands) Biohaven preferred shares $ 125,121 $ 6,159 $ 131,280 Total available for sale debt securities $ 125,121 $ 6,159 $ 131,280 |
Financial Royalty Assets, Net (
Financial Royalty Assets, Net (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Receivables [Abstract] | ||
Summary of Financial Royalty Assets, Net | The gross carrying value, cumulative allowance for changes in expected cash flows, exclusive of the allowance for credit losses, and net carrying value for the current and non-current June 30, 2020 Estimated royalty Gross carrying Cumulative allowance Net carrying value (d) (in thousands) Cystic fibrosis franchise (b) $ 4,692,567 $ (98,381 ) $ 4,594,186 Tysabri (c) 2,065,179 (34,353 ) 2,030,826 Imbruvica 2029 1,368,322 (31,543 ) 1,336,779 Xtandi 2028 1,174,247 (219,405 ) 954,842 Promacta 2026 740,543 (8,924 ) 731,619 Tazverik 2036 346,902 — 346,902 Other 2019-2036 2,502,483 (499,455 ) 2,003,028 Total $ 12,890,243 $ (892,061 ) $ 11,998,182 Less: Cumulative allowance for credit losses (Note 7) (301,388 ) Total financial royalty assets, net $ 11,696,794 a) Dates shown are based on the patent duration or management’s best estimate of the date through which the Company will be entitled to royalties. Royalty durations can change due to the grant of additional patents, the invalidation of patents, and other reasons. b) The estimated duration for the cystic fibrosis franchise is based on the patent expiration date for Trikafta, a franchise product which was approved in the US in October 2019. Management estimates that the most material patents provide protection through 2037. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term. d) The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 7 for additional information. December 31, 2019 Estimated royalty Gross carrying Cumulative allowance Net carrying value (in thousands) Cystic fibrosis franchise (d) (b) $ 4,639,045 $ — $ 4,639,045 Tysabri (c) 2,131,272 (71,789 ) 2,059,483 Imbruvica 2029 1,332,077 — 1,332,077 Xtandi 2028 1,193,918 (332,624 ) 861,294 Promacta 2026 776,555 — 776,555 Crysvita 2032 321,234 — 321,234 Other 2019-2036 1,768,929 (464,005 ) 1,304,924 Total $ 12,163,030 $ (868,418 ) $ 11,294,612 a) Dates shown are based on the patent duration or management’s best estimate of the date through which the Company will be entitled to royalties. Royalty duration can change due to the grant of additional patents, the invalidation of patents, and other reasons. b) The estimated duration for the cystic fibrosis franchise is based on the patent expiration date for Trikafta, a franchise product which was approved in the US in October 2019. Management estimates that the most material patents provide protection through 2037. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term which is periodically reviewed by the management. d) The Vertex triple combination therapy, Trikafta, was approved by the FDA in October 2019. Sell-side equity research analysts’ consensus forecasts increased due to expected sales of the newly approved cystic fibrosis franchise product and resulted in a reversal of the entire cumulative allowance for changes in expected cash flows in the fourth quarter of 2019 related to this royalty asset. | The gross carrying value, cumulative allowance for changes in expected cash flows, and net carrying value for the current and non-current (in thousands) Estimated Gross carrying value Cumulative Net carrying value Cystic fibrosis franchise (d) (b) $ 4,639,045 $ — $ 4,639,045 Tysabri (c) 2,131,272 (71,789 ) 2,059,483 Imbruvica 2029 1,332,077 — 1,332,077 Xtandi 2028 1,193,918 (332,624 ) 861,294 Promacta 2026 776,555 — 776,555 Crysvita 2032 321,234 — 321,234 Other 2019-2036 1,768,929 (464,005 ) 1,304,924 Total $ 12,163,030 $ (868,418 ) $ 11,294,612 a) Dates shown are based on the patent expiry date or management’s estimate of the date through which the Company will be entitled to royalties. Royalty expiration dates can change due to the grant of additional patents, the invalidation of patents, and other reasons. b) The expiration date for the Cystic fibrosis franchise is based on the patent expiration date for Trikafta, a franchise product which was approved in the US in October 2019. Management estimates that the most material patents provide protection through 2037. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term. d) The Vertex triple combination therapy, Trikafta, was approved by the FDA in October 2019. Sell-side equity research analysts’ consensus forecasts increased due to expected sales of the newly approved Cystic fibrosis franchise product and resulted in a reversal of the entire cumulative allowance for changes in expected cash flows in the fourth quarter of 2019 related to this royalty asset. The gross carrying value, cumulative allowance for changes in expected cash flows, and net carrying value for the current and non-current (in thousands) Estimated Gross carrying value Cumulative Net carrying value Cystic fibrosis franchise (b) $ 4,641,167 $ (1,101,675 ) $ 3,539,492 Tysabri (c) 2,237,534 (138,240 ) 2,099,294 Imbruvica 2029 1,253,425 — 1,253,425 Xtandi 2028 1,214,081 (256,056 ) 958,025 Soliqua 2025 210,413 — 210,413 Lexiscan 2022 214,572 (46,890 ) 167,682 Other 2019-2028 1,050,757 (440,036 ) 610,721 Total $ 10,821,949 $ (1,982,897 ) $ 8,839,052 a) Dates shown are based on the patent expiry date or management’s best estimate of the date through which we will be entitled to royalties. Royalty expiration dates can change due to the grant of additional patents, the invalidation of patents, and other reasons. b) Kalydeco monotherapy patents begin expiring in 2027, while other patents in the franchise are expected to provide protection for combination use of Kalydeco through 2029 to 2031. Management estimates that the most material patents provide protection through 2030. c) Under terms of the agreement, RPIFT acquired a perpetual royalty on net sales of Tysabri. Management has applied an end date of 2031 for purposes of accreting income over the royalty term. The one-year |
Cumulative Allowance for Chan_2
Cumulative Allowance for Changes in Expected Cash Flows from Financial Royalty Assets (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Credit Loss [Abstract] | ||
Schedule of Cumulative Allowance for Changes in Expected Cash Flows | The following table sets forth the activity in the cumulative allowance for changes in expected cash flows from financial royalty assets, inclusive of the allowance for credit losses, as of the dates indicated: (in thousands) Activity for the period Balance at December 31, 2019 $ (868,418 ) Cumulative adjustment for adoption of ASU 2016-13 (192,705 ) Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets (289,587 ) Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets 262,980 Reversal of cumulative allowance (a) 2,964 Current period provision for credit losses (108,683 ) Balance at June 30, 2020 $ (1,193,449 ) (a) Relates to amounts reversed out of the allowance at the end of a royalty asset’s life to bring the account balance to zero. Reversals solely impact the asset account and allowance account, there is no impact on the condensed consolidated statements of comprehensive income. | The following table sets forth the activity in the cumulative allowance for changes in expected cash flows from financial royalty assets classified as financial assets during 2019, 2018, and 2017: Activity for the year (in thousands) Balance at December 31, 2016 $ (1,838,766 ) Increases to the Cumulative allowance for changes in expected cash flows from financial royalty assets (641,956 ) Decreases to the Cumulative allowance for changes in expected cash flows from financial royalty assets 241,291 Sale of royalty asset 85,550 Reversal of cumulative allowance (a) 108,013 Balance at December 31, 2017 $ (2,045,868 ) Increases to the Cumulative allowance for changes in expected cash flows from financial royalty assets (284,214 ) Decreases to the Cumulative allowance for changes in expected cash flows from financial royalty assets 341,548 Reversal of cumulative allowance (a) 5,637 Balance at December 31, 2018 $ (1,982,897 ) Increases to the C umulative allowance for changes in expected cash flows from financial royalty assets (322,717 ) Decreases to the Cumulative allowance for changes in expected cash flows from financial royalty assets 1,342,038 Reversal of cumulative allowance (a) 95,158 Balance at December 31, 2019 $ (868,418 ) (a) Relates to amounts reversed out of the cumulative allowance at the end of a royalty asset’s life to bring the account balance to zero. Reversals solely impact the gross asset and cumulative allowance balances; there is no impact to the consolidated statements of comprehensive income. |
Intangible Royalty Assets, Net
Intangible Royalty Assets, Net (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Schedule of Intangible Royalty Interests | The following schedules of the intangible royalty interests present the cost, accumulated amortization and net carrying value as of June 30, 2020 and December 31, 2019. As of June 30, 2020 Cost Accumulated Net carrying (in thousands) DPP-IV $ 606,216 $ 565,958 $ 40,258 Total intangible royalty assets $ 606,216 $ 565,958 $ 40,258 As of December 31, 2019 Cost Accumulated Net carrying (in thousands) DPP-IV $ 606,216 $ 554,492 $ 51,724 Total intangible royalty assets $ 606,216 $ 554,492 $ 51,724 | The following are schedules of the royalty assets classified as intangible assets showing cost, accumulated amortization and net carrying value at December 31, 2019 and 2018. (in thousands) As of December 31, 2019 Cost Accumulated Net carrying DPP-IV $ 606,216 $ 554,492 $ 51,724 (in thousands) As of December 31, 2018 Cost Accumulated Net carrying DPP-IV $ 606,216 $ 530,568 $ 75,648 |
Borrowings (Tables)
Borrowings (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Debt Disclosure [Abstract] | ||
Schedule of Borrowings | Our borrowings at June 30, 2020 and December 31, 2019 consisted of the following: (in thousands) Maturity Spread over June 30, December 31, New RPI Intermediate FT Senior Secured Credit Facilities: Term Loan A Facility Tranche A-1 2/2025 150 bps $ 3,120,000 $ — Term Loan B Facility Tranche B-1 2/2027 175 bps 2,825,800 — RPIFT Senior Secured Credit Facilities: Term Loan B Facility Tranche B-6 3/2023 200 bps — 4,123,000 Term Loan A Facility Tranche A-4 5/2022 150 bps — 2,150,000 Loan issuance costs (3,929 ) (1,691 ) Original issue discount (30,023 ) (33,187 ) Total value of senior secured debt (2) 5,911,848 6,238,122 Less: Current portion of long-term debt (182,226 ) (281,984 ) Total long-term debt $ 5,729,622 $ 5,956,138 (1) Borrowings under our senior secured credit facilities bear interest at a rate equal to LIBOR plus an applicable margin. (2) The carrying value of our long term debt, including the current portion, approximates its fair value. | RPIFT’s borrowings at December 31, 2019 and 2018 consisted of the following: (In thousands) Maturity Spread over (1) As of December 31, 2019 2018 RPIFT Senior Secured Credit Facilities: Term Loan B Facility Tranche B-6 3/2023 200 bps $ 4,123,000 $ 4,267,000 Term Loan A Facility Tranche A-4 5/2022 150 bps 2,150,000 2,300,000 Loan issuance costs (1,691 ) (2,284 ) Original issue discount (33,187 ) (45,384 ) Total carrying value of senior secured debt (2) 6,238,122 6,519,332 Less: Current portion of long-term debt (281,984 ) (281,436 ) Total long-term debt $ 5,956,138 $ 6,237,896 (1) Borrowings under RPIFT’s senior secured credit facilities bear interest at a rate equal to LIBOR plus an applicable margin. (2) The carrying value of our long term debt, including the current portion, approximates its fair value. |
