On November 2, 2020 Halozyme Therapeutics, Inc. (NASDAQ: HALO) reported financial results for the third quarter ended September 30, 2020 and provided an update on its recent corporate activities and outlook (Press release, Halozyme, NOV 2, 2020, View Source [SID1234569687]).
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"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 (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: 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.