On January 23, 2021 Halozyme Therapeutics, Inc. (NASDAQ: HALO) reported financial results for the fourth quarter and full year ended December 31, 2020 and provided an update on its recent corporate activities and outlook (Press release, Halozyme, FEB 23, 2021, View Source [SID1234575459]).
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"The fourth quarter capped an extraordinary year for Halozyme during which we transitioned to a profitable, high-growth company with strong prospects for continued growth over the long-term," said Dr. Helen Torley, president and chief executive officer. "Our strong growth prospects are fueled by recent product approvals for subcutaneous DARZALEX (daratumumab) and Phesgo (pertuzumab, trastuzumab and hyaluronidase) utilizing our ENHANZE technology. Building on our portfolio of 5 commercialized partner products, we project the expansion of our development pipeline, including 4 products being evaluated in 7 phase 3 studies utilizing our ENHANZE technology. We believe this advancing pipeline of products utilizing our ENHANZE technology is setting the potential for multiple waves of future product launches that will deliver long-term growth in revenues, profitability and cash flow."
Fourth Quarter 2020 and Recent Highlights Include:
In February 2021, argenx announced a "go" decision for its ADHERE trial evaluating subcutaneous (SC) efgartigimod with 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, ENHANZE partner Janssen Biotech, Inc. (Janssen) received U.S. Food and Drug Administration (FDA) accelerated approval of 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. AL amyloidosis is a rare and potentially fatal disease that develops when plasma cells in the bone marrow generate abnormal light chains, which form amyloid deposits in vital organs and lead to organ deterioration. There were previously no approved therapies for the disease.
In January 2021, argenx initiated a Phase 3 study of ARGX-113 with ENHANZE technology in pemphigus vulgaris and pemphigus foliaceus, rare autoimmune diseases that cause painful blisters on the skin and mucous membranes.
In December 2020, argenx initiated a Phase 3 study of ARGX-113 with ENHANZE technology for patients with immune thrombocytopenia (ITP), an immune disorder in which the blood does not clot normally, resulting in a $15 million payment to Halozyme.
In December 2020, Roche initiated a Phase 3 study in patients with non-small cell lung cancer for Tecentriq (atezolizumab) with ENHANZE technology, resulting in a $17 million payment to Halozyme.
In December 2020, the Company announced that the European Commission approved Roche’s Phesgo, a fixed-dose combination of Perjeta (pertuzumab) and Herceptin (trastuzumab) with ENHANZE technology, administered by SC injection for the treatment of patients with early and metastatic HER2-positive breast cancer. This was the first time the European Commission approved a product combining two monoclonal antibodies that can be administered by a single SC injection utilizing ENHANZE technology.
In November 2020, the Company announced a global collaboration and license agreement that provides Horizon Therapeutics plc exclusive access to ENHANZE technology for SC formulation of medicines targeting IGF-1R for which the Company received an upfront payment of $30 million. Horizon intends to use ENHANZE technology to develop a SC formulation of TEPEZZA (teprotumumab-trbw), indicated for the treatment of Thyroid Eye Disease, a serious, progressive and vision-threatening rare autoimmune disease, potentially shortening drug administration time, reducing healthcare practitioner time and offering additional flexibility and convenience for patients.
In November 2020, Janssen initiated a Phase 1 study of amivantamab utilizing ENHANZE technology in advanced solid tumors.
In November 2020, the Company announced that Janssen submitted regulatory applications to the FDA and European Medicines Agency (EMA) seeking approval of DARZALEX FASPRO in the U.S. and as DARZALEX SC in the European Union (EU) utilizing ENHANZE technology in combination with pomalidomide and dexamethasone (D-Pd) for the treatment of patients with relapsed or refractory multiple myeloma who have received at least one prior line of therapy.
In November 2020, Janssen submitted a Type II variation application to the EMA seeking European approval for DARZALEX SC utilizing ENHANZE technology to be used in the treatment of patients with AL amyloidosis.
In October 2020, the Company announced that argenx expanded its existing global collaboration and license agreement that was signed in February 2019. Under the 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.
During the fourth quarter, the Company repurchased approximately 1.1 million shares of common stock for $37.6 million at an average price per share of $34.36, bringing the total 2020 repurchases to $150.0 million at an average price of $23.05.
Fourth Quarter and Full Year 2020 Financial Highlights
Revenue for the fourth quarter was $121.7 million compared to $53.7 million for the fourth quarter of 2019. The year-over-year increase was primarily driven by a $30.0 million upfront payment from Horizon, a $15.0 million sales milestone from Janssen, an increase in royalty revenue following the strong DARZALEX FASPRO launch during the second quarter and an increase in product sales. Revenue for the quarter included $32.0 million in royalties, an increase of 86% compared to $17.2 million in the prior year period.
Total revenues for the full year were $267.6 million, compared with $196.0 million in 2019, representing growth of 37% year over year.
Research and development expenses for the fourth quarter were $7.4 million, compared to $45.1 million for the fourth 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 and one-time restructuring charges of $17.2 million in the prior year related to the shift in strategic focus to the Company’s ENHANZE technology.
Research and development expenses for the full year were $34.2 million, compared with $140.8 million in 2019.
Selling, general and administrative expenses for the fourth quarter were $10.4 million, compared to $23.9 million for the fourth quarter of 2019. The decrease was due to lower compensation and commercial-related expenses related to the corporate restructuring announced in November 2019 and a one-time restructuring charge of $11.2 million in the prior year.
Selling, general and administrative expenses for the full year were $45.7 million, compared with $77.3 million in 2019.
Operating income for the fourth quarter was $77.6 million, compared to an operating loss of $32.1 million in the fourth quarter of 2019.
Operating income for the full year was $144.3 million, compared to an operating loss of $67.6 million in 2019.
Net income for the fourth quarter was $73.2 million, or $0.50 per share, compared to a net loss in the fourth quarter of 2019 of $34.4 million, or loss of $0.24 per share.
Net income for the full year was $129.1 million or $0.91 per share, compared to a net loss of $72.2 million or loss of $0.50 per share in 2019.
Cash, cash equivalents and marketable securities were $368.0 million at December 31, 2020, compared to $421.3 million at December 31, 2019.
During 2020, the Company repurchased 6.5 million shares of common stock for $150 million at an average price of $23.05, bringing the total for share repurchases since the announcement of the Company’s three-year share repurchase program to $350.0 million at an average price of $19.88.
Financial Outlook for 2021
Based on the latest information from collaboration partners and planned expenditures for the year, the Company expects:
Revenues of $375 million to $395 million, representing year-over-year growth of 40%-48%, with revenues from royalties projected to approximately double versus 2020;
Operating Income of $215 million to $235 million, representing year-over-year growth of 49%-63%;
Earnings per share on a GAAP basis of $1.40 to $1.55, representing year-over-year growth of 54%-70%.
The Company plans to repurchase 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 fourth quarter of 2020 today, Tuesday, February 23, 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.