Halozyme Reports Third Quarter 2017 Results
SAN DIEGO, Nov. 7, 2017 /PRNewswire/ -- Halozyme Therapeutics, Inc. (NASDAQ: HALO), a biotechnology company developing novel oncology and drug-delivery therapies, today reported financial results and recent highlights for the third quarter ended September 30.
"During the third quarter, we realized clear benefits from strategies we have been executing against in both the ENHANZE and PEGPH20 pillars of our business," said Dr. Helen Torley, president and chief executive officer. "On ENHANZE we significantly increased 2017 revenue and the potential future value of the technology with the signing of the landmark collaboration agreement with Bristol-Myers Squibb for development of up to 11 immuno-oncology targets, and with the expansion of our collaboration agreement with Roche. In addition, our partner Janssen took an important step towards the commercialization of a subcutaneous formulation of Darzalex(®) with the initiation of a Phase 3 study.
"In our PEGPH20 pillar, investigator interest remains strong in our HALO-301 study, resulting in continued progress with enrollment. An interim analysis will be conducted for the first primary endpoint of progression-free survival when we achieve the target number of events, which we project will occur in late Q4 2018."
Third Quarter 2017 and Recent Highlights include:
-- Announcing a Global Collaboration and License Agreement with
Bristol-Myers Squibb to develop subcutaneously administered
Bristol-Myers Squibb immuno-oncology medicines using Halozyme's ENHANZE
drug-delivery technology. The agreement is the largest in company
history including a $105 million upfront payment and $160 million in
potential milestones for each of 11 immuno-oncology targets, including
the initial target selection of programmed death 1 (PD-1).
-- Roche licensing a new ENHANZE target in exchange for a $30 million
upfront payment and up to $160 million in potential development,
regulatory and sales-based milestones. The agreement serves as an
extension to the original collaboration between the companies, under
which Roche has developed two subcutaneous formulations of cancer drugs
for markets worldwide.
-- Janssen initiating the first of three planned Phase 3 studies of the
subcutaneous formulation of DARZALEX(®) (daratumumab). Halozyme's
ENHANZE technology has the potential to enable a 15 ml injection to be
delivered in five minutes or less, with no requirement for an
intravenous loading dose. Data informing this decision from the Phase 1
PAVO study in patients with relapsed or refractory multiple myeloma were
accepted for presentation at the 2017 American Society of Hematology
Annual Meeting and Exposition. Upon the dosing of the third patient in
the recently initiated study, Halozyme will earn a $15 million milestone
payment.
-- Genentech launching RITUXAN HYCELA(TM) (rituximab/hyaluronidase human)
for subcutaneous injection, a combination of rituximab and Halozyme's
hyaluronidase human ENHANZE technology, for patients with follicular
lymphoma, diffuse large B-cell lymphoma and chronic lymphocytic
leukemia.
-- Continued progress screening and enrolling patients in the HALO-301
study of PEGPH20 in combination with ABRAXANE(®) (nab-paclitaxel) and
gemcitabine in first line metastatic pancreas cancer patients with high
levels of tumor hyaluronan (HA-High). An interim analysis will be
conducted for the first primary endpoint of progression-free survival
when the target number of events has been reached, which the company
projects will be in late Q4 2018. At that time, Halozyme projects
approximately 500 patients will have been enrolled in the study.
-- Initiating multiple trials in collaboration with Genentech to evaluate
PEGPH20 in combination with TECENTRIQ(®) (atezolizumab) in four tumor
types. Studies include a Halozyme-sponsored randomized clinical trial in
patients with previously untreated, unresectable, locally advanced, or
metastatic cholangiocarcinoma and gallbladder adenocarcinoma and two
Genentech-funded and operated, Phase 1b/2 multi-arm clinical studies
evaluating patients with previously treated metastatic pancreatic ductal
adenocarcinoma and previously treated locally advanced unresectable or
metastatic gastric cancer. The studies are part of a clinical
collaboration agreement announced in 2016 to evaluate PEGPH20 and
atezolizumab in up to eight tumor types.
