HALO - NASDAQ
Halozyme Therapeutics, Inc.
HALO·NASDAQ
$69.82
+2.3%HealthcareBiotechnology
Halozyme Therapeutics, Inc. operates as a biopharma technology platform company in the United States, Switzerland, Ireland, Belgium, Japan, and internationally. The company's products are based on the ENHANZE drug delivery technology, a patented recombinant human hyaluronidase enzyme (rHuPH20) that enables the subcutaneous delivery of injectable biologics, such as monoclonal antibodies and other therapeutic molecules, as well as small molecules and fluids. Its flagship product is Hylenex recombinant, a formulation of rHuPH20 to facilitate subcutaneous fluid administration for achieving hydration to enhance the dispersion and absorption of other injected drugs in subcutaneous urography and to improve resorption of radiopaque agents. The company also develops Perjeta; RITUXAN HYCELA and MabThera SC for the treatment of non-Hodgkin lymphoma and chronic lymphocytic leukemia (CLL); RITUXAN SC for patients with CLL; and HYQVIA for the treatment of immunodeficiency disorders. In addition, it is developing Tecentriq for non-small cell lung cancer; OCREVUS for multiple sclerosis; DARZALEX for the treatment of patients with amyloidosis, smoldering myeloma, and multiple myeloma; nivolumab for the treatment of solid tumors; ARGX-113, a human neonatal Fc receptor; ARGX-117 to treat autoimmune diseases; and BMS-986179, an anti-CD-73 antibody. The company has collaborations with F. Hoffmann-La Roche, Ltd.; Hoffmann-La Roche, Inc.; Baxalta US Inc.; Baxalta GmbH; Pfizer Inc.; Janssen Biotech, Inc.; AbbVie, Inc.; Eli Lilly and Company; Bristol-Myers Squibb Company; Alexion Pharma Holding; ARGENX BVBA; Horizon Therapeutics plc; National Institute of Allergy and Infectious Diseases; Centre for the AIDS Programme of Research in South Africa; and ViiV Healthcare Limited for small and large molecule targets for the treatment and prevention of HIV. Halozyme Therapeutics, Inc. was founded in 1998 and is based in San Diego, California.
At a Glance
Live SnapshotMarket Cap$8.28B
EPS2.6400
P/E Ratio25.45
Earnings Date08/04/2026
Earnings Call Transcript
HALO • 2023 • Q2
Operator
Good afternoon, my name is Chris and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Halozyme Second Quarter 2023 Financial and Operating Results Conference Call. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Please note this event is being recorded. I'll now turn the call over to Tram Bui, Halozyme's Vice President of Investor Relations and Corporate Communications. Please go ahead.
Tram Bui
Thank you, operator. Good afternoon and welcome to our second quarter 2023 financial and operating results conference call. In addition to the press release issued today after the market close, you can find a supplementary slide presentation that will be referenced during today's call in the Investor Relations section of our website. Leading the call will be Dr. Helen Torley, Halozyme's President and Chief Executive Officer who will provide an update on our business and Nicole LaBrosse, our Chief Financial Officer will review our financial results for the second quarter 2023. On today's call, we will be making forward-looking statements as outlined on slide two. I would also refer you to our SEC filings for a full list of risks and uncertainties. During the call, both GAAP and non-GAAP financial measures will be discussed. Certain non-GAAP or adjusted financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and slide presentation. I will now turn the call over to Dr. Helen Torley.
Helen Torley
Thank you, Tram. Good afternoon, everyone. I will begin on Slide three. We're very pleased with our second quarter 2023 results where we delivered strong year-over-year top line and bottom line growth. With our partners we annex multiple milestone bearing Valley increasing events for the next wave of subcutaneous products that we project will deliver meaningful royalty revenues of Wave 3 products, most notably argenx's VYVGART Hytrulo that is coformulated with ENHAN
Nicole LaBrosse
Thank you, Helen. Our strong financial performance in the second quarter sets us up well for another record year. We achieved record revenues of $221 million for a total of $383.2 million year-to-date, in line with our plans in supporting our updated financial performance expectations for the full year. Our cash, cash equivalents and marketable securities are $348.3 million as of June 30 2023, compared to $275.6 million as of March 31 2023. Our balance sheet remains strong with continued projected cash generation in EBITDA growth in 2023 and beyond. Our net-debt-to EBITDA ratio is 2.9 times as of June 30 2023, which is expected to continue to decrease each quarter with EBITDA growth. We completed the full $150 million in share buybacks planned for the year in the first quarter. We will continue to evaluate our future use of capital and monitor market conditions and other factors, while also preserving capital to fund revenue growth and durability through M&A. Turning now to Slide 14, for our detailed financial results for the second quarter of 2023. Recall that we closed the Antares acquisition last year, partway through the second quarter on May 24 2022. And therefore the year-over-year comparison is impacted by the full quarter versus the partial quarter of contribution from the Antares business. Revenue for the second quarter was $221 million, compared to $152.4 million for the second quarter of 2022. The 45% year-over-year increase was largely driven by the strength and growth and enhanced revenue streams related to royalties and an increase in milestones due to the approval and launch of VYVGART Hytrulo, as well as the addition of product sales as a result of the Antares Pharma acquisition. Royalty revenue for the quarter was $111.7 million, an increase of 31% compared to $85.3 million in the prior year period. Driven by continued strong uptake of Janssen DAR
Helen Torley
Thank you, Nicole. Let me conclude by expressing my sincere appreciation for the Halozyme team and our partners and collaborators for the strong progress throughout the first half of 2023. This is establishing a strong growth trajectory for 2023 and beyond. We remain focused on advancing and expanding our diverse and robust portfolio of products that are enabled by our leading drug delivery platform ENHAN
Operator
[Operator Instructions] Our first question is from Mohit Bansal with Wells Fargo. Your line is open.
