FULLTEXT DEL 1 AV 3
10-Q – 2025-11-05 – rprx-20250930.htm
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us-gaap:NoncontrollingInterestMember 2024-12-31 0001802768 rprx:BlackstoneMember us-gaap:SubsequentEventMember 2025-11-01 2025-11-30 0001802768 rprx:TerranceCoyneMember 2025-07-01 2025-09-30 0001802768 rprx:TerranceCoyneMember 2025-09-30 0001802768 rprx:GeorgeLloydMember 2025-07-01 2025-09-30 0001802768 rprx:GeorgeLloydMember 2025-09-30 0001802768 rprx:MarshallUristM.D.Ph.D.Member 2025-07-01 2025-09-30 0001802768 rprx:MarshallUristM.D.Ph.D.Member 2025-09-30 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_________ to __________ Commission file number 001-39329 Royalty Pharma plc (Exact name of registrant as specified in its charter) England and Wales 98-1535773 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 110 East 59 th Street New York , New York 10022 (Address of principal executive offices and zip code) ( 212 ) 883-0200 (Registrant ’ s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Class A ordinary shares, par value $0.0001 RPRX The Nasdaq Stock Market LLC Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of October 31, 2025, Royalty Pharma plc had 427,247,489 Class A ordinary shares outstanding and 149,990,618 Class B ordinary shares outstanding. ROYALTY PHARMA PLC INDEX PART I. FINANCIAL INFORMATION 1 Item 1. Condensed Consolidated Financial Statements 1 Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (unaudited) 1 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (unaudited) 2 Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2025 and 2024 (unaudited) 3 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (unaudited) 5 Notes to Condensed Consolidated Financial Statements (unaudited) 6 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 3. Quantitative and Qualitative Disclosures About Market Risk 60 Item 4. Controls and Procedures 60 PART II. OTHER INFORMATION 60 Item 1. Legal Proceedings 60 Item 1A. Risk Factors 61 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 90 Item 3. Defaults Upon Senior Securities 91 Item 4. Mine Safety Disclosures 91 Item 5. Other Information 91 Item 6. Exhibits 92 Special Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains statements reflecting our views about our future performance that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “target,” “forecast,” “guidance,” “goal,” “predicts,” “project,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective assets, our industry, our beliefs and our assumptions. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q in the context of the numerous risks outlined in Part II under Item 1A. under “Risk Factors.” These risks and uncertainties include factors related to, among other topics: • sales risks of biopharmaceutical products on which we receive royalties; • uncertainties related to the acquisition of interests in development-stage biopharmaceutical product candidates and our strategy to add development-stage product candidates to our product portfolio; • the assumptions underlying our business model; • our ability to successfully execute our royalty acquisition strategy; • our ability to leverage our competitive strengths; • our ability to attract and retain highly talented professionals; • our ability to achieve the benefits of internalizing our formerly external manager; • the effect of changes to tax legislation and our tax position; and • the risks, uncertainties and other factors we identify elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the U.S. Securities and Exchange Commission (“SEC”). Although we believe the expectations reflected in the forward-looking statements are reasonable, any of those expectations could prove to be inaccurate, and as a result, the forward-looking statements based on those expectations also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and business objectives will be achieved. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform our prior statements to actual results or revised expectations. PART 1. FINANCIAL INFORMATION Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ROYALTY PHARMA PLC CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value) (Unaudited) As of September 30, As of December 31, 2025 2024 Assets Current assets Cash and cash equivalents $ 938,944 $ 929,026 Financial royalty assets 860,073 783,770 Available for sale debt securities 16,100 58,200 Other royalty income receivable 28,901 26,956 Other current assets 5,519 4,187 Total current assets 1,849,537 1,802,139 Financial royalty assets, net 15,763,674 15,127,158 Equity securities 129,393 186,960 Available for sale debt securities 302,500 693,500 Equity method investments 290,957 379,424 Goodwill 924,634 — Other assets 86,585 33,534 Total assets $ 19,347,280 $ 18,222,715 Liabilities and shareholders’ equity Current liabilities Distributions payable to non-controlling interests $ 77,222 $ 75,811 Accounts payable and accrued liabilities 41,415 13,370 Interest payable 29,044 98,062 Current portion of long-term debt 380,000 997,773 Other current liabilities 3,121 68,600 Total current liabilities 530,802 1,253,616 Long-term debt 8,565,735 6,614,653 Accrued compensation liabilities 502,938 — Other liabilities 126,944 12,080 Total liabilities 9,726,419 7,880,349 Commitments and contingencies Shareholders’ equity Class A ordinary shares, $ 0.0001 par value; issued and outstanding: 2025– 429,027 and 2024– 445,985 44 45 Class B ordinary shares, $ 0.000001 par value; issued and outstanding: 2025– 149,990 and 2024– 143,128 — — Class R redeemable shares, £ 1 par value; issued and outstanding: 2025– 50 and 2024– 50 63 63 Deferred shares, $ 0.000001 par value; issued and outstanding: 2025– 409,923 and 2024– 392,255 — — Additional paid-in capital 4,112,538 4,103,482 Retained earnings 2,304,314 2,845,653 Non-controlling interests 3,206,513 3,395,785 Treasury interests ( 2,611 ) ( 2,662 ) Total shareholders’ equity 9,620,861 10,342,366 Total liabilities and shareholders’ equity $ 19,347,280 $ 18,222,715 See accompanying notes to these unaudited condensed consolidated financial statements. 1 ROYALTY PHARMA PLC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Income and other revenues Income from financial royalty assets $ 578,812 $ 533,166 $ 1,668,720 $ 1,587,577 Other royalty income and revenues 30,479 31,524 87,483 82,358 Total income and other revenues 609,291 564,690 1,756,203 1,669,935 Operating expense/(income) Provision for changes in expected cash flows from financial royalty assets 12,135 ( 227,604 ) ( 318,943 ) 568,425 Provision for credit losses on unfunded commitments 766 — 93,301 — Research and development funding expense 50,500 500 401,500 1,500 General and administrative expenses (includes $ 73,353 , $ 165,099 , $ 713 and $ 2,511 of share-based compensation expense for the three and nine months ended September 30, 2025 and 2024, respectively; see Note 4) 118,734 56,720 409,209 169,080 Total operating expense/(income), net 182,135 ( 170,384 ) 585,067 739,005 Operating income 427,156 735,074 1,171,136 930,930 Other (income)/expense Equity in (earnings)/losses of equity method investees ( 15,948 ) ( 10,407 ) ( 25,084 ) 2,039 Interest expense 79,564 66,506 213,493 159,751 Gains on derivative financial instruments ( 4,000 ) ( 3,000 ) ( 1,000 ) ( 3,000 ) (Gains)/losses on equity securities ( 18,863 ) ( 50,849 ) 57,568 ( 81,455 ) Gains on available for sale debt securities ( 52,480 ) ( 57,680 ) ( 21,779 ) ( 103,900 ) Interest income ( 6,903 ) ( 17,508 ) ( 26,520 ) ( 38,306 ) Other non-operating expenses/(income), net 1,575 1,654 6,179 ( 661 ) Total other (income)/expense, net ( 17,055 ) ( 71,284 ) 202,857 ( 65,532 ) Consolidated net income before tax 444,211 806,358 968,279 996,462 Income tax expense — — — — Consolidated net income 444,211 806,358 968,279 996,462 Net income attributable to non-controlling interests 155,994 262,371 411,537 345,693 Net income attributable to Royalty Pharma plc $ 288,217 $ 543,987 $ 556,742 $ 650,769 Earnings per Class A ordinary share: Basic $ 0.67 $ 1.22 $ 1.29 $ 1.45 Diluted $ 0.67 $ 1.21 $ 1.28 $ 1.44 Weighted average Class A ordinary shares outstanding: Basic 431,887 447,628 430,281 449,085 Diluted 559,611 592,726 566,754 595,683 See accompanying notes to these unaudited condensed consolidated financial statements. 2 ROYALTY PHARMA PLC CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (In thousands, except per share amounts) (Unaudited) Class A Ordinary Shares Class B Ordinary Shares Class R Redeemable Shares Deferred Shares Additional Paid-in Capital Retained Earnings Non-Controlling Interests Treasury Interests Total Shareholders’ Equity Shares Amount Shares Amount Shares Amount Shares Amount Balance at June 30, 2025 432,288 $ 44 150,881 $ — 50 $ 63 409,032 $ — $ 4,127,665 $ 2,222,750 $ 3,155,030 $ ( 2,612 ) $ 9,502,940 Contributions — — — — — — — — — — 1,200 — 1,200 Distributions — — — — — — — — — — ( 116,027 ) — ( 116,027 ) Dividends ($ 0.22 per Class A ordinary share) — — — — — — — — — ( 95,307 ) — — ( 95,307 ) Other exchanges 891 — ( 891 ) — — — 891 — 22,131 — ( 22,132 ) 1 — Share issuances for EPAs, Equity Incentive Plans and related share-based compensation 63 — — — — — — — 3,116 ( 12 ) 32,448 — 35,552 Repurchases of Class A ordinary shares ( 4,215 ) — — — — — — — ( 40,374 ) ( 111,334 ) — — ( 151,708 ) Net income — — — — — — — — — 288,217 155,994 — 444,211 Balance at September 30, 2025 429,027 $ 44 149,990 $ — 50 $ 63 409,923 $ — $ 4,112,538 $ 2,304,314 $ 3,206,513 $ ( 2,611 ) $ 9,620,861 Class A Ordinary Shares Class B Ordinary Shares Class R Redeemable Shares Deferred Shares Additional Paid-in Capital Retained Earnings Non-Controlling Interests Treasury Interests Total Shareholders’ Equity Shares Amount Shares Amount Shares Amount Shares Amount Balance at June 30, 2024 449,065 $ 45 145,328 $ — 50 $ 63 390,055 $ — $ 4,100,554 $ 2,378,251 $ 3,275,566 $ ( 2,661 ) $ 9,751,818 Contributions — — — — — — — — — — 2,245 — 2,245 Distributions — — — — — — — — — — ( 113,182 ) — ( 113,182 ) Dividends ($ 0.21 per Class A ordinary share) — — — — — — — — — ( 94,061 ) — — ( 94,061 ) Other exchanges 447 — ( 447 ) — — — 447 — 38,407 — ( 38,411 ) 4 — Share-based compensation and related issuances of Class A ordinary shares 3 — — — — — — — 525 — — — 525 Repurchases of Class A ordinary shares ( 3,477 ) — — — — — — — ( 31,744 ) ( 63,492 ) — — ( 95,236 ) Net income — — — — — — — — — 543,987 262,371 — 806,358 Balance at September 30, 2024 446,038 $ 45 144,881 $ — 50 $ 63 390,502 $ — $ 4,107,742 $ 2,764,685 $ 3,388,589 $ ( 2,657 ) $ 10,258,467 See accompanying notes to these unaudited condensed consolidated financial statements. 3 ROYALTY PHARMA PLC CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (In thousands, except per share amounts) (Unaudited) Class A Ordinary Shares Class B Ordinary Shares Class R Redeemable Shares Deferred Shares Additional Paid-in Capital Retained Earnings Non-Controlling Interests Treasury Interests Total Shareholders’ Equity Shares Amount Shares Amount Shares Amount Shares Amount Balance at December 31, 2024 445,985 $ 45 143,128 $ — 50 $ 63 392,255 $ — $ 4,103,482 $ 2,845,653 $ 3,395,785 $ ( 2,662 ) $ 10,342,366 Contributions — — — — — — — — — — 8,751 — 8,751 Distributions — — — — — — — — — — ( 424,399 ) — ( 424,399 ) Dividends ($ 0.66 per Class A ordinary share) — — — — — — — — — ( 283,974 ) — — ( 283,974 ) Other exchanges 17,668 2 ( 17,668 ) — — — 17,668 — 318,605 — ( 318,658 ) 51 — Share issuances for EPAs, Equity Incentive Plans and related share-based compensation 744 — — — — — — — 24,745 ( 430 ) 76,497 — 100,812 Shares and share-based awards issued for Internalization — — 24,530 — — — — — 3,778 — 57,000 — 60,778 Repurchases of Class A ordinary shares ( 35,370 ) ( 3 ) — — — — — — ( 338,072 ) ( 813,677 ) — — ( 1,151,752 ) Net income — — — — — — — — — 556,742 411,537 — 968,279 Balance at September 30, 2025 429,027 $ 44 149,990 $ — 50 $ 63 409,923 $ — $ 4,112,538 $ 2,304,314 $ 3,206,513 $ ( 2,611 ) $ 9,620,861 Class A Ordinary Shares Class B Ordinary Shares Class R Redeemable Shares Deferred Shares Additional Paid-in Capital Retained Earnings Non-Controlling Interests Treasury Interests Total Shareholders’ Equity Shares Amount Shares Amount Shares Amount Shares Amount Balance at December 31, 2023 446,692 $ 45 150,743 $ — 50 $ 63 384,640 $ — $ 4,011,435 $ 2,517,583 $ 3,557,792 $ ( 2,629 ) $ 10,084,289 Contributions — — — — — — — — — — 6,797 — 6,797 Distributions — — — — — — — — — — ( 367,320 ) — ( 367,320 ) Dividends ($ 0.63 per Class A ordinary share) — — — — — — — — — ( 282,809 ) — — ( 282,809 ) Other exchanges 5,862 1 ( 5,862 ) — — — 5,862 — 154,400 — ( 154,373 ) ( 28 ) — Share-based compensation and related issuances of Class A ordinary shares 78 — — — — — — — 1,819 — — — 1,819 Repurchases of Class A ordinary shares ( 6,594 ) ( 1 ) — — — — — — ( 59,912 ) ( 119,750 ) — — ( 179,663 ) Net income — — — — — — — — — 650,769 345,693 — 996,462 Purchase of non-controlling interest in RPCT — — — — — — — — — ( 1,108 ) — — ( 1,108 ) Balance at September 30, 2024 446,038 $ 45 144,881 $ — 50 $ 63 390,502 $ — $ 4,107,742 $ 2,764,685 $ 3,388,589 $ ( 2,657 ) $ 10,258,467 See accompanying notes to these unaudited condensed consolidated financial statements. 4 ROYALTY PHARMA PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) For the Nine Months Ended September 30, 2025 2024 Cash flows from operating activities: Cash collections from financial royalty assets $ 2,438,620 $ 2,205,933 Cash collections from intangible royalty assets 681 14,420 Other royalty cash collections 84,917 79,334 Distributions from equity method investees 13,396 13,396 Interest received 27,935 37,447 Development-stage funding payments ( 401,500 ) ( 1,500 ) Payments for operating and professional costs ( 229,896 ) ( 163,804 ) Payments for Employee EPAs ( 1,868 ) — Interest paid ( 269,610 ) ( 158,765 ) Net cash provided by operating activities 1,662,675 2,026,461 Cash flows from investing activities: Acquisition of businesses, net of cash acquired ( 74,416 ) — Distributions from equity method investees 100,155 20,397 Investments in equity method investees — ( 10,955 ) Purchases of equity securities ( 4,427 ) ( 62,500 ) Proceeds from equity securities — 98,575 Purchases of available for sale debt securities ( 75,000 ) ( 150,000 ) Proceeds from available for sale debt securities 18,346 7,200 Proceeds from sales of available for sale debt securities 510,553 — Acquisitions of financial royalty assets ( 964,044 ) ( 2,009,283 ) Acquisitions of other financial assets — ( 18,000 ) Milestone payments ( 268,600 ) ( 50,000 ) Other ( 8,946 ) 2,039 Net cash used in investing activities ( 766,379 ) ( 2,172,527 ) Cash flows from financing activities: Distributions to legacy non-controlling interests - Portfolio Receipts ( 275,752 ) ( 281,078 ) Distributions to continuing non-controlling interests ( 126,719 ) ( 93,711 ) Dividends to shareholders ( 283,910 ) ( 282,809 ) Repurchases of Class A ordinary shares ( 1,146,846 ) ( 177,044 ) Contributions from legacy non-controlling interests - R&D 220 527 Contributions from non-controlling interests - other 5,697 3,329 Proceeds from revolving credit facility 1,275,000 — Repayment of revolving credit facility ( 1,275,000 ) — Repayment of long-term debt ( 1,000,000 ) — Proceeds from issuance of long-term debt, net of discount 1,954,475 1,471,235 Debt issuance costs and other ( 13,543 ) ( 12,316 ) Other — ( 9,025 ) Net cash (used in)/provided by financing activities ( 886,378 ) 619,108 Net change in cash and cash equivalents 9,918 473,042 Cash and cash equivalents, beginning of period 929,026 477,010 Cash and cash equivalents, end of period $ 938,944 $ 950,052 See accompanying notes to these unaudited condensed consolidated financial statements. 