Third Quarter 2017 Financial Highlights
-- Revenue for the third quarter was $63.7 million compared to $31.9
million for the third quarter of 2016. The year-over-year increase was
driven by a $30 million upfront payment from Roche and growth in
royalties from partner sales of Herceptin(® )(trastuzumab) SC,
MabThera(®) (rituximab) SC and HYQVIA(® )(Immune Globulin Infusion 10%
(Human) with Recombinant Human Hyaluronidase) offset by a decrease in
research and development reimbursements and license payments from
ENHANZE partners. Revenue for the third quarter included $17.1 million
in royalties, an increase of 31 percent from the prior-year period, $9.8
million in sales of bulk rHuPH20 primarily for use in manufacturing
collaboration products and $3.8 million in HYLENEX(®) recombinant
(hyaluronidase human injection) product sales.
-- Research and development expenses for the third quarter were $34.0
million, compared to $33.9 million for the third quarter of 2016. The
increase was primarily due to a ramp in spending associated with the
HALO-301 study.
-- Selling, general and administrative expenses for the third quarter were
$13.3 million, compared to $11.6 million for the third quarter of 2016.
The increase was primarily due to personnel expenses, including stock
compensation, for the period.
-- Net income for the third quarter was $2.7 million, or $0.02 per share,
compared to net loss in the third quarter of 2016 of $28.9 million, or
$0.23 per share.
-- Cash, cash equivalents and marketable securities were $316.9 million at
September 30, 2017, compared to $297.5 million at June 30, 2017.
Financial Outlook for 2017
Halozyme updated year-end guidance, now expecting:
-- Net revenue increasing from the prior range of $245 million to $260
million announced on Sept. 14 to $265 million to $280 million, driven by
stronger product sales, royalties, and sponsored research;
-- Operating expenses decreasing from the prior range of $240 million to
$250 million to $230 million to $240 million;
-- Positive operating cash flow increasing from the prior range of $50
million to $60 million to $70 million to $85 million;
-- Year-end cash balance increasing from the prior range of $380 million to
$395 million to $400 million to $415 million.
Webcast and Conference Call
Halozyme will webcast its Quarterly Update Conference Call for the third quarter of 2017 today, Tuesday, November 7 at 4:30 p.m. ET/1:30 p.m. PT. Dr. Helen Torley, president and chief executive officer, will lead the call. The call will be webcast live through the "Investors" section of Halozyme's corporate website and a recording will be made available following the close of the call. To access the webcast and additional documents related to the call, please visit http://www.halozyme.com approximately fifteen minutes prior to the call to register, download and install any necessary audio software. The call may also be accessed at (877) 410-5657 (domestic callers) (334) 323-7224 (international callers) using passcode 769890. A telephone replay will be available after the call by dialing (877) 919-4059 (domestic callers) or (334) 323-0140 (international callers) using replay ID number 19320711.
About Halozyme
Halozyme Therapeutics is a biotechnology company focused on developing and commercializing novel oncology therapies that target the tumor microenvironment. Halozyme's lead proprietary program, investigational drug PEGPH20, applies a unique approach to targeting solid tumors, allowing increased access of co-administered cancer drug therapies to the tumor in animal models. PEGPH20 is currently in development for metastatic pancreatic cancer, non-small cell lung cancer, gastric cancer, metastatic breast cancer and has potential across additional cancers in combination with different types of cancer therapies. In addition to its proprietary product portfolio, Halozyme has established value-driving partnerships with leading pharmaceutical companies including Roche, Baxalta, Pfizer, Janssen, AbbVie, Lilly and Bristol-Myers Squibb for its ENHANZE(®) drug delivery technology. Halozyme is headquartered in San Diego. For more information visit www.halozyme.com.