Schedule of Repayments of Debt by Year | As of June 30, 2020, we are required to repay the term loans under the Credit Agreement over the next five years and thereafter as follows: (in thousands) Term loan amortization Year Tranche A-1 Tranche B-1 Total Remainder of 2020 $ 80,000 $ 14,200 $ 94,200 2021 160,000 28,400 188,400 2022 160,000 28,400 188,400 2023 160,000 28,400 188,400 2024 160,000 28,400 188,400 Thereafter 2,400,000 2,698,000 5,098,000 Total (1) $ 3,120,000 $ 2,825,800 $ 5,945,800 (1) Excludes discount on long-term debt of $30.0 million and loan issuance costs of $3.9 million, which are amortized through interest expense over the life of the underlying debt obligations. | As of February 2020, we are required to repay the term loans under RPI Intermediate FT’s new senior secured credit facilities over the next five years and thereafter as follows: (in thousands) Term loan amortization Year Tranche A-1 Tranche B-1 Total 2020 $ 160,000 $ 28,400 $ 188,400 2021 160,000 28,400 188,400 2022 160,000 28,400 188,400 2023 160,000 28,400 188,400 2024 160,000 28,400 188,400 Thereafter 2,400,000 2,698,000 5,098,000 Total (1) $ 3,200,000 $ 2,840,000 $ 6,040,000 (1) Excludes discount on long-term debt of $32.6 million and loan issuance costs of $4.1 million, which are amortized through interest expense over the life of the underlying debt obligations. |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Schedule of Balance Of Non-controlling Interests | The net change in the balance of our four non-controlling (in thousands) RPSFT Legacy Continuing EPA Total March 31, 2020 $ 31,563 $ 1,971,212 $ — $ — $ 2,002,775 Contributions — 6,691 — — 6,691 Distributions (25,270 ) (99,581 ) — — (124,851 ) Net income prior to IPO 17,225 89,962 — — 107,187 Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity — (750 ) 2,433,848 — 2,433,098 Issuance of Class A shares sold in initial public offering, net of offering costs — — 758,590 — 758,590 Net income subsequent to IPO 3,400 17,755 31,560 — 52,715 Other comprehensive income: Change in unrealized movement on available for sale debt securities — 1,222 402 — 1,624 June 30, 2020 $ 26,918 $ 1,986,511 $ 3,224,400 $ — $ 5,237,829 (1) Related to the Continuing Investors Partnerships’ ownership of approximately 40% in RP Holdings through their ownership of the RP Holdings Class B Interests. (in thousands) RPSFT Legacy Continuing EPA Total December 31, 2019 $ 35,883 $ — $ — $ — $ 35,883 Contributions — 1,140,319 — — 1,140,319 Transfer of interests — 1,037,161 — — 1,037,161 Distributions (54,516 ) (321,760 ) — — (376,276 ) Net income prior to IPO 42,151 102,892 — — 145,043 Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity — (750 ) 2,433,848 — 2,433,098 Issuance of Class A shares sold in initial public offering, net of offering costs — — 758,590 — 758,590 Net income subsequent to IPO 3,400 17,755 31,560 — 52,715 Other comprehensive income: Change in unrealized movement on available for sale debt securities — 10,894 402 — 11,296 June 30, 2020 $ 26,918 $ 1,986,511 $ 3,224,400 $ — $ 5,237,829 (1) Related to the Continuing Investors Partnerships’ ownership of approximately 40% in RP Holdings through their ownership of the RP Holdings Class B Interests. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth reconciliations used to compute basic and diluted earnings per share of Class A ordinary shares. (in thousands, except per share amounts) Three months Six months Basic net income per share: Numerator Consolidated net income $ 601,976 $ 711,072 Less: net income attributable to Continuing Investors Partnerships prior to the offering (1) 408,602 479,842 Less: net income attributable to non-controlling 31,560 31,560 Less: net income attributable to non-controlling 128,342 166,198 Net income attributable to Royalty Pharma plc $ 33,472 $ 33,472 Denominator Weighted-average shares of Class A ordinary outstanding—basic 353,979 353,979 Earnings per share of Class A common stock—basic $ 0.09 $ 0.09 Diluted net income per share: Numerator Net income attributable to Royalty Pharma plc $ 33,472 $ 33,472 Denominator Weighted-average shares of Class A ordinary outstanding—basic 353,979 353,979 Dilutive effect of unvested restricted units 1 1 Weighted-average shares of Class A ordinary shares outstanding—diluted 353,980 353,980 Earnings per share of Class A ordinary shares—diluted $ 0.09 $ 0.09 (1) Reflected as net income attributable to controlling interest on the unaudited condensed consolidated statement of comprehensive income |
Indirect Cash Flow (Tables)
Indirect Cash Flow (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Supplemental Cash Flow Elements [Abstract] | ||
Schedule of Cash Flow, Supplemental Disclosures | Adjustments to reconcile consolidated net income to net cash provided by operating activities are summarized below. (in thousands) For the six months ended June 30, 2020 2019 Cash flow from operating activities: Consolidated net income $ 711,072 $ 574,864 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Provision for changes in expected cash flows from financial royalty assets 135,290 22,177 Amortization of intangible assets 11,466 12,332 Amortization of loan issuance and discount on long-term debt 4,340 5,964 Unrealized loss on derivative contracts 32,798 65,254 Unrealized gain on equity securities (40,729 ) (16,944 ) Equity in (earnings)/loss of non-consolidated (20,218 ) 13,673 Distributions from non-consolidated 31,840 14,059 Loss on extinguishment of debt 5,405 — Share based compensation 3,740 — Other 3,398 289 (Increase)/decrease in operating assets: Financial royalty assets (937,021 ) (799,161 ) Cash collected on financial royalty assets 1,003,504 895,150 Available for sale debt securities — (150,000 ) Accrued royalty receivable 1,218 (600 ) Other receivables — 150,000 Other royalty income receivable 2,094 5,670 Other current assets (12,634 ) 4,171 Other assets 45,635 (26,352 ) Increase/(decrease) in operating liabilities: Accounts payable and accrued expenses 13,862 (769 ) Derivative financial instruments (34,952 ) — Net cash provided by operating activities $ 960,108 $ 769,777 Non-cash (in thousands) For the six months ended June 30 2020 2019 Supplemental schedule of non-cash Contribution of investment in Legacy Investors Partnerships (1) $ 303,679 $ — Settlement of Epizyme forward purchase contract (2) 5,700 — Accrued purchase obligation—Tazverik (3) 220,000 — Repayments of long-term debt by contributions from non-controlling 1,103,774 — Accrued purchase obligation 1,610 — Accrued capitalized offering costs (5) 8,897 — (1) See Note 9 (2) See Note 4 (3) See Note 17 (4) Related to the pro rata portion of RPIFT’s outstanding debt repaid by the Legacy Investors Partnerships (5) Related to capitalized offering costs incurred in connection with our IPO that have not been paid | Adjustments to reconcile consolidated net income to net cash provided by operating activities are summarized below. For the years ended December 31, 2019 2018 2017 Cash flows from operating activities: Consolidated net income $ 2,461,419 $ 1,517,855 $ 1,343,180 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Provision for changes in expected cash flows from financial royalty assets (1,019,321 ) (57,334 ) 400,665 Amortization of intangible assets 23,924 33,267 33,267 Amortization of loan issuance and discount on long-term debt 12,790 13,127 12,910 Realized gain on available for sale debt securities — (419,481 ) (412,152 ) Unrealized loss/(gain) on derivative contracts 39,138 (11,923 ) (16,999 ) Distributions from non-consolidated 14,059 39,402 — Equity in loss/(earnings) of non-consolidated 32,517 7,023 (163,779 ) Unrealized (gain)/loss on equity securities (155,749 ) 13,939 — Gain on sale of royalty asset — — (52,753 ) Other (2,122 ) (7,771 ) 583 (Increase)/decrease in operating assets: Financial royalty assets (1,648,837 ) (1,524,816 ) (1,539,417 ) Cash collected on financial royalty assets 1,934,092 2,052,592 1,749,010 Available for sale debt securities (150,000 ) (150,000 ) 150,000 Accrued royalty receivable 2,471 (27,372 ) 66,739 Other receivables 150,000 150,000 (150,000 ) Other royalty income receivable 7,390 (11,099 ) (1,219 ) Other current assets 4,607 (442 ) (2,239 ) Other assets (45,635 ) — — Increase in operating liabilities: Accounts payable and accrued expenses 6,496 1,350 517 Net cash provided by operating activities $ 1,667,239 $ 1,618,317 $ 1,418,313 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in accumulated other comprehensive income/(loss) by component are as follows: Unrealized gain/(loss) Unrealized gain/(loss) on Total Accumulated (in thousands) Balance at December 31, 2019 $ 6,159 $ (4,066 ) $ 2,093 Reclassifications to income — 4,066 4,066 Activity for the period 48,378 — 48,378 Reclassifications to NCI (24,022 ) — (24,022 ) Balance at June 30, 2020 $ 30,515 $ — $ 30,515 | Change in accumulated other comprehensive income/(loss) by component are as follows: (In thousands) Unrealized gain/(loss) Unrealized gain/(loss) Unrealized Total Accumulated Balance at December 31, 2017 $ (2,863 ) $ 402,502 $ (18,258 ) $ 381,381 Activity for the year — (402,502 ) — (402,502 ) Cumulative adjustment for adoption of ASU 2016-01 2,863 — — 2,863 Reclassifications — — 8,003 8,003 Balance at December 31, 2018 $ — $ — $ (10,255 ) $ (10,255 ) Activity for the year — 6,159 — 6,159 Reclassifications — — 6,189 6,189 Balance at December 31, 2019 $ — $ 6,159 $ (4,066 ) $ 2,093 |
Organization and Purpose (Detai
Organization and Purpose (Detail) - USD ($) | Jun. 18, 2020 | Feb. 11, 2020 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Feb. 29, 2020 |
Subsidiary, Sale of Stock [Line Items] | |||||||||
Repayments of outstanding debt | $ 5,170,396,000 | $ 0 | $ 294,000,000 | $ 294,000,000 | $ 193,000,000 | ||||
Old RPI | Legacy Investors Partnerships | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Ownership percentage (as a percent) | 80.00% | ||||||||
Noncontrolling interest (percentage) | 20.00% | 18.00% | |||||||
RPCT | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Ownership percentage (as a percent) | 66.00% | ||||||||
RPCT | RPSFT | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Noncontrolling interest (percentage) | 34.00% | ||||||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
New line of credit facility | $ 2,840,000,000 | $ 2,825,800,000 | 2,825,800,000 | ||||||
Senior Secured Debt | Old Credit Facility | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Repayments of outstanding debt | 6,300,000,000 | ||||||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche A-1 | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
