Halozyme Reports Third Quarter 2020 Results And Raises Full Year 2020 Guidance
SAN DIEGO, Nov. 2, 2020 /PRNewswire/ -- Halozyme Therapeutics, Inc. (NASDAQ: HALO) today reported financial results for the third quarter ended September 30, 2020 and provided an update on its recent corporate activities and outlook.
"I am pleased to report the first quarter of what the Company projects will be sustainable royalty revenue growth, primarily driven by the strong uptake of Janssen's DARZALEX(®) SC with our ENHANZE(®) technology," said Dr. Helen Torley, president and chief executive officer. "In addition, we achieved higher milestone-related revenues in the quarter driven by partner clinical trial progress. Based on the improved outlook for royalties and greater visibility on anticipated milestone revenues, we are increasing our full year 2020 financial guidance. Recent new product launches and partner development progress position Halozyme to deliver continued strong growth. Our strong growth outlook supports our commitment to capital return, which has already resulted in $312.4 million worth of share repurchases under our three-year $550 million share repurchase program announced in November 2019."
Third Quarter 2020 and Recent Highlights Include:
-- On October 22, argenx announced it is advancing development of
efgartigimod SC with Halozyme's ENHANZE(®) technology for pemphigus
(vulgaris and foliaceus), a group of autoimmune skin disorders. The
global Phase 3 ADDRESS trial evaluating SC efgartigimod in up to 150
pemphigus patients is expected to initiate by end of 2020, and will
result in a milestone payment to Halozyme. In addition, argenx announced
it had initiated a Phase 1 healthy volunteer study of intravenous
ARGX-117 and subcutaneous ARGX-117 utilizing ENHANZE(®) technology
targeting complement C2. On October 6, the Company announced that argenx
expanded its existing global collaboration and license agreement that
was signed in February 2019. Under the newly announced expansion, argenx
gained the ability to exclusively access Halozyme's ENHANZE(®) drug
delivery technology for three additional targets upon nomination for a
total of up to six targets. To date, argenx has nominated two targets
including the human neonatal Fc receptor FcRn, which is blocked by
efgartigimod, and complement component C2.
-- On September 17, the Company announced that Roche presented a poster
with data from Part 1 of its Phase 1b study (IMscin001) evaluating
atezolizumab (Tecentriq(®)) for subcutaneous administration utilizing
Halozyme's ENHANZE(®) technology in patients with locally advanced or
metastatic non-small cell lung cancer (NSCLC) at the European Society
for Medical Oncology ("ESMO") Virtual Congress 2020. The poster
concluded that atezolizumab utilizing Halozyme's ENHANZE(®) technology,
provided similar exposure as atezolizumab IV and that results supported
further development of subcutaneous atezolizumab in IMscin001 Part 2, a
confirmatory phase III study. Initiation of the Tecentriq(®) Phase 3
study will result in a milestone payment to Halozyme.
-- On September 15, Takeda Pharmaceutical announced that the European
Medicines Agency (EMA) approved a label update for HYQVIA(®) [Immune
Globulin Infusion 10% (Human) with Recombinant Human Hyaluronidase]
broadening its use and making it the first and only facilitated
subcutaneous immunoglobulin replacement therapy in adults, adolescents
and children with an expanded range of secondary immunodeficiencies
(SID).
-- On September 10, the Company announced that Janssen submitted a
supplemental BLA for FDA approval of DARZALEX FASPRO(TM) (daratumumab
and hyaluronidase-fihj) to be approved for a new indication, light chain
(AL) amyloidosis. The application is based on positive data from the
phase 3 ANDROMEDA trial (NCT03201960). An estimated 30,000 to 45,000
people are living with AL amyloidosis in the U.S. and Europe, and an
estimated 4,500 people develop the disease each year in the U.S. alone.
There are currently no approved therapies for the disease.
-- In August 2020, Janssen announced that Health Canada approved
DARZALEX(®) SC utilizing ENHANZE(®) technology (daratumumab) in four
regimens across five indications in patients with multiple myeloma, most
notably newly diagnosed, transplant ineligible patients as well as
relapsed or refractory patients.
