Royalty Pharma plans largest IPO of the year so far

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Royalty Pharma is planning the biggest IPO of the year as the market’s appetite for biotech stocks remains strong. 

The company said in a filing with the US financial regulator that it plans to raise up to $1.96 billion on the Nasdaq using the ticker RPRX.

As its name suggests the company’s business model involves buying royalties from drugs, as well as funding new treatments. 

Its business model involves both indirect and direct investment in pharma development – it partners with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, as well as buying existing royalties from original innovators. 

UK-based Royalty Pharma also collaborates with academic institutions, charitable foundations and not-for-profit companies, and smaller biotechs on R&D projects. 

So far the biggest IPO of 2020 was from Warner Music Group, which sold $1.93 billion in its stock when it debuted on the Nasdaq late last week. 

Since it began operations in 1996, Royalty Pharma has managed to gain interests in some of the biggest drugs on the market. 

Its portfolio includes royalties from blockbuster drugs such as AbbVie and Johnson & Johnson’s cancer drug Imbruvica (ibrutinib), Vertex’s cystic fibrosis drugs Orkambi (lumacaftor+ivacaftor), Kalydeco (ivacaftor), and Biogen’s multiple sclerosis drug Tysabri (natalizumab). 

The most profitable royalties come from its cystic fibrosis investment, which generated nearly $425 million in royalties in 2019. 

Its Tysabri revenue came to $333 million last year, and its Imbruvica revenue came to almost $271 million. 

The company’s revenue rose 15% to $500.9 million for the three months ended on March 2020, compared with a year earlier. 

Operating income fell 16% to $361 million in the same period, and the company already has investors including Adage Capital and Nogra group. 

Swedish biotech Calliditas last week raised $90m with its IPO, the latest in a series of oversubcribed launches as the sector is seen as a safe haven for investment during the COVID-19 pandemic.