New line of credit facility | 3,200,000,000 | $ 3,120,000,000 | $ 3,120,000,000 | ||||||
Senior Secured Debt | Legacy Investors Partnerships | R P I Intermediate Ft Senio Secured Credit Facilities Tranche A1 | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
New line of credit facility | 1,300,000,000 | ||||||||
Senior Secured Debt | RPI Intermediate FT | RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
New line of credit facility | 6,000,000,000 | ||||||||
Senior Secured Debt | RPI Intermediate FT | RPIFT Senior Secured Credit Facilities | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Repayments of outstanding debt | $ 5,200,000,000 | ||||||||
Exchange Offer Transaction | Legacy Investors Partnerships | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Exchange offering, ownership percentage | 82.00% | ||||||||
Exchange Offer Transaction | Old RPI | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Ownership percentage (as a percent) | 82.00% | ||||||||
IPO | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Sale of stock, consideration received | $ 1,900,000,000 | ||||||||
Underwriting discounts and commissions | $ (86,300,000) | ||||||||
IPO | Common Class A | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued (in shares) | 89,333,920 | ||||||||
Sale of stock, price per share (in dollars per share) | $ 28 | ||||||||
IPO Shares From Company | Common Class A | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued (in shares) | 71,652,250 | ||||||||
I P O Shares From Selling Shareholders | Common Class A | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued (in shares) | 17,681,670 | ||||||||
Underwriters' Option | Common Class A | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued (in shares) | 11,652,250 | ||||||||
IPO Continuing Investors Partnerships | Common Class A | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares available to convert (in shares) | 294,175,555 | ||||||||
IPO Continuing Investors Partnerships | Common Class B | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares available to convert (in shares) | 294,175,555 | ||||||||
Number of shares converted (in shares) | 241,207,425 | ||||||||
Forecast | RPCT | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Ownership percentage (as a percent) | 66.00% | ||||||||
Forecast | RPCT | RPSFT | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Noncontrolling interest (percentage) | 34.00% | ||||||||
Forecast | Senior Secured Debt | Old Credit Facility | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Repayments of outstanding debt | $ 6,273,000,000 | ||||||||
Forecast | Senior Secured Debt | Legacy Investors Partnerships | RPI Intermediate FT Senior Secured Credit Facilities - Tranche A-1 | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
New line of credit facility | 1,260,000,000 | ||||||||
Forecast | Senior Secured Debt | RPI Intermediate FT | RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
New line of credit facility | 6,040,000,000 | ||||||||
Forecast | Senior Secured Debt | RPI Intermediate FT | RPIFT Senior Secured Credit Facilities | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Repayments of outstanding debt | $ 5,175,884,653 | ||||||||
Forecast | Exchange Offer Transaction | Legacy Investors Partnerships | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Exchange offering, ownership percentage | 82.00% | ||||||||
Forecast | Exchange Offer Transaction | Old RPI | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Ownership percentage (as a percent) | 82.00% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands | 6 Months Ended | 12 Months Ended | |||||||
Jun. 30, 2020USD ($)Partnership | Dec. 31, 2019USD ($) | Mar. 31, 2020USD ($) | Feb. 29, 2020 | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Number of noncontrolling interests created | Partnership | 2 | ||||||||
Shareholders' equity | $ 9,394,961 | $ 6,141,438 | $ 7,162,693 | $ 4,653,214 | $ 4,705,337 | $ 4,552,079 | $ 4,460,546 | $ 4,445,620 | |
Retained Earnings | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Shareholders' equity | 1,571,399 | 2,825,212 | $ 2,561,971 | $ 1,339,061 | $ 1,385,728 | $ 1,215,953 | 655,446 | $ 180,595 | |
Cumulative Effect, Period of Adoption, Adjustment | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Shareholders' equity | (192,705) | ||||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Shareholders' equity | $ (192,705) | $ (192,705) | $ (2,863) | ||||||
Vertex | Current portion of Financial royalty assets | Customer Concentration Risk | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Concentration risk (as a percent) | 27.00% | 17.00% | |||||||
Old RPI | Legacy Investors Partnerships | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Noncontrolling interest (percentage) | 20.00% | 18.00% | |||||||
RP Holdings | Continuing Investors Partnerships | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Noncontrolling interest (percentage) | 40.00% |
Fair Value Measurements and F_3
Fair Value Measurements and Financial Instruments - Schedule of Fair Value Hierarchy (Detail) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Assets: | |||
Interest rate swaps | $ 19,196 | ||
Available for sale debt securities | $ 28,500 | $ 0 | |
Marketable securities | 343,679 | 56,972 | |
Interest rate swaps | 14,717 | 42,315 | 19,111 |
Equity securities | 477,185 | 380,756 | 146,008 |
Available for sale debt securities | 162,454 | 131,280 | |
Liabilities: | |||
Interest rate swaps | 0 | (9,215) | |
Interest rate swaps | 0 | (18,902) | |
Fair Value, Recurring | |||
Assets: | |||
Available for sale debt securities | 28,500 | ||
Total current assets | 637,937 | 320,781 | 1,834,913 |
Equity securities | 477,185 | 380,756 | 146,008 |
Available for sale debt securities | 162,454 | 131,280 | |
Total non-current assets | 654,356 | 554,351 | 165,119 |
Liabilities: | |||
Total current liabilities | (9,215) | ||
Total non-current liabilities | (18,902) | ||
Fair Value, Recurring | Money Market Funds | |||
Assets: | |||
Cash equivalent | 222,296 | 1,815,717 | |
Fair Value, Recurring | Commercial Paper | |||
Assets: | |||
Cash equivalent | 21,502 | ||
Fair Value, Recurring | Certificates of Deposit | |||
Assets: | |||
Cash equivalent | 20,011 | ||
Marketable securities | 44,095 | ||
Fair Value, Recurring | US Government Debt Securities | |||
Assets: | |||
Marketable securities | 12,877 | ||
Fair Value, Recurring | Warrant | |||
Assets: | |||
Warrants | 30,815 | ||
Fair Value, Recurring | Forward Contracts | |||
Assets: | |||
Warrants | 11,500 | ||
Fair Value, Recurring | Interest Rate Swap | |||
Assets: | |||
Interest rate swaps | 19,196 | ||
Interest rate swaps | 19,111 | ||
Liabilities: | |||
Interest rate swaps | (9,215) | ||
Interest rate swaps | (18,902) | ||
Money Market Funds | Fair Value, Recurring | |||
Assets: | |||
Cash equivalents | 143,859 | ||
Commercial Paper | Fair Value, Recurring | |||
Assets: | |||
Cash equivalents | 107,889 | ||
Certificates of Deposit | Fair Value, Recurring | |||
Assets: | |||
Cash equivalents | 14,010 | ||
Marketable securities | 261,987 | ||
US Treasury and Government | Fair Value, Recurring | |||
Assets: | |||
Marketable securities | 42,994 | ||
Corporate Debt Securities [Member] | Fair Value, Recurring | |||
Assets: | |||
Marketable securities | 38,698 | ||
Warrant | Fair Value, Recurring | |||
Assets: | |||
Warrants | 14,717 | ||
Level 1 | Fair Value, Recurring | |||
Assets: | |||
Total current assets | 143,859 | 222,296 | 1,815,717 |
Equity securities | 477,185 | 380,756 | 146,008 |
Total non-current assets | 477,185 | 380,756 | 146,008 |
Level 1 | Fair Value, Recurring | Money Market Funds | |||
Assets: | |||
Cash equivalent | 222,296 | 1,815,717 | |
Level 1 | Money Market Funds | Fair Value, Recurring | |||
Assets: | |||
Cash equivalents | 143,859 | ||
Level 2 | Fair Value, Recurring | |||
Assets: | |||
Available for sale debt securities | 28,500 | ||
Total current assets | 494,078 | 98,485 | 19,196 |
Available for sale debt securities | 162,454 | ||
Total non-current assets | 177,171 | 42,315 | 19,111 |
Liabilities: | |||
Total current liabilities | (9,215) | ||
Total non-current liabilities | (18,902) | ||
Level 2 | Fair Value, Recurring | Commercial Paper | |||
Assets: | |||
Cash equivalent | 21,502 | ||
Level 2 | Fair Value, Recurring | Certificates of Deposit | |||
Assets: | |||
Cash equivalent | 20,011 | ||
Marketable securities | 44,095 | ||
Level 2 | Fair Value, Recurring | US Government Debt Securities | |||
Assets: | |||
Marketable securities | 12,877 | ||
Level 2 | Fair Value, Recurring | Warrant | |||
Assets: | |||
Warrants | 30,815 | ||
Level 2 | Fair Value, Recurring | Forward Contracts | |||
Assets: | |||
Warrants | 11,500 | ||
Level 2 | Fair Value, Recurring | Interest Rate Swap | |||
Assets: | |||
Interest rate swaps | 19,196 | ||
Interest rate swaps | $ 19,111 | ||
Liabilities: | |||
Interest rate swaps | (9,215) | ||
Interest rate swaps | (18,902) | ||
Level 2 | Commercial Paper | Fair Value, Recurring | |||
Assets: | |||
Cash equivalents | 107,889 | ||
Level 2 | Certificates of Deposit | Fair Value, Recurring | |||
Assets: | |||
Cash equivalents | 14,010 | ||
Marketable securities | 261,987 | ||
Level 2 | US Treasury and Government | Fair Value, Recurring | |||
Assets: | |||
Marketable securities | 42,994 | ||
Level 2 | Corporate Debt Securities [Member] | Fair Value, Recurring | |||
Assets: | |||
Marketable securities | 38,698 | ||
Level 2 | Warrant | Fair Value, Recurring | |||
Assets: | |||
Warrants | $ 14,717 | ||
Level 3 | Fair Value, Recurring | |||
Assets: | |||
Available for sale debt securities | 131,280 | ||
Total non-current assets | $ 131,280 |
Fair Value Measurements and F_4
Fair Value Measurements and Financial Instruments - Summary of Change in Carrying Value of Level 3 Financial Instruments (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | ||||||
Balance at beginning of the period | $ 131,280 | $ 583,021 | ||||
Purchases | $ 0 | $ 125,121 | 0 | $ 125,121 | $ 125,121 | |
Change in unrealized movement | $ 0 | 2,939 | 52,725 | 2,939 | 6,159 | (402,502) |
Realized gains | 419,481 | |||||
Transfer to level 2 | $ (184,005) | 0 | ||||
Proceeds earned | $ (600,000) | |||||
Balance at end of the period | $ 128,060 | $ 128,060 | $ 131,280 |
Fair Value Measurements and F_5
Fair Value Measurements and Financial Instruments - Additional Information (Detail) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | |
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Available for sale debt securities | $ 190,954 | $ 131,280 |
Level 3 | Change Of Control Probability | Valuation Technique, Black-Derman-Troy | ||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Measurement input, percentage (as a percent) | 0 | |
Level 3 | Likelihood of FDA Approval | Valuation Technique, Black-Derman-Troy | Minimum | ||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Measurement input, percentage (as a percent) | 0 | |
