Revenue Increased 38% YOY to $162.1 million; GAAP Diluted Earnings per Share
of $0.29 and Non-GAAP Diluted
Earnings per Share of $0.471
Royalty Revenue Increased 43% YOY to
$99.6 million
Reiterating 2023 Revenue Guidance of
$815-$845
million, Representing 23-28% YOY Growth; EBITDA of
$415-$440
million, Representing >30% YOY
Growth1
SAN
DIEGO, May 9, 2023 /PRNewswire/ -- Halozyme
Therapeutics, Inc. (NASDAQ: HALO) ("Halozyme") today reported its
financial and operating results for the first quarter ended
March 31, 2023 and provided an update on its recent corporate
activities and outlook.
"We executed to our plan in the first quarter with total
year-over-year revenue growth of 38% to $162
million. We expect strong quarter-over-quarter revenue
growth for the remainder of the year, driven largely by royalties
from continued uptake of Darzalex® SC and
Phesgo®, milestone revenue, and sales of our commercial
products," said Dr. Helen Torley,
president and chief executive officer of Halozyme. "We are looking
forward to the expansion of our commercialized partner products
utilizing ENHANZE® with potential regulatory approvals
for SC efgartigimod for generalized myasthenia gravis and for SC
atezolizumab, later this year. We are on track to achieve our
financial guidance and operational goals for 2023. Our
differentiated ENHANZE® and auto-injector technologies
position us well to execute on our growth goals and drive long-term
value for our stakeholders."
Recent Partner Highlights:
- In April 2023, Takeda announced
that the U.S. Food and Drug Administration ("FDA") approved a
supplemental Biologics License Application ("sBLA") to expand the
use of HYQVIA® to treat primary immunodeficiency in
children.
- In March 2023, BMS initiated a
Phase 3 trial to demonstrate the drug exposure levels of nivolumab
and relatlimab fixed-dose combination with ENHANZE® is
not inferior to IV administration in participants with previously
untreated metastatic or unresectable melanoma
(RELATIVITY-127).
- In January 2023, Roche announced
the FDA accepted the Biologics License Application ("BLA") for SC
atezolizumab with ENHANZE® with a PDUFA date of
September 15, 2023.
- In January 2023, argenx announced
that the FDA extended the PDUFA date for SC efgartigimod with
ENHANZE® for generalized myasthenia gravis to
June 20, 2023.
Recent Corporate Highlights:
- In the first quarter of 2023, Halozyme repurchased 4.2 million
shares of common stock for $150.0
million at an average price per share of $36.01. As of March 31,
2023, the Company has repurchased a total of 12.6 million
shares for $500.0 million at an
average price per share of $39.81
under our $750 million 3-year share
repurchase plan approved in December
2021.
- In March 2023, Halozyme converted
the outstanding amount of the 2024 Convertible Notes in full, in
exchange for $13.5 million in cash
and 288,886 shares of common stock.
First Quarter 2023 Financial Highlights:
- Revenue in the first quarter was $162.1
million compared to $117.3
million in the first quarter of 2022. The 38% year-over-year
increase was driven by an increase in royalty revenue primarily
attributable to subcutaneous DARZALEX® (daratumumab) and
the addition of product sales as a result of the Antares Pharma
acquisition. Revenue for the quarter included $99.6 million in royalties, an increase of 43%
compared to $69.6 million in the
prior year period.
- Cost of sales in the first quarter was $35.2 million, compared to $15.9 million in the first quarter of 2022. The
increase was driven by an increase in product sales as a result of
the Antares Pharma acquisition and amortization of inventory
step-up associated with purchase accounting for the Antares Pharma
acquisition.
- Amortization of intangibles expense in the first quarter was
$17.8 million, due to the Antares
Pharma acquisition, in which Halozyme acquired intangible assets
that are amortized over a useful life related to the auto injector
technology platform, XYOSTED® and
TLANDO®.
- Research and development expense in the first quarter was
$18.0 million, compared to
$11.9 million in the first quarter of
2022. The increase is primarily due to an increase in compensation
expense related to the ongoing combined larger workforce as a
result of the Antares Pharma acquisition, which added device
platform resources in regulatory, quality and manufacturing, as
well as planned investments in ENHANZE®.
- Selling, general and administrative expense in the first
quarter was $37.4 million, compared
to $13.8 million in the first quarter
of 2022. The increase was primarily due to an increase in
compensation expense related to the ongoing combined larger
workforce, including the addition of commercial resources in sales
and marketing for the testosterone replacement therapy
products.