Mohit Bansal
Great. Thank you for taking my question. And congrats on all the progress here. Easy question. So when you talk to your potential partners regarding parting opportunities, how much does IRA come into discussions? Also, how do partners think about a lack of patent protection for ENHAN
Helen Torley
Thanks, Mohit. With regard to conversations with partners, I'll divide it into potential partners for I will say the IRA does not come up and may come up more now that there's clarity following the Part D guidance being issued. But it really isn't a focus of conversation. What we really are focused on is the clinical benefit and the differentiation that ENHAN
Mohit Bansal
Super helpful. Thank you.
Operator
The next question is from Vikram Purohit with Morgan Stanley. Your line is open.
Unidentified Analyst
Hi everyone. This was [indiscernible] for Vikram, we have one question. Could you provide some color on what your pipeline of backlog of new potential partners look like and which types of products they are looking to leverage ENHAN
Helen Torley
Yes, as we've mentioned, we are working for signing new deal for ENHAN
Operator
The next question is from Michael DiFiore, with Evercore ISI. Your line is open.
Michael DiFiore
Hi, guys, thanks for taking my questions and congrats on all the progress. Two for me. One, prior to Argenx’s CIDP top line and subcu OCREVUS trial success, the stock did get a nice boost after the final CMS Part D guidance documents came out on June 30. And from your prepared remarks, it sounds like you are more optimistic about the future. Could you perhaps offer any further color on whether or not CMS does in fact considers Halo’s products to be fixed dose combination products and what your potential partners are saying about this? Is there any reason to believe that the Future Part B guidance documents will not resemble Part D? And then I have a follow up?
Helen Torley
All right, thanks for that, Mike. And I would say we were pleased when we did see the final guidance that was consistent with the earlier guidance noting as you say this is the Part D guidance. And most of our drugs are Part B. But what the Part D guidance really I think very nicely reaffirmed that for fixed combination products, which include two or more active ingredients as distinct drugs with purposes that found that these are going to be treated differently in terms of the negotiation timeline, from a separate product of just one of the ingredients. That is what we have interpreted in March when the draft guidance came out. And despite comments and questions coming in, it was -- in response to questions coming in CMS reaffirmed that for the Part D drugs. Now, as you know, ENHAN
Michael DiFiore
Got it. That's very helpful. And my follow-up question is this and I may have missed this in the opening comments but at least back on your Q1 call the, Phesgo conversion in Germany seems to be uniquely low compared to other actual geographies and my question is, is there anything unique in Germany in terms of how physicians practice relative to the rest of the EU? That would explain the comparatively low Phesgo conversion there?
Helen Torley
Yes, we've seen and I can't speak specific to Phesgo, because I don't have information. But if I go back to the launch of Herceptin Mike, the German healthcare system is a little bit like the U.S. where physicians receive an administration fee for IV administration. And what we saw with Herceptin was that the uptake lag the other countries were the -- wasn't that reimbursement dynamic. So perhaps a little bit more like the U.S. where you get a lag in terms of the uptake. Over time, we did see Germany grow with Herceptin. And so I don't believe I ever saw it catch up. But it is certainly it has been a dynamic we've seen because of the reimbursement. And Michael, I realized I didn't answer another question, you're asking whether any of our partners had a similar interpretation as to the Part D guidance and potential for read through to ENHAN
Michael DiFiore
Very helpful. Thank you.
Operator
The next question is from David Risinger, with Leerink Partners, your line is open.
David Risinger
Yes, thanks very much, and congrats on the updates. I have two questions, please. So first, Halozyme previously included a quarterly side and expected new partnership deals in ‘23. Could you please provide an update on your expectations? Helen, I heard you comment verbally in response to a question sounded like, your dialogue is on track. And just wanted to hear you out a little more color since that slide isn't in the deck? And then second, could you remind us about any specific products that will be impacted by enhances EU LOE in ‘24 and the U.S. LOE in ’27? Thanks very much.
Helen Torley
Yes. Thanks David. In the prepared remarks, we did comment that we continue to be confident in signing a new ENHAN
David Risinger
Right, thank you.
Operator
The next question is from Corinne Jenkins with GSC. Your line is open.
Unidentified Analyst
Good afternoon. This is Craig on for Corinne. I had one in regards to your recent positive data of your high volume auto-injector. Can you describe how this data has helped foster partnerships and what partners or potential partners are seeing as most exciting or differentiating about it?
