A Lower-Risk Biotech Stock Amid Market Uncertainty

If you’ve ever looked at biotech or pharma stocks and thought, “Looks promising … but what if the drug fails?” — you’re not alone.

This is the main problem with this sector: drug development is a high-risk, high-reward game. It takes billions of dollars and over a decade to bring a single therapy to market — and that’s if it even gets approved. Most don’t. 

That’s what makes Royalty Pharma (NASDAQ: RPRX), which currently scores a B or Buy rating according to our Zen Ratings system, such a fascinating outlier. Here’s why I keep a close eye on this unique biotech name. 

A Superior Business Model

RPRX is essentially a pharma company that doesn’t develop drugs. Instead, it buys royalty rights to some of the world’s most successful and promising therapies — and gets paid a slice of the revenue, often for decades. It’s the only pure-play royalty investment platform in the entire pharmaceutical space.

In other words: Royalty Pharma doesn’t bet on drug discovery. It bets on winners.

Its business model is a bit like being the landlord in Pharma Land … or owning the Biotech Casino. 

Other companies do the R&D, run the clinical trials, and fight the regulatory battles. RPRX simply steps in with capital, purchases future royalty streams, and collects checks when the drugs sell. 

This setup gives it exposure to blockbuster drugs and cutting-edge science — without the bloated R&D budgets or binary risk.

And it works. Royalty Pharma currently has royalty interests in over 35 therapies, including big names like Tysabri (multiple sclerosis), Imbruvica (cancer), and Trelegy (COPD/asthma). As more of these drugs hit peak sales, those royalty checks just keep growing.

Why Now?

What makes the model even more attractive right now is the broader industry backdrop. The big drugmakers are facing a “patent cliff” over the next five years as many of their top-selling drugs lose exclusivity. They need to fill the pipeline fast — and Royalty Pharma has positioned itself as the go-to capital provider for biotechs sitting on valuable IP but lacking funding. The result: lots of deals, at good terms, in a moment of structural urgency.

RPRX is also fundamentally solid. It generates strong cash flow, pays a growing dividend, and trades at a reasonable valuation given its quality and defensibility. 

That’s why RPRX is not only scoring a B for its Safety Component Grade, but also for Value. Our Value model accounts for cash flow yield, free cash flow to price, and more. And we believe 2025 will be a value investor’s market.  

See how RPRX scores for Growth, Momentum, and more here.

RPRX is a smaller market cap name with less analyst coverage, but the one top Wall Street analysts we track who covers it rated it a strong buy with 28+% upside: 

See RPRX price predictions.

Bottom line? If you like the long-term potential of healthcare and biotech but don’t want the volatility that comes with clinical-stage companies, Royalty Pharma might be the smartest seat at the table.

Click here to see fundamentals and add it to your watchlist.

What to Do Next?

• 8 Stock Lists You Need Now >
• See All “A” Rated Stocks with +32.52% Average Annual Return > 
• 4 Step Process to Find More 100%+ Stock Winners >

Want to get in touch? Email us at news@wallstreetzen.com.