5 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Organization and Purpose Royalty Pharma plc is a public limited company that is incorporated under the laws of England and Wales and is a holding company. “Royalty Pharma,” the “Company,” “we,” “us” and “our” refer to Royalty Pharma plc and its subsidiaries on a consolidated basis. Our principal asset is a controlling equity interest in Royalty Pharma Holdings Ltd (“RP Holdings”), a private limited company incorporated under the laws of England and Wales. We conduct our business through RP Holdings and its subsidiaries. We are the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry. We fund innovation in the biopharmaceutical industry both directly and indirectly - directly when we partner with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, and indirectly when we acquire existing royalties from the original innovators. Prior to May 16, 2025, we were externally managed by RP Management, LLC, a Delaware limited liability company (the “Legacy Manager” or “RPM”), pursuant to advisory and management agreements (collectively, the “Management Agreement”). On May 16, 2025, we completed the Internalization (as defined below) and became an integrated company with the former employees of RPM becoming employees of Royalty Pharma, LLC, a wholly-owned subsidiary of RP Holdings. Refer to Note 3–Internalization for additional discussion. 2. Summary of Significant Accounting Policies Basis of Preparation and Use of Estimates The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, all adjustments considered necessary to present fairly the results of the interim periods have been included and consist of normal and recurring adjustments. Certain information and footnote disclosures have been condensed or omitted as permitted under GAAP. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2024 included in our Annual Report on Form 10-K. The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of income, revenues and expenses during the reporting period. Actual results may differ from those estimates. The results for the interim periods are not necessarily indicative of results for the full year. Basis of Consolidation The unaudited condensed consolidated financial statements include the accounts of Royalty Pharma and all majority-owned and controlled subsidiaries, as well as variable interest entities, where we are the primary beneficiary. We consolidate based upon evaluation of our power, through voting rights or similar rights, to direct the activities of another entity that most significantly impact the entity’s economic performance. For consolidated entities where we own or are exposed to less than 100% of the economics, we record Net income attributable to non-controlling interests in our condensed consolidated statements of operations equal to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties, except for the RP Holdings Class C Interests (as defined below), which are recorded based on their rights. 6 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) RP Holdings is owned by Royalty Pharma plc and, indirectly, by various partnerships (the “Continuing Investors Partnerships”) and, post-Internalization, by the Holders of RP Holdings Class E Interests (as defined below). RP Holdings is the sole owner of Royalty Pharma Investments 2019 ICAV (“RPI 2019 ICAV”), which is an Irish collective asset management vehicle and is the successor to Royalty Pharma Investments, an Irish unit trust. In 2022, we became an indirect owner of an 82 % economic interest in Royalty Pharma Investments ICAV, which was previously owned directly by Royalty Pharma Investments. In connection with the Internalization, Royalty Pharma Investments distributed all of its assets to Royalty Pharma Investments 2011 ICAV (together with Royalty Pharma Investments ICAV, “Old RPI”). We consummated an exchange offer on February 11, 2020 (the “Exchange Offer”) to facilitate our initial public offering (“IPO”). Prior to the Exchange Offer, Royalty Pharma Investments was owned by various partnerships (the “Legacy Investors Partnerships”). Through the Exchange Offer, investors which represented 82 % of the aggregate limited partnership in the Legacy Investors Partnerships exchanged their limited partnership interests in the Legacy Investors Partnerships for limited partnership interests in RPI US Partners 2019, LP and RPI International Holdings 2019, LP which are part of the Continuing Investors Partnerships. Following the Exchange Offer, we became the indirect owner of an 82 % economic interest in Royalty Pharma Investments which entitled us to 82 % of the economics of its wholly-owned subsidiary RPI Finance Trust, a Delaware statutory trust (“RPIFT”) and 66 % of Royalty Pharma Collection Trust, a Delaware statutory trust (“RPCT”). In December 2023, we acquired the remaining 34 % interest in RPCT owned by Royalty Pharma Select Finance Trust, a Delaware statutory trust (“RPSFT”). We report four non-controlling interests: 1. The Legacy Investors Partnerships’ ownership of approximately 18 % in Old RPI, which is the only remaining historical non-controlling interest that existed prior to our IPO. 2. The Continuing Investors Partnerships’ indirect ownership in RP Holdings through their indirect ownership of RP Holdings’ Class B ordinary shares (the “RP Holdings Class B Interests”). 3. Pablo Legorreta’s ultimate ownership of the RP Holdings’ Class C ordinary share (the “RP Holdings Class C Special Interest”) which entitles him to receive Equity Performance Awards (the “Founder’s Equity”). See discussion in Note 5–Shareholders’ Equity. 4. The Sellers’ (as defined in Note 3–Internalization) indirect ownership in RP Holdings through their indirect ownership of RP Holdings’ Class E ordinary shares (the “RP Holdings Class E Interests”). In connection with the Internalization, we issued 24.5 million RP Holdings Class E Interests, subject to vesting conditions, to the Sellers (the “Holders of RP Holdings Class E Interests”) as part of the transaction consideration. The Continuing Investors Partnerships, the Founder’s Equity and the Holders of RP Holdings Class E Interests, collectively, are referred to as the “continuing non-controlling interests.” All intercompany transactions and balances have been eliminated in consolidation. Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. 7 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Concentrations of Credit Risk Financial instruments that subject us to significant concentrations of credit risk consist primarily of financial royalty assets, available for sale debt securities, receivables and derivatives. The majority of our financial royalty assets and receivables arise from contractual royalty agreements that entitle us to royalties on the sales of underlying biopharmaceutical products in the United States, Europe and the rest of the world, with concentrations of credit risk limited due to the broad range of marketers responsible for paying royalties to us and the variety of geographies from which our royalties on product sales are derived. The products in which we hold royalties are marketed by leading industry participants, including, among others, Vertex, Johnson & Johnson, GSK, Roche, Servier, Biogen, AbbVie, Astellas, Pfizer and Gilead. As of September 30, 2025 and December 31, 2024, Vertex, as the marketer and payor of our royalties on the cystic fibrosis franchise, accounted for 31 % and 34 % of our current portion of financial royalty assets, respectively, and represented the largest individual marketer and payor of our royalties. We monitor the financial performance and creditworthiness of the counterparties to our royalty agreements so that we can properly assess and respond to changes in their credit profile. To date, we have not experienced any significant credit losses with respect to the collection of cash on our royalty assets. Segment Information We operate as one reportable segment. The measure of segment profit or loss that is most consistent with our condensed consolidated financial statements is consolidated net income. The accounting policies of our single reportable segment are the same as those for the condensed consolidated financial statements. The level of disaggregation and amounts of significant segment expenses that are regularly provided to the chief operating decision maker are the same as those presented in the condensed consolidated statements of operations. Likewise, the measure of segment assets is reported on the condensed consolidated balance sheets as total assets. Significant Accounting Policies There have been no material changes to our significant accounting policies from our Annual Report on Form 10-K for the year ended December 31, 2024 except for the following policy related to goodwill. As a result of the Internalization (as defined below), we recorded goodwill which represents the excess of the total purchase price over the fair value of the net assets acquired. Goodwill has an indefinite life and therefore is not amortized under the provisions of ASC 350 – Intangibles – Goodwill and Other . We have one reporting unit and assess goodwill for impairment annually in the fourth quarter, or more frequently if there are indicators of impairment. 3. Internalization On January 10, 2025, we entered into an agreement (as amended, the “Purchase Agreement”) with RPM, Royalty Pharma Manager, LLC, a Delaware limited liability company (“RP Manager”) and the Sellers (as defined below). Pursuant to the Purchase Agreement, RPM contributed substantially all of its previously held assets and liabilities to RP Manager and we agreed to acquire all of the equity interests of RP Manager from the Sellers (such transaction, the “Internalization”). The Sellers include our founder, chief executive officer and chairman, Pablo Legorreta, RPM I, LLC and RP MIP Holdings, LLC (“RP MIP Holdings”), as the former equity owners of RPM. The equity interest holders of RP MIP Holdings include our named executive officers and certain employees of the Legacy Manager, who became employees of Royalty Pharma, LLC, in connection with the Internalization. We completed the acquisition of RP Manager on May 16, 2025. We accounted for the acquisition as a business combination in accordance with ASC 805. The announced transaction value for the Internalization of $ 1.1 billion included cash and 24.5 million newly issued RP Holdings Class E Interests, of which 1.7 million shares were recognized as part of the purchase price and 22.8 million shares are subject to vesting, with related share-based compensation expense to be recognized over the vesting period post-Internalization. The announced transaction value also included the assumption of a $ 380 million term loan. In accordance with ASC 805, the $ 380 million term loan was not recognized as part of the purchase price. Instead, it was recorded as a liability acquired in the preliminary allocation of purchase price below. 8 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) In addition, we issued replacement equity awards in the form of RSUs to employees and recognized a liability related to the Employee EPAs. As described and each term as defined in Note 5–Shareholders’ Equity, the Employee EPAs represent the participation of certain employees in the economic returns of the EPAs for a specific Portfolio, which exclude Founder’s Equity ,which represents Mr. Legorreta’s retained EPAs. Accordingly, at the closing of the Internalization, the portions of each of these components attributable to the pre-Internalization service period were included as part of the purchase price. The following table presents the components of the total purchase price to acquire RP Manager (in thousands): Cash $ 81,950 Fair value of equity attributable to pre-Internalization service period: RP Holdings Class E Interests 57,000 Employee RSUs 3,778 Employee EPAs 422,479 Total purchase price $ 565,207 RP Holdings Class E Interests We issued 24.5 million RP Holdings Class E Interests and an equal number of Royalty Pharma plc Class B ordinary shares to the Sellers, with an aggregate fair value of $ 812.4 million based on our stock price of $ 33.12 upon the closing of the Internalization. Approximately 1.7 million of the RP Holdings Class E Interests valued at approximately $ 57.0 million, were considered to be attributable to services rendered pre-Internalization and were included as part of the purchase price. The remaining 22.8 million RP Holdings Class E Interests with an aggregate fair value of approximately $ 755.4 million are subject to straight-line vesting generally over five to nine years and forfeiture if vesting conditions are not met. We recognize the related share-based compensation expense over the corresponding vesting periods. Employee RSUs We issued approximately 316 thousand Class A ordinary shares as replacement awards to certain employees (the “Employee RSUs”) valued at $ 10.5 million based on our stock price of $ 33.12 upon the closing of the Internalization. Approximately $ 3.8 million of the Employee RSUs were considered to be attributable to service rendered pre-Internalization and were included as part of the purchase price. The remaining Employee RSUs are subject to straight-line vesting generally over a period up to four years and forfeiture if vesting conditions are not met. Employee EPAs As described and each term as defined in Note 5–Shareholders’ Equity, after the Internalization, employees who participate in the EPAs became employees of Royalty Pharma, LLC, and the service required for vesting became service required to be rendered to the Company. Accordingly, we began to account for the Employee EPAs under ASC 718 as compensation arrangements and began recognizing share-based compensation expense over the remaining post-Internalization service period. The Employee EPAs exclude Founder’s Equity, which represents Mr. Legorreta’s retained EPAs. The periodic cash distributions as tax advances related to the Employee EPAs are presented as an operating activity in the condensed consolidated statement of cash flows. As a result of the Internalization, we recognized a liability for the Employee EPAs. The fair value of approximately $ 422.5 million, measured as of the closing of the Internalization, was considered attributable to service rendered pre-Internalization and was included as part of the purchase price. The fair value of the remaining Employee EPAs is recorded as share-based compensation expense over the remaining vesting period. The fair value of the Employee EPAs is recognized as a liability within Accrued compensation liabilities on the condensed consolidated balance sheet and is estimated using a Monte Carlo simulation methodology. See Note 7–Fair Value Measurements and Financial Instruments for additional discussion. 