Halozyme Therapeutics Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 6, 2025
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Operator

Good afternoon. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to Halozyme's First Quarter twenty twenty five Financial and Operating Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Please note this event is being recorded. I will now turn the call over to Tram Bui, Halozyme's Vice President of Investor Relations and Corporate Communications. Please go ahead.

Tram Bui
Tram Bui
Vice President of Investor Relations & Corporate Communications at Halozyme Therapeutics

Thank you, operator. Good afternoon, and welcome to our first quarter twenty twenty five financial and operating results conference call. In addition to the press release issued today after the market closed, you could find a supplementary slide presentation that will be referenced during today's call in the Investor Relations section of our website. Leading the call will be Doctor. Helen Torley, Halozyme's President and Chief Executive Officer, who will provide an update on our business and Nicole LaBrosse, our Chief Financial Officer, who will review our financial results as well as our outlook.

Tram Bui
Tram Bui
Vice President of Investor Relations & Corporate Communications at Halozyme Therapeutics

On today's call, we will be making forward looking statements as outlined on Slide two. I would also refer you to our SEC filings for a full list of risks and uncertainties. During the call, both GAAP and non GAAP financial measures will be discussed. Certain non GAAP or adjusted financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and slide presentation. I will now turn the call over to Doctor.

Tram Bui
Tram Bui
Vice President of Investor Relations & Corporate Communications at Halozyme Therapeutics

Helen Torley.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Good afternoon, everyone, and thank you for joining us today. It really has been a tremendous start to 2025. Before I describe the many events and successes in the first quarter, let me begin by thanking the many shareholders and sell side analysts who participated in our investor feedback interviews earlier this year. We really appreciate your feedback, and it has been invaluable. Your feedback helped us understand more granularly the role that we are playing in different investor portfolios, and we're very pleased to be considered your consistent stock grower.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Not surprisingly, each of you recognize our leadership in drug delivery for biologics and how this foundation can be expanded to additional areas of drug delivery. All investors agreed on key themes about Halozyme. For example, no investor wants Halozyme to invest in drug development binary risk. We agree. All investors want to make sure that we maximize the organic growth represented by ENHANZE and our auto injectors by fully investing where there are opportunities.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Again, we agree. And later this year, we will schedule an update about potential new ENHANZE uses and the opportunity. All investors encourage us to also seek to grow inorganically through m and a. While opinions differed about the exact destination for our m and a, all investors want us to remain disciplined about our net leverage, and we listen to your feedback. With this in mind, I'm pleased to reiterate our strategy.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Our goal, set simply, is to grow organically and through serial acquisitions, excelling in licensing disruptive drug delivery platform technologies that improve the patient treatment experience and result in better outcomes. With the strategy, we aim to deliver strong and durable revenue and EBITDA growth well into the next decade. We will achieve this performance by continuing to focus first and foremost on organic growth. We will continue to invest in and grow ENHANZE and our auto injector businesses, for we are absolutely the best positioned company to capitalize on the growing pharma and patient priority for at home patient delivered treatment. We will also seek to grow inorganically through m and a.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Our focus here is on identifying new drug delivery platforms where the business model results in long durable revenue streams such as through royalties and where we see the opportunity to license to multiple pharma partners. We heard you in leverage, and we will be seeking deals that can be accomplished without the need for significant increase in net debt to EBITDA leverage. And we heard how much our share buybacks are appreciated by our investors given the high IRR they have delivered. I am pleased to announce that we are planning to continue this in 2025 announcing today the plan to repurchase $250,000,000 in shares. Let me now move to the Q1 performance, beginning on Slide three.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Now here's how I'd like you to think about our business, our performance and our future. Firstly, we have three blockbusters that are driving our current growth. We'll go into more detail on those in a moment. Secondly, we have 11 new growth catalysts that have either just happened or will happen in the next month. These catalysts will drive our growth for multiple years to come.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

