Halozyme Reports Third Quarter 2021 Results
11/02/2021 - 04:01 PM
SAN DIEGO , Nov. 2, 2021 /PRNewswire/ -- Halozyme Therapeutics, Inc. (NASDAQ: HALO) today reported financial results for the third quarter ended September 30, 2021 and provided an update on its recent corporate activities and outlook.
"Our strong 2021 performance continued in the third quarter fueled by 145% growth over the prior year period in revenue from royalties. We continue to project that full year royalty revenue in 2021 will be more than double 2020 royalty revenue. Our topline growth in turn resulted in strong profitability for the quarter," said Dr. Helen Torley , president and chief executive officer. "We look forward to additional study starts before year-end as our partners continue making progress in the clinic developing products utilizing our ENHANZE® technology, with the goal of providing patients with additional treatment options."
Recent Partner Highlights:
In July 2021 , Janssen elected the target HIV reverse transcriptase, representing the third target selected by Janssen for development with ENHANZE® . In July 2021 , Janssen received U.S. Food and Drug Administration approval for DARZALEX FASPRO® in combination with pomalidomide and dexamethasone for patients with multiple myeloma after first or subsequent relapse. In October 2021 , Janssen's DARZALEX FASPRO® was approved by the China National Medical Products Administration (NMPA) for the treatment of primary light chain amyloidosis, in combination with bortezomib, cyclophosphamide and dexamethasone (D-VCd) in newly diagnosed patients. This followed a similar approval Janssen Pharmaceutical K.K. received in August 2021 from Japan's Ministry of Health, Labour and Welfare (MHLW) for DARZQURO® (Daratumumab SC) for the additional indication of systemic AL amyloidosis. Recent Corporate Highlights:
During the third quarter, the Company repurchased approximately 1.6 million shares of common stock for $64.7 million $41.40 $189.7 million $43.35 October 2021 , the Company repurchased an additional 0.3 million shares of common stock for $10.3 million $200.0 million November 2019 . Under the program a total of 22.3 million shares were repurchased for $550.0 million $24.72 Third Quarter Financial Highlights
Revenue for the third quarter was $115.8 million $65.3 million ® (daratumumab) and an increase in product sales. Revenue for the quarter included $58.6 million 145% compared to $23.9 million Cost of product sales for the third quarter was $18.6 million $5.6 million Research and development expenses for the third quarter were $8.5 million $7.7 million ® targets entering clinical development. Selling, general and administrative expenses for the third quarter were $13.2 million $11.7 million ® targets entering clinical development. Operating Income: On a GAAP basis in the third quarter of 2021, operating income was $75.6 million $40.3 million Net Income: On a GAAP basis in the third quarter of 2021, net income was $216.6 million $36.2 million $80.5 million $44.0 million 1 Earnings per Share: On a GAAP basis in the third quarter of 2021, diluted earnings per share was $1.48 $0.25 $0.55 $0.31 1 Third quarter financial results include the reversal of substantially all of the valuation allowance recorded against the Company's deferred tax assets. This reversal resulted in the recognition of a non-cash income tax benefit during the quarter of $142.5 million $0.97 September 30, 2021 . Cash, cash equivalents and marketable securities were $815.9 million September 30, 2021 , compared to $368.0 million December 31, 2020 . During the third quarter, the Company repurchased 1.6 million shares of common stock for $64.7 million $41.40 October 2021 , the Company repurchased an additional 0.3 million shares of common stock for $10.3 million November 2019 . Under the program a total of 22.3 million shares were repurchased for $550.0 million $24.72 Financial Outlook for 2021
The Company is increasing the lower end of revenue and operating income guidance ranges to reflect strong third quarter results. In addition, the Company is increasing GAAP diluted earnings per share guidance to reflect an income tax benefit related to the release of a valuation allowance for its deferred tax assets, and increasing the lower end of Non-GAAP diluted earnings per share guidance. The Company now expects:
Revenues of $430 million $445 million $425 million $445 million 61% -66% ; GAAP Operating Income of $265 million $280 million $260 million $280 million 84% -94% ; GAAP Net Income of $380 million $395 million $235 million $255 million $285 million $300 million $280 million $300 million 1 GAAP Diluted Earnings per Share of $2.60 $2.70 $1.55 $1.70 Non-GAAP Diluted Earnings per Share of $1.90 $2.00 $1.85 $2.00 70% -79% .1 Webcast and Conference Call
Halozyme will webcast its Quarterly Update Conference Call for the third quarter of 2021 today, Tuesday, November 2, 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: https://conferencingportals.com/event/QfiVLXsr . 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, please register a day in advance or at minimum 10 minutes before the start of the call.
About Halozyme
Halozyme is a biopharmaceutical company bringing disruptive solutions to significantly improve patient experiences and outcomes for emerging and established therapies. Halozyme advises and supports its biopharmaceutical partners in key aspects of new drug development with the goal of improving patients' lives while helping its partners achieve global commercial success. As the innovators of the ENHANZE® technology, which can reduce hours-long treatments to a matter of minutes, Halozyme's commercially-validated solution has touched more than 500,000 patient lives in post-marketing use via five commercialized products across more than 100 global markets. Halozyme and its world-class partners are currently advancing multiple therapeutic programs intended to deliver innovative therapies, with the potential to improve the lives of patients around the globe. Halozyme's proprietary enzyme rHuPH20 forms the basis of the ENHANZE® technology and is used to facilitate the delivery of injected drugs and fluids, potentially reducing the treatment burden of other drugs to patients. Halozyme has licensed its ENHANZE® technology to leading pharmaceutical and biotechnology companies including Roche, Baxalta, Pfizer, AbbVie, Lilly, Bristol-Myers Squibb, Alexion, argenx, Horizon Therapeutics and ViiV Healthcare. Halozyme derives revenues from these collaborations in the form of milestones and royalties as the Company's partners make progress developing and commercializing their products being developed using ENHANZE® . Halozyme is headquartered in San Diego . For more information visit www.halozyme.com
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 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 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.
