Royalty Pharma: An Attractive Business Model But An Uncertain Outcome For Vertex's CF Royalties

Sage Advisors
1.03K Followers

Summary

  • Royalty Pharma purchases royalties on pharmaceutical products.
  • Diversification provides some protection for investors and the company has invested in high quality assets.
  • Investors face risks including poor clinical data and poor commercial execution similar to the risks of a large pharmaceutical company.
  • A significant and under-appreciated risk for investors is a reduction in the royalty revenue from Vertex's CF franchise.
Roll of dollars with sign royalties and keyboard.

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Summary

Royalty Pharma (NASDAQ:RPRX) is a profitable, dividend paying company with a business model which involves buying royalty streams. It has provided funding for unprofitable biotech companies, funded R&D projects for large pharma companies and purchased royalties from commercial products such as

This article was written by

1.03K Followers
M.A. Science. I use my science background, the knowledge acquired while working for a major pharmaceutical company and access to scientists with domain specific knowledge to find the best opportunities in biotech.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of VRTX either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This is not a recommendation to buy or sell any security and I am not a financial advisor. Investors should perform their own due diligence and consult their financial advisor.

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