And thirdly, we have several products in our development pipeline plus our auto injector technology that will drive additional future growth. As an example, today we are pleased to announce our very first high volume auto injector agreement. Turning now to Slide four, let me briefly highlight the strong first quarter results. Total revenue increased 35% year over year to $265,000,000 with royalty revenue increasing by 39% to $168,000,000 primarily driven by the three blockbusters DARZALEX subcutaneous, FESCO and Vivegard Hertullo. Adjusted EBITDA increased to $162,000,000 and non GAAP EPS increased to $1.11 both representing approximately 40% year over year growth.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Net income also grew an impressive 54% in the quarter to $118,000,000 Let me now expand on the three blockbusters that are key revenue drivers and that are projected to keep growing for years to come, DARZALEX FASPRO, FESCO and BIFR HYTULLO. I'll begin with DARZALEX shown on Slide five. In the first quarter, Johnson and Johnson reported another strong quarter of growth for DARZALEX, which increased 22% year over year on an operational basis to $3,200,000,000 The growth was primarily driven by continued share gains of approximately three points across all lines of therapy and approximately five points in the frontline setting as well as through market growth. DARZALEX subcutaneous with ENHANZE, which is marketed as DARZALEX FASPRO in The United States, accounts for approximately 95% of all DARZALEX sales in The United States and commands a similarly high proportion of share in the major ex US markets. And DARZALEX continues to set the standard in multiple myeloma treatment with Johnson and Johnson's commitment to its clinical advancement continuing to solidify its role as the backbone of treatment across front and second line patients.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Moving now to the first of the 11 new growth catalysts, because of recent European approval of a DARZALEX based quadruplet regimen for patients with newly diagnosed multiple myeloma regardless of transplant eligibility, further support near term growth and the analyst estimates for DARZALEX to reach $17,000,000,000 in sales in 2028 with the subcutaneous formulation driving this growth and the vast majority of the sales. We project royalties on DARZALEX subcutaneous through 02/1932. Let me move now to Slide six and Roche's Desco, which is the combined therapy of Perjeta, Herceptin and ENHANZE. VSCO continues to demonstrate strong adoption and commercial success. In the first quarter, VSCO was the number one growth driver in Roche's pharmaceutical portfolio with sales increasing 52% to approximately $675,000,000 with strong performance in international regions.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Our second new growth catalyst is FASGO gaining national reimbursement drug listing in China with Roche commenting on their Q1 call that the growth in China is accelerating noticeably following the listing which happened earlier this year. Conversion from Perjeta to FASGO is ongoing, reaching 47% in the 58 launch countries in the first quarter, with expectations for conversion to reach more than 50% across global markets in 2025. In April of twenty twenty five, the CHMP recommendation in Europe to expand the FSGO label to allow administration outside of a clinical setting is our third growth catalyst. Availability of this option will deliver on patient preference for at home administration. We see this also as an important step in freeing up cancer care capacity in the clinical settings.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Sales of FSGO are projected to reach approximately $3,300,000,000 by 2028 entirely from the ENHANZE enabled subcutaneous formulation where we earn a mid single digit royalty on net sales through 02/1930. The product's strong growth and broad geographic uptake underscore the commercial success possible with ENHANZE enabled therapies. Let me now move to Argenx's Weibart and Weibart Hetulo, which is a subcutaneous version enabled by ENHANZE. These are shown on Slide seven. Today Weibart Hetulo is approved for two indications in The United States, Generalized Myasthenia Gravis and chronic inflammatory demyelinating polyneuropathy and for one indication, generalized myasthenia gravis in Europe.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

In The United States, Weibgart Hertullo with ENHANZE has played a pivotal role in adding new prescribers and new patients in the first approved indication, generalized myasthenia gravis, reaching patients earlier in the treatment paradigm, and accessing uterine brand patients. Moving now to the second approved US indication, CIDP, Viagra Heptulo was approved as a subcutaneous only treatment recently in September of twenty twenty four. Argenx has reported initial strong demand from patients and physicians, highlighting the unmet need for safe and effective treatment alternatives. As reported in February of twenty twenty five, more than one thousand CIDP patients were in therapy. For CIDP, Argenx has stated that they have attained favorable or highly favorable coverage for ninety percent of US lives.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

They further commented that their recent sales force expansion has contributed to deeper community reach, noting that twenty five percent of prescribers for CIBP are new to Wegart. In Europe, Wegart Hytrulo was approved for generalized myasthenia gravis in November of twenty twenty three. Wegart total sales reached $2,200,000,000 in 2024 with continued strong growth, especially of Viagra Herculop projected in 2025. Turning now to Slide eight, I'll comment on the growth catalysts number five, six and seven. In April of twenty twenty five, the FDA approved the new option for patients to self inject Argenx's Viagart Hetulo prefilled syringe, which contains the same Viagart, which is co formulated with ENHANZE as is in the vial and where Halozyme received the same mid single digit royalty on net sales.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

This FDA approval of the prefilled syringe is our fifth new growth catalyst. The ByovGAR HETULA prefilled syringe is approved as a twenty to thirty second subcutaneous injection, which is administered by a patient, a caregiver, or a health care professional and will contribute to WeiGart Hytrola's strong growth trajectory for 2025 and beyond. The prefilled syringe also received a positive recommendation in Europe for use in generalized myasthenia gravis patients in February of this year. This is projected to result in approval in the second quarter of twenty twenty five and is our sixth growth catalyst. In April of twenty twenty five, Argenx received a positive opinion for Weibat Hetulo from the CHMP in Europe for the indication of chronic inflammatory demyelinating polyneuropathy.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