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 2021) and expectations for future growth, profitability, revenue, operating income, cash flow, expenses and earnings-per-share. Forward-looking statements regarding the Company's ENHANZE® drug delivery technology may include the possible activity, benefits and attributes of ENHANZE® , the possible method of action 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 ENHANZE® 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, the size and growth prospects of our partners' drug franchises, potential new ENHANZE® collaborations and collaborative targets and regulatory review and potential approvals of new ENHANZE® 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 results or delays in the growth of the Company's ENHANZE® business, or in the development, regulatory review or commercialization of ENHANZE® 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 Form 10-Q filed with the Securities and Exchange Commission.
Contact: Al Kildani ir@halozyme.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,
2021
2020
2021
2020
Revenues:
Royalties
$
58,563
$
23,931
$
141,264
$
56,599
Product sales, net
25,047
9,048
77,173
23,532
Revenues under collaborative agreements
32,220
32,337
122,870
65,760
Total revenues
115,830
65,316
341,307
145,891
Operating expenses:
Cost of product sales
18,589
5,568
59,826
17,095
Research and development
8,486
7,747
25,564
26,856
Selling, general and administrative
13,169
11,702
36,549
35,309
Total operating expenses
40,244
25,017
121,939
79,260
Operating income
75,586
40,299
219,368
66,631
Other income (expense):
Investment and other income, net
274
961
771
4,764
Inducement expense related to convertible note
—
—
(20,960)
—
Interest expense
(1,754)
(4,990)
(5,471)
(15,342)
Net income before income taxes
74,106
36,270
193,708
56,053
Income tax (benefit) expense
(142,481)
63
(142,232)
132
Net income
$
216,587
$
36,207
$
335,940
$
55,921
Net income per share:
Basic
$
1.53
$
0.27
$
2.39
$
0.41
Diluted
$
1.48
$
0.25
$
2.28
$
0.40
Shares used in computing net income per share:
Basic
142,021
136,578
140,815
136,575
Diluted
146,690
142,081
147,652
139,971
Halozyme Therapeutics, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
September 30, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
491,683
$
147,703
Marketable securities, available-for-sale
324,237
220,310
Accounts receivable, net and other contract assets
112,099
97,730
Inventories
55,978
60,747
Prepaid expenses and other assets
33,302
28,274
Total current assets
1,017,299
554,764
Property and equipment, net
9,588
10,593
Prepaid expenses and other assets
15,552
14,067
Deferred tax assets
142,481
—
Restricted cash
500
500
Total assets
$
1,185,420
$
579,924
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
3,322
$
1,928
Accrued expenses
18,335
20,483
Deferred revenue, current portion
2,245
1,746
Current portion of long-term debt, net
89,251
397,228
Total current liabilities
113,153
421,385
Deferred revenue, net of current portion
2,530
4,026
Long-term debt, net
786,454
—
Other long-term liabilities
1,609
3,466
Stockholders' equity:
Common stock
141
135
Additional paid-in capital
407,229
625,483
Accumulated other comprehensive (loss) income
(14)
22
Accumulated deficit
(125,682)
(474,593)
Total stockholders' equity
281,674
151,047
Total liabilities and stockholders' equity
$
1,185,420
$
579,924
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,
2021
2020
GAAP Net Income
$
216,587
$
36,207
Adjustments:
Share-based compensation
5,399
4,220
Amortization of debt discount
968
3,552
Income tax benefit (1)
(142,481)
—
Income tax effect of above adjustments (1)
(5)
(13)
Non-GAAP Net Income
$
80,468
$
43,966
GAAP Diluted EPS
$
1.48
$
0.25
Adjustments:
Share-based compensation
0.04
0.03
Amortization of debt discount
0.01
0.02
Income tax benefit(1)
(0.97)
—
Non-GAAP Diluted EPS
$
0.55
$
0.31
GAAP & Non-GAAP Diluted Shares
146,690
142,081
(1) 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. 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 2021 Guidance
(Unaudited)
(In millions, except per share amounts)
2021
2020
GAAP Net Income
$ 380 - 395
$
129.1
Adjustments:
Inducement expense related to convertible note
21 - 21
—
Share-based compensation
21 - 21
17.2
Amortization of debt discount
4 - 4
14.1
Income tax benefit
(142) - (142)
Non-GAAP Net Income
$ 285 -300
$
160.4
GAAP Diluted EPS
$ 2.60 - 2.70
$
0.91
Adjustments:
Inducement expense related to convertible note
0.14 - 0.14
—
Share-based compensation
0.14 - 0.15
0.12
Amortization of debt discount
0.02 - 0.02
0.10
Income tax benefit
(0.97) - (0.97)
Non-GAAP Diluted EPS
$ 1.90 - 2.00
$
1.12
GAAP & Non-GAAP Diluted Shares
147 - 148
141.5
Dollar amounts, as presented, are rounded. Consequently totals may not add up.
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SOURCE Halozyme Therapeutics, Inc.