9 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Preliminary Allocation of the Purchase Price We allocated the purchase price to the estimated fair values of assets and liabilities acquired. The purchase price allocation is based on management’s estimates and assumptions, as well as information compiled by management. Our estimates and assumptions are subject to change during the measurement period of up to twelve months from the date of the Internalization as further information becomes available. The excess of the total purchase price over the fair value of the net assets acquired was allocated to goodwill. The goodwill recorded as part of the Internalization includes the assembled workforce and synergies resulting from the Internalization. The following is a summary of a preliminary allocation of the purchase price (in thousands): Preliminary allocation of purchase price Location on Condensed Consolidated Balance Sheet Cash and cash equivalents $ 7,535 Cash and cash equivalents Other current assets 1,458 Other current assets Property, plant and equipment 23,085 Other assets Operating lease right of use asset 20,967 Other assets Other assets 172 Other assets Accounts payable and accrued liabilities ( 1,867 ) Accounts payable and accrued liabilities Interest payable ( 3,822 ) Interest payable Term Loan ( 380,000 ) Long-term debt Operating lease liabilities, current ( 2,749 ) Other current liabilities Operating lease liabilities ( 18,218 ) Other liabilities Other liabilities ( 5,988 ) Other liabilities Goodwill 924,634 Goodwill Total purchase price $ 565,207 Following the Internalization, we no longer pay Operating and Personnel Payments (as defined in Note 16–Related Party Transactions). The Internalization did not result in the recognition of gains or losses in the condensed consolidated statements of operations. For the third quarter and first nine months of 2025, we recorded approximately $ 1.0 million and $ 29.6 million of acquisition-related costs within General and administrative expenses in the condensed consolidated statements of operations, respectively. Of the $ 29.6 million in acquisition-related costs for the first nine months of 2025, $ 27.6 million was paid and included within Payments for operating and professional costs on the condensed consolidated statement of cash flows. These costs are primarily related to legal, advisory and professional services. For the third quarter and first nine months of 2025, approximately 80 % and 51 % of the total General and administrative expenses were related to costs incurred by RP Manager and its subsidiaries, respectively. These costs primarily consisted of employee compensation expenses, including share-based compensation. Pro Forma Information (Unaudited) The unaudited pro forma results presented below are for informational purposes only and are not necessarily indicative of what our actual results of operations would have been had the Internalization occurred at the beginning of 2024 nor are they indicative of our results of operations for future periods. The following table summarizes the pro forma consolidated information assuming we had completed the Internalization on January 1, 2024 (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Pro forma revenue $ 609,291 $ 564,690 $ 1,756,203 $ 1,669,935 Pro forma net income (1) 445,167 787,017 1,039,497 827,443 (1) Pro forma net income for the first nine months of 2024 reflects a $ 29.6 million adjustment for non-recurring acquisition-related expenses. 10 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 4. Share-Based Compensation We record share-based compensation expense on a straight-line basis over the corresponding service-based vesting periods within General and administrative expenses in the condensed consolidated statements of operations. We have elected to account for forfeitures as they occur. Prior to the Internalization, we only recognized share-based compensation expense related to RSUs issued to directors. As a result of the Internalization, we began to recognize share-based compensation expense related to RP Holdings Class E Interests that were issued as part of the Internalization consideration, Employee EPAs and Employee RSUs. The share-based compensation expense is comprised of the following (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 RP Holdings Class E Interests $ 32,448 $ — $ 76,497 $ — Employee EPAs 38,994 — 84,726 — Employee and Director RSUs 1,911 713 3,876 2,511 Total Share-Based Compensation $ 73,353 $ 713 $ 165,099 $ 2,511 RP Holdings Class E Interests In connection with the Internalization, approximately 22.8 million RP Holdings Class E Interests with an aggregate fair value of approximately $ 755.4 million will be expensed generally over vesting periods ranging from five to nine years . In the third quarter and first nine months of 2025, we recorded $ 32.4 million and $ 76.5 million of share-based compensation expense related to the RP Holdings Class E Interests, respectively. As of September 30, 2025, we had $ 678.9 million of unrecognized compensation expense related to 20.5 million RP Holdings Class E Interests that is expected to vest over a weighted average period of 5.7 years. Employee EPAs In accordance with ASC 718, we accounted for the Employee EPAs as liability-classified share-based compensation arrangements. The Employee EPAs are subject to a service-based vesting period, generally four years , commencing at the start of each respective Portfolio (as defined in Note 5–Shareholders’ Equity). We recognized a liability of approximately $ 422.5 million related to Employee EPAs as of the date of the Internalization. The fair value of the remaining Employee EPAs is recognized as share-based compensation expense over the remaining vesting period. We remeasure the fair value of the Employee EPAs at each reporting date with changes in the fair value recognized as part of share-based compensation expense. We estimated the fair value of the Employee EPAs using a Monte Carlo simulation methodology. See Note 7–Fair Value Measurements and Financial Instruments for additional discussion. In the third quarter and first nine months of 2025, we recorded $ 39.0 million and $ 84.7 million of share-based compensation expense related to the Employee EPAs, respectively. As of September 30, 2025, we had $ 71.5 million of unrecognized expense related to the Employee EPAs that is expected to vest over a weighted average period of 1.9 years. 2025 Equity Incentive Plan On May 16, 2025, in connection with the Internalization, the Royalty Pharma plc 2025 Equity Incentive Plan became effective and 2 million Class A ordinary shares were authorized for issuance to employees and consultants. RSUs granted under the plan generally vest over a period of up to four years . In the third quarter and first nine months of 2025, we did not recognize material share-based compensation expense related to the RSUs. 11 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 2020 Independent Directors Equity Incentive Plan On June 15, 2020, our 2020 Independent Director Equity Incentive Plan was approved and became effective, whereby 800 thousand Class A ordinary shares were authorized for issuance in the form of RSUs to our independent directors. RSUs granted under the plan generally vest over one year . In the third quarter and first nine months of 2025 and 2024, we did not recognize material share-based compensation expense related to the RSUs. 5. Shareholders’ Equity Capital Structure Royalty Pharma plc has two classes of voting shares: Class A ordinary shares and Class B ordinary shares, each of which has one vote per ordinary share. The Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of shareholders, except as otherwise required by applicable law. The Class B ordinary shares are not publicly traded and holders of Class B ordinary shares only have limited rights to receive a distribution equal to their nominal value upon a liquidation, dissolution or winding up. As of September 30, 2025, Royalty Pharma plc had 429,027 thousand Class A ordinary shares and 149,990 thousand Class B ordinary shares outstanding. An exchange agreement entered into by, among others, Royalty Pharma plc, RP Holdings, the Continuing Investors Partnerships, RPI International Partners 2019, LP, RPI US Feeder 2019, LP, RPI International Feeder 2019, LP, RPI EPA Vehicle, LLC and certain recipients nominated by the Sellers (as amended from time to time, the “Exchange Agreement”) facilitates the exchange of RP Holdings Class E Interests and the exchange of RP Holdings Class B Interests for Class A ordinary shares. Pursuant to the Exchange Agreement, RP Holdings Class B Interests are exchangeable on a one -for-one basis for Class A ordinary shares on a quarterly basis. Each such exchange also results in the re-designation of the same number of Class B ordinary shares as deferred shares. Such deferred shares are non-voting and do not confer a right to participate in our profits or any right to receive dividends. As of September 30, 2025, Royalty Pharma plc had 409,923 thousand deferred shares outstanding. In addition, Royalty Pharma plc issued 50 thousand Class R redeemable shares, which do not entitle the holder to voting or dividend rights. As required by the U.K. Companies Act 2006, the Class R redeemable shares were issued to ensure sufficient sterling denominated share capital. The Class R redeemable shares may be redeemed at our option in the future. Any such redemption would be at the nominal value of £ 1 each. Class A Ordinary Share Repurchases In January 2025, our board of directors authorized a new share repurchase program, which replaced the share repurchase program approved in March 2023, under which we may repurchase up to $ 3.0 billion of our Class A ordinary shares. The repurchases may be made in the open market or in privately negotiated transactions. The authorization for the new share repurchase program expires June 23, 2027. In the first nine months of 2025, we repurchased 35.4 million shares at a cost of approximately $ 1.2 billion. In the first nine months of 2024, we repurchased 6.6 million shares at a cost of approximately $ 179.7 million. As of September 30, 2025, approximately $ 1.9 billion remained available under the new share repurchase program. In connection with our repurchase of Class A ordinary shares that began in the second quarter of 2023, RP Holdings also began to retire a corresponding number of RP Holdings’ Class A ordinary shares (“RP Holdings Class A Interests”) held by us which reduces our ownership in RP Holdings and which is reflected through Other exchanges in the tables below and in our condensed consolidated statements of shareholders’ equity. 12 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Non-Controlling Interests The changes in the balances of our non-controlling interests are as follows (in thousands): Legacy Investors Partnerships Continuing Investors Partnerships Founder’s Equity RP Holdings Class E Interests Holders Total June 30, 2025 $ 1,124,024 $ 1,700,806 $ — $ 330,200 $ 3,155,030 Contributions 1,098 102 — — 1,200 Distributions ( 80,391 ) ( 27,386 ) ( 2,886 ) ( 5,364 ) ( 116,027 ) Other exchanges — 6,604 — ( 28,736 ) ( 22,132 ) Share-based compensation — — — 32,448 32,448 Net income 53,911 83,014 2,886 16,183 155,994 September 30, 2025 $ 1,098,642 $ 1,763,140 $ — $ 344,731 $ 3,206,513 Legacy Investors Partnerships Continuing Investors Partnerships Founder’s Equity Total June 30, 2024 $ 1,199,719 $ 2,075,847 $ — $ 3,275,566 Contributions 1,291 954 — 2,245 Distributions ( 82,163 ) ( 31,019 ) — ( 113,182 ) Other exchanges — ( 38,411 ) — ( 38,411 ) Net income 86,972 175,399 — 262,371 September 30, 2024 $ 1,205,819 $ 2,182,770 $ — $ 3,388,589 Legacy Investors Partnerships Continuing Investors Partnerships Founder’s Equity (1) RP Holdings Class E Interests Holders Total December 31, 2024 $ 1,188,340 $ 2,207,445 $ — $ — $ 3,395,785 Contributions 6,412 2,339 — — 8,751 Distributions ( 275,814 ) ( 92,500 ) ( 45,325 ) ( 10,760 ) ( 424,399 ) Other exchanges — ( 523,587 ) — 204,929 ( 318,658 ) Internalization — — — 57,000 57,000 Share-based compensation — — — 76,497 76,497 Net income 179,704 169,443 45,325 17,065 411,537 September 30, 2025 $ 1,098,642 $ 1,763,140 $ — $ 344,731 $ 3,206,513 (1) Amounts represent the entirety of the EPAs prior to the Internalization and only the Founder’s Equity portion after the Internalization. Legacy Investors Partnerships Continuing Investors Partnerships Founder’s Equity Total December 31, 2023 $ 1,339,716 $ 2,218,076 $ — $ 3,557,792 Contributions 3,863 2,934 — 6,797 Distributions ( 273,609 ) ( 93,711 ) — ( 367,320 ) Other exchanges — ( 154,373 ) — ( 154,373 ) Net income 135,849 209,844 — 345,693 September 30, 2024 $ 1,205,819 $ 2,182,770 $ — $ 3,388,589 13 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Continuing Investors Partnerships The Continuing Investors Partnerships hold the number of Class B ordinary shares equal to the number of RP Holdings Class B Interests indirectly held by them. As the Continuing Investors Partnerships exchange RP Holdings Class B Interests indirectly held by them for Class A ordinary shares, the Continuing Investors Partnerships’ indirect ownership in RP Holdings decreases. Founder’s Equity In 2020, RP Holdings issued the RP Holdings Class C Special Interest which entitles the holder, through RPI EPA Vehicle, LLC and other intermediary entities that are ultimately controlled by our founder and Chief Executive Officer, Pablo Legorreta, to receive distributions of Equity Performance Awards (the “Founder’s Equity”). Equity Performance Awards (“EPAs”) represent 20 % of the Net Economic Profit (as defined below) generated from investments made during each two-year investment period (each, a “Portfolio”). Net Economic Profit is defined as the aggregate cash receipts for all investments in a Portfolio, less Total Expenses, which is defined as interest expense, operating expense, and recovery of acquisition cost related to that Portfolio. Distributions of EPAs occur only upon the satisfaction of specified performance and return thresholds. EPAs are generally settled in RP Holdings Class B Interests, which are immediately exchanged upon issuance for Class A ordinary shares. A portion of the EPAs may be paid in cash as a tax advance to cover income tax obligations incurred by the beneficial owners of the RP Holdings Class C Special Interest. Mr. Legorreta granted ownership units in the entities that hold the RP Holdings Class C Special Interest to certain employees of RPM. These grants allow such employees to participate on a pro rata basis in the economic returns of the EPAs for a specific Portfolio (the “Employee EPAs”). In exchange for participation in the EPAs, these employees agreed to render services to RPM for generally four years , commencing at the beginning of each Portfolio. Prior to the Internalization, the service requirement for employee participation in the EPAs was previously tied to services rendered to RPM, which was not a consolidated entity. Accordingly, Founder’s Equity, including the employee participation in the EPAs, was accounted for as non-controlling interest. Post-Internalization, Founder’s Equity only includes Mr. Legorreta’s retained EPAs which continues to be accounted for as non-controlling interest. In the third quarter of 2025, we recognized $ 2.9 million of distributions related to Founder’s Equity, all of which were attributable to Mr. Legorreta’s retained EPAs. In the first nine months of 2025, we recognized $ 45.3 million of distributions related to Founder’s Equity, comprising amounts related to Mr. Legorreta’s retained EPAs and amounts recognized prior to the Internalization related to employee participation in the EPAs. Corresponding amounts to the distributions were recorded as net income allocated to non-controlling interests for the respective periods. Out of the $ 45.3 million in the first nine months of 2025, $ 23.5 million was distributed in cash as a tax advance and presented as a financing activity in the condensed consolidated statement of cash flows, $ 20.5 million was settled in shares with the remaining $ 1.4 million expected to be settled in shares in the fourth quarter of 2025. The unsettled portion as of September 30, 2025 is recorded within Distributions payable to non-controlling interests on the condensed consolidated balance sheet. Holders of RP Holdings Class E Interests We issued 24.5 million RP Holdings Class E Interests as part of the transaction consideration for the Internalization, all of which are outstanding as of September 30, 2025. The Holders of RP Holdings Class E Interests represent a non-controlling interest. The change in RP Holdings ownership following the issuance of RP Holdings Class E Interests is reflected through Other exchanges in the above tables and in our condensed consolidated statements of shareholders’ equity. The Holders of RP Holdings Class E Interests are entitled to any dividends and distributions from RP Holdings pro rata (on a per share basis) and on a pari passu basis with each RP Holdings Class A Interest and RP Holdings Class B Interest. Upon vesting, the RP Holdings Class E Interests are exchangeable on a one -for-one basis for Royalty Pharma plc Class A ordinary shares. As of September 30, 2025, approximately 1.8 million of RP Holdings Class E Interests were vested. 