HALOZYME REPORTS FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL AND OPERATING RESULTS
Reiterating 2024 Financial Guidance: Total Revenue of
Fourth Quarter Revenue Increased 27% YOY to
Full Year 2023 Revenue Increased 26% YOY to
Announcing New
"We are pleased to reiterate our 2024 financial guidance, which represents continued robust growth of total revenue, royalty revenue, adjusted EBITDA and non-GAAP diluted EPS, and builds upon our strong 2023 performance and results. Multiple, positive, value-creating events including the first approvals of VYVGART Hytrulo and Tecentriq SC and positive phase 3 data readouts with ENHANZE for VYVGART Hytrulo in CIDP, ocrelizumab SC and nivolumab SC all achieved in 2023, add new opportunities for continued revenue growth," said Dr.
Fourth Quarter and Recent Corporate Highlights:
- Reiterating 2024 financial guidance announced
January 17th including total revenue of$915 million to$985 million , representing year-over-year growth of 10% to 19%, adjusted EBITDA of$535 million to$585 million , representing year-over-year growth of 26% to 37% and non-GAAP diluted earnings per share of$3.55 to$3.90 , representing year-over-year growth of 28% to 41%. - In
February 2024 , the Company announced its third share repurchase program to repurchase up to$750 million of its outstanding common stock. - In
November 2023 ,Halozyme entered into an Accelerated Share Repurchase agreement to accelerate the remaining$250.0 million in share repurchases under the$750 million approved program fromDecember 2021 .
Fourth Quarter and Recent Partner Highlights:
- In
February 2024 , argenx announced that theU.S. Food and Drug Administration ("FDA") has accepted for priority review a supplemental Biologics License Application ("sBLA") for VYVGART® Hytrulo (efgartigimod alfa and hyaluronidase-qvfc) for the treatment of chronic inflammatory demyelinating polyneuropathy ("CIDP"). The application has been granted a PDUFA action date ofJune 21, 2024 . - In
February 2024 , Takeda submitted a New Drug Application inJapan seeking approval for TAK-771, subcutaneous 10% human immunoglobulin with ENHANZE®, for treatment of primary immunodeficiency. - In
January 2024 , Janssen announced submission of a sBLA to the FDA seeking approval of a new indication for DARZALEX FASPRO® in combination with bortezomib, lenalidomide and dexamethasone for induction and consolidation treatment and with lenalidomide for maintenance treatment of adult patients who are newly diagnosed with multiple myeloma and are eligible for autologous stem cell transplant. - In
January 2024 , Roche receivedEuropean Commission ("EC") marketing authorization for Tecentriq® subcutaneous ("SC") for all approved indications of Tecentriq® IV for multiple cancer types. - In
January 2024 , Takeda received FDA approval for HYQVIA® for the treatment of CIDP as maintenance therapy to prevent the relapse of neuromuscular disability and impairment in adults. - In
January 2024 , Takeda received EC approval for HYQVIA® for the treatment of CIDP as maintenance therapy in patients of all ages after stabilization with intravenous immunoglobulin therapy. - In
January 2024 , argenx received regulatory approval inJapan for VYVDURA® (efgartigimod alfa and hyaluronidase-qvfc) co-formulated with ENHANZE® for the treatment of adult patients with generalized myasthenia gravis ("gMG") including options for self-administration, resulting in a$5.0 million milestone payment. - In 2023, Roche filed ocrelizumab SC with ENHANZE® with regulatory authorities in the
U.S. ,European Union andGreat Britain . - In
November 2023 ,Halozyme andAcumen entered into a global collaboration and non-exclusive license agreement that providesAcumen access to ENHANZE® for a single target.Acumen intends to explore the potential use of ENHANZE® for ACU193,Acumen's clinical stage monoclonal antibody candidate to target Amyloid-β Oligomers for the treatment of early Alzheimer's disease. - In
November 2023 , Teva announced FDA approval of the generic version of Forteo®, featuringHalozyme's multi-dose auto-injector pen platform for the treatment of osteoporosis among certain women and men. - In
November 2023 , argenx received EC approval of VYVGART® SC (efgartigimod alfa and hyaluronidase-qvfc) co-formulated with ENHANZE® for the treatment of gMG in adult patients who are AChR antibody positive, and inDecember 2023 , VYVGART® SC was made available to patients, resulting in$23.0 million in milestone payments. The European approval of VYVGART® SC provides the option for patient self-administration. - In
October 2023 , Takeda initiated a Phase 2/3 study to evaluate the pharmacokinetics, safety, and tolerability of subcutaneous administration of TAK-881 in adult and pediatric participants with Primary Immunodeficiency Diseases.
