Halozyme(HALO) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue in Q2 2024 grew to $231 million, supporting full-year growth expectations of 13% to 22% [6][35] - Royalty revenue reached$ 125 million, an increase of 12% year-over-year, marking the 16th consecutive quarter of double-digit year-on-year royalty growth [6][35] - Adjusted EBITDA grew by 19% to $137 million, with non-GAAP diluted earnings per share increasing by 23% to$ 0.91 [6][37] Business Line Data and Key Metrics Changes - The ENHANZE IP portfolio was strengthened with a new patent granted in Europe, extending coverage to March 6, 2029 [7][8] - The approval of OCREVUS subcutaneous and VYVGART Hytrulo expanded ENHANZE's reach into neurology and autoimmune diseases [9][10] - Sales of DARZALEX in Q2 were $2.9 billion, a 21.3% increase year-over-year, driven by share gains across therapy lines [15][16] Market Data and Key Metrics Changes - OCREVUS subcutaneous has a PDUFA action date of September 13, 2024, with the brand maintaining a 26% global patient share [25][26] - Phesgo sales increased by 60% to almost CHF800 million in the first half of 2024, with Roche expecting global conversion to reach 50% by 2026 [17] - Nivolumab IV sales grew 16% to$ 2.4 billion in Q2, with expectations for significant conversion to subcutaneous formulations [27] Company Strategy and Development Direction - The company aims to achieve $1 billion in royalty revenue by 2027, driven by strong performance from Wave 2 products and new royalty streams from Wave 3 products [14] - The focus remains on expanding ENHANZE technology into new treatment areas, with ongoing discussions for new partnerships [41][50] - The company is actively seeking M&A opportunities, particularly in drug delivery and licensing models that align with its high-margin business profile [74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving financial targets, citing a strong pipeline of launches and growing awareness of subcutaneous technology [39] - The company anticipates continued growth in royalty revenue, particularly in the second half of the year, following the reinstatement of full royalty rates [38][70] - Management noted that external factors like election uncertainty have not impacted partnership discussions [54] Other Important Information - The company completed a$ 250 million ASR, bringing total shareholder returns via share repurchases to $1.3 billion over five years [34] - Cash and marketable securities increased to$ 529 million as of June 30, 2024, reflecting strong operational cash generation [35] Q&A Session Summary Question: Overview of new partnership activities - Management is confident in securing additional deals, primarily focused on ENHANZE technology, with a mix of established and early-stage products [41] Question: Drivers of higher-than-expected API sales - API sales were higher due to partner demand shifts, with expectations for flat sales in Q3 [42][43] Question: Potential partnerships in the myostatin pathway - The company is interested in targeting obesity and muscle loss areas and is actively reaching out to relevant companies [46] Question: Updates on undisclosed Roche and Chugai products - Details on these products remain confidential, and no near-term disclosure plans have been indicated by partners [49] Question: Impact of PALOMA 3 results on partnership discussions - The PALOMA 3 results have generated interest, particularly in areas like nucleic acids and mRNA, but further data is needed [51] Question: Expectations for new ENHANZE deals - Management remains optimistic about signing new deals this year, with ongoing discussions with around 10 companies [70][71]