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Halozyme (HALO) Stock Down Despite Q1 Earnings & Sales Beat

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Halozyme Therapeutics, Inc. HALO reported first-quarter 2021 earnings of 34 cents per share (including stock-based compensation expense), which beat the Zacks Consensus Estimate of 28 cents. The company had reported a loss of 1 cent in the year-ago quarter.

Total revenues increased 250.4% year over year to $89.0 million, primarily driven by milestone payments from Bristol Myers BMY and J&J JNJ, and higher royalty revenues. The top line also beat the Zacks Consensus Estimate of $85.0 million.

Halozyme’s stock was down 3.1% in after-market trading on May 10, despite the better-than-expected results. However, the stock has gained 7% this year so far against the industry’s 5.2% decrease.

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 subcutaneous formulation of their currently marketed drugs. The company has five marketed partnered drugs based on this technology.

Royalty revenues were $36.9 million in the first quarter, up 119.5% from the year-ago quarter, mainly driven by strong sales uptake of J&J’s subcutaneous Darzalex (Darzalex SC). In the quarter, J&J received FDA and Health Canada approval for label expansion of Darzalex Faspro for treating newly diagnosed light chain (AL) amyloidosis in adult patients. The approval should support the future growth of subcutaneous Darzalex and subsequently Halozyme’s royalty revenues.

Product sales, solely from the sale of bulk API to collaborators using the ENHANZE platform for drug development, increased 167.2% to $21.8 million in the quarter. The increase was driven by higher bulk API sales to ENHANZE partners J&J and Roche RHHBY.

Revenues under collaborative agreements were $30.3 million compared with $0.4 million in the prior-year quarter. The significant increase was due to $25 million in milestone payment received from Bristol-Myers (following start of a phase III study on subcutaneous formulation of Opdivo using ENHANZE technology) and $5 million in milestone revenues from J&J (due to approval of Darzalex SC in Japan).

Research and development (R&D) expenses declined 11.8% year over year to $9.0 million mainly due to discontinuation of oncology drug development efforts and some development activities related to PEGPH20.

Selling, general and administrative (SG&A) expenses were $11.1 million, down 11.9% from the year-ago period.

The company repurchased 1.8 million shares of common stock for $76.2 million during the fourth quarter.

2021 Guidance Issued

Halozyme maintained its previously issued guidance for revenues and earnings for 2021. The company expects total revenues in 2021 to be between $375 million and $395 million, indicating year-over-year growth of 40%-48%. The company expects revenues from royalties to double year over year on the back of strong uptake of subcutaneous formulation of J&J’s Darzalex and growth in Roche’s Phesgo. Halozyme expects Darzalex SC to be the key driver of its royalty revenue growth in 2021. Product sales are expected to increase 50% to 60% from 2020 levels.

It expects earnings to be in the range of $1.55-$1.70 per share (excluding stock-based compensation expense), representing year-over-year growth of 38%-52%.

Zacks Rank & Stocks to Consider

Halozyme currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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Johnson & Johnson (JNJ) : Free Stock Analysis Report

Roche Holding AG (RHHBY) : Free Stock Analysis Report

Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report

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

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