Fourth Quarter 2023 Financial Highlights:
- Revenue was
$230.0 million compared to$181.5 million in the fourth quarter of 2022. The 27% year-over-year increase was primarily driven by royalty revenue growth, higher product sales as a result of an increase in bulk rHuPH20 sales driven by partner demand and continued growth in XYOSTED® and an increase in milestone revenue. Revenue for the quarter included$122.1 million in royalties, an increase of 15% compared to$106.0 million in the prior year period, primarily attributable to increases in revenue of subcutaneous DARZALEX® (daratumumab) and Phesgo®.
Total revenue for the full year was$829.3 million , compared with$660.1 million in 2022, representing 26% year-over-year growth. The increase was primarily driven by royalty revenue growth, full year revenue contributions from the Antares acquisition inMay 2022 , and higher sales of bulk rHuPH20, partially offset by timing of milestone revenue driven by partner activities. - Cost of sales was
$52.3 million , compared to$42.1 million in the fourth quarter of 2022. The increase was primarily driven by growth in proprietary product sales and bulk rHuPH20 demand.
Cost of sales for the full year was$192.4 million , compared to$139.3 million in 2022. The increase was primarily due to an increase in sales of our proprietary and device partnered products as a result of the Antares acquisition and higher bulk rHuPH20 sales. - Amortization of intangibles expense was
$17.8 million , compared to$4.6 million in the fourth quarter of 2022. The increase was primarily due to a remeasurement adjustment of our acquired intangible assets recorded in the fourth quarter of 2022.
Amortization of intangible expenses for the full year$73.8 million , compared to$43.1 million in 2022. The increase was primarily due to the recognition of a full year amortization expense during the current year for our acquired intangible assets and an impairment charge of$2.5 million to fully impair the TLANDO® product rights intangible asset as a result of the license agreement termination notice provided to Lipocine inSeptember 2023 . - Research and development expense was
$21.3 million , compared to$22.6 million in the fourth quarter of 2022. The decrease was primarily due to the non-recurring clinical trial expense incurred in the prior year, partially offset by higher compensation expense in the current year.
Research and development expense for the full year was$76.4 million , compared to$66.6 million in 2022. The increase was primarily due to an increase in compensation expense related to the ongoing combined larger workforce to support the device platform in regulatory, quality and manufacturing, as well as planned investments in ENHANZE®, partially offset by one-time transaction costs incurred in the prior year. - Selling, general and administrative expense remained flat at
$37.6 million , compared to$37.7 million in the fourth quarter of 2022.
Selling, general and administrative expense for the full year was$149.2 million , compared to$143.5 million in 2022. The increase was primarily due to an increase in compensation expense related to the ongoing combined larger workforce, including the addition of commercial resources in sales and marketing for our testosterone replacement therapy products, partially offset by one-time transaction costs incurred in the prior year. - Operating income was
$101.0 million , compared to operating income of$74.5 million in the fourth quarter of 2022. Operating income for the full year was$337.6 million , compared to$267.5 million in 2022. - Net Income was
$85.4 million , compared to net income of$57.7 million in the fourth quarter of 2022. Net income for the full year was$281.6 million , compared to net income of$202.1 million in 2022. - EBITDA was
$121.7 million , compared to EBITDA of$81.6 million in the fourth quarter of 2022. Adjusted EBITDA was$121.7 million , compared to Adjusted EBITDA of$83.0 million in the fourth quarter of 2022.1
EBITDA for the full year was$435.6 million , compared to EBITDA of$314.5 million in the fourth quarter 2022. Adjusted EBITDA was$426.2 million , compared to Adjusted EBITDA of$358.9 million in 2022.1 - GAAP diluted earnings per share was
$0.65 , compared to$0.42 in the fourth quarter of 2022. Non-GAAP diluted earnings per share was$0.82 , compared to$0.48 in the fourth quarter of 2022.1
GAAP diluted earnings per share for the full year was$2.10 , compared to$1.44 in 2022. Non-GAAP diluted earnings per share was$2.77 , compared to$2.21 in 2022.1 - Cash, cash equivalents and marketable securities were
$336.0 million onDecember 31, 2023 , compared to$362.8 million onDecember 31, 2022 . The decrease was primarily a result of the repurchase of common stock for$400.0 million during 2023, partially offset by cash generated from operations.