Level 3 | Likelihood of FDA Approval | Valuation Technique, Black-Derman-Troy | Maximum | ||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Measurement input, percentage (as a percent) | 0.86 | |
Level 3 | Likelihood Of FDA Approval At End Of Any Given Quarter By 2024 | Valuation Technique, Black-Derman-Troy | Minimum | ||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Measurement input, percentage (as a percent) | 0 | |
Level 3 | Likelihood Of FDA Approval At End Of Any Given Quarter By 2024 | Valuation Technique, Black-Derman-Troy | Maximum | ||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Measurement input, percentage (as a percent) | 0.59 | |
Preferred Shares | ||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Preferred shares, fixed payment amount | 250,000 | |
Preferred shares, quarterly payments | $ 15,600 | |
Preferred shares, weighted average cost of capital | 11.10% | |
Available for sale debt securities | $ 190,954 | $ 131,280 |
Percent of possibility of FDA approval, reduction | 20.00% | 20.00% |
Fair Value Measurements and F_6
Fair Value Measurements and Financial Instruments - Schedule of Estimated Fair Values Based on Level 3 Inputs (Detail) - Level 3 - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Estimate of Fair Value Measurement | |||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |||
Financial royalty assets, net | $ 17,024,285 | $ 16,501,819 | $ 12,021,288 |
Reported Value Measurement | |||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |||
Financial royalty assets, net | $ 11,169,857 | $ 10,842,052 | $ 8,377,231 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Detail) - USD ($) | Apr. 05, 2019 | Nov. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Swap termination payments | $ 35,448,000 | $ 0 | |||||||
Swap collateral received | 45,252,000 | 360,000 | $ 360,000 | $ 3,467,000 | $ 900,000 | ||||
Unrealized (gain)/loss on derivative contracts | (32,798,000) | (65,254,000) | 39,138,000 | (11,923,000) | (16,999,000) | ||||
Derivative liability, current | $ 0 | 0 | 9,215,000 | ||||||
Derivative financial instruments | 0 | 0 | 18,902,000 | ||||||
Other assets | 0 | 0 | 45,635,000 | ||||||
Investments in non-consolidated affiliates | 430,296,000 | 430,296,000 | 124,061,000 | 143,595,000 | |||||
Derivative financial instruments | 14,717,000 | 14,717,000 | 42,315,000 | 19,111,000 | |||||
Derivative asset, current | 19,196,000 | ||||||||
Preferred Shares | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Additional issuance, purchase price, maximum | $ 75,000,000 | ||||||||
Additional issuance, purchase price, minimum | $ 25,000,000 | ||||||||
Derivative instrument, exercise period | 12 months | ||||||||
Epizyme Common Stock Warrant | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Warrants to purchase additional shares (in shares) | 2,500,000 | ||||||||
Equity Investment In Epizyme Inc. | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Investments in non-consolidated affiliates | $ 100,000,000 | ||||||||
Equity securities | 100,000,000 | ||||||||
Upfront payment for equity investment | 100,000,000 | ||||||||
Equity Investment In Epizyme Inc. | Put Option | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Put option to sell additional common stock | $ 50,000,000 | ||||||||
Put option, selling price, maximum (in dollars per share) | $ 20 | ||||||||
Put option, term (in months) | 18 months | ||||||||
Equity Investment In Epizyme Inc. | Epizyme Common Stock Warrant | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Exercise price of warrant (in dollars per share) | $ 20 | ||||||||
Term of warrant (in years) | 3 years | ||||||||
Interest Rate Swap | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Unrealized (gain)/loss on derivative contracts | 39,400,000 | $ 0 | 10,900,000 | $ 65,300,000 | (72,600,000) | 11,900,000 | $ 17,000,000 | ||
Derivative liability | 28,100,000 | 28,100,000 | |||||||
Derivative liability, current | 9,200,000 | 9,200,000 | |||||||
Derivative financial instruments | 18,900,000 | 18,900,000 | |||||||
Derivative financial instruments | 19,100,000 | 19,100,000 | |||||||
Derivative asset | 38,300,000 | 38,300,000 | |||||||
Derivative asset, current | 19,200,000 | $ 19,200,000 | |||||||
Forward Contracts | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Unrealized (gain)/loss on derivative contracts | 11,500,000 | ||||||||
Derivative financial instruments | 11,500,000 | ||||||||
Warrant | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Unrealized (gain)/loss on derivative contracts | 600,000 | 16,100,000 | |||||||
Derivative financial instruments | $ 14,700,000 | $ 14,700,000 | $ 30,800,000 | ||||||
Put option, exercise price | $ 20 | ||||||||
Shares on settlement | 2,500,000 |
Derivative Instruments - Schedu
Derivative Instruments - Schedule of Notional Values and Fixed Rates (Detail) | Dec. 31, 2019USD ($) |
Interest Rate Swap, Due November 2020 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 600,000,000 |
Fixed Rate (as a percent) | 2.019% |
Interest Rate Swap, Due March 2023 - 1 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 250,000,000 |
Fixed Rate (as a percent) | 2.094% |
Interest Rate Swap, Due March 2023 - 2 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 500,000,000 |
Fixed Rate (as a percent) | 2.029% |
Interest Rate Swap, Due March 2023 - 3 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 250,000,000 |
Fixed Rate (as a percent) | 2.113% |
Interest Rate Swap, Due March 2023 - 4 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 500,000,000 |
Fixed Rate (as a percent) | 2.129% |
Interest Rate Swap, Due May 2018 -1 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 450,000,000 |
Fixed Rate (as a percent) | 1.31% |
Interest Rate Swap, Due May 2018 -2 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 325,000,000 |
Fixed Rate (as a percent) | 1.795% |
Interest Rate Swap, Due May 2018 -3 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 325,000,000 |
Fixed Rate (as a percent) | 1.787% |
Interest Rate Swap, Due November 2018 -1 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 300,000,000 |
Fixed Rate (as a percent) | 1.775% |
Interest Rate Swap, Due November 2018 -2 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 200,000,000 |
Fixed Rate (as a percent) | 1.585% |
Interest Rate Swap, Due November 2019 -1 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 385,000,000 |
Fixed Rate (as a percent) | 1.25% |
Interest Rate Swap, Due November 2019 -2 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Notional Value (in millions) | $ 385,000,000 |
Fixed Rate (as a percent) | 1.358% |
Derivative Instruments - Summar
Derivative Instruments - Summary of Derivatives and Reclassifications (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Interest Rate Swap | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Amount of loss reclassified from AOCI into income | $ 4,100 | ||||||
Interest Rate Swap | Gain (Loss) on Derivative Instruments | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivatives not designated as hedging instruments | $ 0 | $ (29,801) | $ (6,908) | $ (47,758) | (49,472) | $ 16,569 | $ 6,982 |
Interest Rate Swap | Gain (Loss) on Derivative Instruments | Designated as Hedging Instrument | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Amount of loss reclassified from AOCI into income | 0 | (1,602) | (4,066) | (3,189) | (6,189) | (8,003) | (8,931) |
Interest rate swaps | 0 | (8,011) | 73 | (14,307) | (16,954) | 3,357 | 18,948 |
Interest Rate Swap | Interest Expense | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivatives not designated as hedging instruments | 0 | 1,479 | (408) | 3,032 | (2,681) | 440 | |
Interest Rate Swap | Interest Expense | Designated as Hedging Instrument | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Interest rate swaps | 0 | 3,115 | (114) | 6,888 | 9,565 | $ 9,758 | $ (13,734) |
Warrant | Gain (Loss) on Derivative Instruments | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivatives not designated as hedging instruments | $ 647 | $ 0 | (16,097) | 0 | 21,977 | ||
Forward Contracts | Gain (Loss) on Derivative Instruments | Not Designated as Hedging Instrument | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Change in fair value of derivative contracts | $ (5,800) | $ 0 | $ 11,500 |
Available for Sale Debt Secur_3
Available for Sale Debt Securities - Summary of Available for Sale Debt Securities (Detail) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Cost | $ 125,121 | $ 125,121 |
Unrealized gains | 65,833 | 6,159 |
Fair Value | 190,954 | 131,280 |
Available for sale debt securities, current | 28,500 | 0 |
Available for sale debt securities, noncurrent | 162,454 | 131,280 |
Preferred Shares | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Cost | 125,121 | 125,121 |
Unrealized gains | 65,833 | 6,159 |
Fair Value | $ 190,954 | $ 131,280 |
Available for Sale Debt Secur_4
Available for Sale Debt Securities - Narrative (Detail) | Apr. 05, 2019USD ($)$ / sharesshares | Feb. 29, 2020 | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($)Payment | Mar. 31, 2019USD ($) |
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Purchase of available for sale debt securities | $ 125,000,000 | $ 0 | $ 125,117,000 | $ 125,121,000 | |||
Reduction of the investment | 190,954,000 | 131,280,000 | |||||
Milestone payments receivable | $ 150,000,000 | ||||||
Tecfidera | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Number of potential milestone payments | Payment | 22 | ||||||
Milestone payments | $ 600,000,000 | ||||||
Realized gain on available for sale securities | 419,500,000 | ||||||
Reduction of the investment | 180,500,000 | ||||||
Milestone payments receivable | $ 150,000,000 | ||||||
Maximum | Tecfidera | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Maximum Cumulative sales for Milestone payments | $ 20,000,000,000 | ||||||
Preferred Shares | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Number of shares purchased (in shares) | shares | 2,495 | ||||||
Price per share (in USD per share) | $ / shares | $ 50,100 | ||||||
Additional issuance, purchase price, maximum | $ 75,000,000 | ||||||
Additional issuance, purchase price, minimum | $ 25,000,000 | ||||||
Redemption price, percentage | 200.00% | ||||||
Redemption default, interest rate | 18.00% | ||||||
Redemption default, threshold period | 1 year | ||||||
Percentage redeemed | 200.00% | ||||||
Reduction of the investment | $ 190,954,000 | $ 131,280,000 | |||||
Preferred Shares | Redemption, Period One | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Redemption price, percentage | 150.00% | ||||||
Preferred Shares | Redemption, Period One | Maximum | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Redemption price, percentage | 200.00% | ||||||
Preferred Shares | Redemption, Period Two | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Redemption price, percentage | 200.00% | ||||||
Preferred Shares | Redemption, Period Three | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Redemption price, percentage | 120.00% | ||||||
Preferred Shares | Redemption, Period Four | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Redemption price, percentage | 200.00% |