With approval expected to occur midyear twenty twenty five following the CHMP opinion, this new indication, which we expect to be for the vial and for the prefilled syringe, will significantly expand the opportunity and add new growth, and this is our seventh new growth catalyst in 2025. Fivegart is just starting its journey of innovation. As you will see on Slide nine, Argenx has multiple active subcutaneous programs in development with ENHANZE, including for ocular myasthenia gravis and for thyroid eye disease, which will further fuel the revenue growth. With Halozyme earning royalties through the early 2040s, Fivegart Hetulo represents one of the most significant and durable contributors to our long term financial performance. Continue to expand the new growth catalyst, I'll now move to Slide 10 and the four additional recently launched products that are just warming up and are at the start of what promised to be exciting launches.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Let me begin with Ocrevus Zenuvo with ENHANZE, which was approved last year for multiple sclerosis as an approximately ten minute subcutaneous injection. This compares with multiple hours that is typically required for the intravenous administration. Importantly, and the eighth new growth catalyst, Roche recently reported that Ocrevus Zenuvo received its permanent J code in The U. S. On April 1, which they stated will help accelerate uptake in the second half of twenty twenty five.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Outside The United States, work continues to gain that all important reimbursement in each country. Roche reported that fifty percent of patients who started on Ocrevus Xenuvo were naive to the brand, providing Roche with confidence that Xenuvo will open up new patient populations to Ocrevus and not simply cannibalize existing share. Roche believes that Ocrevus de Nuvo could represent an incremental approximately 2,000,000,000 opportunity for the brand through this expansion, resulting in an approximately $10,000,000,000 analyst projection for IV and subcutaneous Ocrevus in 2028. Ocrevus Inuvo is projected to earn Halozyme royalties at its full mid single digit rate until 02/1930 and at a step down rate until at least 02/1934. I'll move now to Roche's Tecentriq Hybrisa with ENHANZE, which gained FDA and EMA approval in 2024.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

The approvals were for all of the intravenous indications, offering patients the convenience of an approximately seven minute subcutaneous injection. With a permanent J code in place and work continuing to gain reimbursement in all countries, the strategy is to convert IV Tecentriq patients to Tecentriq Hybrisa. Halozyme will earn royalties on Tecentriq Hybrisa at the full mid single digit rate until the 2040s. Moving now to Bristol Myers Squibb Opdivo Covantag, the subcutaneous formulation of nivolumab with ENHANZE, which was granted FDA approval at the end of twenty twenty four in The United States. BMS is focused on continuing to increase breadth of prescribing in both the community and academic settings, and the permanent J code, our ninth new growth catalyst, is expected on July 1.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

The J code is expected to drive adoption of the subcutaneous formulation in the second half of the year. BMS recently commented that they're receiving promising early feedback from practices and patients on the subcutaneous formulation, which is a three to five minute subcutaneous injection. Use is predominantly happening in the community setting and is occurring across multiple tumor types. In April of twenty twenty five, BMS announced the positive CHMP opinion for Opdivo subcutaneous with ENHANZE, representing our tenth new growth catalyst. We anticipate European approval in mid-twenty twenty five.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

I'll move now to subcutaneous Ribrovant, which is Johnson and Johnson's innovative EGFR c Met inhibitor. Johnson and Johnson gained European approval of subcutaneous Ribrovant co formulated with ENHANZE in April of twenty twenty five for use in combination with lisetronib in the first line treatment of adult patients with advanced EGFR mutated non small cell lung cancer. Subcutaneous Ribrovant represents a more convenient patient friendly formulation, reducing administration time from multiple hours required for the IV to just five minutes for the subcutaneous. Importantly, there is a fivefold reduction in infusion related reactions compared to the IV formulation. Work is now underway to gain reimbursement for subcutaneous Riborvant in each country.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

And our eleventh new growth catalyst is a potential U. S. Approval of Riborvant subcutaneous. J and J is continuing to work on gaining this approval in 2025. I wanted to also highlight recent data on Riborvant.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Very excitingly, the results of the Phase III MARIPOSA trial were presented at the European Lung Cancer Congress in March of twenty twenty five. The combination of Ribrovant and luzacronib significantly reduced the risk of death by twenty five percent versus Tagrisso, which is considered by many to be the current standard of care in patients with newly diagnosed EGFR mutated non small cell lung cancer. With a projected improvement projected of more than twelve months survival benefit over this current standard of care, this is certainly a potentially important advance for patients with this type of cancer, where only twenty percent of patients survive beyond five years today. With our now 10 launch products, which are shown on slide 11, we remain on track to deliver over $1,000,000,000 in royalty revenue in 2027, but all products continue to generate royalties to at least 2,030 and many expected to continue to the 2040s. I'll move now to slide 12 and to some highlights on our pipeline that represent potential new growth drivers, the royalty revenues of which are not included in our multiyear guidance.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