- Operating income in the first quarter was $53.8 million, compared to operating income of
$75.7 million in the first quarter of
2022. Net Income in the first quarter was $39.6 million, compared with net income of
$60.1 million in the first quarter of
2022. EBITDA in the first quarter was $74.3
million, compared with EBITDA of $76.4 million in the first quarter of 2022. The
year-over-year comparisons reflect a $25
million milestone payment in the first quarter of 2022 which
did not repeat in the first quarter of 2023, as well as year over
year increases in operating expenses.
- Earnings per Share: On a GAAP basis in the first quarter of
2023, diluted earnings per share was $0.29, compared with $0.43 in the first quarter of 2022. On a non-GAAP
basis, diluted earnings per share was $0.47, compared with diluted earnings per share
of $0.47 in the first quarter of
2022.1
- Cash, cash equivalents and marketable securities were
$275.6 million on March 31, 2023, compared to $362.8 million on December
31, 2022. The decrease was primarily due to the repurchase
of common stock for $150 million in
the first quarter of 2023.
Financial Outlook for 2023
The Company is reiterating its financial guidance for 2023,
which was initially provided on January 10,
2023. For the full year 2023, the Company expects:
- Total revenue of $815 million to
$845 million, representing growth of
23% to 28% over 2022 total revenue primarily driven by continued
strength in Wave 2 products, including DARZALEX® SC
(daratumumab) and Phesgo® (pertuzumab, trastuzumab and
hyaluronidase) utilizing ENHANZE®, as well as full year
auto-injector royalty and product contribution. The Company expects
revenue from royalties of $445
million to $455 million,
representing growth of 23% to 26%.
- EBITDA of $415 million to
$440 million, representing growth of
>30% over 2022. EBITDA excludes the impact of amortization costs
related to the Antares Pharma acquisition.1
- Non-GAAP diluted earnings per share of $2.50 to $2.65,
representing growth of >10% over 20221. The Company's
earnings per share guidance does not consider the impact of
potential future share repurchases.
Table 1. 2023 Financial Guidance
|
|
Guidance
Range
|
Total
Revenue
|
|
$815 to $845
million
|
Royalty
Revenue
|
|
$445 to $455
million
|
EBITDA
|
|
$415 to $440
million
|
Non-GAAP Diluted
EPS
|
|
$2.50 to
$2.65
|
Webcast and Conference Call
Halozyme will host its Quarterly Update Conference Call for the
first quarter ended March 31, 2023 today, Tuesday, May 9,
2023 at 4:30 p.m. ET/1:30 p.m. PT. The conference call may be
accessed live with pre-registration via this link:
https://conferencingportals.com/event/QfiVLXsr. The call will
also be webcast live through the "Investors" section of Halozyme's
corporate website and a recording will be made available following
the close of the call. To access the webcast and additional
documents related to the call, please visit the "Investors" section
of www.halozyme.com.
About Halozyme
Halozyme is a biopharmaceutical company bringing disruptive
solutions to significantly improve patient experiences and outcomes
for emerging and established therapies. As the innovators of the
ENHANZE® technology with the proprietary enzyme rHuPH20,
Halozyme's commercially-validated solution is used to facilitate
the delivery of injected drugs and fluids in order to reduce the
treatment burden to patients. Having touched more than 700,000
patient lives in post-marketing use in five commercialized products
across more than 100 global markets, Halozyme has licensed its
ENHANZE® technology to leading pharmaceutical and
biotechnology companies including Roche, Takeda, Pfizer, AbbVie,
Eli Lilly, Bristol-Myers Squibb, Alexion, argenx, Horizon
Therapeutics, ViiV Healthcare and Chugai Pharmaceutical.
Halozyme also develops, manufactures and commercializes, for
itself or with partners, drug-device combination products using its
advanced auto-injector technology that are designed to provide
commercial or functional advantages such as improved convenience
and tolerability, and enhanced patient comfort and adherence. The
Company has a commercial portfolio of proprietary products
including XYOSTED®, TLANDO® and
NOCDURNA® and partnered commercial products and ongoing
product development programs with several pharmaceutical companies
including Teva Pharmaceutical, Pfizer and Idorsia
Pharmaceuticals.