14 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Non-Controlling Interests Ownership The changes in RP Holdings ownership among the Continuing Investors Partnerships, the Holders of RP Holdings Class E Interests and us are reflected through Other exchanges in the above tables and in our condensed consolidated statements of shareholders’ equity. These changes typically result from activities during the period, including (1) the exchanges of RP Holding Class B Interests for Class A ordinary shares, (2) retirement of RP Holdings Class A Interests in connection with our repurchase of Class A ordinary shares and (3) the exchanges of RP Holding Class E Interests for Class A ordinary shares. As of September 30, 2025, the ownership of RP Holdings was as follows: 4 % by the Holders of RP Holdings Class E Interests, 22 % by the Continuing Investors Partnerships and 74 % by Royalty Pharma plc. As of September 30, 2024, the ownership of RP Holdings was as follows: 24 % by the Continuing Investors Partnerships and 76 % by Royalty Pharma plc. Dividends The holders of Class A ordinary shares are entitled to receive dividends subject to approval by our board of directors. The holders of Class B ordinary shares do not have any rights to receive dividends; however, RP Holdings Class B Interests and RP Holdings Class E Interests are entitled to dividends and distributions from RP Holdings. In the first nine months of 2025, we declared and paid three quarterly cash dividends of $ 0.22 per Class A ordinary share in an aggregate amount of $ 284.0 million to holders of our Class A ordinary shares. 6. Available for Sale Debt Securities Funding Arrangements with Cytokinetics In May 2024, we expanded our funding collaboration with Cytokinetics, Incorporated (“Cytokinetics”). As part of the expanded funding collaboration, we provided funding of $ 100 million for Cytokinetics’ Phase 3 clinical trial of omecamtiv mecarbil (“Cytokinetics Development Funding”) and amended the funding agreement that we entered into with Cytokinetics in 2022 to provide two additional funding tranches (as amended, “Cytokinetics Commercial Launch Funding”). Following the amendment in May 2024, the Cytokinetics Commercial Launch Funding is comprised of seven tranches with total funding of up to $ 525 million. Our return on the Cytokinetics Development Funding depends on the outcome of omecamtiv mecarbil’s Phase 3 clinical trial and approval by the U.S. Food and Drug Administration (the “FDA”). If omecamtiv mecarbil’s Phase 3 clinical trial is successful and approval by the FDA is received within a specific timeframe, we will receive a return of $ 100 million and the greater of an incremental 2.0 % royalty on annual net sales of omecamtiv mecarbil or quarterly fixed payments for 18 quarters and an incremental 2.0 % royalty thereafter. If FDA approval is not received within a specific timeframe, we will receive a return of 2.4 times the Cytokinetics Development Funding over 18 quarters. If the Phase 3 clinical trial is not successful within a specific timeframe, we will receive a return of 2.3 times the Cytokinetics Development Funding over 22 quarters. Out of the seven tranches of the Cytokinetics Commercial Launch Funding, we have funded a total of $ 175 million under tranches one, four, and six as of September 30, 2025, including the required minimum draw in April 2025. Tranches two and three are no longer available because the related regulatory milestones were not met. Tranches five and seven , which provide for draws up to $ 100 million and $ 175 million, respectively, are available for draw upon the occurrence of certain regulatory and clinical development milestones (“Cytokinetics Funding Commitments”) and have a one-year draw period from the date when such contingency is met. The contingency for tranche five was met in 2024 and in September 2025, Cytokinetics requested the $ 100 million draw, which we funded in October 2025. The contingency for tranche seven has not been met as of September 30, 2025. For tranches one, four, five, six and seven, we expect a return of 1.9 times the amount drawn over 34 consecutive quarterly payments beginning on the last business day of the seventh quarter following the quarter of the funding date of each tranche. In the fourth quarter of 2023, we began receiving quarterly repayments on tranche one. 15 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) We elected the fair value option to account for the Cytokinetics Development Funding and the Cytokinetics Commercial Launch Funding (collectively the “Cytokinetics Funding Arrangements”) as it most accurately reflects the nature of the funding arrangements. The funded Cytokinetics Funding Arrangements are recorded within Available for sale debt securities on the condensed consolidated balance sheets. The Cytokinetics Funding Commitments, which include options and forwards, are recognized at fair value within Other liabilities on the condensed consolidated balance sheets. The changes in the fair value of the funded Cytokinetics Funding Arrangements and Cytokinetics Funding Commitments are recorded within Gains on available for sale debt securities in the condensed consolidated statements of operations. Further, as part of the expanded funding collaboration in May 2024, we purchased Cytokinetics common stock and provided funding for clinical trials of CK-586 in exchange for a royalty, which is further described in Note 7–Fair Value Measurements and Financial Instruments. Lastly, the funding collaboration also included the restructuring of our royalty on aficamten. The table below summarizes the components of our funding collaboration with Cytokinetics, including the expanded funding collaboration in May 2024 and related funding status as of September 30, 2025 (in thousands): Funded Required Future Draw Potential Future Draw Total Cytokinetics Commercial Launch Funding (1) $ 175,000 $ 100,000 $ 175,000 $ 450,000 Cytokinetics Development Funding 100,000 — — 100,000 Cytokinetics R&D Funding Derivative (2) 50,000 — 150,000 200,000 Cytokinetics Common Stock 50,000 — — 50,000 Total $ 375,000 $ 100,000 $ 325,000 $ 800,000 (1) The contingency for tranche five was met in the fourth quarter of 2024 and Cytokinetics requested the draw on tranche five in September 2025. As such, we were obligated to fund $ 100 million as of September 30, 2025, which we funded in October 2025. (2) Related to our funding for the clinical trials of CK-586. We have the option to fund up to an additional $ 150 million. See Note 7–Fair Value Measurements and Financial Instruments for additional discussion. MorphoSys Development Funding Bonds In September 2022, we provided MorphoSys funding of $ 300 million (“MorphoSys Development Funding Bonds”), for which we began receiving quarterly repayments in the fourth quarter of 2024. MorphoSys was acquired by Novartis in 2024. In January 2025, the MorphoSys Development Funding Bonds were sold for approximately $ 511 million. We elected the fair value option to account for the MorphoSys Development Funding Bonds as it most accurately reflects the nature of the instrument. The MorphoSys Development Funding Bonds were recorded within Available for sale debt securities on the condensed consolidated balance sheet. The changes in the fair value of the MorphoSys Development Funding Bonds were recorded within Gains on available for sale debt securities in the condensed consolidated statement of operation. 16 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The table below summarizes our available for sale debt securities recorded at fair value (in thousands): Cost Unrealized Gains Fair Value Current Assets Non-Current Assets Non-Current Liabilities Total As of September 30, 2025 Debt securities (1) $ 282,378 $ 36,222 $ 318,600 $ 16,100 $ 302,500 $ — $ 318,600 Funding commitments (2) ( 16,600 ) 5,500 ( 11,100 ) — — ( 11,100 ) ( 11,100 ) Total $ 265,778 $ 41,722 $ 307,500 $ 16,100 $ 302,500 $ ( 11,100 ) $ 307,500 As of December 31, 2024 Debt securities (1) $ 516,329 $ 235,371 $ 751,700 $ 58,200 $ 693,500 $ — $ 751,700 Funding commitments (2) ( 12,300 ) 220 ( 12,080 ) — — ( 12,080 ) ( 12,080 ) Total $ 504,029 $ 235,591 $ 739,620 $ 58,200 $ 693,500 $ ( 12,080 ) $ 739,620 (1) The cost related to tranches one and six of the Cytokinetics Commercial Launch Funding and the cost for the Cytokinetics Development Funding reflect the fair values on their respective funding dates. As of September 30, 2025 and December 31, 2024, the cost related to tranche four of the Cytokinetics Commercial Launch Funding and the cost of the MorphoSys Development Funding Bonds, respectively, represent the amounts funded. The costs are amortized as quarterly repayments are received. The MorphoSys Development Funding Bonds were sold in January 2025. (2) The costs associated with the Cytokinetics Funding Commitments represent the fair values on their respective transaction dates. 7. Fair Value Measurements and Financial Instruments Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table summarizes assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): As of September 30, 2025 As of December 31, 2024 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds (1) $ 486,094 $ — $ — $ 486,094 $ 568,317 $ — $ — $ 568,317 Available for sale debt securities (2) — — 16,100 16,100 — — 58,200 58,200 Total current assets $ 486,094 $ — $ 16,100 $ 502,194 $ 568,317 $ — $ 58,200 $ 626,517 Equity securities (3) 127,152 — 2,241 129,393 184,719 — 2,241 186,960 Available for sale debt securities (2) — — 302,500 302,500 — — 693,500 693,500 Cytokinetics R&D Funding Derivative (4) — — 13,000 13,000 — — 12,000 12,000 Royalty at fair value (3) — — 5,323 5,323 — — 5,323 5,323 Total non-current assets $ 127,152 $ — $ 323,064 $ 450,216 $ 184,719 $ — $ 713,064 $ 897,783 Liabilities: Cytokinetics Funding Commitments — — ( 11,100 ) ( 11,100 ) — — ( 12,080 ) ( 12,080 ) Employee EPAs (5) — — ( 502,938 ) ( 502,938 ) — — — — Total non-current liabilities $ — $ — $ ( 514,038 ) $ ( 514,038 ) $ — $ — $ ( 12,080 ) $ ( 12,080 ) (1) Recorded within Cash and cash equivalents on the condensed consolidated balance sheets. (2) Related to the funded Cytokinetics Funding Arrangements as of respective balance sheet dates. As of December 31, 2024, amount also included the MorphoSys Development Funding Bonds, which were sold in January 2025. (3) The amounts reflected within Level 3 are related to equity securities and a revenue participation right acquired from ApiJect Holdings, Inc. (“ApiJect”), a private company. We estimated the fair values related to both instruments using a discounted cash flow with Level 3 inputs, including forecasted cash flows and the weighted average cost of capital. The revenue participation right was recorded within Other assets on the condensed consolidated balance sheets. See Note 10–Non-Consolidated Affiliates for additional discussion. (4) Recorded within Other assets on the condensed consolidated balance sheets. See definition below. (5) As a result of the Internalization, the fair value of Employee EPAs is recognized as a liability and recorded within Accrued compensation liabilities on the condensed consolidated balance sheet. See Note 4–Share-Based Compensation for additional discussion. 17 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) For the third quarter and first nine months of 2025, we recognized a gain of $ 18.9 million and a loss $ 57.6 million, respectively, on equity securities still held as of September 30, 2025. For the third quarter and first nine months of 2024, we recognized gains of $ 50.8 million and $ 35.9 million, respectively, on equity securities still held as of September 30, 2025. The tables presented below summarize the change in the combined fair value (current and non-current) of Level 3 financial instruments (in thousands): For the Three Months Ended September 30, 2025 Equity Securities Debt Securities Funding Commitments Derivative Instrument Royalty at Fair Value Employee EPAs Balance at the beginning of the period $ 2,241 $ 285,100 $ ( 27,200 ) $ 9,000 $ 5,323 $ 467,143 Changes in fair value (1) — 36,380 16,100 4,000 — 20,419 Vested (1) — — — — — 18,575 Settled (2) — — — — — ( 3,199 ) Redemption (3) — ( 2,880 ) — — — — Balance at the end of the period $ 2,241 $ 318,600 $ ( 11,100 ) $ 13,000 $ 5,323 $ 502,938 (1) For the Employee EPAs, both changes in fair value and amounts vested are recorded within General and administrative expenses in the condensed consolidated statement of operations. Changes in fair value of all other financial instruments are recorded within their respective financial statement line items in the Other (income)/expense section of the condensed consolidated statements of operations. (2) The Employee EPAs are generally settled partially in shares and partially through periodic cash distributions required for tax advances. (3) Amount relates to the quarterly repayment on the Cytokinetics Commercial Launch Funding. For the Three Months Ended September 30, 2024 Equity Securities Debt Securities Funding Commitments Derivative Instrument Royalty at Fair Value Balance at the beginning of the period $ 52,322 $ 668,400 $ ( 22,000 ) $ 18,000 $ 5,323 Changes in fair value (1) 577 40,280 17,400 3,000 — Redemption (2) — ( 2,880 ) — — — Balance at the end of the period $ 52,899 $ 705,800 $ ( 4,600 ) $ 21,000 $ 5,323 (1) Changes in fair value of the financial instruments are recorded within their respective financial statement line items in the Other (income)/expense section of the condensed consolidated statements of operations. (2) Amount relates to the quarterly repayment on the Cytokinetics Commercial Launch Funding. 