Michael DiFiore: This is Mike DiFiore in for Umer. Congrats on the quarter. Two for me. One, again, it’s a question on the Merck deal. Understand that, again, Royalty Pharma’s upfront financing gives them an option to provide bigger financing later for a product that’s well aligned with its interest. But again, the fact that Merck is asking $50 million for this early stage funding, it doesn’t suggest, at least now, a high confidence in this product, especially since it’s been in Phase 2 limbo for some time now. Any color to be added here on their confidence in the product? And aside from better safety, how competitive could this unique MoA be in terms of efficacy? So that’s my first question. Second question is that just, given the nearly $3 billion of capital deployed year-to-date and the fact that you forecast $1 trillion in cumulative industry spending through 2027, any thoughts as to when the long-term average annual capital deployment goals of $4 billion to $5 billion that were previewed at your Investor Day may kick in?
Is it more of a near-term thing that we should expect this level of spending? Or more towards latter end of the decade?
Pablo Legorreta: I think the sort of the smaller size of the investment initially for us is more a reflection of the fact that the cost of the first trial is not as big as the later stage trials, right? So, it’s commensurate with the overall cost of the initial trial, the Phase 2b. And Marshall can add more things to that. But then regarding the question about capital deployment and the fact that the industry requires huge amounts of capital, whether you look at biotech or Big Pharma, and if you look at 5 or 10 years, but it’s in the many several trillions of dollars. As I’ve explained in the past, we see our business with a more predictable, more stable capital deployment that comes from a lot of the deals that we’re doing with biotechs €“ hybrid and synthetic royalties.
And we feel confident that those deals, on a yearly basis, will probably allow us to deploy close to $2 billion, somewhere between $1.5 billion and $2 billion. And then, if you add to that one-off transactions that are larger, and you saw this year, one that’s quite large with Trelegy or you saw last year another one that was quite large with MorphoSys, $2 billion, those one-offs will increase the overall capital deployment meaningfully. And so, getting from the #2 billion to $2.5 billion that we have guided for sort of $4 billion to $5 billion should happen over time and will also be a function of us having those larger one-off transactions included over the next three to five years, and I think it’s likely that we will have those larger transactions.
I don’t know if every year, but, certainly, over a three to five year period, there will be several of those. But, Marshall, maybe if you want to add anything on the Merck transaction, Merck collaboration, question. And, Chris, if you want to add anything on the capital deployment, please go ahead.
