2023 Third Quarter Earnings Call
The biopharmaceutical sector is experiencing a wave of innovation driven by accelerating discovery, development and commercialization of life-changing drugs. At the same time, an aging and longer living population, combined with increased biopharmaceutical penetration in emerging markets, is leading to growing demand for medicines that effectively treat and address unmet medical needs. This boom in scientific advancements has created an insatiable demand for capital and consequently a tremendous opportunity for value creation.
DRI Healthcare Trust is managed by DRI Capital Inc. (together “DRI Healthcare”), a pioneer in global pharmaceutical royalty monetization. We provide uniquely favorable exposure for investors in the biopharma industry, managing a diversified portfolio of interests in medicines that have a demonstrable positive impact on the world. We aim to acquire dependable, patent-protected cash flow streams derived from the sales of those important drugs, while limiting the risks and costs connected to drug development. DRI Healthcare has developed a disciplined strategy predicated on actively sourcing royalty streams on medically necessary products, and proudly work with multiple repeat deal partners.
Trust Unit Information
TSX: DHT.UN (CAD)
TSX: DHT.U (USD)
Computershare Investor Services Inc.
100 University Avenue, 8th floor
Toronto, Ontario M5J 2Y1
Unitholders can contact the National Customer Contact Centre at 1-800-564-6253 (toll free in Canada and the United States) between the hours of 8:30 a.m. and 8:00 p.m. Eastern Time or 514-982-7555 (international direct dial).
Deloitte LLP, Chartered
Insider unit ownership information is available
on the System for Electronic Disclosure by
Insiders (“SEDI”) at www.sedi.ca.
Canadian unitholders in DRI Healthcare Trust might be subject to Canadian income taxes, as cash distributions and unit distributions made in respect of a tax year should be treated as foreign income for tax purposes as income distributed from a trust retains its character in the hand of its beneficiaries. A special year-end distribution is made to unitholders of record on December 31 of each year to ensure that 100% of the taxable income earned by DRI Healthcare Trust for that tax year is distributed to unitholders ensuring that DRI Healthcare Trust will not be subject to Part I tax. In order to assist with the completion of your Canadian income tax filings on an annual basis, unitholders may be mailed a T3 slip by the unitholders’ brokers or dealers by March 15th which will include information on the income distributed by DRI Healthcare Trust to unitholders for the relevant tax year. Please consult your tax advisor on how this will impact your tax filing position.
At DRI Healthcare, we are building a diversified portfolio of interests in medicines that have a demonstrable positive impact on the world through the deployment of capital to support further scientific innovation. In many cases, these medicines are for serious conditions for which no other effective treatment or therapy exists.
Through this lens we view a commitment to best practices in environmental, social, and governance principles as a key factor in the success of our company. This includes ongoing evaluation of our environmental impact and how to minimize it; promotion of a diverse, inclusive and supportive culture that encourages innovation; and a governance structure that values transparency and accountability.
We believe this approach will benefit our internal and external stakeholders, our community, and society as a whole.
DRI Healthcare’s business activities are office-based, and in that context, we are dedicated to a greener world. We support sustainable business practices and encourage our employees to take initiative to minimize our environmental impact. Some of these include:
Our people are our greatest asset. Our diverse team and inclusive environment are a competitive advantage assisting us in achieving our business objectives, and delivering value for our investors, our royalty partners, and other stakeholders. Going forward, DRI Healthcare will continue to focus on attracting and retaining employees from diverse backgrounds, building awareness of diversity issues, and maintaining a supportive environment. Highlights of DRI Healthcare’s Social profile are:
We are committed to corporate governance leadership in the life sciences. Responsibility and integrity in this area are critical not only for the future success of our business, but also for establishing long-term trust with investors, royalty partners, and regulators. Our Board of Trustees undertakes an annual review of our governance structures and practices in reference to all regulatory requirements and good practices. Features of our governance practices include:
Please download and review the following PDF documents for more information on our corporate governance policies and procedures.
You may communicate with the Board of Trustees by emailing the Chair directly at email@example.com
Matters relating to the Trust’s accounting, internal accounting controls or auditing matters will be referred to the Audit Committee. Other matters will be referred to the Governance, Compensation and Nominating Chair or others as appropriate.
The following list contains the names of analysts who provide research coverage on DRI Healthcare Trust. Please note that we do not distribute analyst reports to persons outside of the company. Please contact the research analyst directly to obtain a report.
Please note that any opinions, estimates or forecasts regarding DRI Healthcare Trust’s performance made by these analysts do not represent opinions, forecasts or predictions of DRI Healthcare Trust, DRI Capital Inc. or its management. DRI Healthcare Trust does not, by its reference below, imply its endorsement of, or concurrence with, such information, conclusions or recommendations.
DRI Healthcare Trust’s units are listed and trade on the Toronto Stock Exchange in Canadian dollars under the symbol “DHT.UN” and in U.S. dollars under the symbol “DHT.U”.
Our fiscal year-end is December 31.
Our auditor is Deloitte LLP, Chartered Professional Accountants, based in Toronto, Ontario.
Distributions are typically paid on the last day of March, June, September and December subject to approval by the DRI Healthcare Trust Board of Trustees.
The quarterly distribution payable on units of DRI Healthcare Trust is declared in U.S. dollars.