Financial Royalty Assets, Net -
Financial Royalty Assets, Net - Summary of Financial Royalty Assets, Net (Detail) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Feb. 28, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross carrying value | $ 12,890,243 | $ 12,163,030 | $ 10,821,949 | |||
Cumulative allowance for changes in expected cash flows | (892,061) | |||||
Net carrying value, before cumulative allowance for credit losses | 11,998,182 | |||||
Cumulative allowance for credit losses | (301,388) | |||||
Cumulative allowance for changes in expected cash flows | (1,193,449) | (868,418) | (1,982,897) | $ (2,045,868) | $ (1,838,766) | |
Net carrying value | 11,696,794 | 11,294,612 | 8,839,052 | $ 62,200 | ||
Cystic fibrosis franchise | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross carrying value | 4,692,567 | 4,639,045 | 4,641,167 | |||
Cumulative allowance for changes in expected cash flows | (98,381) | |||||
Net carrying value, before cumulative allowance for credit losses | 4,594,186 | |||||
Cumulative allowance for changes in expected cash flows | 0 | (1,101,675) | ||||
Net carrying value | 4,639,045 | 3,539,492 | ||||
Tysabri | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross carrying value | 2,065,179 | 2,131,272 | 2,237,534 | |||
Cumulative allowance for changes in expected cash flows | (34,353) | |||||
Net carrying value, before cumulative allowance for credit losses | 2,030,826 | |||||
Cumulative allowance for changes in expected cash flows | (71,789) | (138,240) | ||||
Net carrying value | 2,059,483 | 2,099,294 | ||||
Imbruvica | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross carrying value | 1,368,322 | 1,332,077 | 1,253,425 | |||
Cumulative allowance for changes in expected cash flows | (31,543) | |||||
Net carrying value, before cumulative allowance for credit losses | 1,336,779 | |||||
Cumulative allowance for changes in expected cash flows | 0 | |||||
Net carrying value | 1,332,077 | 1,253,425 | ||||
Xtandi | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross carrying value | 1,174,247 | 1,193,918 | 1,214,081 | |||
Cumulative allowance for changes in expected cash flows | (219,405) | |||||
Net carrying value, before cumulative allowance for credit losses | 954,842 | |||||
Cumulative allowance for changes in expected cash flows | (332,624) | (256,056) | ||||
Net carrying value | 861,294 | 958,025 | ||||
Promacta | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross carrying value | 740,543 | 776,555 | 210,413 | |||
Cumulative allowance for changes in expected cash flows | (8,924) | |||||
Net carrying value, before cumulative allowance for credit losses | 731,619 | |||||
Cumulative allowance for changes in expected cash flows | 0 | |||||
Net carrying value | 776,555 | 210,413 | ||||
Tazverik | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross carrying value | 346,902 | |||||
Net carrying value, before cumulative allowance for credit losses | 346,902 | |||||
Crysvita | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross carrying value | 321,234 | 214,572 | ||||
Cumulative allowance for changes in expected cash flows | 0 | (46,890) | ||||
Net carrying value | 321,234 | 167,682 | ||||
Other | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross carrying value | 2,502,483 | 1,768,929 | 1,050,757 | |||
Cumulative allowance for changes in expected cash flows | (499,455) | |||||
Net carrying value, before cumulative allowance for credit losses | $ 2,003,028 | |||||
Cumulative allowance for changes in expected cash flows | (464,005) | (440,036) | ||||
Net carrying value | $ 1,304,924 | $ 610,721 |
Financial Royalty Assets, Net_2
Financial Royalty Assets, Net - Narrative (Detail) - USD ($) $ in Thousands | Feb. 28, 2017 | Nov. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Cash proceeds from sale of royalty asset | $ 115,000 | |||||
Net carrying value of the royalty asset | $ 62,200 | $ 11,696,794 | $ 11,294,612 | $ 8,839,052 | ||
Royalty distribution payable to affiliates | 122,771 | 31,041 | 44,259 | |||
Milestone payment | $ 0 | $ 250,000 | 250,000 | |||
Tysabri | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Net carrying value of the royalty asset | 2,059,483 | 2,099,294 | ||||
Royalty distribution payable to affiliates | 333,000 | |||||
Milestone payment | 250,000 | |||||
Increase to the gross carrying value | 250,000 | |||||
Cystic fibrosis franchise | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Reduction in financial royalty assets | 41,000 | |||||
Net carrying value of the royalty asset | $ 4,639,045 | $ 3,539,492 | ||||
Cystic fibrosis franchise | Minimum | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Expected reduction in royalty receipts | $ 35,000 | |||||
Cystic fibrosis franchise | Maximum | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Expected reduction in royalty receipts | $ 45,000 |
Cumulative Allowance for Chan_3
Cumulative Allowance for Changes in Expected Cash Flows from Financial Royalty Assets - Additional Information (Detail) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||||||
Shareholders' equity | $ 9,394,961 | $ 7,162,693 | $ 6,141,438 | $ 4,653,214 | $ 4,705,337 | $ 4,552,079 | $ 4,460,546 | $ 4,445,620 |
Retained Earnings | ||||||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||||||
Shareholders' equity | 1,571,399 | $ 2,561,971 | 2,825,212 | $ 1,339,061 | $ 1,385,728 | $ 1,215,953 | 655,446 | $ 180,595 |
Cumulative Effect, Period of Adoption, Adjustment | ||||||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||||||
Shareholders' equity | (192,705) | |||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | ||||||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||||||
Shareholders' equity | $ (192,705) | (192,705) | $ (2,863) | |||||
Cumulative Effect, Period of Adoption, Adjustment | ASU 2016-13 | ||||||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||||||
Shareholders' equity | (192,705) | |||||||
Cumulative Effect, Period of Adoption, Adjustment | ASU 2016-13 | Retained Earnings | ||||||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||||||
Shareholders' equity | $ (192,705) |
Cumulative Allowance for Chan_4
Cumulative Allowance for Changes in Expected Cash Flows from Financial Royalty Assets - Schedule of Cumulative Allowance for Changes in Expected Cash Flows (Detail) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Beginning balance | $ (868,418) | $ (1,982,897) | $ (2,045,868) | $ (1,838,766) |
Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets | (289,587) | (322,717) | (284,214) | (641,956) |
Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets | 262,980 | 1,342,038 | 341,548 | 241,291 |
Sale of royalty asset | 85,550 | |||
Reversal of cumulative allowance | 2,964 | 95,158 | 5,637 | 108,013 |
Current period provision for credit losses | (108,683) | |||
Ending balance | (1,193,449) | (868,418) | $ (1,982,897) | $ (2,045,868) |
Cumulative Effect, Period of Adoption, Adjustment | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Beginning balance | $ (192,705) | |||
Ending balance | $ (192,705) |
Intangible Royalty Assets, Ne_2
Intangible Royalty Assets, Net - Schedule of Intangible Royalty Interests (Detail) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | |||
Cost | $ 606,216 | $ 606,216 | |
Accumulated amortization | 565,958 | 554,492 | |
Net carrying value | 40,258 | 51,724 | $ 75,648 |
DPP-IV Inhibitors | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cost | 606,216 | 606,216 | 606,216 |
Accumulated amortization | 565,958 | 554,492 | 530,568 |
Net carrying value | $ 40,258 | $ 51,724 | $ 75,648 |
Intangible Royalty Assets, Ne_3
Intangible Royalty Assets, Net - Narrative (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||||||
Bad debt expense | $ 1 | $ 34.7 | |||||
Revenue Benchmark | Individual Licensees Concentration List | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Individual licensees exceeding 10% or more of revenue (as a percent) | 96.00% | 92.00% | 95.00% | 91.00% | 91.00% | 49.00% | |
Revenue Benchmark | Individual Licensees Concentration List | Licensee One | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Individual licensees exceeding 10% or more of revenue (as a percent) | 73.00% | ||||||
Revenue Benchmark | Individual Licensees Concentration List | Licensee Two | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Individual licensees exceeding 10% or more of revenue (as a percent) | 14.00% | ||||||
DPP-IV Inhibitors | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Finite lived intangible assets, useful life | 1 year 9 months | 2 years 2 months 12 days | |||||
Projected amortization expense, 2020 | $ 11.6 | $ 11.6 | |||||
Projected amortization expense, 2020 | 23 | 23 | $ 23 | ||||
Projected amortization expense, 2021 | $ 5.7 | $ 5.7 | 23 | ||||
Projected amortization expense, 2022 | $ 5.7 |
Non-Consolidated Affiliates (De
Non-Consolidated Affiliates (Detail) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Feb. 11, 2020 | May 31, 2018 | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2014 | |
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Investments in non-consolidated affiliates | $ 124,061 | $ 430,296 | $ 430,296 | $ 124,061 | $ 143,595 | ||||||||
Distributions from non-consolidated affiliates | 15,084 | $ 0 | |||||||||||
Equity in income (loss) of non-consolidated affiliates | 29,292 | $ (8,144) | 20,218 | (13,673) | (32,517) | (7,023) | $ 163,779 | ||||||
Distributions from non-consolidated affiliates | 31,840 | 14,059 | 14,059 | 39,402 | |||||||||
Avillion I | Bosulif Clinical Trial | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Investments in non-consolidated affiliates | $ 46,000 | ||||||||||||
Other commitment | $ 46,000 | ||||||||||||
Other commitments, percentage of costs (as a percent) | 40.00% | ||||||||||||
Avillion II | Merck Asset - Phase II Clinical Trial | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Other commitment | 19,000 | 19,000 | 19,000 | 19,000 | $ 15,000 | ||||||||
Other commitments, percentage of costs (as a percent) | 50.00% | ||||||||||||
Increase in funding commitment | 4,000 | ||||||||||||
Avillion II | AZ Asset - Phase II and Phase III Clinical Trial | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Other commitment | $ 105,000 | ||||||||||||
Other commitments, percentage of costs (as a percent) | 44.00% | ||||||||||||
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Legacy Investors Partnerships | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Investments in non-consolidated affiliates | $ 303,700 | ||||||||||||
Distributions from non-consolidated affiliates | 5,300 | 12,200 | |||||||||||
Equity in income (loss) of non-consolidated affiliates | 20,200 | 23,400 | |||||||||||
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Avillion I | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Distributions from non-consolidated affiliates | 13,400 | $ 14,100 | 14,100 | 39,400 | |||||||||
Guaranteed fixed annual payments period | 10 years | ||||||||||||
Non-recurring gain | $ 165,000 | ||||||||||||