Halozyme is headquartered in San
Diego, CA and has offices in Ewing, NJ and Minnetonka, MN. Minnetonka is also the site of its operations
facility.
For more information visit www.halozyme.com and connect with us
on LinkedIn and Twitter.
Note Regarding Use of Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), this press release and the accompanying tables contain
certain Non-GAAP financial measures. The Company reports earnings
before interest, taxes, depreciation and, amortization (EBITDA),
adjusted EBITDA and Non-GAAP diluted earnings per share, and
guidance with respect to those measures, in addition to, and not as
a substitute for, or superior to, financial measures calculated in
accordance with GAAP. The Company calculates Non-GAAP diluted
earnings per share excluding share-based compensation expense,
amortization of debt discount, debt extinguishment expense,
intangible asset amortization, changes in contingent liabilities,
transaction costs for business combinations and certain adjustments
to income tax expense. The Company calculates EBITDA excluding
interest, taxes, depreciation and amortization. The Company
calculates adjusted EBITDA excluding transaction costs for business
combinations. Reconciliations between GAAP and Non-GAAP financial
measures are included at the end of this press release. The Company
does not provide reconciliations of forward-looking adjusted
measures to GAAP due to the inherent difficulty in forecasting and
quantifying certain amounts that are necessary for such
reconciliation, including adjustments that could be made for
changes in contingent liabilities, share-based compensation expense
and the effects of any discrete income tax items. The Company
evaluates other items of income and expense on an individual basis
for potential inclusion in the calculation of Non-GAAP financial
measures and considers both the quantitative and qualitative
aspects of the item, including (i) its size and nature, (ii)
whether or not it relates to the Company's ongoing business
operations and (iii) whether or not the Company expects it to occur
as part of Halozyme's normal business on a regular basis. Non-GAAP
financial measures do not have any standardized meaning and are
therefore unlikely to be comparable to similarly titled measures
presented by other companies. These Non-GAAP financial measures are
not meant to be considered in isolation and should be read in
conjunction with the Company's consolidated financial statements
prepared in accordance with GAAP; and are not prepared under any
comprehensive set of accounting rules or principles. In addition,
from time to time in the future there may be other items that the
Company may exclude for purposes of its Non-GAAP financial
measures; and the Company may in the future cease to exclude items
that it has historically excluded for purposes of its Non-GAAP
financial measures. Halozyme considers these Non-GAAP financial
measures to be important because they provide useful measures of
the operating performance of the Company, exclusive of factors that
do not directly affect what the Company considers to be its core
operating performance, as well as unusual events. The Non-GAAP
measures also allow investors and analysts to make additional
comparisons of the operating activities of the Company's core
business over time and with respect to other companies, as well as
assessing trends and future expectations. The Company uses Non-GAAP
financial information in assessing what it believes is a meaningful
and comparable set of financial performance measures to evaluate
operating trends, as well as in establishing portions of our
performance-based incentive compensation programs.
Safe Harbor Statement
In addition to historical information, the statements set forth
in this press release include forward-looking statements including,
without limitation, statements concerning the Company's expected
future growth, financial performance (including the Company's
financial outlook for 2023) and expectations for future growth,
achieving operational goals, profitability, revenues (including
royalty, milestone and product sales revenue), EBITDA and non-GAAP
diluted earnings-per-share and potential share repurchase under its
share repurchase program. Forward-looking statements regarding the
Company's ENHANZE® drug delivery technology may include
the possible benefits and attributes of ENHANZE®, its
potential application to aid in the dispersion and absorption of
other injected therapeutic drugs and facilitating more rapid
delivery and administration of higher volumes of injectable
medications through subcutaneous delivery. Forward-looking
statements regarding the Company's business may include
potential growth and receipt of royalty and milestone payments
driven by our partners' development and commercialization efforts,
potential new clinical trial study starts, regulatory submissions
and product launches, the size and growth prospects of our
partners' drug franchises, potential new or expanded collaborations
and collaborative targets and regulatory review and potential
approvals of new partnered or proprietary products. These
forward-looking statements are typically, but not always,
identified through use of the words "believe," "enable," "may,"
"will," "could," "intends," "estimate," "anticipate," "plan,"
"predict," "probable," "potential," "possible," "should,"
"continue," and other words of similar meaning and involve risk and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements. Actual results could
differ materially from the expectations contained in these
forward-looking statements as a result of several factors,
including unexpected levels of revenues, expenditures and costs,
unexpected delays in the execution of the Company's share
repurchase program, unexpected results or delays in the growth of
the Company's business, or in the development, regulatory review or
commercialization of the Company's partnered or proprietary
products, regulatory approval requirements, unexpected adverse
events or patient outcomes and competitive conditions. These and
other factors that may result in differences are discussed in
greater detail in the Company's most recent Annual Report on Form
10-K and Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission.