During the first quarter, Acumen reported top line results for Supernitag subcutaneous with ENHANZE for Alzheimer's disease, which support further clinical development for the subcutaneous formulation with ENHANZE. We've also reported positive Phase II data for N6LS subcutaneous with ENHANZE in combination with cabotegravir. The study demonstrated the promise of an every four month treatment in combination with cabotegravir. This is another terrific example of how ENHANZE can support a more extended dosing interval, reducing the treatment burden for patients. And we were also very hard at work during the quarter, continuing discussions with several companies and entering into discussions with multiple new companies with regard to new deals.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

I'm pleased to announce that we have signed our first development agreement with the current ENHANZE partner for development of our high volume auto injector. The majority of the ongoing discussions continue to focus on ENHANZE alone and ENHANZE with the high volume auto injector if the volume is between two to 10. I can update that we are progressing through the multistep review and decision making committees in several of these discussions. And turning to our small volume auto injector business, I'm pleased to say that one of our current partners is progressing now to test the small volume auto injector in a Phase I study. There has not been a time in Halozyme history when we have been in such a strong position in terms of having 10 de risk proven approved subcutaneous products with 11 recent or soon to happen events that are catalysts to expand opportunity, adoption, and growth.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

The underlying continued strength of DARZALEX subcutaneous, Tesco and Vyvagar Hertullo, plus these new growth catalysts have resulted in the increased 2025 guidance, which Nicole will review in a moment after she discusses our first quarter results in more detail. Nicole?

Nicole LaBrosse
Nicole LaBrosse
CFO at Halozyme Therapeutics

Thank you, Helen. The first quarter of twenty twenty five represented a strong start to the year and we are excited to raise our full year expectations based on these strong results. We grew revenue by 35% with EBITDA growth of 40% as we continue to drive leverage on our high margin royalty revenue contributing $153,000,000 in free cash flow in the quarter. Let me start on Slide 13. In the first quarter, we completed the $250,000,000 ASR announced in December of twenty twenty four.

Nicole LaBrosse
Nicole LaBrosse
CFO at Halozyme Therapeutics

Since 2019, we have repurchased 1,550,000,000 of shares, which is on average $250,000,000 each year at an average price of $33.72 Due to the strong performance to date, we are announcing an additional $250,000,000 of share repurchases to be executed during the remainder of the year. As Helen mentioned, we continue to evaluate M and A opportunities to complement our organic growth expectations. Let me now turn to our detailed first quarter results on Slide 14. Revenue grew 35% to $264,900,000 compared to $195,900,000 in the prior year period. This includes higher than expected revenue in all categories.

Nicole LaBrosse
Nicole LaBrosse
CFO at Halozyme Therapeutics

Royalty revenue of $168,200,000 increased by 39% from $120,600,000 in the prior year and was higher than our original expectations. The continued commercial success of subcutaneous DARZALEX and FEZZ GO and the robust growth of VIBGARTE HITRULO exceeded our expectations for the quarter, driving an increase in our full year guidance. Product sales of $78,000,000 increased by 33% from $58,600,000 in the prior year period, mainly driven by higher API sales than originally estimated due to an increase in partner orders. We have an increase in partner orders in later quarters of 2025, which is also a driver of the increase in our full year guidance. Collaboration revenue of $18,600,000 an increase of 12% from $16,700,000 in the prior year period, was also higher than expected due to the achievement of a VIBGARTE HITRULO sales milestone one quarter earlier than originally projected.

Nicole LaBrosse
Nicole LaBrosse
CFO at Halozyme Therapeutics

Research and development expenses were $14,800,000 compared to $19,100,000 in the prior year period. The decrease was primarily due to lower compensation expense driven by resource optimization and improved labor allocations to COGS and the timing of planned investments in Enhance related to the development of our new high yield rHuPH20 manufacturing process. Selling, general and administrative expenses were $42,400,000 in the quarter, up from $35,100,000 in the prior year period, primarily due to increased compensation expense and consulting and professional service fees. Adjusted EBITDA increased 40% to $162,000,000 from $115,700,000 last year. GAAP diluted earnings per share was $0.93 and non GAAP diluted earnings per share was $1.11 This is compared with GAAP diluted earnings per share of $0.60 and non GAAP diluted earnings per share of $0.79 in the first quarter of twenty twenty four.

Nicole LaBrosse
Nicole LaBrosse
CFO at Halozyme Therapeutics

We continue to maintain a strong balance sheet with cash, cash equivalents and marketable securities of $747,900,000 on 03/31/2025 compared to $596,100,000 on 12/31/2024. The increase was primarily a result of cash generated from operations. Our net debt position was $777,000,000 with a net leverage ratio of one time. As a result of our strong first quarter performance, we are raising our guidance as you can see on slide 15. We now expect total revenues of $1,200,000,000 to $1,280,000,000 representing year over year growth of 18% to 26% driven by increased projections in all three revenue categories royalties, product sales and collaboration revenue Royalty revenues of $750,000,000 to $785,000,000 representing year over year growth of 31% to 37%.