18 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) For the Nine Months Ended September 30, 2025 Equity Securities Debt Securities Funding Commitments Derivative Instrument Royalty at Fair Value Employee EPAs Balance at the beginning of the period $ 2,241 $ 751,700 $ ( 12,080 ) $ 12,000 $ 5,323 $ — Purchases — 75,000 — — — — Initial recognition (1) — — — — — 422,479 Changes in fair value (2) — 20,799 180 1,000 — 58,876 Vested (2) — — — — — 25,850 Settled (3) — — — — — ( 4,267 ) Sales (4) — ( 510,553 ) — — — — Settlement of forward (5) — — 800 — — — Redemptions (6) — ( 18,346 ) — — — — Balance at the end of the period $ 2,241 $ 318,600 $ ( 11,100 ) $ 13,000 $ 5,323 $ 502,938 (1) Amount reflects the Employee EPAs attributable to service rendered pre-Internalization which was recognized as a liability at the closing of the Internalization, see Note 3–Internalization for additional discussion. (2) For the Employee EPAs, both changes in fair value and amounts vested are recorded within General and administrative expenses in the condensed consolidated statement of operations. Changes in the fair value of all other financial instruments are recorded within their respective financial statement line items in the Other (income)/expense section of the condensed consolidated statements of operations. (3) The Employee EPAs are generally settled partially in shares and partially through periodic cash distributions required for tax advances. (4) The MorphoSys Development Funding Bonds were sold in January 2025. (5) Amount reflects the fair value attributable to the required draw under tranche four of the Cytokinetics Commercial Launch Funding that was settled upon funding. (6) Amount relates to the quarterly repayments on the MorphoSys Development Funding Bonds prior to the sale and on the Cytokinetics Commercial Launch Funding. For the Nine Months Ended September 30, 2024 Equity Securities Debt Securities Funding Commitments Derivative Instrument Royalty at Fair Value Balance at the beginning of the period $ 297 $ 455,400 $ ( 900 ) $ — $ 1,778 Purchases 46,500 150,000 — 18,000 — Gains/(losses) on initial recognition (1) — 5,000 ( 5,000 ) — — Changes in fair value (2) 6,102 102,600 1,300 3,000 3,545 Redemptions (3) — ( 7,200 ) — — — Balance at the end of the period $ 52,899 $ 705,800 $ ( 4,600 ) $ 21,000 $ 5,323 (1) Represents purchase price allocation to arrive at the appropriate fair value on initial recognition. (2) Changes in fair value of the financial instruments are recorded within their respective financial statement line items in the Other (income)/expense section of the condensed consolidated statement of operations. (3) Amount relates to the quarterly repayments on the Cytokinetics Commercial Launch Funding. Below is a discussion of the valuation inputs used for financial instruments classified as Level 3 measurement as of September 30, 2025 and December 31, 2024 in the fair value hierarchy. As of September 30, 2025 and December 31, 2024, we did not have any financial instruments recorded at fair value using Level 2 inputs. Cytokinetics Research & Development (“R&D”) Funding Derivative In May 2024, we funded $ 50 million upfront in exchange for a royalty on CK-586. We have an option to fund up to an additional $ 150 million for which we would be eligible to receive milestone payments of up to $ 150 million upon regulatory approvals and an incremental royalty on CK-586. Upon a change of control event, we have the option to cause Cytokinetics to pay us 1.5 times the initial and additional funding amounts in a lump sum to terminate our rights to receive royalties and milestone payments. Our funding arrangement on CK-586 is accounted for as a derivative instrument and is recorded at fair value (“Cytokinetics R&D Funding Derivative”). 19 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) We estimated the fair value of the Cytokinetics R&D Funding Derivative as of September 30, 2025 and December 31, 2024 by utilizing probability-adjusted discounted cash flow calculations using Level 3 inputs, including the probabilities of us exercising the additional funding option, regulatory approvals and the occurrence of a change of control event during the duration of the arrangement. As of September 30, 2025 and December 31, 2024, we also assumed a risk-adjusted discount rate of 11.5 % and 11.1 %, respectively. Our estimate of expectation of timing and probabilities of us exercising the additional funding option, regulatory approvals and a change of control event, the risk-adjusted discount rate and the interest rate volatility could reasonably be different than the assumptions selected by a market participant, which would mean that the estimated fair value could be significantly higher or lower. Cytokinetics Funding Arrangements and Cytokinetics Funding Commitments We estimated the fair values of the funded Cytokinetics Funding Arrangements as of September 30, 2025 and December 31, 2024 by utilizing probability-adjusted discounted cash flow calculations using Level 3 inputs, including an estimated risk-adjusted discount rate and the probability that there will be a change of control event, which would result in accelerated payments. Developing a risk-adjusted discount rate and assessing the probability that there will be a change of control event over the duration of the Cytokinetics Funding Arrangements require significant judgment. Our estimate of the risk-adjusted discount rate could reasonably be different than the discount rate selected by a market participant, which would mean that the estimated fair value could be significantly higher or lower. Our expectation of the probability and timing of the occurrence of a change of control event could reasonably be different than the timing of an actual change of control event, and if so, would mean that the estimated fair value could be significantly higher or lower than the fair value determined by management at any particular date. We estimated the fair value of the Cytokinetics Funding Commitments as of September 30, 2025 and December 31, 2024 using a Monte Carlo simulation methodology that includes simulating the interest rate movements using a Geometric Brownian Motion-based pricing model. This methodology simulates the likelihood of future discount rates exceeding the counterparty’s assumed cost of debt, which would impact Cytokinetics’ decision to exercise its option to draw on each respective tranche. As of September 30, 2025 and December 31, 2024, this methodology incorporates Level 3 inputs, including the probability of a change of control event occurring during the investment term, an assumed interest rate volatility of 42.5 % and 40.0 %, respectively, and an assumed risk-adjusted discount rate of 11.5 % and 11.1 %, respectively. We also assumed probabilities for the occurrence of each regulatory or clinical milestone, which impacts the availability of each future tranche of funding. Our estimate of expectation of the probability and timing of the occurrence of a change of control event, the risk-adjusted discount rate, the interest rate volatility and the probabilities of each underlying milestone could reasonably be different than the assumptions selected by a market participant, which would mean that the estimated fair value could be significantly higher or lower. MorphoSys Development Funding Bonds We estimated the fair value of the MorphoSys Development Funding Bonds as of December 31, 2024 based on a discounted cash flow calculation using estimated risk-adjusted discount rates, which are Level 3 inputs. Our estimate of the risk adjusted discount rates could reasonably be different than the discount rates selected by a market participant, which would mean that the estimated fair value could be significantly higher or lower. The MorphoSys Development Funding Bonds were sold in January 2025. Employee EPAs In connection with the Internalization, we recognized a liability related to the fair value of the Employee EPAs for the portion of the share-based compensation arrangement attributable to services rendered prior to the Internalization. We will increase the liability as we recognize share-based compensation expense for the remaining Employee EPAs attributable to the post-Internalization service-based vesting period. We remeasure the liability at fair value at each reporting date with changes recognized as share-based compensation expense. We estimated the fair value of the Employee EPAs as of the closing date of the Internalization and as of September 30, 2025 by using a Monte Carlo simulation under the option pricing framework, which is derived from the fair value of all of the underlying investments within the respective portfolio. The Monte-Carlo model also simulates the probability of satisfying the performance and return thresholds required for EPAs. See below for additional description of the Monte Carlo methodology. 20 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Fair Value Disclosure of Financial Assets Not Measured at Fair Value Financial royalty assets are not measured at fair value. Instead, they are measured and carried at amortized cost using the effective interest method on the condensed consolidated balance sheets. Financial royalty assets do not include our entire portfolio of investments, and specifically exclude the following: 1. development-stage product candidates where the funding was (i) expensed as upfront R&D upon acquisition (e.g., Trodelvy and Nurtec ODT), (ii) expensed as ongoing R&D (e.g., our funding arrangement for litifilimab with Biogen) or (iii) treated as a derivative instrument (e.g., CK-586); and 2. contractual funding arrangements (e.g., the MorphoSys Development Funding Bonds and the Cytokinetics Funding Arrangements), which are accounted for as available for sale debt securities. We used a Monte Carlo simulation under the option pricing framework to calculate the fair value of our portfolio of financial royalty assets for disclosure as of September 30, 2025 and December 31, 2024. In 2024, we refined our methodology to calculate the fair value given the growing complexity of our royalty investments, which may include features such as milestone payments, royalty tiers, caps, and floors that could alter the cash flows based on future commercial, clinical or regulatory outcomes. The Monte Carlo model allows us to simulate a range of different outcomes based on various inputs, primarily the underlying projected product sales of each royalty bearing product, to project the cash flows, including royalty receipts and milestone payments, based on each of the simulated sales scenarios. The Monte Carlo methodology also takes volatility at the sales level into consideration. The fair value of financial royalty assets disclosed herein is classified as Level 3 within the fair value hierarchy since it is determined based on inputs that are both significant and unobservable. As of September 30, 2025, the estimated fair values of the current and non-current portions of financial royalty assets were $ 0.9 billion and $ 22.8 billion, respectively. As of September 30, 2025, approximately 8 % of the current portion and 7 % of the non-current portion of the financial royalty assets was attributable to the legacy non-controlling interests. As of December 31, 2024, the estimated fair values of the current and non-current portions of financial royalty assets were $ 0.8 billion and $ 21.4 billion, respectively. As of December 31, 2024, approximately 9 % of the current portion and 8 % of the non-current portion of the financial royalty assets was attributable to the legacy non-controlling interests. 8. Financial Royalty Assets Financial royalty assets consist of contractual rights to cash flows relating to royalties 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. 21 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 are as follows (in thousands): As of September 30, 2025 Estimated Royalty Duration (1) Gross Carrying Value Cumulative Allowance for Changes in Expected Cash Flows (Note 9) Net Carrying Value (4) Cystic fibrosis franchise 2039-2041 (2) $ 4,962,998 $ — $ 4,962,998 Evrysdi 2035-2036 2,103,747 ( 444,108 ) 1,659,639 Trelegy 2029-2030 997,724 — 997,724 Voranigo 2038 976,996 — 976,996 Tremfya 2031-2032 924,526 ( 12,918 ) 911,608 Tysabri (3) 1,184,138 ( 282,736 ) 901,402 Other 2025-2042 8,943,956 ( 2,509,886 ) 6,434,070 Total $ 20,094,085 $ ( 3,249,648 ) $ 16,844,437 Less: Cumulative allowance for credit losses (Note 9) ( 220,690 ) Total current and non-current financial royalty assets, net $ 16,623,747 (1) Durations shown represent our estimates as of the current reporting date of when a royalty will substantially end, which may vary by geography and may depend on clinical trial results, regulatory approvals, contractual terms, commercial developments, estimates of regulatory exclusivity and patent expiration dates (which may include estimated patent term extensions) or other factors. There can be no assurances that our royalties will expire when expected. (2) Royalty is perpetual. We estimate royalty duration of 2039-2041 due to expected Alyftrek patent expiration and potential generic entry thereafter leading to sales decline. (3) Royalty is perpetual. We have applied an end date of 2035 for purposes of accreting income over the royalty term, which is periodically reviewed based on our estimates of impact from biosimilars. (4) The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 9–Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets for additional information. As of September 30, 2025, the balance of $ 16.6 billion above for total current and non-current financial royalty assets, net included $ 1.3 billion in unapproved financial royalty assets held at cost related to frexalimab for $ 522.6 million and other assets, including primarily olpasiran, pelacarsen and olanzapine (TEV-’749). As of December 31, 2024 Estimated Royalty Duration (1) Gross Carrying Value Cumulative Allowance for Changes in Expected Cash Flows (Note 9) Net Carrying Value (4) Cystic fibrosis franchise 2039-2041 (2) $ 5,126,521 $ ( 259,353 ) $ 4,867,168 Evrysdi 2035-2036 2,085,851 ( 378,565 ) 1,707,286 Trelegy 2029-2030 1,121,980 ( 66,647 ) 1,055,333 Tysabri (3) 1,319,298 ( 276,134 ) 1,043,164 Voranigo 2038 946,588 — 946,588 Tremfya 2031-2032 935,069 ( 77,895 ) 857,174 Other 2025-2042 8,164,902 ( 2,492,565 ) 5,672,337 Total $ 19,700,209 $ ( 3,551,159 ) $ 16,149,050 Less: Cumulative allowance for credit losses (Note 9) ( 238,122 ) Total current and non-current financial royalty assets, net $ 15,910,928 (1) Durations shown represent our estimates as of December 31, 2024 of when a royalty will substantially end, which may vary by geography and may depend on clinical trial results, regulatory approvals, contractual terms, commercial developments, estimates of regulatory exclusivity and patent expiration dates (which may include estimated patent term extensions) or other factors. There can be no assurances that our royalties will expire when expected. (2) Royalty is perpetual. We estimate royalty duration of 2039-2041 due to expected Alyftrek patent expiration and potential generic entry thereafter leading to sales decline. (3) Royalty is perpetual. We have applied an end date of 2035 for purposes of accreting income over the royalty term, which is periodically reviewed based on our estimates of impact from biosimilars. (4) The net carrying value by asset is presented before the allowance for credit losses. Refer to Note 9–Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets for additional information. 22 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 9. Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets The cumulative allowance for changes in expected cash flows from financial royalty assets is presented net within the non-current portion of financial royalty assets on the condensed consolidated balance sheets and includes the following: • the movement in the cumulative allowance related to changes in forecasted royalty payments to be received based on royalty bearing products’ projected sales which are primarily derived from sell-side equity research analysts’ consensus sales forecasts, • the write-off of cumulative allowance at the end of a royalty asset’s life which only impacts the condensed consolidated balance sheets, and • the movement in the cumulative allowance for current expected credit losses, primarily associated with new financial royalty assets with limited protective rights and changes in the underlying cash flow forecasts of financial royalty assets with limited protective rights. The following table sets forth the activity in the cumulative allowance for changes in expected cash flows from financial royalty assets, inclusive of the cumulative allowance for credit losses (in thousands): Activity for the Period Balance at December 31, 2024 (1) $ ( 3,789,281 ) Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets ( 547,225 ) Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets 848,736 Current period provision for credit losses, net 17,432 Balance at September 30, 2025 $ ( 3,470,338 ) (1) Includes $ 238.1 million related to cumulative allowance for credit losses. 10. Non-Consolidated Affiliates We have equity investments in certain entities at a level that provide us with significant influence. We account for such investments as equity method investments or as equity securities over which we have elected the fair value option. ApiJect In April 2022, we acquired common stock and a revenue participation right from ApiJect. We elected the fair value option to account for our investments in ApiJect because it is more reflective of current values for such investments. We are also required to purchase additional common stock from ApiJect if certain milestones are achieved. The fair value of our equity investment in ApiJect is recorded within Equity securities and the change in fair value is recorded within (Gains)/losses on equity securities . The fair value of the revenue participation right is recorded within Other assets and the change in fair value is recorded within Other non-operating expenses/(income), net . No amounts were due from or to ApiJect as of September 30, 2025 and December 31, 2024. The Legacy SLP Interest In connection with the Exchange Offer, we acquired a special limited partnership interest in the Legacy Investors Partnerships (the “Legacy SLP Interest”) from the Continuing Investors Partnerships for $ 303.7 million in exchange for issuing shares in our subsidiary. As a result, we became a special limited partner in the Legacy Investors Partnerships. The Legacy SLP Interest entitles us to the equivalent of performance distribution payments that would have been paid to the general partner of the Legacy Investors Partnerships and an income allocation on a similar basis. Our income allocation is equal to the general partner’s former contractual rights to the income of the Legacy Investors Partnerships, net of amortization of the basis difference. The Legacy SLP Interest is accounted for under the equity method as we have the ability to exercise significant influence over the Legacy Investors Partnerships. The Legacy Investors Partnerships no longer participate in investment opportunities from June 30, 2020 and, as such, the value of the Legacy SLP Interest is expected to decline over time. The Legacy Investors Partnerships also indirectly own a non-controlling interest in Old RPI. 23 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The income allocation from the Legacy SLP Interest is based on an estimate as the Legacy Investors Partnerships are private partnerships that report on a lag. Management’s estimate of equity in earnings from the Legacy SLP Interest for the current period will be updated for historical results in the subsequent period. Equity in earnings from the Legacy SLP Interest is recorded within Equity in (earnings)/losses of equity method investees. We recorded income allocations of $ 3.2 million and $ 13.8 million in the third quarter and first nine months of 2025, respectively. We recorded income allocations of $ 10.2 million and $ 5.5 million in the third quarter and first nine months of 2024, respectively. We did not collect any cash receipts from the Legacy SLP Interest in the third quarter of 2025. We collected cash receipts from the Legacy SLP Interest of $ 70.7 million in the first nine months of 2025 which included a one-time distribution in the second quarter of 2025. We collected cash receipts from the Legacy SLP Interest of $ 11.0 million and $ 19.9 million in the third quarter and first nine months of 2024, respectively. The Avillion Entities We account for our partnership interests in Avillion Financing I, LP and its related entities (“Avillion I”) and BAv Financing II, LP and its related entities (“Avillion II” and, together with Avillion I, the “Avillion Entities”) as equity method investments because RPIFT has the ability to exercise significant influence over the Avillion Entities. Equity in earnings from the Avillion Entities is recorded within Equity in (earnings)/losses of equity method investees. We recorded income allocations of $ 12.8 million and $ 11.3 million in the third quarter and first nine months of 2025, respectively. We recorded an income allocation of $ 0.2 million and a loss allocation of $ 7.6 million in the third quarter and first nine months of 2024, respectively. On December 19, 2017, the FDA approved a supplemental New Drug Application for Pfizer’s Bosulif. Avillion I is eligible to receive fixed payments from Pfizer based on this approval under its co-development agreement with Pfizer. The only operations of Avillion I are the collection of cash and unwinding of the discount on the series of fixed annual payments due from Pfizer. We received distributions from Avillion I of $ 13.4 million in each of the first nine months of 2025 and 2024, respectively. In May 2018, we entered into an agreement with Avillion II, which was subsequently amended, to fund a total of $ 155 million over multiple years for a portion of the costs of Phase 2 and 3 clinical trials to advance Airsupra, formerly known as PT027, which was approved by the FDA in January 2023. Avillion II is a party to a co-development agreement with AstraZeneca to develop Airsupra for the treatment of asthma in exchange for royalties, a series of success-based milestones and other potential payments. In the fourth quarter of 2024, Airsupra met the primary endpoint in the Phase 3 clinical trial and triggered a milestone payment of $ 55 million from AstraZeneca to Avillion II, of which we received our pro rata share of approximately $ 27.4 million in the first quarter of 2025. In the third quarter of 2025, the FDA approval of a supplemental new drug application for Airsupra triggered a milestone payable of $ 22 million from AstraZeneca to Avillion II, of which our pro rata portion is approximately $ 11 million. We received distributions of $ 0.9 million and $ 2.0 million from Avillion II related to the Airsupra royalty in the third quarter and first nine months of 2025, respectively. We received the first distribution of $ 0.5 million from Avillion II related to the Airsupra royalty in the third quarter of 2024. Our maximum exposure to loss at any particular reporting date is limited to the carrying value of our equity method investments plus the unfunded commitments. As of September 30, 2025 and December 31, 2024, we had unfunded commitments related to the Avillion Entities of $ 10.3 million. 11. Research and Development Funding Expense R&D funding expense consists of development-stage funding payments that we have made to counterparties to acquire royalties or milestones on product candidates. The payments can be made upfront, as milestones upon the achievement of certain predefined criteria, or over time as the related product candidates undergo clinical trials. In the first quarter of 2025, we entered into an R&D funding arrangement with Biogen to provide $ 250 million over six quarters, including $ 50 million upfront for the development of litifilimab. We did not enter into ongoing R&D funding arrangements in 2024. We recognized R&D funding expense of $ 50.5 million and $ 401.5 million in the third quarter and first nine months of 2025, respectively, primarily related to an upfront payment of $ 250.0 million in the second quarter of 2025 to acquire royalties on daraxonrasib and the R&D funding arrangement for litifilimab. We recognized R&D funding expense of $ 0.5 million and $ 1.5 million in the third quarter and first nine months of 2024, respectively, related to ongoing development-stage funding payments. 24 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) As of September 30, 2025, we had an unfunded commitment of $ 100 million related to the R&D funding arrangement with Biogen for litifilimab. 12. Borrowings Our borrowings consisted of the following (in thousands): Type of Borrowing Date of Issuance Maturity As of September 30, 2025 As of December 31, 2024 Senior Unsecured Notes: $ 1,000,000 , 1.20 % (issued at 98.875 % of par) 9/2020 9/2025 $ — $ 1,000,000 $ 1,000,000 , 1.75 % (issued at 98.284 % of par) 9/2020 9/2027 1,000,000 1,000,000 $ 500,000 , 5.15 % (issued at 98.758 % of par) 6/2024 9/2029 500,000 500,000 $ 1,000,000 , 2.20 % (issued at 97.760 % of par) 9/2020 9/2030 1,000,000 1,000,000 $ 600,000 , 4.45 % (issued at 98.909 % of par) 9/2025 3/2031 600,000 — $ 600,000 , 2.15 % (issued at 98.263 % of par) 7/2021 9/2031 600,000 600,000 $ 500,000 , 5.40 % (issued at 97.872 % of par) 6/2024 9/2034 500,000 500,000 $ 900,000 , 5.20 % (issued at 97.989 % of par) 9/2025 9/2035 900,000 — $ 1,000,000 , 3.30 % (issued at 95.556 % of par) 9/2020 9/2040 1,000,000 1,000,000 $ 1,000,000 , 3.55 % (issued at 95.306 % of par) 9/2020 9/2050 1,000,000 1,000,000 $ 700,000 , 3.35 % (issued at 97.565 % of par) 7/2021 9/2051 700,000 700,000 $ 500,000 , 5.90 % (issued at 97.617 % of par) 6/2024 9/2054 500,000 500,000 $ 500,000 , 5.95 % (issued at 95.824 % of par) 9/2025 9/2055 500,000 — Term Loan See below 7/2026 380,000 — Unamortized debt discount and issuance costs ( 234,265 ) ( 187,574 ) Total debt carrying value 8,945,735 7,612,426 Less: Current portion of long-term debt ( 380,000 ) ( 997,773 ) Total long-term debt $ 8,565,735 $ 6,614,653 Senior Unsecured Notes In September 2025, we issued $ 2.0 billion of senior unsecured notes (the “2025 Notes”). The 2025 Notes were issued at a total discount of $ 45.5 million and we capitalized approximately $ 16.2 million in debt issuance costs, primarily composed of underwriting fees. The 2025 Notes were issued with a weighted average coupon rate and a weighted average effective interest rate of 5.16 % and 5.61 %, respectively. In June 2024, we issued $ 1.5 billion of senior unsecured notes (the “2024 Notes”). The 2024 Notes were issued at a total discount of $ 28.8 million and we capitalized approximately $ 12.6 million in debt issuance costs primarily composed of underwriting fees. The 2024 Notes were issued with a weighted average coupon rate and a weighted average effective interest rate of 5.48 % and 5.92 %, respectively. We issued $ 1.3 billion and $ 6.0 billion of senior unsecured notes in 2021 (the “2021 Notes”) and 2020 (the “2020 Notes” and, collectively with the “2021 Notes”, “2024 Notes” and “2025 Notes”, the “Notes”), respectively. The 2021 Notes and 2020 Notes were issued at a total discount of $ 176.4 million and we capitalized approximately $ 52.7 million in debt issuance costs primarily composed of underwriting fees. The 2021 Notes were issued with a weighted average coupon rate and a weighted average effective interest rate of 2.80 % and 3.06 %, respectively. The 2020 Notes were issued with a weighted average coupon rate and a weighted average effective interest rate of 2.13 % and 2.50 %, respectively. Through September 30, 2025, we have repaid $ 2.0 billion of the 2020 Notes upon maturity. Interest on each series of the Notes accrues at the respective rate per annum and is payable semi-annually in arrears in March and September of each year. The first interest payment for the 2025 Notes will be in March 2026. 25 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The Notes may be redeemed at our option at a redemption price equal to the greater of (i) 100 % of the principal amount of the Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semiannual basis at the treasury rate, plus a make-whole premium as defined in the indenture. In each case, accrued and unpaid interest is also required to be redeemed to the date of redemption. Upon the occurrence of a change of control triggering event and downgrade in the rating of our Notes by two of three credit agencies, the holders may require us to repurchase all or part of their Notes at a price equal to 101 % of the aggregate principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to the date of repurchase. Our obligations under the Notes are fully and unconditionally guaranteed by RP Holdings and RP Manager, our non-wholly owned subsidiaries. We are required to comply with certain covenants under our Notes and as of September 30, 2025, we were in compliance with all applicable covenants. As of September 30, 2025 and December 31, 2024, the fair value of our outstanding Notes using Level 2 inputs was approximately $ 7.8 billion and $ 6.5 billion , respectively. Term Loan In connection with the Internalization, RP Holdings and RP Manager were each joined as a borrower under RPM’s then existing $ 380 million term loan (the “Term Loan”) with Bank of America, N.A (as amended, the “Loan Agreement”). Pablo Legorreta, Legorreta Investments, LLC and Legorreta Investments II LLC are guarantors under the Term Loan. Upon the closing of the Internalization, RPM was released as a borrower under the Term Loan. In the third quarter of 2025, the Loan Agreement was amended to accelerate the maturity of the Term Loan to July 31, 2026 and decrease the applicable interest rate. Following the amendment, the Term Loan is subject to an interest rate, at our option, of either (i) the Daily SOFR plus 1.25 % or (ii) Term SOFR plus 1.25 %, each as defined in the Loan Agreement. Interest is payable in arrears quarterly. We made the first interest payment in the third quarter of 2025. As of September 30, 2025, the carrying value of the Term Loan approximates fair value, as the interest rate is variable and reflects current market rates. The Term Loan is subject to certain customary covenants, that among other things, require us to maintain (i) a Consolidated Leverage Ratio, (ii) a Consolidated Coverage Ratio, and (iii) a Consolidated Portfolio Cash Flow Ratio, each as described further below under the description of the Credit Agreement that governs the Revolving Credit Facility. Senior Unsecured Revolving Credit Facility Our subsidiary, RP Holdings, as borrower, initially entered into the Amended and Restated Revolving Credit Agreement (the “Credit Agreement”) on September 15, 2021, which provides for an unsecured revolving credit facility (the “Revolving Credit Facility”). Amendment No. 3 to the Credit Agreement, which was entered into on December 22, 2023, increased the borrowing capacity to $ 1.8 billion for general corporate purposes with $ 1.69 billion of the revolving commitments maturing on December 22, 2028 and the remaining $ 110.0 million of revolving commitments maturing on October 31, 2027. On January 24, 2024 and April 8, 2025, we entered into Amendments No. 4 and 5, respectively, to the Credit Agreement to make certain technical modifications. As of September 30, 2025 and December 31, 2024, there were no outstanding borrowings under the Revolving Credit Facility. The Revolving Credit Facility is subject to an interest rate, at our option, of either (a) a base rate determined by reference to the highest of (1) the administrative agent’s prime rate, (2) the federal funds rate plus 0.5 % and (3) Term SOFR plus 1 % or (b) Daily SOFR, Term SOFR, the Alternative Currency Term Rate or the Alternative Currency Daily Rate (each as defined in the Credit Agreement), plus in each case, the applicable margin. The applicable margin for the Revolving Credit Facility varies based on our public debt rating. Accordingly, the interest rates for the Revolving Credit Facility fluctuate during the term of the facility based on changes in the applicable interest rate and future changes in our public debt rating. 