Benzinga | Aug 17, 2021 01:50PM EDT

Wall Street Journal Creates A Pitch In Favor Of Royalty Pharma

* Drug development, both a lucrative and a risky segment. Royalty Pharma plc (NASDAQ:RPRX) offers a middle ground for its investors.

* The Company was founded in 1996 and went public in June last year.

* It helps fund expensive clinical trials for a promising new drug in a typical transaction.

* In return, drug-making companies pay a predetermined portion of that drug's revenue after commercialization.

* The Company owns rights to drugs sold by Johnson & Johnson (NYSE:JNJ), AbbVie Inc (NYSE:ABBV), Pfizer Inc (NYSE:PFE), Gilead Sciences Inc (NASDAQ:GILD), and Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX).

* While the most significant drug companies typically narrow their focus by therapeutic category, Royalty can generate revenue from oncology, rare diseases, HIV, and diabetes.

* That isn't to say Royalty shares are immune from the challenges of the drug industry, writes Wall Street Journal.

* Any changes to tax policy or drug-pricing regulations could impact Royalty Pharma shares.

* The stock trades at about 15 times last year's cash flow. So far this year, cash flow is up 25% from 1H of 2020.

* Expectations of solid performance in the years ahead could be a reality.

* Price Action: RPRX shares are up 1.75% at $38.92 during the market session on the last check Tuesday.