-- During the third quarter, the Company repurchased approximately 2.1
million shares of common stock for $58.9 million at an average price per
share of $27.57, bringing the total for year-to-date open market share
repurchases to $112.4 million at an average price of $20.76.
Third Quarter 2020 Financial Highlights
-- Revenue for the third quarter was $65.3 million compared to $46.2
million for the third quarter of 2019. The year-over-year increase was
primarily driven by $32.0 million in collaboration revenue from Roche
and argenx in the current period. Revenue for the quarter included $23.9
million in royalties, an increase of 44% compared to $16.6 million in
the prior year period.
-- Research and development expenses for the third quarter were $7.7
million, compared to $30.5 million for the third quarter of 2019. The
decrease in expenses was due to a decrease in clinical trial
activities-related costs as a result of the Company halting its oncology
drug development efforts beginning in November 2019.
-- Selling, general and administrative expenses for the third quarter were
$11.7 million, compared to $18.0 million for the third quarter of 2019.
The decrease was due to lower compensation and commercial-related
expenses related to the corporate restructuring announced in November
2019.
-- The Company reported its second consecutive quarter of what it expects
will be sustainable profitability. Net income for the third quarter was
$36.2 million, or $0.25 per share, compared to a net loss in the third
quarter of 2019 of $25.0 million, or $0.17 per share.
-- Cash, cash equivalents and marketable securities were $346.7 million at
September 30, 2020, compared to $421.3 million at December 31, 2019.
Financial Outlook for 2020
The Company continues to monitor the impact of the COVID-19 pandemic on its business and receives updates from its partners and suppliers on how their businesses are affected. Based on this information and Halozyme's planned expenditures for the year, the Company is raising full year 2020 financial guidance and now expects:
-- Revenues of $250 million to $260 million, increased from prior guidance
of $230 million to $245 million, representing growth of 28 to 33% over
prior year revenues;
-- Earnings per share on a GAAP basis of $0.80 to $0.85, increased from
prior guidance of $0.60 to $0.75.
Webcast and Conference Call
Halozyme will webcast its Quarterly Update Conference Call for the third quarter of 2020 today, Monday, November 2, 2020 at 4:30 p.m. ET/1:30 p.m. PT. Dr. Torley will lead the call, which will be webcast live through the "Investors" section of Halozyme's corporate website and a replay will be available following the close of the call. To register for this conference call, please use this link: http://www.directeventreg.com/registration/event/7767139. After registering, you will receive an email confirmation that includes dial in details and unique conference call codes for entry. Registration is open through the live call. However, to ensure you are connected for the full call, we suggest registering a day in advance or at minimum 10 minutes before the start of the call.
About Halozyme
Halozyme is a biopharmaceutical company bringing disruptive solutions to significantly improve patient experiences and outcomes for emerging and established therapies. Halozyme advises and supports its biopharmaceutical partners in key aspects of new drug development with the goal of improving patients' lives while helping its partners achieve global commercial success. As the innovators of the ENHANZE(®) technology, which can reduce hours-long treatments to a matter of minutes, Halozyme's commercially-validated solution has positively impacted more than 400,000 patient lives via five commercialized products across more than 100 global markets. Halozyme and its world-class partners are currently advancing multiple therapeutic programs intended to deliver innovative therapies, with the potential to improve the lives of patients around the globe. Halozyme's proprietary enzyme rHuPH20 forms the basis of the ENHANZE(®) technology and is used to facilitate the delivery of injected drugs and fluids, potentially reducing the treatment burden of other drugs to patients. Halozyme has licensed its ENHANZE(®) technology to leading pharmaceutical and biotechnology companies including Roche, Baxalta, Pfizer, Janssen, AbbVie, Lilly, Bristol-Myers Squibb, Alexion and argenx. Halozyme derives revenues from these collaborations in the form of milestones and royalties as the Company's partners make progress developing and commercializing their products being developed with ENHANZE(®). 