Halozyme's (HALO) ENHANZE Drives Stock: Rally to Continue?
Shares of Halozyme Therapeutics HALO have gained 9.5% so far this year against the industry’s decline of 14.7%. A key driver of this growth is the strong demand for one of its partnered drugs — J&J’s JNJ Darzalex SC/Drazalex Faspro. The demand for this drug is likely to remain robust for the next few quarters and drive the momentum in Halozyme’s shares.
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Although Halozyme’s earnings and revenues missed estimates for the first quarter of 2022, adjusted earnings were up 27% year over year on the back of 31.8% growth in revenues. The company continues to expect growth of 20%-26% in 2022 revenues. It expects the majority of the gain in revenues to be driven by robust demand for its partner, J&J’s subcutaneous Darzalex, multiple label expansions of the drug and continued launches in new territories.
Partnered Drugs
Please note that Darzalex SC/Drazalex Faspro is a subcutaneous (SC) formulation of J&J’s popular intravenous (IV) cancer drug, Darzalex, developed using Halozyme proprietary ENHANZE technology for easier administration compared to IV.
Halozyme has five marketed partnered drugs developed using its ENHANZE technology. Apart from Darzalex SC/Drazalex Faspro, other key partnered drugs of Halozyme include the SC formulation of three drugs from Roche’s RHHBY portfolio — Herceptin, Phesgo and Rituxan. Another commercialized partnered drug includes Baxalta’s Hyqvia, approved for treating immunodeficiency.
Partnered Pipeline
Apart from marketed partnered drugs, there are multiple drugs under development as part of Halozyme’s collaborations with different pharma/biotech companies. Currently, the company has 11 collaborations and five marketed partnered drugs based on this technology. The marketed partnered drugs are driving royalties for Halzoyme, while the under-development drugs indicate the potential for additional royalties going forward.
Roche is also developing SC formulations of its popular immunotherapy, Tecentriq, and multiple sclerosis drug — Ocrevus — across 12 potential targets in different stages of clinical studies, with the development of Tecentriq for lung cancer in a late-stage study.
In March, Halzoyme’s partner, argenx ARGX successfully completed a phase III study evaluating an SC formulation of its efgartigimod in generalized myasthenia gravis. argenx is planning to file a biologics license application by the end of 2022. A potential approval will likely boost Halozyme revenues through additional royalties in 2023.
Halozyme expects to generate $1 billion in annual royalties from its ENHANZE technology by 2027.
Net Margin to Improve
Halozyme had initiated the restructuring of its business to support future growth in 2019 following the failure of its lead pipeline candidate, PEGPH20. The restructuring activities have reduced operating expenses in the past two years with the trend expected to continue in 2022. The company expects adjusted earnings to be in the range of $2.05-$2.20 per share (excluding stock-based compensation expense), implying growth of 2.5%-10% year over year.
Antares Acquisition
Halozyme acquired Antares Pharma last month, adding an industry-leading auto-injector platform to complement its ENHANZE technology. The company believes that the addition of Antares’ leading auto-injector platform will help it to become a leader in the drug-delivery space. The platform may also offer a broad licensing opportunity. The acquisition also adds testosterone replacement therapies to Halozyme’s portfolio. Halozyme believes that the acquisition of Antares will accelerate its growth going forward.
Halozyme Therapeutics, Inc. Price
Halozyme Therapeutics, Inc. price | Halozyme Therapeutics, Inc. Quote
Zacks Rank
Halozyme currently carries 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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