On May 10, 2021 Halozyme Therapeutics, Inc. (NASDAQ: HALO) reported financial results for the first quarter ended March 31, 2021 and provided an update on its recent corporate activities and outlook (Press release, Halozyme, MAY 10, 2021, View Source [SID1234579570]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
"The first quarter marked a strong start to 2021 highlighted by record quarterly royalty revenue driven by the continued successful launch of subcutaneous DARZALEX worldwide," said Dr. Helen Torley, president and chief executive officer. "Our pipeline of partnered product candidates using ENHANZE technology continues to build momentum with four new clinical study starts in the first quarter. Additionally, we were able to strengthen our balance sheet on highly attractive terms reflective of the strong anticipated cash flow generation and growth prospects for Halozyme."
Recent Partner Highlights:
Janssen achieved several important successes related to the subcutaneous formulation of DARZALEX (daratumumab) using ENHANZE technology during the first quarter and since including:
Janssen Pharmaceutical K.K. announced approval from Japan’s Ministry of Health, Labour and Welfare (MHLW) in March for the subcutaneous formulation of DARZALEX (known as DALACURO in Japan) for the treatment of multiple myeloma. Accordingly, Halozyme recognized $5 million in milestone revenues.
The Janssen Pharmaceutical Companies of Johnson & Johnson announced Health Canada approved DARZALEX SC (daratumumab injection), a subcutaneous (SC) formulation of daratumumab, in combination with bortezomib, cyclophosphamide and dexamethasone (D-VCd, also known as DCyBorD) in April for the treatment of adult patients with newly diagnosed light chain (AL) amyloidosis. There were previously no approved therapies for the disease.
Janssen Biotech, Inc. received U.S. Food and Drug Administration accelerated approval in January for DARZALEX FASPRO (daratumumab and hyaluronidase-fihj) in combination with bortezomib, cyclophosphamide and dexamethasone (D-VCd) for the treatment of adult patients with newly diagnosed light chain (AL) amyloidosis. There were previously no approved therapies for the disease.
In March, Horizon completed dosing for its first trial exploring a subcutaneous (SC) formulation of TEPEZZA (teprotumumab-trbw) using ENHANZE technology. The trial is a small, single-dose Phase 1 pharmacokinetic trial which includes evaluating the use of ENHANZE drug-delivery technology for a SC formulation, which could potentially shorten drug administration time, reducing healthcare practitioner time and offering additional flexibility and convenience for patients.
Bristol Myers Squibb (BMS) has advanced plans to initiate a Phase 3 study of nivolumab with ENHANZE technology for patients with advanced or metastatic clear cell renal cell carcinoma during the second quarter of 2021. Accordingly, Halozyme recognized $25 million in milestone revenues.
During the first quarter, argenx reached two important achievements related to its development of efgartigimod using ENHANZE including:
In February 2021, argenx announced a "go" decision for its late-stage ADHERE trial evaluating subcutaneous (SC) efgartigimod using ENHANZE technology in chronic inflammatory demyelinating polyneuropathy (CIDP). argenx plans to continue enrollment to include approximately 130 patients to support potential registration of SC efgartigimod for the treatment of CIDP.
In January 2021, argenx initiated a Phase 3 study of ARGX-113 using ENHANZE technology in pemphigus vulgaris and pemphigus foliaceus, rare autoimmune diseases that cause painful blisters on the skin and mucous membranes.
Recent Corporate Highlights:
In March 2021, the Company completed the sale of $805.0 million aggregate principal amount of the 2027 Convertible Senior Notes. A portion of the net proceeds were used to repurchase 80% of the 2024 Convertible Senior Notes. In connection with the note repurchase, the Company paid the holders $370.2 million in cash and issued 9.08 million shares.
During the first quarter, the Company repurchased approximately 1.8 million shares of common stock for $76.2 million at an average price per share of $42.89, partially offsetting shares issued to 2024 Convertible Senior Notes holders.
First Quarter and Full Year 2021 Financial Highlights
Revenue for the first quarter was $89.0 million compared to $25.4 million for the first quarter of 2020. The year-over-year increase was primarily driven by $30.0 million in milestone revenues from BMS and Janssen, an increase in royalty revenue attributable to subcutaneous DARZALEX and an increase in product sales. Revenue for the quarter included $36.9 million in royalties, an increase of 119% compared to $16.8 million in the prior year period.
Cost of product sales for the first quarter was $18.2 million, compared to $5.8 million for the first quarter of 2020. The year-over-year increase was primarily driven by higher product sales, principally the sales of bulk rHuPH20 to the Company’s partners.
Research and development expenses for the first quarter were $9.0 million, compared to $10.2 million for the first quarter of 2020. The decrease in expenses was due to the discontinuation of some development related activities for PEGPH20 and closure of the Company’s oncology operations, partially offset by an increase in costs to support additional ENHANZE targets.
Selling, general and administrative expenses for the first quarter were $11.1 million, compared to $12.6 million for the first quarter of 2020. The decrease was primarily due to one-time costs in the prior year related to the discontinuation of the Company’s development activities for PEGPH20 and closure of its oncology operations.
Operating Income: On a GAAP basis in the first quarter of 2021, operating income was $50.7 million, compared to an operating loss of $3.2 million in the first quarter of 2020.
Net Income: On a GAAP basis in the first quarter of 2021, net income was $27.9 million, compared with a net loss of $6.1 million in the first quarter of 2020. Non-GAAP net income was $54.3 million in the first quarter of 2021, compared with Non-GAAP net income of $1.9 million in the first quarter of 2020.1
Earnings per Share: On a GAAP basis in the first quarter of 2021, diluted earnings per share was $0.19, compared with a loss per share of $0.04 in the first quarter of 2020. On a non-GAAP basis diluted earnings per share was $0.37, compared with diluted earnings per share of $0.02 in the first quarter of 2020.1
Cash, cash equivalents and marketable securities were $764.3 million at March 31, 2021, compared to $368.0 million at December 31, 2020.
During the first quarter, the Company repurchased 1.8 million shares of common stock for $76.2 million at an average price of $42.89, bringing the total for share repurchases since the announcement of the Company’s three-year share repurchase program to $426.2 million at an average price of $21.99.
Financial Outlook for 2021
Based on the latest information from collaboration partners and planned expenditures for the year, the Company continues to expect:
Revenues of $375 million to $395 million, representing year-over-year growth of 40%-48%;
GAAP Operating Income of $215 million to $235 million, representing year-over-year growth of 49% – 63%;
GAAP Net Income of $190 million to $210 million, representing year-over-year growth of 47%-63% and Non-GAAP Net Income of $235 million to $255 million, representing year-over-year growth of 47% – 59%;1
GAAP Diluted Earnings per Share of $1.25 to $1.40, representing year-over-year growth of 37%-54%; and Non-GAAP Diluted Earnings per Share of $1.55 to $1.70, representing year-over-year growth of 38%-52%.1
The Company plans to repurchase up to an additional $49 million in common stock this year for a total of up to $125 million in common stock during 2021 as part of the $550 million three-year share repurchase plan authorized by Halozyme’s board of directors in 2019. The amount and timing of shares to be repurchased in 2021 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 first quarter of 2021 today, Monday, May 10, 2021 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: View Source 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.