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Third Quarter Revenue Increased 80% YOY to $209 Million, with GAAP Diluted Earnings per Share of $0.44 and Non-GAAP Diluted Earnings per Share of $0.741
Record Third Quarter Royalty Revenue Increased 70% YOY to $99.6 Million
Reiterating 2022 Revenue Guidance of $655 Million to $685 Million, Representing 48%-55% Growth over Reported 2021 Revenue
SAN DIEGO, Nov. 8, 2022 /PRNewswire/ -- Halozyme Therapeutics, Inc. (NASDAQ: HALO) ("Halozyme") today reported its financial and operating results for the third quarter ended September 30, 2022 and provided an update on its recent corporate activities and outlook.
"Our third quarter accomplishments are reflective of the expanded opportunities and capabilities at Halozyme that support an enhanced and extended revenue and earnings growth trajectory. DARZALEX® SC and Phesgo® have continued to demonstrate strong momentum driving 70% year-over-year royalty revenue growth in the third quarter. Our partners also continued to advance their development pipelines with ENHANZE®. Our Wave 3 products represent the most near-term opportunities with the potential to launch between 2023 and 2025. We are excited for argenx's biologics license application to the FDA for efgartigimod SC with ENHANZE® for Myasthenia Gravis as well as Roche's plans for regulatory submissions for Tecentriq® SC in the U.S. and EU," said Dr. Helen Torley, president and chief executive officer of Halozyme. "Our leadership in drug delivery technologies and innovative commercial products have augmented our growth initiatives, diversified our revenue streams and extended revenue durability. We look forward to further strengthening our position as the drug delivery partner of choice for pharmaceutical and biotechnology companies with both ENHANZE® and our auto-injectors."
Recent Partner Highlights:
Recent Corporate Highlights:
Third Quarter Financial Highlights:
Financial Outlook for 2022
The Company is reiterating its financial guidance for 2022, which was last provided on August 9, 2022 as a result of the close of the Antares Pharma transaction and strong year-to-date results. For the full year 2022, the Company expects:
The Company's earnings per share guidance does not consider the impact of potential future share repurchases.
Table 1. 2022 Financial Guidance | ||
Guidance Range | ||
Net Revenue | $655 to $685 million | |
GAAP Operating Income | $240 to $265 million | |
Adjusted Operating Income | $365 to $390 million1 | |
GAAP Net Income | $170 to $195 million | |
Non-GAAP Net Income | $295 to $320 million1 | |
GAAP Diluted EPS | $1.20 to $1.35 | |
Non-GAAP Diluted EPS | $2.10 to $2.251 |
Webcast and Conference Call
Halozyme will host its Quarterly Update Conference Call for the third quarter ended September 30, 2022 today, Tuesday, November 8, 2022 at 4:30 p.m. ET/1:30 p.m. PT. The call will 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 HalozymeHalozyme 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 600,000 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, Covis Pharma, 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 Non-GAAP net income 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 net income and Non-GAAP diluted earnings per share excluding share-based compensation expense, amortization of debt discount, debt extinguishment expense and certain adjustments to income tax expense. Reconciliations between GAAP and Non-GAAP financial measures are included at the end of this press release. 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 financial performance (including the Company's financial outlook for 2022) and expectations for future growth, profitability, total revenue and royalty revenue, net and operating income and earnings-per-share and to repurchase shares 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 larger 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 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, risks associated with integrating the Antares Pharma business, such as the risk that the businesses will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the acquisition will not be realized, 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, including any potential delays caused by the current COVID-19 global pandemic, 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 recently filed Annual Report on Form 10-K and Quarterly Reports 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. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Revenues: | ||||||||
