On May 10, 2022 Halozyme Therapeutics, Inc. (NASDAQ: HALO) ("Halozyme") reported financial results for the first quarter ended March 31, 2022 and provided an update on its recent corporate activities and outlook (Press release, Halozyme, MAY 10, 2022, View Source [SID1234614080]).
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"We started 2022 strongly, achieving record royalty revenues with significant growth that was in-line with our guidance for 2022, and with the signing of a new ENHANZE collaboration and licensing agreement with Chugai Pharmaceutical," said Dr. Helen Torley, president and chief executive officer of Halozyme. "We were delighted to recently announce our plans to acquire Antares Pharma, Inc., which is expected to increase our top and bottom-line growth for the long term. We look forward to a transformative year as we add three commercial products and explore our combined platform capabilities and build on the strong momentum of our ENHANZE royalty business.
Recent Partner Highlights:
In March 2022, argenx announced positive topline results from its ADAPT-SC study evaluating subcutaneous (SC) efgartigimod (1000mg efgartigimod-PH20) using ENHANZE drug delivery technology for the treatment of generalized myasthenia gravis. The study met its primary endpoint, demonstrating noninferior total IgG reduction at day 29 with subcutaneously administered efgartigimod compared to intravenous (IV) administration. Based on these results, argenx has stated it plans to submit a Biologics License Application to the U.S. Food and Drug Administration by the end of 2022. Efgartigimod SC is on track to be the first of Halozyme’s Wave 3 potential partner launches that are projected to occur between 2023 and 2025.
In March 2022, Halozyme and Chugai Pharmaceutical entered into a global collaboration and license agreement for ENHANZE technology. Halozyme received upfront payments of $25 million from Chugai and is eligible to receive additional future payments of up to $160 million, subject to achievement of specified development, regulatory and sales-based milestones. Halozyme will also be entitled to receive royalties on sales of commercialized medicines using the ENHANZE technology.
In March 2022, ViiV initiated enrollment of a Phase 1 study to evaluate the safety and pharmacokinetics of N6LS, a broadly neutralizing antibody, administered subcutaneously with ENHANZE technology.
Recent Corporate Highlights:
In April 2022, Halozyme announced the pending acquisition of Antares, extending its revenue growth and durability by expanding its drug-delivery capabilities with the addition of an industry-leading auto-injector platform as well as a commercial business with three proprietary products. The proposed acquisition provides compelling financial and strategic benefits including expected revenue and non-GAAP earnings accretion in 2022 and long-term financial upside, accelerating both top and bottom-line growth. Halozyme expects to build on Antares’ existing platform technology and capabilities to drive incremental, durable revenue opportunities with additional intellectual property protections for Antares technology in place beyond 2030. The acquisition is expected to close in the first half of 2022.
In March 2022, Halozyme announced the appointment of Moni Miyashita to its board of directors. Ms. Miyashita is an accomplished executive with over 25 years of global strategic, mergers & acquisitions and business transformation expertise and currently serves as chief strategy officer of Valo Health.
In February 2022, Halozyme announced the appointment of Nicole LaBrosse as Halozyme’s chief financial officer. Nicole brings over 18 years of public accounting and corporate finance experience to Halozyme and most recently served as Halozyme’s vice president of finance and accounting.
First Quarter Financial Highlights
Revenue for the first quarter was $117.3 million compared to $89.0 million for the first quarter of 2021. The 32% year-over-year increase was primarily driven by an increase in royalty revenue primarily attributable to subcutaneous DARZALEX (daratumumab), partially offset by a decrease in revenues under collaborative agreements. Revenue for the quarter included $69.6 million in royalties, an increase of 89% compared to $36.9 million in the prior year period.
Cost of product sales for the first quarter was $15.9 million, compared to $18.2 million for the first quarter of 2021. The year-over-year decrease, despite an increase in product sales, was primarily driven by the timing of manufacturing overhead costs in the prior year period.
Research and development expenses for the first quarter were $11.9 million, compared to $9.0 million for the first quarter of 2021. The increase is primarily due to an increase in compensation expense, including share-based compensation, for personnel in support of investment in ENHANZE.
Selling, general and administrative expenses for the first quarter were $13.8 million, compared to $11.1 million for the first quarter of 2021. The increase was primarily due to an increase in compensation expense and costs associated with M&A and diligence activities.
Operating Income: On a GAAP basis in the first quarter of 2022, operating income was $75.7 million, compared to an operating income of $50.7 million in the first quarter of 2021.
Net Income: On a GAAP basis in the first quarter of 2022, net income was $60.1 million, compared with net income of $27.9 million in the first quarter of 2021. Non-GAAP net income was $66.1 million in the first quarter of 2022, compared with non-GAAP net income of $54.3 million in the first quarter of 2021.1
Earnings per Share: On a GAAP basis in the first quarter of 2022, diluted earnings per share was $0.43, compared with $0.19 in the first quarter of 2021. On a non-GAAP basis, diluted earnings per share was $0.47, compared with diluted earnings per share of $0.37 in the first quarter of 2021.1
Cash, cash equivalents and marketable securities were $786.1 million on March 31, 2022, compared to $740.9 million on December 31, 2021.
Financial Outlook for 2022
The Company is reiterating its financial guidance for 2022 which was first provided on January 10, 2022. For the full year 2022, the Company expects:
Total revenue of $530 million to $560 million, representing growth of 20%-26% over 2021 total revenue. The Company expects revenue from royalties to increase approximately 50% over revenue from royalties in 2021 to approximately $300 million.
GAAP operating income of $350 million to $380 million, representing growth of 27%-38% over 2021 GAAP operating income, resulting in operating margins greater than 65%.
GAAP net income of $270 million to $295 million; and non-GAAP net income of $290 million to $315 million.1 The Company notes that 2022 will be the first full fiscal year in which Halozyme will record income tax expense as part of its income statement.
GAAP diluted earnings per share of $1.90 to $2.05, inclusive of the first full year of income tax expense, projected to be $0.55-$0.60 per share. In comparison, in 2021 the Company recorded a one-time non-cash income tax benefit of $154.2 million or $1.05 per share, related to the release of its tax valuation allowance.
Non-GAAP diluted earnings per share are expected to be $2.05 to $2.20,1 reflective of the first full year in which the company will record income tax expense, projected to be $0.55-$0.60 per share.
The Company’s financial guidance does not consider the impact of the potential Antares acquisition, and the Company’s earnings per share guidance does not consider the impact of potential future share repurchases.
Halozyme will webcast its Quarterly Update Conference Call for the first quarter of 2022 today, Tuesday, May 10, 2022 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, please register a day in advance or at minimum 10 minutes before the start of the call.