On February 24, 2020 Halozyme Therapeutics, Inc. (NASDAQ: HALO) reported financial results for the fourth quarter and full year ended December 31, 2019 and provided an update on its recent corporate activities and outlook (Press release, Halozyme, FEB 24, 2020, View Source [SID1234554652]).

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"I am pleased to report 2020 is off to a strong start as we have substantially completed our actions to reposition the company to focus on ENHANZE," said Dr. Helen Torley, president and chief executive officer. "As a result of our decisive actions, we expect to become sustainably profitable in the second quarter. In addition, we anticipate multiple events that will grow the value of our ENHANZE technology in 2020. Both the subcutaneous formulation of Darzalex and the fixed-dose combination of Perjeta-Herceptin are under regulatory review in the U.S. and EU with potential approvals and launches expected this year. We anticipate three ENHANZE pipeline candidates to begin Phase 3 testing, one to begin Phase 2, and at least five new Phase 1 trial starts. With these key developments, a transition to profitability and plans for continued return of capital, Halozyme has never been in a stronger position to deliver value for our shareholders. With a target of 19 products in clinical development or already commercialized by the end of this year, we continue to see the potential for our royalty revenues to achieve $1 billion by 2027."

Fourth Quarter 2019 and Recent Highlights

In December, Janssen selected for development with ENHANZE the targets EGFR and cMET on an exclusive basis as part of the bispecific antibody (JNJ-61186372), which is being studied in solid tumors.
Halozyme recently completed $200 million worth of share repurchases under the Board of Directors authorized capital return program to repurchase up to $550 million of the Company’s outstanding common stock over the next three years. This repurchase plan was first authorized by the Board of Directors in November 2019 and has $350 million remaining under the authorization. The Company plans to repurchase up to an additional $150M worth of shares in 2020.
In November 2019, Halozyme completed the sale of $460.0 million aggregate principal amount of Convertible Senior Notes due 2024. A portion of the net proceeds from the offering were used to repurchase $200 million of the Company’s stock and $26.1 million to repay all outstanding amounts under loan agreements with Oxford Finance and Silicon Valley Bank.
In November 2019, Halozyme announced strategic actions to reposition the Company with a focus on its ENHANZE drug delivery technology and immediately implemented a restructuring following the announcement of results of the HALO-301 clinical study. Since then, the Company has completed the majority of the restructuring and remains on track to become a sustainably profitable company beginning in the second quarter of 2020.
In October 2019, collaboration partner Roche nominated one new undisclosed target to be studied utilizing the ENHANZE technology, triggering a $10 million milestone payment to Halozyme.
In October 2019, collaboration partner Bristol-Myers Squibb initiated a Phase 1 study of relatlimab in combination with nivolumab utilizing the ENHANZE technology.
Fourth Quarter and Full Year 2019 Financial Highlights

Revenue for the fourth quarter was $53.7 million compared to $60.2 million for the fourth quarter of 2018. The year-over-year decrease was primarily driven by a $25 million upfront payment from Roche in the year ago period 2018 related to the expansion of Roche’s collaboration with Halozyme, partially offset by higher API sales to our partners in the current period. Revenue for the quarter included $17.2 million in royalties, which compared to $19.3 million in the prior year period.

Total revenues for the full year were $196.0 million, compared with $151.9 million in 2018, representing growth of 29% year over year.
Research and development expenses for the fourth quarter were $45.1 million, compared to $36.7 million for the fourth quarter of 2018. The increase in expenses was due to $17.2 million in restructuring and one-time charges related to the shift in strategic focus to the Company’s ENHANZE drug delivery technology, partially offset by $9.4 million lower PEGPH20 clinical trial related costs.

Research and development expenses for the full year were $140.8 million, compared with $150.3 million in 2018.
Selling, general and administrative expenses for the fourth quarter were $23.9 million, compared to $18.0 million for the fourth quarter of 2018. The increase was due to restructuring and other one-time charges of $11.2 million, partially offset by lower personnel costs.

Selling, general and administrative expenses for the full year were $77.3 million, compared with $60.8 million in 2018.
Net loss for the fourth quarter was $34.4 million, or 0.24 per share, compared to a net loss in the fourth quarter of 2018 of $2.1 million, or $0.01 per share.

Net loss for the full year was $72.2 million or $0.50 per share, compared to $80.3 million or $0.56 per share in 2018.
Cash, cash equivalents and marketable securities were $421.3 million at December 31, 2019, compared to $354.5 million at December 31, 2018.
Financial Outlook for 2020

Halozyme is reiterating its 2020 financial guidance ranges as first announced on January 14, 2020. For 2020, Halozyme expects:

Revenues of $230 million to $245 million, representing growth of 17% to 25%;
Earnings per share on a GAAP basis of $0.60 to $0.75 with the first quarter of sustainable profitability beginning in Q2 2020.
The guidance for earnings per share does not reflect any potential impact from the Company’s plans to repurchase an additional number of shares, up to $150 million worth, during 2020. The amount and timing of shares repurchased during 2020 will be subject to a variety of factors including market conditions, other business considerations and applicable legal requirements.

Webcast and Conference Call

Halozyme will webcast its Quarterly Update Conference Call for the fourth quarter of 2019 today, Monday, February 24, 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 access the webcast and additional documents related to the call, please visit halozyme.com approximately fifteen minutes prior to the call to register, download and install any necessary audio software. The call may also be accessed by dialing (877) 824-0907 (domestic callers) or (647) 689-5655 (international callers). A telephone replay will be available after the call by dialing (800) 585-8367 (domestic callers) or (416) 621-4642 (international callers) using replay ID number 1266162.