Halozyme (HALO) Q2 Earnings & Revenues Beat, 2023 View Raised
Halozyme Therapeutics, Inc. HALO delivered second-quarter 2023 adjusted earnings of 74 cents per share, which beat the Zacks Consensus Estimate of 63 cents. The company recorded earnings of 53 cents per share in the year-ago period.
Total revenues increased 45% year over year to $221 million in the second quarter. This was primarily driven by an increase in milestone revenues due to the approval and launch of Argenx’s ARGX Vyvgart Hytrulo using Halozyme’s proprietary Enhanze technology for generalized myasthenia gravis. This approval of Argenx’s drug gives Halozyme its sixth commercialized partnered product, generating royalty revenues.
The addition of product sales following the acquisition of Antares Pharma in May 2022 and higher royalty payments from J&J JNJ for subcutaneous Darzalex (daratumumab) also boosted the top line.
Revenues in the reported quarter surpassed the Zacks Consensus Estimate of $202 million.
Shares of Halozyme were up almost 4% in after-hours trading on Tuesday, following the company’s results. The stock has plunged 23.9% in the year-to-date period compared with the industry’s decline of 13.1%.
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Quarterly Highlights
Halozyme’s top line comprises product sales, royalties and revenues under collaborative agreements.
Several companies use HALO’s Enhanze technology to develop a subcutaneous formulation of their currently marketed drugs. Halozyme now has six marketed partnered drugs based on this technology, including the subcutaneous formulation of J&J’s Darzalex and Roche’s RHHBY Phesgo.
Royalty revenues totaled $111.7 million in the first quarter, up 31% from the year-ago quarter’s level. This was mainly due to robust demand for JNJ’s subcutaneous Darzalex. Royalty revenues accounted for nearly 51% of the company’s net revenues during the reported quarter. Royalty revenues beat our model estimate of $100.4 million but missed the Zacks Consensus Estimate of 117.8 million.
Product sales came in at $73.9 million, about 60% higher than the year-ago quarter’s figure. HALO supplies API to ENHANZE partners like JNJ and Roche, contributing to product revenues. Product sales beat the Zacks Consensus Estimate of $69.4 million and our estimate of $60.7 million.
Revenues under collaborative agreements were $35.4 million, up about 71% from the year-ago quarter’s level. Collaboration revenues fell short of the Zacks Consensus Estimate of $37 million as well as our estimate of $37.1 million.
Adjusted EBITDA was clocked at $115.1 million in the second quarter, marking a 31.2% increase over the prior-year quarter.
Adjusted Net Income increased 30% to $98.4 million in the reported quarter.
Halozyme had cash, cash equivalents and marketable securities of $348.3 million as of Jun 30, 2023 compared with $275.6 million as of Mar 31, 2023.
2023 Guidance Updated
Halozyme increased the lower end of its previously issued revenue guidance to reflect its strong second-quarter results.
The company raised its total revenue expectations from $815-$845 million to $825-$845 million for 2023, indicating year-over-year growth of 25-28%. This improvement reflects the continued higher royalty revenues from Darzalex SC and Phesgo, along with strong growth in royalty revenues and product sales.
Revenues from royalties are anticipated to increase approximately 23-26% to $445-$455 million year over year (unchanged).
The EBITDA projection has also been raised from $415-$440 million to $420-$440 million, excluding amortization costs, implying year-over-year growth of more than 30%.
The company expects adjusted earnings in the range of $2.65-$2.75 per share, up from $2.50-$2.65 per share (excluding stock-based compensation expenses), indicating an improvement of 20% year over year. Halozyme’s earnings per share guidance does not consider the impact of potential future share repurchases.
Halozyme Therapeutics, Inc. Price, Consensus and EPS Surprise
Halozyme Therapeutics, Inc. price-consensus-eps-surprise-chart | Halozyme Therapeutics, Inc. Quote
Recent Updates
Toward the beginning of the second quarter, Halozyme’s partner, Takeda, announced that the FDA expanded the label of its immunodeficiency drug, Hyqvia, to treat primary immunodeficiency in children. Later in June 2023, Takeda also announced positive results from its late-stage study of Hyqvia in another indication, for maintenance treatment of chronic inflammatory demyelinating polyneuropathy (CIDP). Label expansion-seeking applications are currently under review in the United States and the EU.
In June 2023, Argenx received FDA approval for subcutaneous Vyvgart Hytrulo injection with Enhanze technology to treat generalized myasthenia gravis in adult patients who are anti-acetylcholine receptor antibody positive. Following the approval, the drug was commercially launched in July, which triggered a $33.0 million milestone payment to Halozyme and the right to receive royalties on net product sales.
Argenx is also evaluating Vyvgart Hytrulo in its ADHERE study to treat CIDP, announcing positive top-line data from the same in July 2023. Per observation, the study met its primary endpoint, resulting in a 61% reduction in the risk of relapse when treated with Vyvgart Hytrulo compared with treatment with placebo.
In July 2023, HALO announced that Roche reported positive top-line results from its late-stage multiple sclerosis (MS) study evaluating a subcutaneous (SC) formulation of its drug Ocrevus (ocrelizumab). The SC formulation of Ocrevus has been developed with Halo’s novel drug delivery technology, Enhanze. Roche’s phase III OCARINA II study of Ocrevus as a twice-a-year 10-minute SC injection, to treat patients with relapsing forms of MS or primary progressive MS, met its primary and secondary endpoints.
Halozyme also expects its commercialized partnered products portfolio to further expand with the potential FDA approval of Roche's SC Tecentriq (atezolizumab) in the treatment of non-small cell lung cancer later this year.
Zacks Rank
Halozyme currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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