Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Halozyme Therapeutics Inc (HALO, Financial) reported a 34% increase in total revenues, reaching an all-time high of $290 million for the third quarter.
- Royalty revenue increased by 36% to a record $155 million, driven by the adoption of their enhanced drug delivery technology.
- The company raised its full-year guidance for total revenue, royalty revenue, adjusted EBITDA, and non-GAAP earnings per share.
- Operationally, Halozyme saw two partners nominate new targets under expanded licensing agreements, adding new revenue streams.
- Roche, a key partner, gained two significant regulatory approvals, expanding the reach of Halozyme's technology in oncology and neurology.
Negative Points
- Despite strong financial performance, Halozyme's product sales are expected to remain flat in 2024, with growth anticipated over the next four years.
- The company faces potential challenges in securing new collaboration deals before the end of the year, as indicated by their guidance range.
- There is uncertainty regarding the adoption and commercial success of the MDA platform compared to the established enhanced platform.
- The collaboration revenue guidance range was tightened, indicating potential variability in expected outcomes.
- The company must navigate intellectual property complexities, particularly with the introduction of the MDA patent portfolio.
Q & A Highlights
Q: What is your current view on subcutaneous conversion for Roche's recent launches, and how might this ramp up in the coming quarters?
A: Helen Torley, President and CEO, explained that for Ocrevus, Roche's strategy is not immediate conversion but market growth, allowing more treatment centers to use subcutaneous due to shorter treatment times. They expect a $2 billion market expansion. For Tecentriq, there will be a focus on converting patients from IV to subcutaneous for simpler regimens, with good conversion expected alongside market growth.
Q: Can you clarify Roche's $2 billion market expansion for Ocrevus subcutaneous and how it relates to peak sales estimates?
A: Helen Torley clarified that the $2 billion is an expansion on top of existing sales, potentially increasing the total market to $11 billion. The strategy is to expand the market initially and then convert IV sales to subcutaneous over time, with 80% of new starts already being new to brand.
Q: What is the status of new collaboration deals expected before the end of the year?
A: Helen Torley stated that they are focused on achieving their guidance of $130 million to $150 million in collaboration revenue, with strong contributions from expanded agreements like with Argenx. They continue to pursue new deals and nominations.
Q: How will licensees manage development and regulatory challenges for MDA licenses without Halozyme's support?
A: Helen Torley explained that companies using MDA licenses will need to develop their own product and regulatory pathways, as Halozyme will not provide support or API supply. The focus remains on enhancing partnerships, with MDA licenses available for those unable to use ENHANZE.
Q: Can you discuss the primary drivers of the increase in royalty revenues?
A: Helen Torley highlighted strong execution and new indications as key drivers. Darzalex saw significant share gains, particularly in frontline settings. VYVGART's growth was driven by broadening adoption and new indications, while Phesgo continued its strong trajectory.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
