Wall Street Journal Creates A Pitch In Favor Of Royalty Pharma

  • Drug development, both a lucrative and a risky segment. Royalty Pharma plc RPRX offers a middle ground for its investors.
  • The Company was founded in 1996 and went public in June last year.
  • It helps fund expensive clinical trials for a promising new drug in a typical transaction. 
  • In return, drug-making companies pay a predetermined portion of that drug’s revenue after commercialization.
  • The Company owns rights to drugs sold by Johnson & Johnson JNJAbbVie Inc ABBVPfizer Inc PFEGilead Sciences Inc GILD, and Vertex Pharmaceuticals Incorporated VRTX.
  • While the most significant drug companies typically narrow their focus by therapeutic category, Royalty can generate revenue from oncology, rare diseases, HIV, and diabetes. 
  • That isn’t to say Royalty shares are immune from the challenges of the drug industry, writes Wall Street Journal.
  • Any changes to tax policy or drug-pricing regulations could impact Royalty Pharma shares. 
  • The stock trades at about 15 times last year’s cash flow. So far this year, cash flow is up 25% from 1H of 2020.
  • Expectations of solid performance in the years ahead could be a reality.
  • Price Action: RPRX shares are up 1.75% at $38.92 during the market session on the last check Tuesday.
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