On August 12, Royalty Pharma (NASDAQ:RPRX) agreed to pay Zealand Pharma $100 million for the rights to future royalties on rusfertide, an experimental treatment for a rare blood disorder called polycythemia vera. It is Royalty Pharma’s second collaboration with Zealand, and it arrives just as rusfertide awaits a decision from the FDA. For a company that makes its living buying pieces of other companies’ drugs, the timing says a lot about how it weighs risk against reward before a regulatory verdict even lands.
Buying Conviction Ahead Of A Verdict
Royalty Pharma’s business depends on picking the right moment to buy into a drug’s future, and this deal fits that pattern. Under the agreement, $50 million changes hands at closing and the remaining $50 million arrives on the first anniversary, in exchange for a 1% royalty on rusfertide’s global sales plus any regulatory and commercial milestones. Rusfertide, a once-weekly self-injected therapy that mimics the hormone hepcidin to control iron levels in polycythemia vera patients, already has an FDA goal date set for the third quarter of 2026, with Takeda lined up to handle commercialization worldwide. That is a near-term catalyst most royalty purchases do not carry.
The broader portfolio backs up the confidence. Royalty Receipts grew 14% to $768 million in the second quarter of 2026, lifted by Tremfya, Voranigo, Imdelltra and Evrysdi, and the company raised its full-year 2026 guidance for Portfolio Receipts to a range of $3.4 billion to $3.5 billion, the second increase this year. Capital deployment has already topped $1 billion in 2026, including a July 2026 royalty purchase tied to AstraZeneca’s cliramitug, pushing the development-stage pipeline to 19 potential therapies. Even after repaying a $380 million term loan in July 2026, Royalty Pharma still paid a quarterly dividend of $0.235 per share and bought back $45 million of stock in the second quarter alone.
When Royalties Run Dry
Not every royalty ages well, and Royalty Pharma’s own numbers show it. Promacta royalties fell 75% in the second quarter of 2026 to just $8 million as US generic competition took hold, and Imbruvica payments slipped 16% to $36 million, a reminder that patent cliffs eventually catch up to even the steadiest cash flows. That same risk sits underneath every new deal the company signs, including the one with Zealand.
The rusfertide agreement carries its own strings. Royalty Pharma’s 1% royalty stops scaling once global sales pass $1.5 billion, at which point Zealand keeps a 0.25% cut and Royalty Pharma only 0.75%, so the largest commercial outcomes get split rather than fully captured. And rusfertide still has not cleared the FDA. The agency’s goal date only falls in the third quarter of 2026, meaning the second $50 million payment is committed before regulators finish their review. Layer that onto a balance sheet carrying $9.2 billion in total debt principal against $812 million of cash as of June 30, 2026, and it becomes clear this is a company funding new bets with borrowed as well as earned capital, even while working through roughly $350 million to $360 million in expected interest payments for the year.
What The Market Is Pricing In
Hedge fund ownership climbed from 42 funds to 47 in the most recent quarter, pointing to institutions adding rather than trimming. Short interest sits at just 2.64% of float, showing little organized skepticism toward the stock. Yet shares trade at a forward price-to-earnings ratio of 48.08, as of September 1, a multiple that already assumes plenty of future growth lands on schedule.
A Bet Still Being Written
Royalty Pharma has built a track record of turning royalty purchases into growing cash flow, and the Zealand deal follows that same playbook of paying up front for a share of a drug’s future. The bet still hinges on an FDA decision that has not happened yet, and the deal’s tiered structure caps how much upside Royalty Pharma keeps if rusfertide turns into a blockbuster. A third-quarter approval would validate the pattern investors have come to expect from this company.
READ NEXT: 10 Best Future Stocks to Buy Under $10 and 12 Best Performing Semiconductor Stocks to Invest In.
Disclosure: None. Follow Insider Monkey on Google News.
Hedge Fund Resource Center