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Avillion II | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Distributions from non-consolidated affiliates | 21,300 | ||||||||||||
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Avillion Entities | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Equity method investment, unfunded commitments | $ 70,800 | $ 41,500 | $ 41,500 | $ 70,800 | $ 93,800 |
Research and Development Fund_2
Research and Development Funding Expense - Additional Information (Detail) $ in Thousands, € in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||
Jun. 30, 2018USD ($) | Jan. 31, 2018USD ($) | Jan. 31, 2016USD ($) | Dec. 31, 2014EUR (€) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||||||||||
Research and development funding expense | $ 5,776 | $ 21,457 | $ 13,415 | $ 44,448 | $ 83,036 | $ 392,609 | $ 117,866 | |||||
Acquisitions of financial royalty assets | 574,620 | 1,231,736 | 1,721,291 | 269,593 | 2,290,707 | |||||||
Revenues | 510,932 | 457,608 | 1,011,811 | 892,491 | 1,814,254 | 1,794,894 | 1,597,930 | |||||
Royalty Income, Other | ||||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||||||||||
Revenues | 3,310 | 5,187 | 6,362 | 14,608 | 19,642 | 135,960 | 20,423 | |||||
Funding Agreements With Sanofi | ||||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||||||||||
Research and development funding expense | 5,300 | 3,100 | 12,400 | 7,100 | 18,200 | 6,900 | 35,800 | |||||
Remaining commitment for R&D funding agreement | $ 21,000 | $ 21,000 | 32,500 | 50,700 | ||||||||
Acquisitions of financial royalty assets | € | € 264 | |||||||||||
Funding Agreements With Sanofi | Royalty Income, Other | ||||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||||||||||
Revenues | 8,700 | 5,500 | 3,500 | |||||||||
Funding Agreements With Sanofi | Maximum | ||||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||||||||||
R&D funding agreement amount | € | € 294 | |||||||||||
Funding Agreements With Pfizer | ||||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||||||||||
Research and development funding expense | $ 17,800 | $ 36,300 | $ 62,800 | 99,300 | $ 80,100 | |||||||
Remaining commitment for R&D funding agreement | 62,800 | |||||||||||
Royalties eligibility period on certain sales | 7 years | 7 years | ||||||||||
Funding Agreements With Pfizer | Maximum | ||||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||||||||||
R&D funding agreement amount | $ 300,000 | |||||||||||
R&D fixed milestone payments | $ 250,000 | |||||||||||
Funding Agreement With Biohaven Pharmaceuticals | ||||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||||||||||
Research and development funding expense | 100,000 | |||||||||||
R&D funding agreement amount | $ 100,000 | |||||||||||
common stock stock purchase amount | $ 50,000 | |||||||||||
Funding Agreements with Immunomedics | ||||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||||||||||
Research and development funding expense | $ 175,000 | |||||||||||
R&D funding agreement amount | $ 175,000 | |||||||||||
common stock stock purchase amount | $ 75,000 |
Borrowings - Narrative (Detail)
Borrowings - Narrative (Detail) $ in Thousands | Feb. 11, 2020USD ($) | May 31, 2018USD ($) | May 31, 2017USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($)Partnership | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Mar. 31, 2017USD ($) |
Repaid outstanding balance | $ 5,170,396 | $ 0 | $ 294,000 | $ 294,000 | $ 193,000 | ||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche A-4 | |||||||||
New line of credit facility | $ 2,400,000 | $ 2,150,000 | $ 2,300,000 | ||||||
Amortization rate (percentage) | 5.90% | 5.90% | |||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche A-4 | London Interbank Offered Rate (LIBOR) | |||||||||
Basis spread on variable rate (percentage) | 1.50% | 1.50% | 1.50% | ||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche B-6 | |||||||||
New line of credit facility | $ 4,123,000 | $ 4,267,000 | |||||||
Amortization rate (percentage) | 3.20% | 3.20% | |||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche B-6 | London Interbank Offered Rate (LIBOR) | |||||||||
Basis spread on variable rate (percentage) | 2.00% | 2.00% | 2.00% | ||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche B-6 | Tysabri | |||||||||
New line of credit facility | $ 1,100,000 | ||||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities | |||||||||
Number of instruments held | Partnership | 2 | ||||||||
Collateral as a percentage of the collection trust account | 80.00% | ||||||||
Maximum total leverage ratio | 4 | 4 | |||||||
Minimum debt coverage ratio | 3.50 | 3.50 | |||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche B-5 | Tysabri | |||||||||
Refinance outstanding loan | $ 3,400,000 | ||||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche A-2 | |||||||||
Repaid outstanding balance | $ 2,500,000 | ||||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche A-2 | Maximum | |||||||||
Basis spread on variable rate (percentage) | 2.25% | ||||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche A-2 | Minimum | |||||||||
Basis spread on variable rate (percentage) | 1.75% | ||||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche A-3 | |||||||||
New line of credit facility | $ 2,500,000 | ||||||||
Repaid outstanding balance | $ 2,400,000 | ||||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche A-3 | Maximum | |||||||||
Basis spread on variable rate (percentage) | 1.75% | ||||||||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche A-3 | Minimum | |||||||||
Basis spread on variable rate (percentage) | 1.50% | ||||||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche A-1 | |||||||||
New line of credit facility | $ 3,200,000 | $ 3,120,000 | |||||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche A-1 | London Interbank Offered Rate (LIBOR) | |||||||||
Basis spread on variable rate (percentage) | 1.50% | 1.50% | |||||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | |||||||||
New line of credit facility | $ 2,840,000 | $ 2,825,800 | |||||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | London Interbank Offered Rate (LIBOR) | |||||||||
Basis spread on variable rate (percentage) | 1.75% | 1.75% | |||||||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities | |||||||||
Maximum consolidated leverage ratio | 4 | ||||||||
Maximum consolidated leverage ratio following qualifying material acquisition | 4.50 | ||||||||
Minimum consolidated coverage ratio | 2.50 |
Borrowings - Schedule of Borrow
Borrowings - Schedule of Borrowings (Detail) - USD ($) $ in Thousands | Feb. 11, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | May 31, 2018 |
Debt Instrument [Line Items] | |||||
Less: Current portion of long-term debt | $ (182,226) | $ (281,984) | $ (281,436) | ||
Total long-term debt | 5,729,622 | 5,956,138 | 6,237,896 | ||
Senior Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Loan issuance costs | (3,929) | (1,691) | (2,284) | ||
Original issue discount | (30,023) | (33,187) | (45,384) | ||
Total carrying value of senior secured deb | 5,911,848 | 6,238,122 | 6,519,332 | ||
Less: Current portion of long-term debt | (182,226) | (281,984) | (281,436) | ||
Total long-term debt | 5,729,622 | 5,956,138 | 6,237,896 | ||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche A-1 | |||||
Debt Instrument [Line Items] | |||||
New line of credit facility | $ 3,200,000 | $ 3,120,000 | |||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche A-1 | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percentage) | 1.50% | 1.50% | |||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | |||||
Debt Instrument [Line Items] | |||||
New line of credit facility | $ 2,840,000 | $ 2,825,800 | |||
Senior Secured Debt | RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percentage) | 1.75% | 1.75% | |||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche B-6 | |||||
Debt Instrument [Line Items] | |||||
New line of credit facility | $ 4,123,000 | $ 4,267,000 | |||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche B-6 | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percentage) | 2.00% | 2.00% | 2.00% | ||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche A-4 | |||||
Debt Instrument [Line Items] | |||||
New line of credit facility | $ 2,150,000 | $ 2,300,000 | $ 2,400,000 | ||
Senior Secured Debt | RPIFT Senior Secured Credit Facilities - Tranche A-4 | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percentage) | 1.50% | 1.50% | 1.50% |
Borrowings - Schedule of Repaym
Borrowings - Schedule of Repayments of Debt by Year (Detail) - Senior Secured Debt - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | |||
Loan issuance costs | $ 3,929 | $ 1,691 | $ 2,284 |
Original issue discount | 30,023 | 33,187 | $ 45,384 |
RPI Intermediate FT Senior Secured Credit Facilities - Tranche A-1 | |||
Debt Instrument [Line Items] | |||
Remainder of 2020 | 80,000 | ||
Year one | 160,000 | 160,000 | |
Year two | 160,000 | 160,000 | |
Year three | 160,000 | 160,000 | |
Year four | 160,000 | 160,000 | |
Thereafter (after 2024) | 2,400,000 | ||
Year five | 160,000 | ||
Thereafter (after 2025) | 2,400,000 | ||
Long-term debt, gross | 3,120,000 | 3,200,000 | |
RPI Intermediate FT Senior Secured Credit Facilities - Tranche B-1 | |||
Debt Instrument [Line Items] | |||
Remainder of 2020 | 14,200 | ||
Year one | 28,400 | 28,400 | |
Year two | 28,400 | 28,400 | |
Year three | 28,400 | 28,400 | |
Year four | 28,400 | 28,400 | |
Thereafter (after 2024) | 2,698,000 | ||
Year five | 28,400 | ||
Thereafter (after 2025) | 2,698,000 | ||
Long-term debt, gross | 2,825,800 | 2,840,000 | |
RPI Intermediate FT Senior Secured Credit Facilities | |||
Debt Instrument [Line Items] | |||
Remainder of 2020 | 94,200 | ||
Year one | 188,400 | 188,400 | |
Year two | 188,400 | 188,400 | |
Year three | 188,400 | 188,400 | |
Year four | 188,400 | 188,400 | |
Thereafter (after 2024) | 5,098,000 | ||
Year five | 188,400 | ||
Thereafter (after 2025) | 5,098,000 | ||
Long-term debt, gross | 5,945,800 | 6,040,000 | |
Loan issuance costs | 3,900 | 4,100 | |
Original issue discount | $ 30,000 | $ 32,600 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Detail) | Jun. 18, 2020Director$ / sharesshares | Jun. 30, 2020USD ($)shares | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)shares | Jun. 30, 2020€ / sharesshares | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($) |
Class of Stock [Line Items] | |||||||||
Shares outstanding | 36,705,936 | 36,705,936 | |||||||
Share based compensation | $ | $ 3,700,000 | $ 0 | $ 3,700,000 | $ 0 | |||||
Distributions | $ | $ 296,483,000 | 233,533,000 | $ 689,684,000 | 475,629,000 | $ 880,142,000 | $ 1,031,823,000 | $ 996,086,000 | ||
Restricted Stock Units (RSUs) | |||||||||
Class of Stock [Line Items] | |||||||||
Restricted stock granted during period (in shares | 71,430 | 39,000 | |||||||
Restricted stock units, grant date fair value (in dollars per share) | $ / shares | $ 50.90 | ||||||||
Number of directors who received RSUs | Director | 2 | ||||||||
Deferred Shares | |||||||||
Class of Stock [Line Items] | |||||||||