Helen Torley
Thanks, Craig. And I would say the HCI data specifically is just off the price. We completed that study just a few weeks ago. And so in terms all our job number one was to file intellectual property filings based on all of the innovations that we found with regard to this novel approach that we don't believe is being done. And so we're just at the very start of actually sharing this data with partners now that all of that IP filing has been done. I will say prior to that, we were sharing with partners, the prototype that we had the intent of the study, and I can tell you interest was very strong in learning more about it once we had the clinical data. So more to come over the next weeks and months, in that, Craig, know that we're in a position to safely start sharing the data, which, just to reiterate, we were delighted with to show the feasibility of that 10ml injection and approximately 30 seconds, well tolerated by all of the subjects and everybody indicating they would be willing to have the injection again. We couldn't have had a better outcome with this. And I know that is exactly what the partners and potential partners we were talking about beforehand, we're looking to see. So what more in the next weeks and months.
Unidentified Analyst
Got it. Thank you very much.
Operator
The next question is from Jason Butler with JMP Securities, your line is open.
Jason Butler
Hi, thanks for taking the questions. I just had a couple of high volume injector study. Helen, I think you referred to IGG as a representative biologic, do you have preclinical data that support that? There's bridging value here, high success in this study has brought a predictive value to other molecules. And then just thoughts on how different viscosities would act in the 10ml auto injector? Thanks.
Helen Torley
Thanks, Jason. With regard to bridging value, I will say we do expect that each partner is going to be able to do this themselves. But what we do know that with the viscosity, or the immune globulin, it mirrors in many ways the viscosity of many of our other biologics, such as Herceptin and [indiscernible] and that's why it was selected. And so in terms of being able to understand and use this to model based on a lot of great picky data we have across lots of different products with a similar viscosity, I do believe there's going to be some value. But the ultimate requirement from the FDA is going to be that partners do their own clinical studies. And so it was right in the sweet spot of viscosity, which is why our technical team recommended we select that, Jason.
Jason Butler
Great. That's helpful. Helen, thanks. And then just one more, can you just give us your current thinking about capital return and how you evaluate, whether you would increase or renew a buyback versus looking at other mechanisms of returning shareholder capital versus wanting to keep dry powder for business development purposes?
Helen Torley
Yes, I'll ask Nicole to address that. That's alright.
Nicole LaBrosse
Yes, Thanks, Jason. So we have not seen our capital allocation plans for the year. We continued to -- and we did execute on the plan share repurchases for the year, we took the opportunity to fully execute for the amount we allocated this year $150 million in the first quarter when we saw a nice buying opportunity. So no change in plans at this time. We continue to also very much focused on the investments in our platforms, and also in growing our revenue durability via M&A. So we continue to focus on all avenues at this time.
Jason Butler
Okay, great. Thank you.
Helen Torley
Yes, thanks for the question. I do think is that DAR
Mitchell Kapoor
Great. Thank you, Helen.
Operator
The next question is from Mack Chandler with Jefferies, your line is open.
Matt Chandler
Thanks for taking the questions. This is Mack on for Eun. Congratulations on the quarter. One question was just you know, for the Wave 4 products, you noted that eight are in or have completed Phase 1. Could you give any color on which ones have completed Phase 1, and which Wave 4 products do you expect to be able to progress into Phase 3 next? Thanks.
Helen Torley
Yes, we were a little bit restricted in what we can communicate on that Mack, because that would be partner confidential information. And the partners are in the process of analyzing their data making any development decisions, and so they certainly don't like us to get ahead of them. So we have to wait until they make announcements on their next steps and plans. Obviously, we're delighted that two of the products are in Wave 3 clinical development, that amivantamab and relatlimab and nivolumab. And we have a very nice array of other products that are in that including products for thyroid eye disease, for HIV for other neurological disorders. But we're going to have to just wait until our partners are ready to talk about their clinical development programs and recall, often they choose not to do that for competitive reasons. And so we can't front run them by giving any specifics yet, but we are as interested as you all are in making announcements when as soon as we can.
Operator
The next question is from Caroline Palomeque with Berenberg Capital Markets. Your line is open.
Caroline Palomeque
Great. Thanks for taking the question. So just to follow up on cash on the balance sheet. On your 10-Q you mentioned that you have a runway for about 12 months. And I'm just wondering, which strategy are you prioritizing an M&A or cash raise? And what would that look like? Thanks.
Nicole LaBrosse
Yes, thanks, Caroline. So we ended the quarter with $348.3 million of cash and cash equivalents and marketable securities on the balance sheet. So at this time, we feel very well capitalized and continue to project growth in EBITDA and growth in cash flows. Also note that we ended the quarter with a net debt to EBITDA ratio 2.9 times. Also very nicely within from a leverage perspective. From an M&A perspective and the capital allocation perspective in general, I mentioned our capital allocation plans remain unchanged. We'll continue to look to deploy our cash four our three year share repurchase plan, per our investments in our platform, and also in investing in M&A and the timing of that will really be when we find the right target to invest in that meets our growth criteria.
Caroline Palomeque
Great, thanks.
Transcript from August 8, 2023
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