US Pharmaceuticals & Biotechnology "Royalty investing in Biopharma: Pane..."

Research evidence excerpt

US Pharmaceuticals & Biotechnology "Royalty investing in Biopharma: Pane..."

nd as an alternative funding source

(now largely behind us); medium term, royalties continue to gain share as market

recovered; longer term, the model should become fully mainstream, supported by

broader pharma use.

Therapeutic areas: The panelists noted they were largely agnostic, focusing on

asset-level fundamentals rather than thematic exposure, with a goal to build a

broadly diversified portfolio. Preference leans toward durable, predictable

opportunities (sometimes smaller in peak sales but with high visibility). Decision

making is driven by qualitative and risk return considerations rather than sector

“hot spots.” For example, in Obesity space: Despite strong interest, current

royalty opportunities are limited as leading players are well capitalized and do not

require external financing. Looking ahead, royalty funds would be interested in

participating in the next wave Obesity drugs, if the right assets emerge, but

exposure is not essential.

Early clinical stage focus shift: All panelists agreed that demand for pre-

approval investments is increasing. DRI and HealthCare Royalty remain primarily

focused on commercial stage assets, where scale and return profile make more

sense. RPRX is more active in earlier stage opportunities (~40%+ of accumulative

capital deployed pre-approval), targeting situations where risk/reward is attractive

and upside can be maximized. For example, the recent Teva (Buy) IL-15 deal was

done at the Phase 1 stage with proof-of-concept data and used an option based

structure, where Teva can draw down additional funding following a potentially

positive Phase 2 readout and move into Phase 3 once the asset is sufficiently de-

risked.