DRI Healthcare is a pioneer in global pharmaceutical royalty monetization. We accelerate therapeutic innovation by providing capital to inventors, academic institutions and biopharma companies. We aim to provide uniquely favorable exposure for investors through a diversified, risk-mitigated portfolio of therapeutic assets that aims to generate attractive returns and significant growth potential. We focus on medicines that matter – pursuing deals for medicines that have a demonstrable positive impact on the world, aiming to acquire dependable, patent-protected cash flow streams derived from the sales of those important drugs. Since our founding in 1989, DRI Healthcare has deployed more than $2.5 billion, acquiring more than 70 royalties on 40-plus drugs, including Eylea, Spinraza, Zytiga, Remicade, Keytruda and Stelara. DRI Healthcare Trust’s units are listed and trade on the Toronto Stock Exchange in Canadian dollars under the symbol “DHT.UN” and in U.S. dollars under the symbol “DHT.U”.
The biopharmaceutical sector is experiencing a wave of innovation driven by accelerating discovery, development and commercialization of life-changing drugs. At the same time, an aging and longer living population, combined with increased biopharmaceutical penetration in emerging markets, is leading to growing demand for medicines that effectively treat and address unmet medical needs. This boom in scientific advancements has created an increased demand for capital and consequently created a significant opportunity for value creation.
DRI Healthcare’s business lies at the nexus of these human health improvements, funding needs and value-creating opportunities. In return for providing capital to biopharmaceutical innovators, we are building a diversified portfolio of interests in medicines that have a demonstrable positive impact on the world. We acquire dependable, patent-protected cash flow streams derived from the sales of these important drugs.
Originally founded in 1989, DRI is a pioneer in global pharmaceutical royalty monetization. We have earned a reputation as a smart capital allocator with our investors and as a trusted transaction partner with innovators – including inventors, academic and research institutions, and biotechs – as well as global biopharma companies.
We have built a strong reputation by acting with integrity, through our commitment to comprehensive due diligence and by delivering reliable returns. We are proud of our history and results – as evidenced by multiple repeat deal partners – and strive each day to be a best-in-class partner for investors and innovators alike.
DRI Healthcare excels at identifying, evaluating and completing strategic royalty acquisitions of growing assets primarily in mid-sized transactions. Since our inception, we have strategically deployed more than $2.5 billion, acquiring more than 70 royalties on 40-plus drugs, including Eylea, Spinraza, Zytiga, Remicade, Keytruda and Stelara. We are active across a broad range of therapeutic areas, with specialized expertise in oncology, rare diseases, ophthalmology and immunology. DRI Healthcare has developed a disciplined strategy predicated on actively sourcing royalty streams on medically necessary products with long-term patent protection and high growth potential. Today, we continue to apply this proven, disciplined approach – even as we broaden our universe of potential acquisitions, partners and structures.
Over the course of three decades, DRI Healthcare has been a trusted partner, demonstrating strong execution. That foundation sets us apart as we continue developing capital solutions for innovators, while building and managing a risk-mitigated portfolio of therapeutic assets that aims to generate attractive returns and growth potential for investors.
Every innovator is different, so his/her offer should be tailored rather than a standard template. We pride ourselves on thoroughly listening to the needs of innovators and delivering unique, creative and flexible deal structures to meet their needs. These solutions include designing delayed payment structures, sharing in potential upside and/or risk, or otherwise addressing specific objectives.
We conduct rigorous upfront work to make sure our offers are solid from the start, so innovators can be confident in those terms as we complete diligence. The result is a straightforward approach that our partners appreciate as part of our steadfast commitment.
We aim to source, research and acquire what we believe to be the best assets for our portfolio by applying rigorous analysis for a product’s market outlook and social impact. Our team leverages DRI Healthcare’s accumulated institutional knowledge in pharmaceutical royalties, longstanding relationships, highly refined sourcing and diligence processes, proprietary data and information tools, as well as access to world-class resources. We believe investors gain DRI Healthcare’s proven experience selecting and acquiring high-quality biopharma products, benefiting from the growth trends in life sciences while limiting the risks and costs connected to drug development.
A typical licensing transaction involves granting rights to use intellectual property created by an inventor, academic institution or drug developer to develop and commercialize a product in exchange for upfront cash payments, royalties or other economic consideration. The amount of royalties payable under such a license agreement is typically a percentage of the net sales of the relevant product. Traditional royalty investing involves a purchaser paying an initial purchase price to an innovator (or licensor) in return for some or all of the royalties to which the innovator is entitled under the license agreement.
Synthetic royalty transactions involve creating a new royalty stream, whereby the buyer contracts directly with the marketer to receive a portion of top-line product sales in exchange for funding. As biotechnology companies continue to conduct their own research and development to bring their own internally developed technologies to market, synthetic royalties have become an increasingly important tool for these companies to finance ongoing capital requirements through non-dilutive means.
At DRI Healthcare, we continue to concentrate on medicines that matter – pursuing deals for long-duration commercial assets that provide significant clinical benefits. We believe investors gain DRI Healthcare’s proven experience selecting and acquiring high-quality biopharma products, benefiting from the growth trends in life sciences while limiting the risks and costs connected to drug development.
Royalty investing may be less risky than directly investing in pharmaceutical companies, because the royalties represent direct investments in pharmaceutical sales. In addition, there is less exposure to many of the traditional risks associated with the pharmaceutical industry, including failed drugs which represent the majority of research and development costs, clinical development, a focus on core therapeutic areas due to R&D and salesforce limitations, product commercialization risks (including limitations on product and geographical diversity and being subject to intense regulatory processes and development timelines), expenses relating to R&D, manufacturing, sales and marketing and potential liability risks.
Historically, the pharmaceutical royalty market has been observed as having a low correlation to credit or equity markets. Instead, returns have been more closely linked to broader trends in demographics such as overall population growth and the ageing of the population, as well as general acceleration in medical research, which has advanced treatments across a range of therapeutic areas from oncology to rare diseases. It’s also important to point out that our disciplined investment strategy is predicated on active sourcing of royalties on medically necessary products with long term patent lives. Medically necessary products are generally demand inelastic, meaning that they are less sensitive to price changes than other products.