Financial Outlook for 2024
The Company is reiterating its financial guidance for 2024, which was initially provided on
- Total revenue of
$915 million to$985 million , representing growth of 10% to 19% over 2023 total revenue primarily driven by increases in royalty revenue, collaboration revenue and growth in product sales from XYOSTED®. Revenue from royalties of$500 million to$525 million , representing growth of 12% to 17% over 2023. - Adjusted EBITDA of
$535 million to$585 million , representing growth of 26% to 37% over 2023. - Non-GAAP diluted earnings per share of
$3.55 to$3.90 , representing growth of 28% to 41% over 2023.1 The Company's earnings per share guidance does not consider the impact of potential future share repurchases.
Table 1. 2024 Financial Guidance
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Total Revenue |
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Royalty Revenue |
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Adjusted EBITDA |
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Non-GAAP Diluted EPS |
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Webcast and Conference Call
About
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
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 financial performance (including the Company's financial outlook for 2024 and longer term projections) and expectations for future growth, profitability, total revenue, royalty revenue, EBITDA, Adjusted EBITDA, non-GAAP diluted earnings-per-share and potential share repurchase 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 higher 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 and clinical data, regulatory submissions and product launches, the size and growth prospects of our partners' drug franchises, potential new or expanded collaborations and collaborative targets and regulatory review and potential approvals of new partnered or proprietary products and the Company's development and partnership potential of a high volume auto-injector. These forward-looking statements are typically, but not always, identified through use of the words "expect," "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, 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 its high volume auto-injector), 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 recent Annual Report on Form 10-K filed with the
Contacts:
Tram Bui
VP, Investor Relations and Corporate Communications
609-359-3016
tbui@halozyme.com
Teneo
617-877-9710
samantha.gaspar@teneo.com
Footnotes:
1. Reconciliations between GAAP reported and non-GAAP financial information and adjusted guidance measures are provided at the end.
Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) |
||||||||
|
||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Revenues |
|
|
|
|
|
|
|
|
Royalties |
|
$ 122,052 |
|
$ 105,979 |
|
$ 447,865 |
|
$ 360,475 |
Product sales, net |
|
79,602 |
|
61,163 |
|
300,854 |
|
191,030 |
Revenues under collaborative agreements |
|
28,385 |
|
14,354 |
|
80,534 |
|
108,611 |
Total revenues |
|
230,039 |
|
181,496 |
|
829,253 |
|
660,116 |
Operating expenses |
|
|
|
|
|
|
|
|
Cost of sales |
|
52,298 |
|
42,120 |
|
192,361 |
|
139,304 |
Amortization of intangibles |
|
17,762 |
|
4,552 |
|
73,773 |
|
43,148 |
Research and development |
|
21,336 |
|
22,566 |
|
76,363 |
|
66,607 |
Selling, general and administrative |
|
37,608 |
|
37,749 |
|
149,182 |
|