Contacts:
Tram Bui
VP, Investor Relations and Corporate Communications
609-359-3016
tbui@antarespharma.com
Dawn Schottlandt / Claudia Styslinger
Argot Partners
212-600-1902
Halozyme@argotpartners.com
Footnotes:
1. Reconciliations between GAAP reported and non-GAAP financial
information and adjusted guidance measures are provided at the
end.
Halozyme
Therapeutics, Inc.
Consolidated
Statements of Operations
(Unaudited)
(In thousands,
except per share amounts)
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
|
Royalties
|
|
$
99,640
|
|
$
69,605
|
Product sales,
net
|
|
60,794
|
|
22,140
|
Revenues under
collaborative agreements
|
|
1,709
|
|
25,534
|
Total
revenues
|
|
162,143
|
|
117,279
|
Operating
expenses:
|
|
|
|
|
Cost of
sales
|
|
35,170
|
|
15,922
|
Amortization of
intangibles
|
|
17,835
|
|
—
|
Research and
development
|
|
17,979
|
|
11,853
|
Selling, general and
administrative
|
|
37,357
|
|
13,834
|
Total operating
expenses
|
|
108,341
|
|
41,609
|
Operating
income
|
|
53,802
|
|
75,670
|
Other income
(expense):
|
|
|
|
|
Investment and other
(expense) income, net
|
|
2,979
|
|
498
|
Interest
expense
|
|
(4,543)
|
|
(1,759)
|
Net income before
income taxes
|
|
52,238
|
|
74,409
|
Income tax
expense
|
|
12,623
|
|
14,301
|
Net income
|
|
$
39,615
|
|
$
60,108
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
Basic
|
|
$
0.29
|
|
$
0.44
|
Diluted
|
|
$
0.29
|
|
$
0.43
|
|
|
|
|
|
Shares used in
computing net income per share:
|
|
|
|
|
Basic
|
|
135,027
|
|
137,658
|
Diluted
|
|
137,900
|
|
141,277
|
Halozyme
Therapeutics, Inc
Consolidated Balance
Sheets
(Unaudited)
(In
thousands)
|
|
|
|
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
96,383
|
|
$
234,195
|
Marketable securities,
available-for-sale
|
|
179,225
|
|
128,599
|
Accounts receivable,
net and contract assets
|
|
194,883
|
|
231,072
|
Inventories,
net
|
|
107,521
|
|
100,123
|
Prepaid expenses and
other current assets
|
|
37,007
|
|
45,024
|
Total current
assets
|
|
615,019
|
|
739,013
|
Property and equipment,
net
|
|
77,964
|
|
75,570
|
Prepaid expenses and
other assets
|
|
25,240
|
|
26,301
|
Goodwill
|
|
416,223
|
|
409,049
|
Intangible assets,
net
|
|
528,817
|
|
546,652
|
Deferred tax assets,
net
|
|
35,684
|
|
44,426
|
Restricted
cash
|
|
500
|
|
500
|
Total
assets
|
|
$ 1,699,447
|
|
$
1,841,511
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
8,695
|
|
$
17,693
|
Accrued
expenses
|
|
79,978
|
|
96,516
|
Deferred revenue,
current portion
|
|
3,246
|
|
3,246
|
Current portion of
long-term debt, net
|
|
—
|
|
13,334
|
Total current
liabilities
|
|
91,919
|
|
130,789
|
Deferred revenue, net
of current portion
|
|
2,253
|
|
2,253
|
Long-term debt,
net
|
|
1,494,380
|
|
1,492,766
|
Other long-term
liabilities
|
|
29,573
|
|
30,433
|
Contingent
liability
|
|
15,472
|
|
15,472
|
Total
liabilities
|
|
1,633,597
|
|
1,671,713
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common
stock
|
|
132
|
|
135
|
Additional paid-in
capital
|
|
—
|
|
27,368
|
Accumulated other
comprehensive loss
|
|
24
|
|
(922)
|
Retained earnings
(accumulated deficit)
|
|
65,694
|
|
143,217
|
Total stockholders'
equity
|
|
65,850
|
|
169,798
|
Total liabilities and
stockholders' equity