Nicole LaBrosse
Nicole LaBrosse
CFO at Halozyme Therapeutics

We continue to expect Visgart HiTruvo with ENHANCE to be the largest loyalty dollar growth driver product sales of $340,000,000 to $365,000,000 driven by higher partner demand for rHuPH20 in the year collaboration revenue of 110,000,000 to $130,000,000 driven by the EU approval of Ribrovant SD in April, for which a milestone will be recognized in the second quarter Adjusted EBITDA of between $790,000,000 to $840,000,000 representing year over year growth of 25% to 33%, reflecting high margin royalty growth coupled with flat operating expenses from our continued focus on operational efficiency and non GAAP diluted EPS of $5.3 to $5.7 representing year over year growth of 25% to 35%, which does not include the impact of future share repurchases, including the $250,000,000 announced today. As you refine your models, I'd like to reiterate the following. While we achieved a BIVVAR Hytrulo milestone one quarter earlier than expected in the first quarter, we continue to expect collaboration revenue for the year to be more weighted in the second half of twenty twenty five. We continue to expect product sales to be weighted in the second half of the year, with the second quarter flat with the first quarter. For royalties, we continue to expect quarterly sequential growth for the remaining quarters in the year.

Nicole LaBrosse
Nicole LaBrosse
CFO at Halozyme Therapeutics

With that, I'll now turn the call back over

Nicole LaBrosse
Nicole LaBrosse
CFO at Halozyme Therapeutics

to Helen.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Thank you, Nicole. Our strong first quarter performance, particularly of DARZALEX subcutaneous, SESGO and Heifgart Hetulo plus our 11 new growth catalysts gave us the confidence to raise the full year 2025 financial guidance ranges. With 10 products now approved and launched in at least one major region, we have durable revenue streams that will continue to support our conviction in the future success of Halozyme. Our robust pipeline, along with our ability to defend our intellectual property, further strengthens our confidence in delivering sustainable growth and profitability well into the future.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

This is an incredibly exciting time of growth for Halozyme, and this would not have been possible without our terrific partners and our dedicated and expert Halozyme team. And I'd like to say a sincere thank you to everybody who has contributed. Operator, with that, we are now ready to open the call for questions. Thank you.

Operator

Your first question comes from the line of Mohit Bansal with Wells Fargo. Your line is open.

Sadia Rahman
Sadia Rahman
Vice President, Biopharma Equity Research at Wells Fargo

Hi, sorry about that. I was on mute. Hi. This is Saadia Rahman on for Mohit. Thanks for taking the questions.

Sadia Rahman
Sadia Rahman
Vice President, Biopharma Equity Research at Wells Fargo

So on the IP case with Merck, I had

Sadia Rahman
Sadia Rahman
Vice President, Biopharma Equity Research at Wells Fargo

a question about that.

Sadia Rahman
Sadia Rahman
Vice President, Biopharma Equity Research at Wells Fargo

Can you comment on the expected timelines for the PGR decisions and what action you could take if the PGR goes in Merck's favor?

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Yes, thanks for that. With regard to the PGR, the first decision by the patent office on institution will be in early June. And if there is institution that will mean that the case will be reviewed about twelve months from them. They also can decide not to pick up the case, in which case it would not proceed.

Sadia Rahman
Sadia Rahman
Vice President, Biopharma Equity Research at Wells Fargo

Got it. And just related to that, is there a possibility that, that PGR case and your patent infringement lawsuit could be tied together? Or is that not possible due to logistical reasons?

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Yeah. Not difficult, but two very different approaches that are going on there. Obviously, the PGR we consider to be frankly a little bit of a sideshow. PGRs tend to be filed when companies are concerned that they are infringing and they seek to invalidate the patents. We feel very confident in our ability to prevail in those PGRs.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

And even if they were to win one or two of the PGRs, because there are several in place, we do not believe that will have any impact at all on our infringement case, where we have multiple additional claims that are not subject to the PGR that are the basis of that infringement case. So two very separate things. The most important one is actually the actual lawsuit that we filed. I'd keep your attention on that one.

Sadia Rahman
Sadia Rahman
Vice President, Biopharma Equity Research at Wells Fargo

Got it. Thanks so much.

Operator

Your next question comes from the line of Sean Laughman with Morgan Stanley. Your line is open.

