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Halozyme (HALO) Q4 Earnings Top, Royalties Drive Revenues

·4 min read

Halozyme Therapeutics, Inc. HALO reported fourth-quarter 2021 adjusted earnings of 42 cents per share (excluding stock-based compensation expense), which beat the Zacks Consensus Estimate of 40 cents. The company’s earnings were 56 cents per share in the year-ago period.

Total revenues decreased 16.2% year over year to $102 million, primarily due to lower revenues under collaboration agreements and product sales, which were partially offset by strong royalty payments, especially from J&J JNJ. The top line however beat the Zacks Consensus Estimate of $97.1 million.

Halozyme stock has declined 30.5% in the past year compared with the industry’s 38.6% decrease.

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Zacks Investment Research

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Quarterly Highlights

Halozyme’s top line comprises product sales, royalties and revenues under collaborative agreements.

Several companies are using Halozyme’s ENHANZE technology for developing a subcutaneous formulation of their currently marketed drugs. The company has five marketed partnered drugs based on this technology including the subcutaneous formulation of J&J’s Darzalex and Roche’s RHHBY Phesgo.

Royalty revenues were $62.6 million in the fourth quarter, up 96% from the year-ago quarter, mainly driven by strong sales uptake of J&J’s subcutaneous Darzalex and to a lesser extent by Roche’s Phesgo. Royalty revenues generated more than 60% of the total revenues for the company. Robust demand for J&J’s subcutaneous Darzalex, multiple label expansions and continued launches in new territories along with an additional contribution from Roche’s Phesgo are likely to drive Halozyme’s strong royalty revenues.

Product sales, solely from the sale of bulk API to collaborators using the ENHANZE platform for drug development, were $27.1 million in the quarter, down 16.7% from the year-ago quarter. The company supplies API to ENHANZE partners like J&J and Roche.

Revenues under collaborative agreements were $12.3 million, down 78.5% year over year. The company had recorded an upfront license payment of $30 million from one of its partners in the fourth quarter of 2020, which was absent in the reported quarter.

Research and development ([R&D] including stock-based compensation) expense increased 37% year over year to $10.1 million due to higher costs to support additional ENHANZE targets.

Selling, general and administrative (SG&A) including stock-based compensation) expenses were $13.8 million, up 32.1% from the year-ago period.

Full-Year Results

Halozyme reported revenues of $443.3 million in 2021, up 65.7% year over year, primarily driven by strong growth in royalties. The company’s earnings for 2021 were $2.00 per share, compared with $1.12 per share in the year-ago period.

2022 Guidance

Halozyme maintained its guidance for revenues and earnings for 2022 issued last month. The company expects total revenues in 2022 to be between $530 million and $560 million, indicating year-over-year growth of 20%-26%.

The company expects revenues from royalties to increase approximately 50% year over year to $300 million on the back of strong uptake of a subcutaneous formulation of J&J’s Darzalex as well as growth in Roche’s Phesgo. Product sales and collaborative revenues are expected to be flat year over year.

The company expects adjusted earnings to be in the range of $2.05-$2.20 per share (excluding stock-based compensation expense), implying year-over-year growth of 2.5%-10%.

Halozyme Therapeutics, Inc. Price, Consensus and EPS Surprise

Halozyme Therapeutics, Inc. Price, Consensus and EPS Surprise
Halozyme Therapeutics, Inc. Price, Consensus and EPS Surprise

Halozyme Therapeutics, Inc. price-consensus-eps-surprise-chart | Halozyme Therapeutics, Inc. Quote

Zacks Rank & Stock to Consider

Halozyme currently carries a Zacks Rank #5 (Strong Sell).

A better-ranked company from the medical sector is Collegium Pharmaceutical COLL, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Collegium’s earnings per share estimates have moved north from $3.52 to $5.86 for 2022 in the past 30 days. COLL has gained 18.8% so far this year.

Collegium delivered a negative earnings surprise of 22.76%, on average, in the last four quarters.

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Roche Holding AG (RHHBY) : Free Stock Analysis Report

Johnson & Johnson (JNJ) : Free Stock Analysis Report

Halozyme Therapeutics, Inc. (HALO) : Free Stock Analysis Report

Collegium Pharmaceutical, Inc. (COLL) : Free Stock Analysis Report

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