|
|
$ 1,699,447
|
|
$
1,841,511
|
Halozyme
Therapeutics, Inc
GAAP to Non-GAAP
Reconciliations
Net Income and
Diluted EPS
(Unaudited)
(In thousands,
except per share amounts)
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2023
|
|
2022
|
GAAP Net
Income
|
|
$
39,615
|
|
$
60,108
|
Adjustments:
|
|
|
|
|
Share-based
compensation
|
|
7,966
|
|
4,742
|
Amortization of debt
discount
|
|
1,835
|
|
971
|
Amortization of
intangible assets
|
|
17,835
|
|
—
|
Transaction costs for
business combinations(1)
|
|
278
|
|
1,511
|
Amortization of
inventory step-up at fair value(2)
|
|
1,304
|
|
—
|
Income tax effect of
above adjustments(3)
|
|
(3,797)
|
|
(1,250)
|
Non-GAAP Net
Income
|
|
$
65,036
|
|
$
66,082
|
|
|
|
|
|
GAAP Diluted
EPS
|
|
$
0.29
|
|
$
0.43
|
Adjustments:
|
|
|
|
|
Share-based
compensation
|
|
0.06
|
|
0.03
|
Amortization of debt
discount
|
|
0.01
|
|
0.01
|
Amortization of
intangible assets
|
|
0.13
|
|
—
|
Transaction costs for
business combinations(1)
|
|
—
|
|
0.01
|
Amortization of
inventory step-up at fair value(2)
|
|
0.01
|
|
—
|
Income tax effect of
above adjustments(3)
|
|
(0.03)
|
|
(0.01)
|
Non-GAAP Diluted
EPS
|
|
$
0.47
|
|
$
0.47
|
|
|
|
|
|
GAAP & Non-GAAP
Diluted Shares
|
|
137,900
|
|
141,277
|
|
|
|
|
|
Dollar amounts, as
presented, are rounded. Consequently, totals may not add
up.
|
|
|
(1)
|
Amount represents
incremental costs including legal fees, accounting fees and
advisory fees incurred for the Antares acquisition.
|
(2)
|
Amount related to
amortization of the inventory step-up associated with purchase
accounting for the Antares acquisition.
|
(3)
|
Adjustments related to
taxes for the reconciling items, as well as excess benefits or tax
deficiencies from stock-based
compensation, and the quarterly impact of other discrete
items.
|
Halozyme
Therapeutics, Inc
GAAP to Non-GAAP
Reconciliations
EBITDA
(Unaudited)
(In
thousands)
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2023
|
|
2022
|
GAAP Net
Income
|
|
$
39,615
|
|
$
60,108
|
Adjustments:
|
|
|
|
|
Investment and other
income
|
|
(2,979)
|
|
(498)
|
Interest
expense
|
|
4,543
|
|
1,759
|
Income tax
expense
|
|
12,623
|
|
14,301
|
Depreciation and
amortization
|
|
20,457
|
|
778
|
EBITDA
|
|
74,259
|
|
76,448
|
Adjustments:
|
|
|
|
|
Transaction costs for
business combinations
|
|
278
|
|
1,511
|
Adjusted
EBITDA
|
|
$
74,537
|
|
$
77,959
|
Halozyme
Therapeutics, Inc
GAAP to Non-GAAP
Reconciliations
EBITDA
(Unaudited)
(In
millions)
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended December 31,
2022
|
|
2023 Guidance
Range
|
|
Percentage
Change
|
GAAP Net
Income
|
|
$
202
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
Investment and other
income
|
|
(1)
|
|
|
|
|
Interest
expense
|
|
17
|
|
|
|
|
Income tax
expense
|
|
47
|
|
|
|
|
Depreciation and
amortization
|
|
50
|
|
|
|
|
EBITDA
|
|
315
|
|
$415
-440
|
|
32% -
40%
|
Adjustments:
|
|
|
|
|
|
|
Transaction costs for
business combinations
|
|
22
|
|
|
|
|
Severance and
share-based compensation acceleration expense
|
|
23
|
|
|
|
|
Adjusted
EBITDA
|
|
$
360
|
|
$415 -
440
|
|
15% -
22%
|
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SOURCE Halozyme Therapeutics, Inc.