26 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The Credit Agreement that governs the Revolving Credit Facility and the amended loan agreement that governs the Term Loan contain certain customary covenants, that among other things, require us to maintain (i) a Consolidated Leverage Ratio at or below 4.00 to 1.00 (or at or below 4.50 to 1.00 following a qualifying material acquisition) of consolidated funded debt to Adjusted EBITDA, each as defined and calculated as set forth in the Credit Agreement, (ii) a Consolidated Coverage Ratio at or above 2.50 to 1.00 of Adjusted EBITDA to consolidated interest expense, each as defined and calculated as set forth in the Credit Agreement and (iii) a Consolidated Portfolio Cash Flow Ratio at or below 5.00 to 1.00 (or at or below 5.50 to 1.00 following a qualifying material acquisition) of consolidated funded debt to Portfolio Cash Flow, each as defined and calculated as set forth in the Credit Agreement. All obligations under the Revolving Credit Facility are unconditionally guaranteed by us. Noncompliance with the leverage ratio, Portfolio Cash Flow ratio and interest coverage ratio covenants under the Credit Agreement could result in our lenders requiring us to immediately repay all amounts borrowed. The Credit Agreement includes customary covenants for credit facilities of this type that limit our ability to engage in certain activities, such as incurring additional indebtedness, paying dividends, making certain payments and acquiring and disposing of assets. We were in compliance with the financial covenants as of September 30, 2025. Uncommitted Credit Facility In August 2025, we entered into an uncommitted line of credit agreement with Société Générale (the “Uncommitted Credit Facility”) which provides for an aggregate borrowing capacity of up to $ 350.0 million for general corporate purposes within a quarter. As of September 30, 2025, there were no outstanding borrowings under the Uncommitted Credit Facility. Principal Payments on the Borrowings The future principal payments for our borrowings as of September 30, 2025 are as follows (in thousands): Year Principal Payments Remainder of 2025 $ — 2026 380,000 2027 1,000,000 2028 — 2029 500,000 Thereafter 7,300,000 Total (1) $ 9,180,000 (1) Excludes unamortized debt discount and issuance costs of $ 234.3 million as of September 30, 2025, which are amortized through interest expense over the remaining life of the underlying debt obligations. 13. Earnings per Share In the third quarter and first nine months of 2025, Class B ordinary shares contingently issuable for the EPAs were evaluated and included in the diluted earnings per share computation as certain conditions were met. In the third quarter and first nine months of 2024, Class B ordinary shares contingently issuable for the EPAs were evaluated and were determined not to have any dilutive impact. In the second quarter of 2025, we issued 24.5 million RP Holdings Class E Interests and an equal number of Royalty Pharma plc Class B ordinary which, upon vesting, are exchangeable on a one -for-one basis for Royalty Pharma plc Class A ordinary shares. We use the “if-converted” method to determine the potentially dilutive effect related to the RP Holdings Class E Interests. 27 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table sets forth reconciliations of the numerators and denominators used to calculate basic and diluted earnings per Class A ordinary share (in thousands, except per share amounts): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Numerator Consolidated net income $ 444,211 $ 806,358 $ 968,279 $ 996,462 Less: Net income attributable to the Continuing Investors Partnerships 83,014 175,399 169,443 209,844 Less: Net income attributable to the Legacy Investors Partnerships 53,911 86,972 179,704 135,849 Less: Net income attributable to the Founder’s Equity (1) 2,886 — 45,325 — Less: Net income attributable to the RP Holdings Class E Interests Holders 16,183 — 17,065 — Net income attributable to Royalty Pharma plc - basic 288,217 543,987 556,742 650,769 Add: Reallocation of net income attributable to the Continuing Investors Partnerships from the assumed exchanges of Class B ordinary shares 83,014 175,399 169,443 209,844 Add: Reallocation of net income attributable to the Holders of RP Holdings Class E Interests from the assumed exchanges of eligible Class B ordinary shares 1,160 — 1,223 — Net income attributable to Royalty Pharma plc - diluted $ 372,391 $ 719,386 $ 727,408 $ 860,613 Denominator Weighted average Class A ordinary shares outstanding - basic 431,887 447,628 430,281 449,085 Add: Dilutive effects as shown separately below Assumed exchanges of Class B ordinary shares by the Continuing Investors Partnerships 125,828 145,085 135,324 146,576 Unvested RSUs 58 13 20 22 Shares contingently issuable for the Equity Performance Awards 79 — 240 — Assumed exchanges of eligible Class B ordinary shares by the Holders of RP Holdings Class E Interests 1,759 — 889 — Weighted average Class A ordinary shares outstanding - diluted 559,611 592,726 566,754 595,683 Earnings per Class A ordinary share - basic $ 0.67 $ 1.22 $ 1.29 $ 1.45 Earnings per Class A ordinary share - diluted $ 0.67 $ 1.21 $ 1.28 $ 1.44 (1) Amounts represent the entirety of the EPAs prior to the Internalization and only the Founder’s Equity portion after the Internalization. 28 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 14. Indirect Cash Flow Adjustments to reconcile consolidated net income to net cash provided by operating activities are summarized below (in thousands): For the Nine Months Ended September 30, 2025 2024 Cash flow from operating activities: Consolidated net income $ 968,279 $ 996,462 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Income from financial royalty assets ( 1,668,720 ) ( 1,587,577 ) Provision for changes in expected cash flows from financial royalty assets ( 318,943 ) 568,425 Provision for credit losses on unfunded commitments 93,301 — Share-based compensation 164,126 1,819 Amortization of debt discount and issuance costs 16,724 14,256 Gains on derivative financial instruments ( 1,000 ) ( 3,000 ) Losses/(gains) on equity securities 57,568 ( 81,455 ) Equity in (earnings)/losses of equity method investees ( 25,084 ) 2,039 Distributions from equity method investees 13,396 13,396 Amortization of prepaid expenses 4,371 — Gains on available for sale debt securities ( 21,779 ) ( 103,900 ) Depreciation 2,656 — Other 4,819 ( 1,801 ) Changes in operating assets and liabilities: Cash collected on financial royalty assets 2,438,620 2,205,933 Other royalty income receivable ( 1,945 ) ( 2,496 ) Other current assets ( 4,523 ) 13,068 Other assets 383 — Accounts payable and accrued liabilities 14,604 3,582 Interest payable ( 72,840 ) ( 13,270 ) Other liabilities ( 1,338 ) 980 Net cash provided by operating activities $ 1,662,675 $ 2,026,461 Non-cash investing and financing activities are summarized below (in thousands): For the Nine Months Ended September 30, 2025 2024 Milestone payable - Cobenfy (1) $ — $ 25,000 Milestone payable - Erleada (1) — 6,200 (1) Related to the achievements of milestone payments on Cobenfy and Erleada that were not paid as of September 30, 2024. 15. Commitments and Contingencies BeOne Medicines Funding Commitments In August 2025, we entered into a funding arrangement with BeOne Medicines (“BeOne”) for up to $ 950 million, including an upfront payment of $ 885 million for the purchase of a royalty on Imdelltra. BeOne has the option to sell to us additional royalties on Imdelltra for up to $ 65 million within twelve months from the acquisition date. As of September 30, 2025, BeOne has not exercised the option. 29 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Revolution Medicines Funding Commitments In June 2025, we entered into a two part funding arrangement for up to $ 2 billion with Revolution Medicines, Inc. (“Revolution Medicines”). The funding arrangement is comprised of the purchase of a royalty on daraxonrasib and a senior secured term loan. The royalty purchase is comprised of five $ 250 million tranches, totaling up to $ 1.25 billion. Out of the five tranches, the first tranche was funded upon closing. Revolution Medicines is required to draw the second tranche upon the occurrence of a certain clinical milestone and has the option to draw the remaining tranches upon the achievement of certain clinical, regulatory, or sales-based milestones. As of September 30, 2025, $ 1 billion of the royalty remained unfunded. The term loan is comprised of three $ 250 million tranches, totaling up to $ 750 million. Out of the three tranches, Revolution Medicines is required to draw the first tranche upon the occurrence of a certain regulatory milestone and has the option to draw the remaining tranches upon the achievement of certain sales-based milestones. As of September 30, 2025,$ 750 million of the term loan remained unfunded. We recorded an allowance for credit losses on the unfunded portions of the funding arrangements with Revolution Medicines and BeOne based on our estimate of probability of future funding as we have limited protective rights with respect to each unfunded portion once the funding is provided. We estimated the credit loss allowance using the probability of default and loss given default method. Accordingly, we recorded an allowance for credit losses of $ 93.3 million within Other liabilities on the condensed consolidated balance sheet and a provision for credit losses of the same amount in the first nine months of 2025 within Provision for credit losses on unfunded commitments in the condensed consolidated statements of operations. We reassess our estimate as of each reporting date and any subsequent change to such allowance, which can be income or expense, is reflected within Provision for credit losses on unfunded commitments in the condensed consolidated statements of operations. Cytokinetics Funding Commitments As of September 30, 2025, $ 275 million remained available under the Cytokinetics Funding Commitments. Leases In connection with the Internalization, we entered into an operating lease agreement for office spaces. The lease agreement has a non-cancelable term through October 31, 2031 and a five-year extension option. The extension option is not recognized as part of our right of use assets and lease liabilities. As of September 30, 2025, we have recognized $ 19.8 million of right of use assets within Other assets and $ 16.9 million of lease liabilities within Other liabilities on the condensed consolidated balance sheet. As of September 30, 2025, the future minimum lease payments under the non-cancelable operating lease are as follows (in thousands): Year Payments Remainder of 2025 $ 1,011 2026 4,053 2027 3,776 2028 3,721 2029 3,726 Thereafter 6,884 Total lease payments 23,171 Less: imputed interest ( 3,152 ) Present value of lease liabilities $ 20,019 30 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Other Commitments We have commitments to advance funds to counterparties through our investment in the Avillion Entities and R&D arrangements. Please refer to Note 10–Non-Consolidated Affiliates and Note 11–Research and Development Funding Expense for details of these arrangements. Indemnifications In the ordinary course of our business, we may enter into contracts or agreements that contain customary indemnifications relating to such things as confidentiality agreements and representations as to corporate existence and authority to enter into contracts. The maximum exposure under such agreements is indeterminable until a claim, if any, is made. However, no such claims have been made against us to date and we believe that the likelihood of such proceedings taking place in the future is remote. Legal Proceedings We are a party to legal actions with respect to a variety of matters in the ordinary course of business. Some of these proceedings may be based on complex claims involving substantial uncertainties and unascertainable damages. Unless otherwise noted, it is not possible to determine the probability of loss or estimate damages, and therefore we have not established accruals for any of these proceedings on our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024. When we determine that a loss is both probable and reasonably estimable, we record a liability, and, if the liability is material, we disclose the amount of the liability reserved. We do not believe the outcome of any existing legal proceedings to which we are a party, either individually or in the aggregate, will adversely affect our business, financial condition or results of operations. Beginning in the second quarter of 2025, we did not receive from Vertex the full amount of royalty receipts on Alyftrek net sales to which we believe that we are contractually entitled. Accordingly, in the second quarter of 2025, we commenced the dispute resolution procedures contemplated by the agreements relating to our royalties on Vertex’s cystic fibrosis products. Any amounts receivable by us, if any, in connection with this dispute will be recognized only upon the resolution of the matter in our favor. 16. Related Party Transactions Internalization On May 16, 2025, we acquired from the Sellers all of the equity interests in RP Manager. The Sellers include Pablo Legorreta, RPM I, LLC and RP MIP Holdings. Pablo Legorreta is a managing member of the Legacy Manager, holds an interest in us, and serves as our Chief Executive Officer and Chairman of our board of directors. The equity interest holders of RP MIP Holdings include our named executive officers. The Sellers received cash and equity consideration, with the equity consideration subject to vesting conditions. Refer to Note 3–Internalization for additional discussion. Payments to Legacy Manager Prior to the Internalization, we paid a quarterly operating and personnel payment to RPM or its affiliates pursuant to the Management Agreement equal to 6.5 % of the cash receipts from Royalty Investments (as defined in the Management Agreement) for such quarter and 0.25 % of the value of our security investments under GAAP as of the end of such quarter (“Operating and Personnel Payments”). We also paid certain costs and expenses of RPM. After the Internalization, we no longer pay Operating and Personnel Payments or RPM’s costs and expenses. Total operating and personnel payments incurred, including the amounts attributable to Old RPI, which is an obligation of Legacy Investors Partnerships, are recognized within General and administrative expenses in the condensed consolidated statements of operations. Total operating and personnel payments recognized in the third quarter and first nine months of 2025 were $ 1.1 million and $ 114.7 million, respectively. Total operating and personnel payments recognized in the third quarter and first nine months of 2024 were $ 49.5 million and $ 138.9 million, respectively. 