Sean Laaman
Sean Laaman
Analyst at Morgan Stanley

Thank you, operator. Hello, Helen. Hope you're well and congratulation on a nice set of numbers. What's the, you know, the the be down number today and and you've upgraded guidance, but they would is there one particular area of strength that surprised you during the quarter and and is driving the the upgrade, or is it more broad based?

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Yeah. I I will say it's it's our three blockbuster products that have been performing for us for the last several years and frankly are expected to continue to have this excellent performance. So it's across the board with DARZALEX subcutaneous, Stesco and also with Weifgart HYTULLO. And so one of the other things we mentioned not just the royalties, but we achieved a milestone on Weifengart Hytrula one quarter earlier than we had anticipated as well and that was a commercial sales attainment milestone. So they are just continuing to perform very, very well Sean.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Behind them, we're obviously excited about the other four launch products that are really just at the very beginning. But just based on the performance comments from the partners and our estimates, we're going to continue to see strong growth from all of those products for many years to come.

Sean Laaman
Sean Laaman
Analyst at Morgan Stanley

Great. Thank you. And on the small volume auto injector, when might you be in a position to tell us who the partner is? And how do the economics of that deal compare to the high volume auto injector partnerships? And when do you ultimately see commercialization might be a reality?

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Yeah. The with the with regard to when that might become public, that really will be a partner who will be in control of that. I would take an estimate and guess that when it enters clinical studies, it might be public that it's our small volume auto injector. But for competitive reasons, we're seeing again that our partners don't want to be signaling to their competition exactly what they're doing to continue to evolve their product offering and differentiate it down for patients. The small volume and the high volume auto injector agreements are both development agreements, Sean.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

They really lay out exactly how we will work together to create auto injector for use in clinical development. We have yet to move forward to the commercial licensing supply agreement, sorry, where the actual financial terms will be there. But I would expect in both instances, what you're going to see is going to be where we have a price per device that is based on the cost of manufacturing and the time it takes us to manufacture and some cost plus benefit for Halozyme. But more to come on that later, we're just incredibly excited that we're now moving forward with two of our partners to be using and testing our auto injectors in the future in their clinical studies.

Sean Laaman
Sean Laaman
Analyst at Morgan Stanley

Great. Thank you, Helen. That's all I have for now.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Thanks, John.

Operator

Your next question comes from the line of Michael DeFeura with Evercore ISI. Your line is open.

Michael Difiore
Managing Director at Evercore

Thanks a lot. Hey, guys. Thanks for taking my question and congrats on all the continued progress. Two questions from me centering on the Merck Halozyme litigation. Number one, do you guys see AstraZeneca's Altigen deal as evidence that large pharma companies are willing to accept patent litigation risk rather than sign enhanced deals?

Michael Difiore
Managing Director at Evercore

And if so, how do you counter that narrative? Second question is, have any enhanced partners paused new target add ons or renegotiations while they watch this litigation play out? And if so, how material could that be to long term growth? Thank you.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Yes. I'll tackle the second one first, Mike. And no, we have not heard from any partner who is a current partner or even conversations we're having with potential future partners where anything is being paused to evaluate the outcome of the market litigation. And I don't expect that really to happen at all. I think it's very clear ENHANZE has seen as the market leader here, where the most derisked, most validated with a million patients treated.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

And I can say that for all of the people who are looking at hyaluronidase, including all of the ones who have signed deals with Alteagen, all of them have come to Halozyme first and perhaps found that the target they were intending or wanting to use it for was not available. And I think we're going to continue to see that pattern. With regard to your specific question on AstraZeneca, again, don't want to speculate on what AstraZeneca is thinking with regard to litigation, but I'll come back to the comment I made a moment ago. All of the people that have moved forward with a deal with LTH and have actually discussed specific targets with Halozyme that were taken by other of our current partners. And I think again that is the trend that we have seen to date.

Michael Difiore
Managing Director at Evercore

Okay. Very helpful. Thank you.

Operator

Your next question comes from the line of Jessica Fye with JPMorgan. Your line is open.

Adam Ferrarini
Adam Ferrarini
Biotech Equity Research Associate at J.P. Morgan

Hello. This is Adam on for Jess. Thank you for taking our question. I just wanted to ask, how are you thinking about the implications of the Enhertu frontline breast cancer data for FeSCO sales and royalties? Thank you.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Yes. Obviously, we're keeping a close watch on that. What we are seeing with FASGO is with the great long term data and there's more long term data as you know that's going to be coming out on FASGO this year as well together with the very convenient patient administration in just five to seven minutes for it, we believe that sales team is going to continue to demonstrate this very strong market adoption and uptake where there is incredibly high patient satisfaction for it. So not just the clinical benefits, the administration benefits, but also the patient satisfaction. So we're not concerned with regard to the InHER2 data that will be emerging.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Delighted to see the strong uptake continues for FeSGO. We mentioned on the call 47% share now in the 58 launch markets expected to get to more than 50% this year. And we've seen with our products that when a patient has moved to the subcu version of the products, they tend to be very sticky. So we are projecting continued strong growth of, FeSGO for multiple years to come.