143,526 |
Total operating expenses |
|
129,004 |
|
106,987 |
|
491,679 |
|
392,585 |
Operating income |
|
101,035 |
|
74,509 |
|
337,574 |
|
267,531 |
Other income (expense) |
|
|
|
|
|
|
|
|
Investment and other (expense) income, net |
|
5,360 |
|
852 |
|
16,317 |
|
1,046 |
Inducement expense related to convertible note |
|
— |
|
— |
|
— |
|
(2,712) |
Contingent liability fair value measurement gain |
|
— |
|
— |
|
13,200 |
|
— |
Interest expense |
|
(5,220) |
|
(4,570) |
|
(18,762) |
|
(16,947) |
Net income before income taxes |
|
101,175 |
|
70,791 |
|
348,329 |
|
248,918 |
Income tax expense |
|
15,787 |
|
13,089 |
|
66,735 |
|
46,789 |
Net income |
|
$ 85,388 |
|
$ 57,702 |
|
$ 281,594 |
|
$ 202,129 |
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
Basic |
|
$ 0.66 |
|
$ 0.43 |
|
$ 2.13 |
|
$ 1.48 |
Diluted |
|
$ 0.65 |
|
$ 0.42 |
|
$ 2.10 |
|
$ 1.44 |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
129,054 |
|
135,284 |
|
131,927 |
|
136,844 |
Diluted |
|
131,035 |
|
138,601 |
|
134,197 |
|
140,608 |
Consolidated Balance Sheets (Unaudited) (In thousands) |
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||||
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|
|
|
|
ASSETS |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ 118,370 |
|
$ 234,195 |
Marketable securities, available-for-sale |
|
217,630 |
|
128,599 |
Accounts receivable, net and contract assets |
|
234,210 |
|
231,072 |
Inventories, net |
|
127,601 |
|
100,123 |
Prepaid expenses and other current assets |
|
48,613 |
|
45,024 |
Total current assets |
|
746,424 |
|
739,013 |
Property and equipment, net |
|
74,944 |
|
75,570 |
Prepaid expenses and other assets |
|
17,816 |
|
26,301 |
|
|
416,821 |
|
409,049 |
Intangible assets, net |
|
472,879 |
|
546,652 |
Deferred tax assets, net |
|
4,386 |
|
44,426 |
Restricted cash |
|
— |
|
500 |
Total assets |
|
$ 1,733,270 |
|
$ 1,841,511 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ 11,816 |
|
$ 17,693 |
Accrued expenses |
|
100,678 |
|
99,762 |
Current portion of long-term debt, net |
|
— |
|
13,334 |
Total current liabilities |
|
112,494 |
|
130,789 |
Long-term debt, net |
|
1,499,248 |
|
1,492,766 |
Other long-term liabilities |
|
37,720 |
|
32,686 |
Contingent liability |
|
— |
|
15,472 |
Total liabilities |
|
1,649,462 |
|
1,671,713 |
|
|
|
|
|
Stockholders' equity |
|
|
|
|
Common stock |
|
127 |
|
135 |
Additional paid-in capital |
|
2,409 |
|
27,368 |
Accumulated other comprehensive loss |
|
(9,278) |
|
(922) |
Retained earnings |
|
90,550 |
|
143,217 |
Total stockholders' equity |
|
83,808 |
|
169,798 |
Total liabilities and stockholders' equity |
|
$ 1,733,270 |
|
$ 1,841,511 |
GAAP to Non-GAAP Reconciliations EBITDA (Unaudited) (In thousands) |
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|
||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
GAAP Net Income |
|
$ 85,388 |
|
$ 57,702 |
|
$ 281,594 |
|
$ 202,129 |
Adjustments |
|
|
|
|
|
|
|
|
Investment and other income |
|
(5,360) |
|
(852) |
|
(16,317) |
|
(1,046) |
Interest expense |
|
5,220 |
|
4,570 |
|
18,762 |
|
16,947 |
Income tax expense |
|
15,787 |
|
13,089 |
|
66,735 |
|
46,789 |
Depreciation and amortization |
|
20,693 |
|
7,114 |
|
84,856 |
|
49,641 |
EBITDA |
|
121,728 |
|
81,623 |
|
435,630 |
|
314,460 |
Adjustments |
|
|
|
|
|
|
|
|
Gain on changes in fair value of contingent liability(1) |
|
— |
|
— |
|
(13,200) |
|
— |
Inventory write-off(2) |
|