Royalties | $ 99,551 | $ 58,563 | $ 254,496 | $ 141,264 | ||||
Product sales, net | 61,427 | 25,047 | 129,867 | 77,173 | ||||
Revenues under collaborative agreements | 47,998 | 32,220 | 94,257 | 122,870 | ||||
Total revenues | 208,976 | 115,830 | 478,620 | 341,307 | ||||
Operating expenses: | ||||||||
Cost of sales | 47,319 | 18,589 | 97,184 | 59,826 | ||||
Amortization of intangibles | 27,193 | — | 38,596 | — | ||||
Research and development | 16,705 | 8,486 | 44,041 | 25,564 | ||||
Selling, general and administrative | 34,467 | 13,169 | 105,777 | 36,549 | ||||
Total operating expenses | 125,684 | 40,244 | 285,598 | 121,939 | ||||
Operating income | 83,292 | 75,586 | 193,022 | 219,368 | ||||
Other income (expense): | ||||||||
Investment and other (expense) income, net | 641 | 274 | 194 | 771 | ||||
Inducement expense related to convertible note | (2,712) | — | (2,712) | (20,960) | ||||
Interest expense | (7,514) | (1,754) | (12,377) | (5,471) | ||||
Net income before income taxes | 73,707 | 74,106 | 178,127 | 193,708 | ||||
Income tax expense | 12,073 | (142,481) | 33,700 | (142,232) | ||||
Net income | $ 61,634 | $ 216,587 | $ 144,427 | $ 335,940 | ||||
Net income per share: | ||||||||
Basic | $ 0.45 | $ 1.53 | $ 1.05 | $ 2.39 | ||||
Diluted | $ 0.44 | $ 1.48 | $ 1.02 | $ 2.28 | ||||
Shares used in computing net income per share: | ||||||||
Basic | 136,527 | 142,021 | 137,370 | 140,815 | ||||
Diluted | 139,387 | 146,690 | 141,019 | 147,652 |
Halozyme Therapeutics, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands) | ||||
September 30, | December 31, | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 147,159 | $ 118,719 | ||
Marketable securities, available-for-sale | 118,425 | 622,203 | ||
Accounts receivable, net and contract assets | 233,302 | 90,975 | ||
Inventories, net | 103,276 | 53,908 | ||
Prepaid expenses and other current assets | 51,039 | 40,482 | ||
Total current assets | 653,201 | 926,287 | ||
Property and equipment, net | 36,674 | 8,794 | ||
Prepaid expenses and other assets | 25,783 | 13,414 | ||
Goodwill | 199,481 | — | ||
Intangible assets, net | 948,904 | — | ||
Deferred tax assets, net | — | 155,434 | ||
Restricted cash | 500 | 500 | ||
Total assets | $ 1,864,543 | $ 1,104,429 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ 18,166 | $ 1,541 | ||
Accrued expenses | 74,317 | 24,441 | ||
Deferred revenue, current portion | 3,586 | 1,746 | ||
Current portion of long-term debt, net | 13,315 | 89,419 | ||
Total current liabilities | 109,384 | 117,147 | ||
Deferred revenue, net of current portion | 2,833 | 2,530 | ||
Long-term debt, net | 1,491,156 | 787,255 | ||
Other long-term liabilities | 5,418 | 544 | ||
Deferred tax liabilities, net | 28,989 | — | ||
Contingent liability | 129,772 | — | ||
Stockholders' equity: | ||||
Common stock | 135 | 138 | ||
Additional paid-in capital | 13,177 | 256,347 | ||
Accumulated other comprehensive loss | (1,836) | (620) | ||
Retained earnings (accumulated deficit) | 85,515 | (58,912) | ||
Total stockholders' equity | 96,991 | 196,953 | ||
Total liabilities and stockholders' equity | $ 1,864,543 | $ 1,104,429 |
Halozyme Therapeutics, Inc. GAAP to Non-GAAP Reconciliations Net Income and Diluted EPS (Unaudited) (In thousands, except per share amounts) | ||||
Three Months Ended September 30, | ||||
2022 | 2021 | |||
GAAP Net Income | $ 61,634 | $ 216,587 | ||
Adjustments: | ||||
Inducement expense related to convertible notes | 2,712 | — | ||
Share-based compensation | 6,797 | 5,399 | ||
Amortization of debt discount | 3,932 | 968 | ||