31 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Payments from Legacy Manager After the Internalization, we entered into an agreement with RPM to provide administrative services in exchange for a fee. In the third quarter and first nine months of 2025, we did not recognize material income related to this agreement. Distributions Payable to Non-Controlling Interests The Distributions payable to non-controlling interests includes the contractual cash flows required to be distributed to the Legacy Investors Partnerships based on their non-controlling interest in Old RPI and the unpaid portion of the distributions for Equity Performance Awards attributable to the Founder’s Equity as of quarter end. Refer to Note 5–Shareholders’ Equity for additional discussion of the Equity Performance Awards. The distributions payable to non-controlling interests consists of the following (in thousands): As of September 30, 2025 As of December 31, 2024 Payable to Founder $ 1,356 $ — Payable to Legacy Investors Partnerships 75,866 75,811 Total distributions payable to non-controlling interests $ 77,222 $ 75,811 Acquisition from Bristol Myers Squibb In November 2017, RPI Acquisitions (Ireland), Limited (“RPI Acquisitions”), a consolidated subsidiary, entered into a purchase agreement with Bristol Myers Squibb (“BMS”) to acquire from BMS a percentage of its future royalties on worldwide sales of Onglyza, Farxiga and related diabetes products marketed by AstraZeneca (the “BMS Purchase Agreement”). On December 8, 2017, RPI Acquisitions entered into a purchase, sale and assignment agreement (“Assignment Agreement”) with a wholly-owned subsidiary of BioPharma Credit PLC (“BPCR”), an entity related to us. Under the terms of the Assignment Agreement, RPI Acquisitions assigned the benefit of 50 % of the payment stream acquired from BMS to BPCR in consideration for BPCR meeting 50 % of the funding obligations owed to BMS under the BMS Purchase Agreement. As of September 30, 2025 and December 31, 2024, the financial royalty asset of $ 18.7 million and $ 44.7 million, respectively, on the condensed consolidated balance sheets represented only our right to the future payment streams acquired from BMS. Other Transactions In January 2024, we acquired a royalty interest in ecopipam which was previously owned by Psyadon Pharmaceuticals, Inc. (“Psyadon”). Errol De Souza, Ph.D., an independent director on our board of directors, was a shareholder of Psyadon. In connection with this transaction, Dr. De Souza received an upfront payment of $ 2.5 million and could receive milestone payments of up to $ 2.22 million in the future. Henry Fernandez was the lead independent director of our board of directors through August 13, 2025 and serves as the chairman and chief executive officer of MSCI. On April 16, 2021, we entered into an agreement with MSCI with an initial term of seven years to develop thematic life sciences indexes. In return, we will receive a percentage of MSCI’s revenues from those indexes. No amounts were due from MSCI as of September 30, 2025 and December 31, 2024. The financial impact associated with this transaction has not been material to date. In connection with the Exchange Offer, we acquired the Legacy SLP Interest from the Continuing Investors Partnerships in exchange for issuing shares in our subsidiary. As a result, we became a special limited partner in the Legacy Investors Partnerships. The Legacy Investors Partnerships own a non-controlling interest in Old RPI. Refer to Note 10–Non-Consolidated Affiliates for additional discussion of the Legacy SLP Interest and our investments in other non-consolidated entities. RPIFT owns 27,210 limited partnership interests in the Continuing Investors Partnerships, whose only substantive operations are their investment in our subsidiaries. The total investment of $ 4.3 million was recorded as treasury interests, of which $ 1.7 million and $ 1.6 million were held by non-controlling interests as of September 30, 2025 and December 31, 2024, respectively. 32 ROYALTY PHARMA PLC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Each Continuing Investor Partnership and the Holders of RP Holdings Class E Interests is responsible for a pro rata portion based on its ownership percentage of RP Holdings of any costs and expenses in connection with the contemplation of, formation of, listing and ongoing operation of us and any of our subsidiaries, including any third-party expenses of managing us and any of our subsidiaries, such as accounting, audit, legal, reporting, compliance, administration (including directors’ fees), financial advisory, consulting, investor relations and insurance expenses relating to our affairs and those of any subsidiary. 17. Subsequent Event In November 2025, we acquired a royalty interest in Amvuttra from Blackstone for $ 310 million. 33 Item 2. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations, cash flows, other changes in financial condition and business performance. MD&A is provided as a supplement to, and should be read in conjunction with, our 2024 Annual Report on Form 10-K and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Special Note Regarding Forward-Looking Statements included elsewhere in this Quarterly Report on Form 10-Q and in Part II, Item 1A. Risk Factors. Royalty Pharma plc is a public limited company that is incorporated under the laws of England and Wales and is a holding company. “Royalty Pharma,” the “Company,” “we,” “us” and “our” refer to Royalty Pharma plc and its subsidiaries on a consolidated basis. Our principal asset is a controlling equity interest in Royalty Pharma Holdings Ltd (“RP Holdings”), a private limited company incorporated under the laws of England and Wales. We conduct our business through RP Holdings and its subsidiaries. Business Overview We are the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry. Since our founding in 1996, we have been pioneers in the royalty market, collaborating with innovators from academic institutions, research hospitals and not-for-profits through small and mid-cap biotechnology companies to leading global pharmaceutical companies. We have assembled a portfolio of royalties which entitles us to payments based directly on the top-line sales of many of the industry’s leading therapies, which includes royalties on more than 35 commercial products, including Vertex’s Trikafta and Alyftrek, Johnson & Johnson’s Tremfya, GSK’s Trelegy, Roche’s Evrysdi, Servier’s Voranigo, Biogen’s Tysabri and Spinraza, AbbVie and Johnson & Johnson’s Imbruvica, Astellas and Pfizer’s Xtandi, Pfizer’s Nurtec ODT, and Gilead’s Trodelvy, among others, and 17 development-stage product candidates. We fund innovation in the biopharmaceutical industry both directly and indirectly - directly when we partner with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, and indirectly when we acquire existing royalties from the original innovators. Background and Format of Presentation RP Holdings is owned by Royalty Pharma plc and, indirectly, by various partnerships (the “Continuing Investors Partnerships”) and, in addition, post-Internalization (as defined below), by the Holders of RP Holdings Class E Interests (as defined below). RP Holdings is the sole owner of Royalty Pharma Investments 2019 ICAV (“RPI 2019 ICAV”), which is an Irish collective asset management vehicle and is the successor to Royalty Pharma Investments, an Irish unit trust. In 2022, we became an indirect owner of an 82 % economic interest in Royalty Pharma Investments ICAV, which was previously owned directly by Royalty Pharma Investments. In connection with the Internalization, Royalty Pharma Investments distributed all of its assets to Royalty Pharma Investments 2011 ICAV (together with Royalty Pharma Investments ICAV, “Old RPI”). We consummated an exchange offer on February 11, 2020 (the “Exchange Offer”) to facilitate our initial public offering (“IPO”). Prior to the Exchange Offer, Royalty Pharma Investments was owned by various partnerships (the “Legacy Investors Partnerships”). Through the Exchange Offer, investors which represented 82% of the aggregate limited partnership in the Legacy Investors Partnerships exchanged their limited partnership interests in the Legacy Investors Partnerships for limited partnership interests in RPI US Partners 2019, LP and RPI International Holdings 2019, LP which are part of the Continuing Investors Partnerships. Following the Exchange Offer, we became the indirect owner of an 82% economic interest in Royalty Pharma Investments which entitled us to 82% of the economics of its wholly-owned subsidiary RPI Finance Trust, a Delaware statutory trust (“RPIFT”) and 66% of Royalty Pharma Collection Trust, a Delaware statutory trust (“RPCT”). In December 2023, we acquired the remaining 34% interest in RPCT owned by Royalty Pharma Select Finance Trust, a Delaware statutory trust (“RPSFT”). 34 Prior to Internalization (as defined below), we were externally managed by RP Management, LLC, a Delaware limited liability company (the “Legacy Manager” or “RPM”), pursuant to advisory and management agreements (collectively, the “Management Agreement”). On January 10, 2025, we entered into an agreement (as amended, the “Purchase Agreement”) with RPM, Royalty Pharma Manager, LLC, a Delaware limited liability company (“RP Manager”) and the Sellers (as defined below). Pursuant to the Purchase Agreement, RPM contributed substantially all of its previously held assets and liabilities to RP Manager and we agreed to acquire all of the equity interests of RP Manager from the Sellers (such transaction, the “Internalization”). The Sellers include our founder, chief executive officer and chairman, Pablo Legorreta, RPM I, LLC and RP MIP Holdings, LLC (“RP MIP Holdings”), as the former equity owners of RPM. The equity interest holders of RP MIP Holdings include our named executive officers and certain employees of the Legacy Manager, who became employees of Royalty Pharma, LLC, a wholly-owned subsidiary of RP Holdings, in connection with the Internalization. We completed the acquisition of RP Manager on May 16, 2025. Understanding Our Financial Reporting Our portfolio of investments contains royalties and royalty-like terms held through different forms or instruments. Most of the royalties we acquire are treated as investments in cash flow streams and are classified as financial assets measured under the effective interest method in accordance with generally accepted accounting principles in the United States (“GAAP”). Under this accounting methodology, we calculate the effective interest rate on each financial royalty asset using a forecast of the expected cash flows to be received over the life of the financial royalty asset relative to the initial acquisition price. The yield, which is calculated at the end of each reporting period and applied prospectively, is then recognized via accretion into our income at the effective rate of return over the expected life of the financial royalty asset. The measurement of income from our financial royalty assets requires significant judgments and estimates, including management’s judgment in forecasting the expected future cash flows of the underlying royalties and the expected duration of each financial royalty asset. Our cash flow forecasts are updated each reporting period primarily using sell-side equity research analysts’ consensus sales estimates. We then calculate our expected royalty receipts by applying our royalty terms to these consensus sales forecasts. As we update our forecasted cash flows on a periodic basis and recalculate the present value of the remaining future cash flows, any shortfall when compared to the carrying value of the financial royalty asset is recorded directly in the condensed consolidated statements of operations as non-cash provision expense. If, in a subsequent period, there is an increase in expected cash flows or if actual cash flows are greater than cash flows previously expected, we reverse the provision expense previously recorded in part or in full by recording a non-cash credit to the provision, or provision income. As a result of the non-cash charges associated with applying the effective interest method accounting methodology to our financial royalty assets, our condensed consolidated statements of operations activity can be volatile and unpredictable. Small declines in sell-side equity research analysts’ consensus sales forecasts over a long time horizon can result in an immediate non-cash income statement expense recognition, even though the applicable cash inflows will not be realized for many years into the future. For example, in late 2014 we acquired the cystic fibrosis franchise and shortly after, declines in near-term sales forecasts of sell-side equity research analysts caused us to recognize non-cash provision expense in our condensed consolidated statements of operations. Over the course of the next 10 quarters, we continued to recognize non-cash provision expense because of these changes in sales forecasts, ultimately reaching a peak cumulative allowance of $1.30 billion by September 30, 2017. With the approval of Vertex’s Trikafta, in October 2019, sell-side equity research analysts’ consensus sales forecasts increased to reflect the larger addressable market and the extension of the expected duration of the Trikafta royalty, resulting in the reversal of the remaining $1.10 billion cumulative allowance. The recognition of the associated non-cash provision income of $1.10 billion in 2019 was not tied to royalty receipts, but rather to the increase in sales forecasts due to the U.S. Food and Drug Administration (“FDA”) approval of Trikafta. This example illustrates the volatility caused by our accounting model in our condensed consolidated statements of operations. We believe there is no direct correlation between income from financial royalty assets and royalty receipts due to the nature of the accounting methodology applied for financial royalty assets. Further, income from financial royalty assets and the provision for changes in expected cash flows related to these financial royalty assets can be volatile and unpredictable. 35 Our operations have historically been financed primarily with cash flows generated by our royalties. Given the importance of cash flows and their predictability to management’s operation of the business, management uses Portfolio Receipts (as defined below) as a primary measure of our operating performance. See “ — Portfolio Overview” for additional discussion regarding Portfolio Receipts. Understanding Our Results of Operations We report non-controlling interests related to the portion of ownership interests of consolidated subsidiaries not owned by us and which are attributable to: 1. The Legacy Investors Partnerships’ ownership of approximately 18% in Old RPI, which is the only remaining historical non-controlling interest that existed prior to our IPO. The value of this non-controlling interest will continue to decline over time as the assets in Old RPI expire. The Legacy Investors Partnerships are referred to as the “legacy non-controlling interests.” 2. The Continuing Investors Partnerships’ indirect ownership in RP Holdings through their indirect ownership of RP Holdings’ Class B ordinary shares (the “RP Holdings Class B Interests”). RP Holdings Class B Interests are exchangeable into our Class A ordinary shares. As the Continuing Investors Partnerships conduct exchanges, the Continuing Investors Partnerships’ ownership in RP Holdings decreases and the value of this non-controlling interest decreases. 3. Pablo Legorreta’s ultimate ownership of the RP Holdings’ Class C ordinary share (the “RP Holdings Class C Special Interest”) which entitles him to receive Equity Performance Awards (“Founder’s Equity”).