Chris Schott: Thank you.
Operator: Thank you. Our next question comes from Umer Raffat with Evercore. Your line is open.
Umer Raffat: Hi guys, thanks for taking my question. I have a couple here, if I may. First, Pablo, I know you guys did $4 billion in transactions in 2023, and you did share buybacks of $300 million, and you clearly have conviction on the deals you did, but I’m also sure you believe the stock is undervalued. So, how should we think about that ratio of external deployment and the IRR expectation there relative to shares and where they trade? And secondly, Terry, these updates to the non-GAAP measures, were they prompted by an SEC request or was it volunteered by Royalty Pharma? And was there any discussion in these SEC conversations around how you account for the subset of development-stage funding payments that you guys still exclude? Thank you.
Pablo Legorreta: So, your first question which was about capital deployment and also our share buyback program, I mean, one very clear message to give you and everyone is, the management of our business, us here, you should really view us as fellow shareholders, right? So, we actually own a lot of this business, and we’re very careful in the way we allocate capital. Our priority, as we’ve said multiple times in the past, is to actually make great investments because that’s what’s going to drive growth and value creation for all of our investors, including ourselves. But then what we have also seen is a big disconnect in the intrinsic value of Royalty Pharma, our portfolio, and our ability to continue to generate value by deploying capital.
And that was what prompted this $1 billion share buyback program. And as you know, we’ve actually repurchased about $300 million of the $1 billion, which was the goal for five years because of this disconnect. But we are obviously going to prioritize going forward new royalty investments over buying back shares. And on to you, Terry, regarding …
Terrance Coyne: Yes. So, Umer, thanks for the question. We’ve been a public company for three and a half years now, and over that time, we’ve had lots of interactions with investors and analysts. And one area that’s come up is the uniqueness of our financials. I mean, we really are, and we always highlight this, but our financials also show it, we’re really an end of one. And so, what we’re announcing today is the culmination of that feedback we received from investors and analysts and discussions with the SEC. As I mentioned in the prepared remarks, when we think about the ability to pursue our strategy, we look at the cash inflows from our diversified portfolio of royalties. We subtract the relatively small cash expenses to run the business, and we deploy the vast – we redeploy the vast majority of that capital in attractive new royalties to drive future value creation and growth.
So, our updated financial disclosures, which we’re really happy with, really highlight the virtuous cycle of our business model.
Umer Raffat: Thank you so much.
Operator: Thank you. Our next question comes from Terence Flynn with Morgan Stanley. Your line is open.
Terence Flynn: Great. thanks so much for taking the questions. Two for me. I always appreciate the funnel slide that you guys present every year, and was just wondering if you could provide a little bit more detail on the 47 proposals submitted. How many of those were unilateral processes? I think in the past you’ve said that the majority of the proposals you submit are unilateral, but just wondering, unilateral versus competitive, if you can kind of give us a mix there. And then the other one I had is just on your 2024 guidance, Terry. Can you give us any color about how you’re thinking about the impact from Tysabri biosimilars because I know there’s a range of outcomes here. Thank you.
Pablo Legorreta: Thank you, Terence, for your question. So, Marshall will take the first part of your question and then Terry will take the second.
Marshall Urist: Hi, Terence. Good morning. Thanks for the question on the funnel. So, maybe just to answer your question qualitatively, which is, I think when we looked at last year and the mix of the proposals that we made between outgoing proposals that our team – were proprietary to our team and we identified versus things that might have been incoming or processes, I think the mix was probably very consistent with prior years, sort of underscoring what you heard from Pablo and Chris about our confidence in the underlying trends. And I think as we look forward, we’re certainly prioritizing those creating one-on-one opportunities or proprietary opportunities for two reasons. I think one is, when we are one-on-one with a company that’s – when we do – when we’re in the best position to solve their problems and create really great investments.
And two, we have been building the team and focusing more and more on our priori, identifying those products and programs that we think are really exciting and going after those to do everything we can to build the portfolio and make it as strong as it can be with the greatest medicines that can be in it. So, we feel really good about the underlying trends in the business and where our team is to continue to execute as we’ve been doing.
Terrance Coyne: And then, Terrence, on the Tysabri biosimilar, this is something we’re obviously tracking. We have similar information to you in terms of timing there, and there’s still a little bit of uncertainty. But we take really a scenario-based approach in our guidance, and we definitely looked at downside scenarios in terms of biosimilar launch and potential impact to the brand, and feel really good about the guidance that we gave there. I would say the consensus now that’s – actually, we now are including the consensus for our top products on our website to, again, sort of make it easier to sort of follow the portfolio. And I would say that that consensus certainly seems to reflect some pretty substantial impact from the biosimilar.