Operator

Your next question comes from the line of C. Wainwright. Your line is open.

Mitchell Kapoor
Director, Senior Biotechnology Analyst at H.C. Wainwright & Co., LLC

Hi, everyone. Thanks for taking the question. I wanted to ask a little bit about your views in the future of the changing proportion of the mix of royalty revenues as your pipeline evolves? Just kind of trying to understand when we could get to more even proportions versus the three blockbusters serving as the heavyweights for the royalty revenues.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

All right. It's when you have such great products, Mitch, it's an embarrassment of Ritu's and we do expect several of our products that are currently just starting their launch trajectories to also be meaningful contributors. There was a time where people were very focused on DARZALEX and it's having a very large proportion of our sales. It will continue to be a very important contributor to us for many years to come. But products like Five Trullo, FESGO, Ocreviz, others are going to be very important contributors as well.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

I think Nicole mentioned that this year the larger installer growth is actually Five Star, Trullo, which shows you how our portfolio is broadening. So we're going to have multiple very high impact blockbusters like DARZALEX and frankly by the end of this year, next year. Let me see if Nicole would add anything to that.

Nicole LaBrosse
Nicole LaBrosse
CFO at Halozyme Therapeutics

Yes. And we don't break out our royalties by products, but we have shared the buckets as we think about our royalty projections. We shared DARZALEX and FSGO in total, the contribution that they're expected to have in the long term. And then the next wave of our products, so comparing it to DARZALEX and FSGO having a $20,000,000,000 market opportunity in 2028. And then looking at the next wave of our products totality, having a $35,000,000,000 market opportunity in 2028, I think that gives you that good sense for how over the next few years, those products will start contributing very meaningfully and taking up a good proportion of our royalty revenue.

Mitchell Kapoor
Director, Senior Biotechnology Analyst at H.C. Wainwright & Co., LLC

Thank you. That's very helpful. And one more from me. Just talking about the M and A activity and the expectations for future activity in that space. Could you talk a little bit about what you're looking for in your next BD deal there and how that contrasts with your strategy with Evotec?

Mitchell Kapoor
Director, Senior Biotechnology Analyst at H.C. Wainwright & Co., LLC

And then if you could just talk about timing on when you would like to execute on one of those transactions? Is there kind of a timeline for that? And kind of the size, larger or smaller multiple smaller ones? Any clarity around those particular aspects of the M and A strategy?

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Yes. Thanks, Mitch. Well, with regard to M and A, we're very focused on seeking to find opportunities in the drug delivery space, where there are platform technologies that can result in long durable revenues, including and particularly for royalties. Obviously, like that model. But I will say we are not in a hurry to do it and we're going to be carefully evaluating and being thoughtful as we've always been to identify something that we believe would be needed and required by multiple pharma companies and result in a very positive contribution to Halozyme long term growth.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

So think drug delivery, think licensing business that is where we are evaluating today. No specific timeline. And as we're still evaluating, it should be premature to comment on the size. But it but it's, so I can't comment on that, at this period of time. So that's where we're going to be focused, and we're excited to try to create new platforms and create just great businesses like in Enhance, and and that we've done so successfully with that.

Mitchell Kapoor
Director, Senior Biotechnology Analyst at H.C. Wainwright & Co., LLC

Great. Thank you all very much for taking the questions.

Operator

Your next question comes from the line of Brendan Smith with TD Cowen.

Brendan Smith
Director & Senior Analyst at TD Cowen

Maybe just another one kind of regarding the litigation, for the PT Truda. Just kind of in in point blank terms, can you just confirm first, that, you know, whatever the outcome for your litigation against Merck, that the decision will have no impact on your actual core and Hanes business? And then, on the flip side, kind of the same question regarding the PGR suit from Merck, or is the one from them a little bit more targeted to NHANES itself? Just trying to kind of understand the relative potential impact down the line.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

That's great, Brendan. And to be very clear, what is going on in the MDAYS, which is a separate and distinct set of patents from ENHANZE, will have absolutely no impact whatsoever on our ENHANZE business, our guidance that we have provided or our future growth of Enhance. Think of the MDs as future upside opportunity that has been identified as we are finding that companies are infringing our intellectual property and we're seeking to have those companies take licenses from us. So that's it bottom line with regard to what would happen. So specifically with the outcome of the PGRs, yes, absolutely no impact on our enhanced business and same with the infringement case, no impact on the enhanced business, all potential upside if we were to win either a license with Merck or when compensatory damages as we are seeking in the litigation.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

So two very distinct things where MDAYS is just a potential upside coming from great innovation and inventions that Halozyme has created over the years.