Shares outstanding | 294,175,555 | 294,175,555 | 294,175,555 | ||||||
Common Class A | |||||||||
Class of Stock [Line Items] | |||||||||
Common share outstanding | 365,899,235 | 365,899,235 | 365,899,235 | 0 | |||||
Shares issued | 365,899,000 | 365,899,000 | 365,899,000 | 0 | |||||
Common Class A | 2020 Equity Incentive Plan | |||||||||
Class of Stock [Line Items] | |||||||||
Shares reserved for future issuance (in shares) | 800,000 | 800,000 | 800,000 | ||||||
Common Class B | |||||||||
Class of Stock [Line Items] | |||||||||
Common share outstanding | 241,207,425 | 241,207,425 | 241,207,425 | 0 | |||||
Shares issued | 241,207,000 | 241,207,000 | 241,207,000 | 0 | |||||
Class R Redeemable Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Common share outstanding | 50,000 | 50,000 | 50,000 | 0 | |||||
Shares issued | 50,000 | 50,000 | 50,000 | 0 | |||||
Redeemable stock, redemption price | € / shares | € 1 | ||||||||
Retained Earnings | |||||||||
Class of Stock [Line Items] | |||||||||
Distributions | $ | $ 171,632,000 | $ 198,380,000 | $ 313,408,000 | $ 396,049,000 | $ 739,276,000 | $ 814,359,000 | $ 735,174,000 |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of Noncontrolling Interests (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Noncontrolling Interest [Line Items] | |||||||
Beginning balance | $ 7,162,693 | $ 4,705,337 | $ 6,141,438 | $ 4,552,079 | $ 4,552,079 | $ 4,460,546 | $ 4,445,620 |
Contributions | 6,691 | 1,447,965 | |||||
Transfer of interests | 0 | ||||||
Distributions | (296,483) | (233,533) | (689,684) | (475,629) | (880,142) | (1,031,823) | (996,086) |
Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity | (1) | (1) | |||||
Issuance of Class A shares sold in initial public offering, net of offering costs | 1,909,332 | 1,909,332 | |||||
Net income (loss) | 601,976 | 178,770 | 711,072 | 574,864 | 2,461,419 | 1,517,855 | 1,343,180 |
Change in unrealized movement on available for sale debt securities | 6,949 | 2,939 | 59,674 | 2,939 | 6,159 | (402,502) | (341,099) |
Ending balance | $ 9,394,961 | 4,653,214 | $ 9,394,961 | 4,653,214 | 6,141,438 | 4,552,079 | 4,460,546 |
RP Holdings | Continuing Investors Partnerships | |||||||
Noncontrolling Interest [Line Items] | |||||||
Noncontrolling interest (percentage) | 40.00% | 40.00% | |||||
RP Holdings | Continuing Investors Partnerships | |||||||
Noncontrolling Interest [Line Items] | |||||||
Noncontrolling interest (percentage) | 40.00% | 40.00% | |||||
Prior to IPO | |||||||
Noncontrolling Interest [Line Items] | |||||||
Net income (loss) | $ 515,789 | $ 624,885 | |||||
Non-Controlling Interest | |||||||
Noncontrolling Interest [Line Items] | |||||||
Beginning balance | 2,002,775 | 48,088 | 35,883 | 63,865 | 63,865 | 141,203 | 268,960 |
Contributions | 6,691 | 1,140,319 | |||||
Transfer of interests | 1,037,161 | ||||||
Distributions | (124,851) | (35,153) | (376,276) | (79,580) | (140,866) | (217,464) | (260,912) |
Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity | 2,433,098 | 2,433,098 | |||||
Issuance of Class A shares sold in initial public offering, net of offering costs | 758,590 | 758,590 | |||||
Net income (loss) | 52,715 | 27,057 | 52,715 | 55,707 | 112,884 | 140,126 | 133,155 |
Change in unrealized movement on available for sale debt securities | 1,624 | 11,296 | |||||
Ending balance | 5,237,829 | $ 39,992 | 5,237,829 | $ 39,992 | 35,883 | $ 63,865 | $ 141,203 |
Non-Controlling Interest | RPSFT | |||||||
Noncontrolling Interest [Line Items] | |||||||
Beginning balance | 31,563 | 35,883 | |||||
Distributions | (25,270) | (54,516) | |||||
Net income (loss) | 3,400 | 3,400 | |||||
Ending balance | 26,918 | 26,918 | $ 35,883 | ||||
Non-Controlling Interest | Legacy Investors Partnerships | |||||||
Noncontrolling Interest [Line Items] | |||||||
Beginning balance | 1,971,212 | ||||||
Contributions | 6,691 | 1,140,319 | |||||
Transfer of interests | 1,037,161 | ||||||
Distributions | (99,581) | (321,760) | |||||
Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity | (750) | (750) | |||||
Net income (loss) | 17,755 | 17,755 | |||||
Change in unrealized movement on available for sale debt securities | 1,222 | 10,894 | |||||
Ending balance | 1,986,511 | 1,986,511 | |||||
Non-Controlling Interest | Continuing Investors Partnerships | |||||||
Noncontrolling Interest [Line Items] | |||||||
Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity | 2,433,848 | 2,433,848 | |||||
Issuance of Class A shares sold in initial public offering, net of offering costs | 758,590 | 758,590 | |||||
Net income (loss) | 31,560 | 31,560 | |||||
Change in unrealized movement on available for sale debt securities | 402 | 402 | |||||
Ending balance | 3,224,400 | 3,224,400 | |||||
Non-Controlling Interest | Prior to IPO | |||||||
Noncontrolling Interest [Line Items] | |||||||
Net income (loss) | 107,187 | 145,043 | |||||
Non-Controlling Interest | Prior to IPO | RPSFT | |||||||
Noncontrolling Interest [Line Items] | |||||||
Net income (loss) | 17,225 | 42,151 | |||||
Non-Controlling Interest | Prior to IPO | Legacy Investors Partnerships | |||||||
Noncontrolling Interest [Line Items] | |||||||
Net income (loss) | $ 89,962 | $ 102,892 |
Earnings Per Share (Detail)
Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Numerator | ||||||||
Net income (loss) | $ 601,976 | $ 178,770 | $ 711,072 | $ 574,864 | $ 2,461,419 | $ 1,517,855 | $ 1,343,180 | |
Less: net income attributable to Continuing Investors Partnerships prior to the offering | 408,602 | 479,842 | ||||||
Less: net income attributable to non-controlling interest | 159,902 | $ 27,057 | 197,758 | $ 55,707 | $ 112,884 | $ 140,126 | $ 133,155 | |
Net income attributable to Royalty Pharma plc | $ 33,472 | $ 33,472 | ||||||
Denominator | ||||||||
Basic (in shares) | [1] | 353,979 | 353,979 | |||||
Basic (in dollars per share) | [1] | $ 0.09 | $ 0.09 | |||||
Numerator | ||||||||
Net income attributable to Royalty Pharma plc | $ 33,472 | $ 33,472 | ||||||
Denominator | ||||||||
Dilutive effect of unvested restricted units (in shares) | 1 | 1 | ||||||
Diluted (in shares) | [1] | 353,980 | 353,980 | |||||
Diluted (in dollars per share) | [1] | $ 0.09 | $ 0.09 | |||||
Common Class A | ||||||||
Denominator | ||||||||
Diluted (in shares) | 607,100 | |||||||
Class B Holders | ||||||||
Numerator | ||||||||
Less: net income attributable to non-controlling interest | $ 31,560 | $ 31,560 | ||||||
Legacy Investors Partnerships and RPSFT | ||||||||
Numerator | ||||||||
Less: net income attributable to non-controlling interest | $ 128,342 | $ 166,198 | ||||||
[1] | Represents earnings per share of Class A ordinary shares and weighted-average Class A ordinary shares outstanding for the period from June 16, 2020 through June 30, 2020, the period following our initial public offering (see Note 13). |
Indirect Cash Flow (Detail)
Indirect Cash Flow (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Supplemental Cash Flow Elements [Abstract] | ||||||||
Consolidated net income | $ 601,976 | $ 178,770 | $ 711,072 | $ 574,864 | $ 2,461,419 | $ 1,517,855 | $ 1,343,180 | |
Adjustments to reconcile consolidated net income to net cash provided by operating activities: | ||||||||
Provision for changes in expected cash flows from financial royalty assets | 47,278 | 72,210 | 135,290 | 22,177 | (1,019,321) | (57,334) | 400,665 | |
Amortization of intangible assets | 5,733 | 5,733 | 11,466 | 12,332 | 23,924 | 33,267 | 33,267 | |
Amortization of loan issuance and discount on long-term debt | 4,340 | 5,964 | 12,790 | 13,127 | 12,910 | |||
Realized gain on available for sale debt securities | (419,481) | (412,152) | ||||||
Unrealized loss on derivative contracts | (32,798) | (65,254) | 39,138 | (11,923) | (16,999) | |||
Unrealized (gain)/loss on equity securities | (193,895) | 36,800 | (40,729) | (16,944) | (155,749) | 13,939 | ||
Equity in (earnings)/loss of non-consolidated affiliates | $ (29,292) | $ 8,144 | (20,218) | 13,673 | 32,517 | 7,023 | (163,779) | |
Distributions from non-consolidated affiliates | 31,840 | 14,059 | 14,059 | 39,402 | ||||
Loss on extinguishment of debt | 5,405 | 0 | ||||||
Gain on sale of royalty asset | (52,753) | |||||||
Share based compensation | 3,740 | 0 | ||||||
Other | (3,398) | (289) | (2,122) | (7,771) | 583 | |||
(Increase)/decrease in operating assets: | ||||||||
Financial royalty assets | 937,021 | 799,161 | (1,648,837) | (1,524,816) | (1,539,417) | |||
Cash collected on financial royalty assets | 1,003,504 | 895,150 | 1,934,092 | 2,052,592 | 1,749,010 | |||
Available for sale debt securities | 0 | 150,000 | (150,000) | (150,000) | 150,000 | |||
Accrued royalty receivable | (1,218) | 600 | 2,471 | (27,372) | 66,739 | |||
Other receivables | 0 | (150,000) | 150,000 | 150,000 | (150,000) | |||
Other royalty income receivable | (2,094) | (5,670) | 7,390 | (11,099) | (1,219) | |||
Other current assets | 12,634 | (4,171) | 4,607 | (442) | (2,239) | |||
Other assets | (45,635) | 26,352 | (45,635) | |||||
Increase/(decrease) in operating liabilities: | ||||||||
Accounts payable and accrued expenses | 13,862 | (769) | 6,496 | 1,350 | 517 | |||
Derivative financial instruments | (34,952) | 0 | ||||||
Net cash provided by operating activities | 960,108 | 769,777 | $ 1,667,239 | $ 1,618,317 | $ 1,418,313 | |||
Supplemental schedule of non-cash investing / financing activities: | ||||||||
Contribution of investment in Legacy Investors Partnerships | [1] | 303,679 | 0 | |||||
Settlement of Epizyme forward purchase contract | [2] | 5,700 | 0 | |||||
Accrued purchase obligation-Tazverik | [3] | 220,000 | 0 | |||||
Repayments of long-term debt by contributions from non-controlling interest | [4] | 1,103,774 | 0 | |||||
Accrued purchase obligation | 1,610 | 0 | ||||||
Accrued capitalized offering costs | [5] | $ 8,897 | $ 0 | |||||
[1] | See Note 9 | |||||||
[2] | See Note 4 | |||||||
[3] | See Note 17 | |||||||
[4] | Related to the pro rata portion of RPIFT's outstanding debt repaid by the Legacy Investors Partnerships | |||||||
[5] | Related to capitalized offering costs incurred in connection with our IPO that have not been paid |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Reclassifications | $ 4,066 | $ 6,189 | $ 8,003 |
Activity for the period | 48,378 | 6,159 | (402,502) |
Reclassifications to NCI | (24,022) | ||
Cumulative adjustment for adoption of ASU 2016-01 | 2,863 | ||
Unrealized gain/ (loss) on equity securities | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 0 | 0 | (2,863) |
Reclassifications | 0 | 0 | |
Activity for the period | 0 | 0 | |
Cumulative adjustment for adoption of ASU 2016-01 | 2,863 | ||
Ending balance | 0 | 0 | |
Unrealized gain/(loss) on available for sale debt securities | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 6,159 | 0 | 402,502 |
Reclassifications | 0 | 0 | 0 |
Activity for the period | 48,378 | 6,159 | (402,502) |
Reclassifications to NCI | (24,022) | ||
Cumulative adjustment for adoption of ASU 2016-01 | 0 | ||
Ending balance | 30,515 | 6,159 | 0 |
Unrealized gain/(loss) on interest rate swaps | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | (4,066) | (10,255) | (18,258) |
