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Back of Napkin

Royalty Pharma plc RPRX

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Royalty Pharma collected $773M of cash last quarter and reported $17.9M of net income.

The gap is accounting, not economics: the company re-estimates the value of its royalty streams every quarter and runs the change through earnings.

RPRX · price with moving averages

Daily · 6MWeekly · 3Y
$22$32$43$54$64 Sep '23Apr '24Nov '24Jun '25Jan '26Aug '26 BID
EMAs82140

Source: market data.

The business

Royalty Pharma buys the right to receive royalties on drugs it did not develop. A university or a biotech invents something, sells the future royalty stream for cash today, and Royalty Pharma collects a percentage of that drug's sales for as long as the patents hold. It owns interests in more than thirty-five approved products.

There is no research, no salesforce and no manufacturing. There is a portfolio of contracts and a team deciding what to buy.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05The shape of the payoff
  6. 06Closing thoughts
  7. 07Methodology

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