Amortization of intangible assets | 27,193 | — | ||
Transaction costs for business combinations(1) | 439 | — | ||
Amortization of inventory step-up at fair value(2) | 5,830 | — | ||
Other one time items | 825 | |||
Income tax benefit(3) | — | (142,481) | ||
Income tax effect of above adjustments(4) | (6,034) | (5) | ||
Non-GAAP Net Income | $ 103,328 | $ 80,468 | ||
GAAP Diluted EPS | $ 0.44 | $ 1.48 | ||
Adjustments: | ||||
Inducement expense related to convertible notes | 0.02 | — | ||
Share-based compensation | 0.05 | 0.04 | ||
Amortization of debt discount | 0.03 | 0.01 | ||
Amortization of intangible assets | 0.20 | — | ||
Transaction costs for business combinations(1) | — | — | ||
Amortization of inventory step-up at fair value(2) | 0.04 | — | ||
Other one time items | 0.01 | |||
Income tax benefit(3) | — | (0.97) | ||
Income tax effect of above adjustments(4) | (0.04) | — | ||
Non-GAAP Diluted EPS | $ 0.74 | $ 0.55 | ||
GAAP & Non-GAAP Diluted Shares | 139,387 | 146,690 | ||
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) | In the third quarter of 2021, the Company recognized a non-cash tax benefit of approximately $142 million related to the release of substantially all of its valuation allowance against its deferred tax assets. | |
(4) | Estimated income tax effect of the Non-GAAP reconciling items are calculated using applicable statutory tax rates, taking into consideration of any valuation allowance. |
Halozyme Therapeutics, Inc GAAP to Non-GAAP Reconciliations Net Income and Diluted EPS 2022 Guidance (Unaudited) (In millions, except per share amounts) | ||||
2022 | 2021 | |||
GAAP Net Income | $ 170 - 195 | $ 402.7 | ||
Adjustments: | ||||
Inducement expense related to convertible notes | 3 - 3 | 21.0 | ||
Share-based compensation | 24 - 25 | 20.8 | ||
Amortization of debt discount | 8 - 8 | 3.9 | ||
Amortization of intangible assets | 66 - 66 | — | ||
Transaction costs for business combinations | 19 - 19 | — | ||
Severance and share-based compensation acceleration expense | 23 - 23 | — | ||
Amortization of inventory step-up at fair value | 14 - 15 | — | ||
Realized loss from marketable securities | 2 - 2 | |||
Other one time items | 3 - 4 | |||
Income tax benefit | — | (154.2) | ||
Income tax effect of above adjustments | (36) - (39) | (0.1) | ||
Non-GAAP Net Income | $ 295 -320 | $ 294.1 | ||
GAAP Diluted EPS | $ 1.20 - 1.35 | $ 2.74 | ||
Adjustments: | ||||
Inducement expense related to convertible notes | 0.02 - 0.02 | 0.14 | ||
Share-based compensation | 0.17 - 0.18 | 0.14 | ||
Amortization of debt discount | 0.06 - 0.06 | 0.03 | ||
Amortization of intangibles | 0.47 - 0.47 | — | ||
Transaction costs for business combinations | 0.14 - 0.14 | — | ||
Severance and share-based compensation acceleration expense | 0.16 - 0.16 | — | ||
Amortization of inventory step-up at fair value | 0.10 - 0.11 | — | ||
Realized loss from marketable securities | 0.01 - 0.01 | — | ||
Other one time items | 0.02 - 0.03 | — | ||
Income tax benefit | — | (1.05) | ||
Income tax effect of above adjustments | (0.26) - (0.28) | — | ||
Non-GAAP Diluted EPS | $ 2.10 - 2.25 | $ 2.00 | ||
GAAP & Non-GAAP Diluted Shares | 140.0 - 141.0 | 146.8 | ||
Dollar amounts, as presented, are rounded. Consequently, totals may not add up. |
Halozyme Therapeutics, Inc GAAP to Non-GAAP Reconciliations Operating Income 2022 Guidance (Unaudited) (In millions) | ||||
2022 | 2021 | |||
GAAP Operating Income | 240 - 265 | $ 275.9 | ||
Adjustments: | ||||
Amortization of intangible assets | 66 - 66 | — | ||
Transaction costs for business combinations | 19 - 19 | — | ||
Severance and share-based compensation acceleration expense | 23 - 23 | — | ||
Amortization of inventory step-up at fair value | 14 - 15 | — | ||
Other one time Items | 3 - 4 | |||
Adjusted Operating Income (1) | 365 - 390 | $ 275.9 | ||
Dollar amounts, as presented, are rounded. Consequently, totals may not add up. | |
(1). The adjusted operating income is adjusted for acquisition related costs. |
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SOURCE Halozyme Therapeutics, Inc.