Reclassifications | 4,066 | 6,189 | 8,003 |
Activity for the period | 0 | 0 | 0 |
Reclassifications to NCI | 0 | ||
Cumulative adjustment for adoption of ASU 2016-01 | 0 | ||
Ending balance | 0 | (4,066) | (10,255) |
Total Accumulated Other Comprehensive Income/(Loss) | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 2,093 | (10,255) | 381,381 |
Ending balance | $ 30,515 | $ 2,093 | $ (10,255) |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands | Dec. 08, 2017 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2020 | Nov. 30, 2019 | Mar. 31, 2019 | Nov. 30, 2017 | Feb. 28, 2017 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | ||||||||||||||
Royalty distribution payable to affiliates | $ 122,771 | $ 122,771 | $ 31,041 | $ 44,259 | ||||||||||
Investments in non-consolidated affiliates | 430,296 | 430,296 | 124,061 | 143,595 | ||||||||||
Financial royalty asset, net | 11,696,794 | 11,696,794 | 11,294,612 | 8,839,052 | $ 62,200 | |||||||||
Purchase of treasury interests | 9,394,961 | $ 4,653,214 | 9,394,961 | $ 4,653,214 | 6,141,438 | 4,552,079 | $ 4,460,546 | $ 7,162,693 | $ 4,705,337 | $ 4,445,620 | ||||
Treasury Interests | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Purchase of treasury interests | (2,119) | (4,228) | (2,119) | (4,228) | $ (4,266) | 0 | (4,266) | $ (2,327) | ||||||
Effect of exchange by Continuing Investors of Class B shares for Class A shares and reallocation of historical equity | $ 2,100 | |||||||||||||
Minimum | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Estimated funding commitment after benefit assignment | $ 140,000 | |||||||||||||
Maximum | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Estimated funding commitment after benefit assignment | $ 160,000 | |||||||||||||
Equity Investment In Epizyme Inc. | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Investments in non-consolidated affiliates | $ 100,000 | |||||||||||||
Options to invest in common stock | $ 100,000 | |||||||||||||
The Manager | Operating and Personnel Payments | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Increase in quarterly installment payments (as a percent) | 5.00% | 5.00% | ||||||||||||
Operating and personnel payments incurred | $ 27,600 | $ 47,300 | $ 60,000 | 57,200 | $ 54,400 | |||||||||
Quarterly payments to affiliates, percent of adjusted cash receipts (as a percent) | 6.50% | 6.50% | 6.50% | |||||||||||
Quarterly payments to affiliates, percent of security investment (as a percent) | 0.25% | 0.25% | 0.25% | |||||||||||
The Manager | Former Operating and Personnel Payments | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Increase in quarterly installment payments (as a percent) | 5.00% | |||||||||||||
Operating and personnel payments incurred | $ 15,000 | $ 30,000 | ||||||||||||
Affiliated Entity | Bristol-Myers Squibb | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Installment payments made | $ 171,000 | 128,800 | ||||||||||||
Affiliated Entity | Bristol-Myers Squibb | Minimum | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Estimated total payments for acquisition of future royalties | $ 280,000 | |||||||||||||
Affiliated Entity | Bristol-Myers Squibb | Maximum | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Estimated total payments for acquisition of future royalties | $ 320,000 | |||||||||||||
Affiliated Entity | Assignment Agreement - Benefit of Payment Stream | Bristol-Myers Squibb | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Related party, rate (as a percent) | 50.00% | |||||||||||||
Affiliated Entity | Assignment Agreement - Funding Obligations | Bristol-Myers Squibb | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Related party, rate (as a percent) | 50.00% | |||||||||||||
Financial royalty asset, net | $ 159,600 | $ 159,600 | 150,300 | 64,800 | ||||||||||
Cumulative funding amount | $ 162,400 | |||||||||||||
Affiliated Entity | Funded by RPI Acquisitions | Bristol-Myers Squibb | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Installment payments made | $ 85,500 | $ 64,400 | ||||||||||||
Affiliated Entity | Acquisition Of Limited Partnership Interests In Affiliate | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Number of limited partnership interest acquired (in shares) | 27,210 | |||||||||||||
Affiliated Entity | Royalty Distribution Payable to RPI Intermediate FT | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Royalty distribution payable to affiliates | 96,200 | 96,200 | ||||||||||||
Affiliated Entity | Royalty Distribution Payable to RP Select Finance Trust | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Royalty distribution payable to affiliates | 26,600 | 26,600 | ||||||||||||
Pablo Legorreta [Member] | Purchasing And Donating Ventilators [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Amount paid to CEO | $ 1,000 | $ 1,000 |
Commitments and Contingencies (
Commitments and Contingencies (Detail) € in Millions, $ in Millions | Jan. 21, 2019EUR (€) | Nov. 30, 2021USD ($) | Nov. 30, 2020USD ($) | Jan. 31, 2020USD ($) | Nov. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2015EUR (€) |
AbbVie | |||||||||
Long-term Purchase Commitment [Line Items] | |||||||||
Proceeds related to royalties received | $ 243.5 | ||||||||
Janssen | |||||||||
Long-term Purchase Commitment [Line Items] | |||||||||
Proceeds related to royalties received | $ 93.7 | ||||||||
Refund For Overpayment Of Royalties | |||||||||
Long-term Purchase Commitment [Line Items] | |||||||||
Estimated overpayment of royalties | € | € 7.7 | ||||||||
Damages sought | € | € 23.1 | ||||||||
Purchase Of Eisai Royalties | |||||||||
Long-term Purchase Commitment [Line Items] | |||||||||
Payment for purchase of royalties | $ 330 | ||||||||
Purchase commitment, upfront payment | $ 110 | ||||||||
Purchase commitment, additional payments | $ 220 | $ 110 | |||||||
Purchase Of Eisai Royalties | Forecast | |||||||||
Long-term Purchase Commitment [Line Items] | |||||||||
Purchase commitment, additional payments | $ 110 | $ 110 |
Subsequent Events (Detail)
Subsequent Events (Detail) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Aug. 31, 2020 | Jul. 31, 2020 | Mar. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Subsequent Event [Line Items] | ||||||||
Upfront payment for financial royalty assets | $ 574,620 | $ 1,231,736 | $ 1,721,291 | $ 269,593 | $ 2,290,707 | |||
Subsequent Event | ||||||||
Subsequent Event [Line Items] | ||||||||
Upfront payment for financial royalty assets | $ 650,000 | |||||||
Subsequent Event | Funding Agreement With Biohaven Pharmaceuticals | ||||||||
Subsequent Event [Line Items] | ||||||||
Payment for purchase of royalties | $ 450,000 | |||||||
Purchase commitment, upfront payment | 150,000 | |||||||
Purchase commitment, additional payments | 100,000 | |||||||
Purchase commitment, purchase of committed, non-contingent Commercial Launch Preferred Equity payable | $ 200,000 | |||||||
Subsequent Event | Entyvio | ||||||||
Subsequent Event [Line Items] | ||||||||
Upfront payment to acquire royalty | $ 86,600 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Detail) $ in Thousands | 12 Months Ended | ||||||||
Dec. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Feb. 29, 2020 | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2016USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Number of operating segments | Segment | 1 | ||||||||
Royalty term | 10 years | ||||||||
Cash and cash equivalent | $ 283,682 | $ 1,924,211 | $ 2,443,430 | ||||||
Marketable securities | 56,972 | 343,679 | |||||||
Shareholders' equity | 6,141,438 | 4,552,079 | $ 4,460,546 | 9,394,961 | $ 7,162,693 | $ 4,653,214 | $ 4,705,337 | $ 4,445,620 | |
Retained Earnings | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Shareholders' equity | 2,825,212 | $ 1,215,953 | 655,446 | 1,571,399 | $ 2,561,971 | $ 1,339,061 | $ 1,385,728 | $ 180,595 | |
Cumulative Effect, Period of Adoption, Adjustment | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Shareholders' equity | (192,705) | ||||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Shareholders' equity | $ (192,705) | $ (2,863) | $ (192,705) | ||||||
Customer Concentration Risk | Revenue Benchmark | Vertex | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Concentration risk (as a percent) | 23.00% | 22.00% | 22.00% | ||||||
Commercial paper and certificates of deposit with maturities of 90 days or less | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Cash and cash equivalent | $ 41,500 | ||||||||
Money Market Funds | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Cash and cash equivalent | 222,300 | $ 1,800,000 | |||||||
Certificates of Deposit | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Marketable securities | 44,100 | ||||||||
US Treasury and Government | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Marketable securities | $ 12,900 | ||||||||
Legacy Investors Partnerships | Old RPI | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Noncontrolling interest (percentage) | 20.00% | 18.00% | |||||||
Noncontrolling Interest, Ownership by Parent (percentage) | 80.00% |
Fair Value Measurements and F_7
Fair Value Measurements and Financial Instruments - Narrative (Detail) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018 | |
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Available for sale debt securities | $ 190,954 | $ 131,280 | |
Change Of Control Probability | Level 3 | Valuation Technique, Black-Derman-Troy | |||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Measurement input, percentage (as a percent) | 0 | ||
Likelihood of FDA Approval | Level 3 | Valuation Technique, Black-Derman-Troy | Minimum | |||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Measurement input, percentage (as a percent) | 0 | ||
Likelihood of FDA Approval | Level 3 | Valuation Technique, Black-Derman-Troy | Maximum | |||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Measurement input, percentage (as a percent) | 0.86 | ||
Likelihood Of FDA Approval At End Of Any Given Quarter By 2024 | Level 3 | Valuation Technique, Black-Derman-Troy | Minimum | |||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Measurement input, percentage (as a percent) | 0 | ||
Likelihood Of FDA Approval At End Of Any Given Quarter By 2024 | Level 3 | Valuation Technique, Black-Derman-Troy | Maximum | |||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Measurement input, percentage (as a percent) | 0.59 | ||
Measurement Input, Discount Rate | Level 3 | |||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Measurement input, percentage (as a percent) | 0.08 | ||
Preferred Shares | |||
Fair Value Assets Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Available for sale debt securities | $ 190,954 | $ 131,280 | |
Percent of possibility of FDA approval, reduction | 20.00% | 20.00% |
Derivative Instruments - Summ_2
Derivative Instruments - Summary of Derivatives and Reclassifications (Parenthetical) (Detail) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Interest Rate Swap | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Amount of loss reclassified from AOCI into income | $ 4.1 |