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 in this press release include forward-looking statements including, without limitation, statements concerning the Company's expected future financial performance (including the Company's financial outlook for 2020) and expectations for future growth, profitability, revenue, margins, expenses and earnings-per-share and the Company's plans to continue its share repurchase program. Forward-looking statements regarding the Company's ENHANZE(®) drug delivery technology may include the possible activity, benefits and attributes of ENHANZE(®), the possible method of action of ENHANZE(®), its potential application to aid in the dispersion and absorption of other injected therapeutic drugs and facilitating more rapid delivery of injectable medications through subcutaneous delivery. Forward-looking statements regarding the Company's ENHANZE(® )business may include potential growth driven by our partners' development and commercialization efforts, the size and growth prospects of our partners' drug franchises, potential new ENHANZE(® )collaborations and collaborative targets and regulatory review and potential approvals of new ENHANZE(® )products. These 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 and involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Actual results could differ materially from the expectations contained in these forward-looking statements as a result of several factors, including unexpected levels of revenues, expenditures and costs, inability to sustain profitability, unexpected delays in the execution of the Company's share repurchase program, unexpected results or delays in the growth of the Company's ENHANZE(®) business, or in the development, regulatory review or commercialization of ENHANZE(®) products, including any potential delays caused by the current COVID-19 global pandemic, regulatory approval requirements, unexpected adverse events or patient outcomes and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the Company's most recently filed Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Contact:
Al Kildani
Vice President, Investor Relations and Corporate Communications
858-704-8122
ir@halozyme.com
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,
2020 2019 2020 2019
Revenues:
Royalties $
23,931 $
16,609 $
56,599 $
52,669
Product sales, net 9,048 29,205 23,532 43,355
Revenues under collaborative agreements 32,337 416 65,760 46,303
Total revenues 65,316 46,230 145,891 142,327
Operating expenses:
Cost of product sales 5,568 22,333 17,095 28,859
Research and development 7,747 30,455 26,856 95,693
Selling, general and administrative 11,702 17,979 35,309 53,323
Total operating expenses 25,017 70,767 79,260 177,875
Operating income (loss) 40,299 (24,537) 66,631 (35,548)
Other income (expense):
Investment and other income, net 961 1,613 4,764 5,653
Interest expense (4,990) (2,078) (15,342) (7,896)
Net income (loss) before income taxes 36,270 (25,002) 56,053 (37,791)
Income tax expense 63 13 132 52
Net income (loss) $
36,207 $
(25,015) $
55,921 $
(37,843)
Net income (loss) per share:
Basic $
0.27 $
(0.17) $
0.41 $
(0.26)
Diluted $
0.25 $
(0.17) $
0.40 $
(0.26)
Shares used in computing net income (loss) per share:
Basic 136,578 146,136 136,575 145,435
Diluted 142,081 146,136 139,971 145,435
Halozyme Therapeutics, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
September 30, December 31,
2020 2019
ASSETS
Current assets:
Cash and cash equivalents $
65,741 $
120,179
Marketable securities, available-for-
sale 280,965 301,083
Accounts receivable, net and other
contract assets 62,551 59,442
Inventories 57,697 29,359
Prepaid expenses and other assets 31,941 33,373
Total current assets 498,895 543,436
Property and equipment, net 10,252 10,855
Prepaid expenses and other assets 14,382 11,083
Restricted cash 500 500
Total assets $
524,029 $
565,874
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $
433 $
6,434
Accrued expenses 25,795 55,649
Deferred revenue, current portion 748 4,012
Current portion of long-term debt,
net 19,542
Total current liabilities 26,976 85,637
Deferred revenue, net of current
portion 641 1,247
Long-term debt, net 393,631 383,045
Other long-term liabilities 3,793 4,180
Stockholders' equity:
Common stock 135 137
Additional paid-in capital 646,184 695,066
Accumulated other comprehensive income
(loss) 426 240
Accumulated deficit (547,757) (603,678)
Total stockholders' equity 98,988 91,765
Total liabilities and stockholders'
equity $
524,029 $
565,874
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SOURCE Halozyme Therapeutics, Inc.
