On November 12, 2019 Halozyme Therapeutics, Inc. (NASDAQ: HALO) reported financial results for the third quarter ended September 30, 2019 and provided an update on its recent corporate activities and outlook (Press release, Halozyme, NOV 12, 2019, View Source [SID1234550958]).

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"We have transitioned our strategy to focus solely on our high-growth, high-margin ENHANZE drug delivery technology," said Dr. Helen Torley, president and chief executive officer. "With profitability anticipated in the second quarter of 2020 and a long runway for growth with ENHANZE, we are in a strong position to build value and return capital to investors."

Third Quarter 2019 and Recent Highlights Include:

In November 2019, the Company announced strategic actions to reposition the Company with a focus solely on its ENHANZE drug delivery technology following the announcement that the HALO-301 Phase 3 study did not meet its primary endpoint. In order to implement this strategic shift, the Company initiated an organizational restructuring to close its oncology operations. Headcount will be reduced by approximately 55%, or approximately 160 positions, with over 80% of the reduction completed in early January 2020. Upon completion of the restructuring and after booking all related one-time charges, Halozyme anticipates becoming a sustainably profitable company beginning in the second quarter of 2020.
In November 2019, the Company announced that the Board of Directors has authorized the initiation of a capital return program to repurchase up to $350 million of the Company’s outstanding common stock over the next three years. The Board will regularly review this capital return program in connection with a balanced capital allocation strategy.
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.
In September 2019, Roche announced that the global Phase 3 FeDeriCa study met its primary endpoint. The FeDeriCa study investigated a fixed-dose combination of pertuzumab (Perjeta) and trastuzumab (Herceptin) for subcutaneous administration using Halozyme’s ENHANZE drug delivery technology in combination with intravenous chemotherapy. Additional data from the FeDeriCa study will be the subject of a presentation at the San Antonio Breast Cancer Symposium in December, followed by regulatory submissions to health authorities worldwide anticipated in early 2020.
In September 2019, a Halozyme collaboration partner initiated a Phase 1 study in healthy volunteers for an undisclosed target utilizing the ENHANZE technology.
In August 2019, Roche initiated a Phase 1 study with OCREVUS (ocrelizumab) utilizing the ENHANZE technology in patients with multiple sclerosis.
Third Quarter 2019 Financial Highlights

Revenue for the third quarter was $46.2 million compared to $25.6 million for the third quarter of 2018. The year-over-year increase was primarily driven by higher product sales of bulk rHuPH20 to Janssen of $20.1 million. Revenue for the quarter included $16.6 million in royalties, which compared to $18.7 million in the prior year period. The decrease in royalties was mainly driven by lower sales of Herceptin SC by Roche, partially offset by higher sales of RITUXAN HYCELA in the U.S. by Roche and higher sales of HyQvia by Takeda.
Research and development expenses for the third quarter were $30.5 million, compared to $35.5 million for the third quarter of 2018. The decline in expenses was driven by reduced clinical trial activity as the Company approached the topline results readout from HALO-301.
Selling, general and administrative expenses for the third quarter were $18.0 million, compared to $14.9 million for the third quarter of 2018. The increase is due to an increase in personnel expenses related to support of the Company’s oncology operations.
Net loss for the third quarter was $25.0 million, or $0.17 per share, compared to a net loss in the third quarter of 2018 of $27.9 million, or $0.19 per share.
Cash, cash equivalents and marketable securities were $238.0 million at September 30, 2019, compared to $354.5 million at December 31, 2018.
Financial Outlook for 2019

Halozyme is updating its 2019 financial guidance ranges:

Total revenues are now expected in the range of $195 million to $205 million, compared with prior guidance of $205 million to $215 million, primarily driven by the movement of a planned Phase 3 trial start from 2019 to 2020, offset in part, by a new unplanned target nomination. Included in that total, royalties are expected in the range of $67 million to $69 million, compared with prior guidance of $72 million to $74 million;
Operating expenses in the range of $255 million to $265 million, and operating expenses excluding cost of product sales of $215 million to $225 million, both of which are unchanged from prior guidance. These guidance ranges include anticipated one-time restructuring costs of $25 million to $27 million that will be booked in the fourth quarter of 2019. The restructuring costs were offset by expense savings related to the closing of the Company’s oncology operations;
Operating cash burn of $50 million to $60 million, compared with prior guidance of $40 million to $50 million;
Year-end cash, cash equivalents and marketable securities balance is unchanged at $220 million to $230 million.
Webcast and Conference Call
Halozyme will webcast its Quarterly Update Conference Call for the third quarter of 2019 today, Tuesday, November 12, 2019 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 6597916.