Insight
Futch: Orphan drugs preserve pricing power because rare disease costs are negligible to insurers
“The drugs are very expensive, but it's a very small line item on any insurance plan as opposed to cholesterol or diabetes or things that affect millions and millions of patients. So your pricing power there is better and therefore makes it more attractive and …”
Insight
Futch: Healthcare royalty diligence eliminates binary risks to focus on commercial risk
“Those three risks, the patents, manufacturing, and regulatory, are really what we view as potential binary risk. So if the product For safety reasons, gets pulled from the market because it's, have some significant side effect. That's a problem for us because …”
Insight
Futch says medical device patents can be circumvented, unlike chemical entities
“And device, typically, you can engineer around the patent, you can do it a different way. If you have a patent on the chemical entity, there's really no way to get around that.”
Insight
Futch argues dominant commercial marketing can make mediocre pharmaceutical products successful
“And you can also have a product that's maybe okay, maybe not great, maybe it's not high science, but if you have a marketing company that dominates a certain area, they can do very well with those products. We've seen that in the dermatology area, for example.”
Disclosure
Futch: HCR avoids board seats and management changes
“We don't sit on boards. Typically we don't change out management. On a very rare occasion, we've had to step in and be involved, but not very often. It's not what we're set up to do. We're not a loan to own type of investor.”
Assertion Not checkable as stated
Futch says US drug pricing headwinds spare only oncology and orphan diseases
“Pricing headwinds in the U.S. That really applies to almost all therapeutic categories other than Orphan and oncology.”
Opinion
Futch says 80% to 90% of royalty capital sits with top managers
“80, 90% of the capital that's available is probably in the hands of the top. Five, six, seven people, so it's still relatively concentrated.”
Insight
Futch: Biopharma Companies Now Value Deal Certainty Over Lowest Capital Cost
“What seems to be very clear already is that companies are valuing cash, access to capital, certainty of close, and it's not just about lowest cost of capital. If you went back a year or two years for sure, and the more credit oriented type deals in our market,…”
Assertion Supported
Futch: Royalty monetization transaction volume grew from $150M to $9B
“The first year I was there, I think the total amount of transaction volume of all deals added up together for the whole year was like one hundred fifty million dollars. So really, really small. It's subsequently grown last year's about nine billion dollars of …”
Assertion Supported
Futch: 70% of drugs sold by big pharma originated at small companies
“What's happened over the last almost three decades now is that ratio has inverted such that today, the last estimate I saw was 70% of the products sold by the large companies have been invented at small companies.”
Disclosure
Futch: 90% of Healthcare Royalty Partners' investments are FDA-approved products
“And that's the key for us, 90% of what we do are products that have been approved by the FDA”
Assertion Supported
Futch: Biopharma equity raises two to five times more than royalty markets
“If you look at primarily equity raised, either venture capital raised or IPOs or following equity, it's a small fraction. There's two, three, four, five times as much money raised in the equity markets each year, but the equity markets can be volatile, right?”
Disclosure
Futch: HCR structures pre-approval deals in one-third and two-thirds tranches
“So we may put a portion, maybe a third of the capital in Six months before approval, three months before approval, and then have it set up that when it's approved, the second tranche, the post-approval tranche with two-thirds of the capital goes in.”
Assertion Supported
Futch: US commercial insurers must reimburse ACA-recommended vaccines like shingles
“Commercial plans in the U.S. Under the Affordable Care Act have to reimburse these vaccines if they're approved by the Commission on Vaccines, which that one is.”
Assertion Supported
Futch: US Orphan Drug legislation grants seven years of market exclusivity
“In order to make it economically attractive, the government put in legislation that said if you do it, and you have to go through an FDA regulatory review, We will give you seven years of exclusivity where we will not approve another drug that does the same th…”
Assertion Supported
Futch: Shingles vaccine generated nearly $1B in year one and $2B in year two
“That product done phenomenally well, did a billion dollars almost in the first year, two billion in the second year.”
Assertion Partly supported
Futch: No new migraine treatment developments occurred for two decades
“Hasn't been any new development in migraines for two decades.”