Brendan Smith
Director & Senior Analyst at TD Cowen

Got it. Okay, great. And then maybe just a quick one on tariffs just because we do get a lot of questions about this. Can you just speak really quickly to how we should be thinking about the potential impact of pharma and maybe EU tariffs? And if you've had any conversations with any of your partners about them, I guess particularly relevant for DARZALEX and Vivint, just given their global footprint?

Brendan Smith
Director & Senior Analyst at TD Cowen

Thank you.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Yeah. I'll start with Halozyme's manufacturing, where we've been very deliberate ourselves in establishing our manufacturing in The United States. And we also have been seeking to assure we can, source all or virtually all of our components and materials needed in The United States too. And so I can confirm that, from the Halozyme point of view for the products we produce and our API, there is a very, very limited exposure to the currently imposed tariffs and any small impact is already contemplated in our guidance. With regard to the pharma tariffs, I can say that based on our agreements, if the pharma tariffs were implemented for products being imported into The U.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

S, Halozyme will not see, or should not see any impact on our royalty revenues. And so it's based on our agreements and based on what we're aware of with regard to the manufacturing of our partner products and importantly also U. S. Distribution and how that works. So we should not see any impact with regard to tariffs.

Brendan Smith
Director & Senior Analyst at TD Cowen

All right, great. Thank you.

Operator

And your next question comes from the line of David Risinger with Leerink Partners. Your line is open.

David Risinger
Senior Managing Director, Biopharma at Leerink Partners

Thanks very much and congrats Helen and team on the very strong financial progress. I have two questions. The first is with respect to external acquisitions, are you also considering broadening your royalty streams by considering acquiring royalty companies? And then with respect to potential new customer deals, could you just talk about the gating factors for new business announcements? For example, are some customers awaiting FDA guidance or sorry, CMS guidance for IRA negotiations in coming months for 2028 under the new administration?

David Risinger
Senior Managing Director, Biopharma at Leerink Partners

Thanks very much.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

All right. So with regard to external acquisitions, David, I mentioned that we really are focused on creating new platform businesses that can result in durable long revenue streams such as we've created for Enhance. And so think drug delivery platforms as being our primary focus in terms of where we are evaluating opportunities today. On the new customer deals and specifically for Enhance, the and I've talked about this before, what we do see in companies is there's a multi step review process and then a multi step decision process. And so really what we're doing at the moment is working through that process in each company, where each company has a slightly different process.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Now you do get to the end of it as we've seen very nicely by announcing our small volume ocean injector deal last quarter, the high volume one. And we are in several discussions going through that process on ENHANZE. So simply is more a question of getting through the internal decision making processes in the pharma and biotech companies that will result in an ENHANZE deal. And I remain confident we will sign a deal on ENHANZE this year. It's been interesting on CMS and people are awaiting the IRA.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

I would not say that's a gate at all. It just is a question of interest to see whether the CMS will continue to recognize that a product that is two active ingredients is a separate drug from the single ingredients. And so if anything that might bring us some additional new opportunities, David, but it hasn't been holding anyone back waiting to see that that is confirmed. Much more focused on the strong differentiation, that ENHANZE is able to bring, for their patients and their mission for, improving the patient treatment experience.

David Risinger
Senior Managing Director, Biopharma at Leerink Partners

Got it. Thank you.

Helen Torley
Helen Torley
President and CEO at Halozyme Therapeutics

Thanks very much.

Operator

And there are no further questions at this time. This does conclude today's conference call. You may now disconnect.

Executives
Analysts
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Key Takeaways

  • Strong Q1 results: Total revenue rose 35% to $265 million, royalty revenue climbed 39%, adjusted EBITDA grew 40%, and net income jumped 54%, prompting an increase to the full-year outlook.
  • Core blockbusters: ENHANZE-enabled Darzalex subcutaneous, FASGO and Vyvgart Hytulo continue driving royalties with sustained share gains and market expansion.
  • 11 new growth catalysts: Key upcoming drivers include EU approval of a Darzalex quadruplet regimen, home-administration label expansions, new subcutaneous formulations, J-code listings and positive CHMP opinions across multiple programs.
  • Growth strategy: Halozyme will prioritize organic ENHANZE and auto-injector investments, pursue disciplined M&A in drug-delivery platforms without raising net leverage, and has authorized a $250 million share buyback.
  • Auto-injector and pipeline progress: The first high-volume auto-injector development deal is signed, a small-volume injector partner is moving into Phase I, and additional ENHANZE programs (e.g., supernitag and four-month N6LS) advance pre-clinical and clinical stages.
AI Generated. May Contain Errors.
Earnings Conference Call
Halozyme Therapeutics Q1 2025
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