Safe Harbor Statement
In addition to historical information, the statements set forth above include forward-looking statements (including, without limitation, statements concerning the Company's future expectations and plans for growth in 2017, entering into new collaboration agreements, the development and commercialization of product candidates, including timing of clinical trial results announcements and future development and commercial activities of our collaboration partners, the potential benefits and attributes of such product candidates and expected financial outlook for 2017) that involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. The forward-looking statements are typically, but not always, identified through use of the words "believe," "enable," "may," "will," "could," "intends," "estimate," "anticipate," "plan," "predict," "probable," "potential," "possible," "should," "continue," and other words of similar meaning. Actual results could differ materially from the expectations contained in forward-looking statements as a result of several factors, including unexpected expenditures and costs, unexpected fluctuations or changes in revenues, including revenues from collaborators, unexpected delays in entering into new collaboration agreements, unexpected results or delays in development of product candidates, including delays in clinical trial patient enrollment and development activities of our collaboration partners, and regulatory review, regulatory approval requirements, unexpected adverse events and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 7, 2017.
Halozyme Therapeutics, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Revenues:
Product sales, net $13,589 $13,331 $37,803 $39,970
Royalties 17,119 13,036 45,839 36,695
Revenues under collaborative
agreements 33,023 5,486 43,407 31,023
Total revenues 63,731 31,853 127,049 107,688
------ ------ ------- -------
Operating expenses:
Cost of product sales 8,332 9,134 23,664 25,204
Research and development 33,993 33,863 109,267 109,493
Selling, general and administrative 13,329 11,599 39,045 33,626
------ ------ ------ ------
Total operating expenses 55,654 54,596 171,976 168,323
------ ------ ------- -------
Operating income (loss) 8,077 (22,743) (44,927) (60,635)
Other income (expense):
Investment and other income, net 790 334 1,512 960
Interest expense (5,538) (5,253) (16,526) (14,378)
------
Income (loss) before income taxes 3,329 (27,662) (59,941) (74,053)
Income tax expense 580 1,284 970 1,584
--- ----- --- -----
Net income (loss) $2,749 $(28,946) $(60,911) $(75,637)
====== ======== ======== ========
Net income (loss) per share:
Basic $0.02 $(0.23) $(0.45) $(0.59)
===== ====== ====== ======
Diluted $0.02 $(0.23) $(0.45) $(0.59)
===== ====== ====== ======
Shares used in computing net income
(loss) per share:
Basic 141,190 128,154 134,633 127,886
======= ======= ======= =======
Diluted 143,236 128,154 134,633 127,886
======= ======= ======= =======
Halozyme Therapeutics, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
September 30, December 31,
2017 2016
---- ----
ASSETS
Current assets:
Cash and cash equivalents $164,397 $66,764
Marketable securities, available-for-
sale 152,525 138,217
Accounts receivable, net 14,695 15,680
Inventories 9,331 14,623
Prepaid expenses and other assets 12,397 21,248
Total current assets 353,345 256,532
Property and equipment, net 3,232 4,264
Prepaid expenses and other assets 72 219
Restricted cash 500 500
--- ---
Total assets $357,149 $261,515
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable $4,152 $3,578
Accrued expenses 32,370 28,821
Deferred revenue, current portion 4,093 4,793
Current portion of long-term debt, net 61,433 17,393
------ ------
Total current liabilities 102,048 54,585
Deferred revenue, net of current portion 36,755 39,825
Long-term debt, net 145,417 199,228
Other long-term liabilities 540 358
Stockholders' equity (deficit):
Common stock 142 130
Additional paid-in capital 718,553 552,737
Accumulated other comprehensive loss (53) (6)
Accumulated deficit (646,253) (585,342)
-------- --------
Total stockholders' equity (deficit) 72,389 (32,481)
------ -------
Total liabilities and stockholders'
equity (deficit) $357,149 $261,515
======== ========
Contacts:
Jim Mazzola
858-704-8122
ir@halozyme.com
Chris Burton
858-704-8352
ir@halozyme.com
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SOURCE Halozyme Therapeutics, Inc.
