Financial Royalty Assets

12 Months Ended

Dec. 31, 2022

Financial royalty assets consist of contractual rights to cash flows relating to royalty payments derived from the expected sales of patent-protected biopharmaceutical products that entitle us and our subsidiaries to receive a portion of income from the sale of such products by third parties.

The gross carrying value, cumulative allowance for changes in expected cash flows, exclusive of the allowance for credit losses, and net carrying value for the current and non-current portion of financial royalty assets as of December 31, 2022 and 2021 are as follows (in thousands):


		As of December 31, 2022
	Estimated Royalty Duration (1)	Gross Carrying Value		Cumulative Allowance for Changes in Expected Cash Flows (Note 7)		Net Carrying Value (4)
Cystic fibrosis franchise	2037 (2)	$	5,333,535	$	(10,908)	$	5,322,627
Tysabri	(3)	1,683,441		(212,283)		1,471,158
Trelegy	2029-2030	1,284,054		(24,126)		1,259,928
Tremfya	2031-2032	894,160		—		894,160
Imbruvica	2027-2032	1,436,969		(660,703)		776,266
Xtandi	2027-2028	1,009,168		(235,625)		773,543
Other	2023-2041	5,134,980		(1,332,815)		3,802,165
Total		$	16,776,307	$	(2,476,460)	$	14,299,847
Less: Cumulative allowance for credit losses (Note 7)						(115,422)
Total current and non-current financial royalty assets, net						$	14,184,425

(1)Durations shown represent our estimates as of the current reporting date of when a royalty will substantially end, which may depend on clinical trial results, regulatory approvals, contractual terms, commercial developments, estimates of patent expiration dates (which may include estimated patent term extensions) or other factors and may vary by geography. There can be no assurances that our royalties will expire when expected.

(2)Royalty is perpetual; year shown represents Trikafta expected patent expiration and potential sales decline based on timing of potential generic entry.

(3)RPIFT acquired a perpetual royalty on net sales of Tysabri. We have applied an end date of 2031 for purposes of accreting income over the royalty term, which is periodically reviewed.

(4)The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 7–Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets for additional information.

During the fourth quarter of 2022, we recorded $160.1 million and $273.6 million of non-cash impairment charges for otilimab and gantenerumab, respectively, both unapproved financial royalty assets held at cost. The impairment charges were recorded as a result of GSK plc’s announcement that it has decided not to progress with regulatory submissions for otilimab and Roche’s statement that it would discontinue clinical trials of gantenerumab. Included in the total financial royalty assets balance of $14.2 billion as of December 31, 2022, is $533.8 million related to unapproved financial assets held at cost: zavegepant, seltorexant and olpasiran. Additionally, during the fourth quarter of 2022, we impaired our financial royalty asset related to Gavreto and recorded a non-cash impairment charge of $182.1 million due to the uncertainty of Gavreto’s commercial outlook. These impairment charges were recorded within Financial royalty asset impairment in the consolidated statements of operations.


		As of December 31, 2021
	Estimated Royalty Duration (1)	Gross Carrying Value		Cumulative Allowance for Changes in Expected Cash Flows (Note 7)		Net Carrying Value (5)
Cystic fibrosis franchise	2037 (2)	$	5,335,641	$	(48,636)	$	5,287,005
Tysabri	(3)	1,846,069		(16,617)		1,829,452
Imbruvica	2027-2032	1,438,730		(236,871)		1,201,859
Xtandi	2027-2028	1,100,065		(172,101)		927,964
Tremfya	2031-2032	881,671		—		881,671
Evrysdi	2030-2035 (4)	727,774		—		727,774
Other	2023-2041	4,697,591		(909,916)		3,787,675
Total		$	16,027,541	$	(1,384,141)	$	14,643,400
Less: Cumulative allowance for credit losses (Note 7)						(310,804)
Total current and non-current financial royalty assets, net						$	14,332,596

(2)Royalty is perpetual; year shown represents Trikafta expected patent expiration and potential sales decline based on timing of potential generic entry.

(3)RPIFT acquired a perpetual royalty on net sales of Tysabri. We have applied an end date of 2031 for purposes of accreting income over the royalty term, which is periodically reviewed.

(4)Key patents on Evrysdi in the United States expire in 2035, but our royalty will cease when aggregate royalties paid to us equal $1.3 billion.

(5)The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 7–Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets for additional information.