— |
|
— |
|
3,509 |
|
— |
Transaction costs for business combinations(3) |
|
— |
|
1,391 |
|
278 |
|
21,934 |
Severance and share-based compensation acceleration expense(4) |
|
— |
|
— |
|
— |
|
22,552 |
Adjusted EBITDA |
|
$ 121,728 |
|
$ 83,014 |
|
$ 426,217 |
|
$ 358,946 |
|
|
|
|
|
|
|
|
|
Dollar amounts, as presented, are rounded. Consequently, totals may not add up. |
|
|
|
(1) |
Amount relates to fair value gain on contingent liability due to the termination of the TLANDO license agreement in |
(2) |
Amount relates to inventory write-off due to TLANDO Termination and amortization of the inventory step-up associated with purchase accounting for the prior year acquisition of Antares Pharma, Inc. ("Antares"). |
(3) |
Amounts represent incremental costs including legal fees, accounting fees and advisory fees incurred for the prior year Antares acquisition. |
(4) |
Amount represents severance cost and acceleration of unvested equity awards as part of the Antares merger agreement. |
GAAP to Non-GAAP Reconciliations Net Income and Diluted EPS (Unaudited) (In thousands, except per share amounts) |
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|
||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
GAAP Diluted EPS |
|
$ 0.65 |
|
$ 0.42 |
|
$ 2.10 |
|
$ 1.44 |
Adjustments |
|
|
|
|
|
|
|
|
Inducement expense related to convertible notes |
|
— |
|
— |
|
— |
|
0.02 |
Share-based compensation |
|
0.07 |
|
0.05 |
|
0.27 |
|
0.17 |
Amortization of debt discount |
|
0.01 |
|
0.01 |
|
0.05 |
|
0.06 |
Amortization of intangible assets |
|
0.14 |
|
0.03 |
|
0.53 |
|
0.31 |
Transaction costs for business combinations(1) |
|
— |
|
— |
|
— |
|
0.16 |
Severance and share-based compensation acceleration expense(2) |
|
— |
|
— |
|
— |
|
0.16 |
Amortization of inventory step-up at fair value(3) |
|
— |
|
(0.01) |
|
0.02 |
|
0.06 |
Realized loss from marketable securities(4) |
|
— |
|
— |
|
— |
|
0.01 |
Prior income tax benefit adjustments |
|
(0.04) |
|
— |
|
(0.04) |
|
— |
TLANDO Related Adjustments |
|
|
|
|
|
|
|
|
Gain on changes in fair value of contingent liability(5) |
|
— |
|
— |
|
(0.10) |
|
— |
Inventory write-off(5) |
|
— |
|
— |
|
0.03 |
|
— |
Impairment charge of TLANDO product rights intangible assets(5) |
|
— |
|
— |
|
0.02 |
|
— |
Income tax effect of above adjustments(6) |
|
(0.01) |
|
(0.03) |
|
(0.12) |
|
(0.17) |
Non-GAAP Diluted EPS |
|
$ 0.82 |
|
$ 0.48 |
|
$ 2.77 |
|
$ 2.21 |
|
|
|
|
|
|
|
|
|
GAAP & Non-GAAP Diluted Shares |
|
131,035 |
|
138,601 |
|
134,197 |
|
140,608 |
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 prior year Antares acquisition. |
(2) |
Amount represents severance cost and acceleration of unvested equity awards as part of the Antares merger agreement. |
(3) |
Amounts relate to amortization of the inventory step-up associated with purchase accounting for the Antares acquisition. |
(4) |
Amount represents a realized loss from the sale of our marketable securities to finance the prior year acquisition of Antares. |
(5) |
Amounts relate to a fair value gain on contingent liability, inventory write-off and impairment of TLANDO product rights intangible assets due to the TLANDO Termination. |
(6) |
Adjustments relate to taxes for the reconciling items, as well as excess benefits or tax deficiencies from stock-based compensation, and the quarterly impact of other discrete items. |
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