Halozyme – Making The Most Of ENHANZE Opportunities

Shares of Halozyme Therapeutics Inc. (HALO) are down 37% from their 52-week high of $59.46, recorded last December, and trade around $37.

Halozyme is a biopharmaceutical company, whose ENHANZE drug delivery technology is licensed to pharma and biotech companies, including Roche, Takeda, Pfizer, AbbVie, Eli Lilly, Bristol-Myers Squibb, Alexion, argenx, Horizon Therapeutics, ViiV Healthcare and Chugai Pharmaceutical.

ENHANZE is a patented, commercial platform technology enabling rapid, high volume subcutaneous delivery of IV drugs.

The company also commercializes specialty products like adjuvant Hylenex; testosterone replacement therapies like XYOSTED and TLANDO; and NOCDURNA, which is indicated for the treatment of nocturia due to nocturnal polyuria in adults who awaken at least two times per night to urinate.

Halozyme generates revenues from ENHANZE collaborations and from the sales and/or royalties of its approved products.

The company has 5 globally approved partner products, which are based on its ENHANZE technology, that have been driving its revenue since 2021, namely Janssen’s DARZALEX FASPRO, Roche’s Phesgo, SC formulation of Herceptin, MabThera SC, and Takeda’s HYQVIA.

Q1 Scorecard

For the first quarter ended March 31, 2023, revenue rose to $162.1 million from $117.3 million in the first quarter of 2022.

Net income in the first quarter of 2023 slumped to $39.6 million or $0.29 per share from $60.1 million or $0.43 per share in the first quarter of 2022. The decline in net income reflects a lack of a $25 million milestone payment in the first quarter of 2023, which was present in the first quarter of 2022, as well as an increase in operating expenses compared to the previous year.

However, on a non-GAAP basis, earnings per share for the first quarter of 2023, were $0.47, the same as that reported in the year-ago period.

The company ended Mar.31, 2023, with cash, cash equivalents and marketable securities of $275.6 million.

Recent News and Anticipated Milestones

As recently as June 20, 2023, the FDA approved argenx’s VYVGART SC, which is based on Halozyme’s ENHANZE technology. VYVGART SC is indicated for Generalized Myasthenia Gravis.

Roche is also developing a subcutaneous formulation of its multiple sclerosis drug OCREVUS with ENHANZE. In a phase III trial, whose results were reported today, OCREVUS with ENHANZE evaluated as a twice a year 10-minute subcutaneous (SC) injection, met its primary and secondary endpoints in patients with relapsing forms of multiple sclerosis (MS) or primary progressive MS (RMS or PPMS).

Roche’s subcutaneous formulation of Tecentriq based on ENHANZE technology is under FDA review, with a decision due on Sep.15, 2023.

A phase III trial comparing the drug levels of Opdivo with ENHANZE administered subcutaneously versus IV administration in participants with melanoma following complete resection, conducted by Bristol-Myers Squibb, is underway.

Outlook for 2023

Looking ahead to full year 2023, the company expects royalty revenue to be in the range of $445 million to $455 million. Royalty revenue was $360.5 million last year.

The total revenue, including royalties, product sales and revenues under collaborative agreements, is expected to range between $815 million and $845 million. The total revenue was $660.1 million in 2022.

Halozyme anticipates non-GAAP EPS for this year to be in the range of $2.50 to $2.65, up from $2.21 reported in 2022.

Given the fact that ENHANZE is a royalty growth story, with revenue potential projected to be $1 billion by 2027, Halozyme appears to be a stock worth considering.

HALO has traded in a range of $29.85 to $59.46 in the last 1 year. The stock closed Wednesday’s trading at $37.19, up 0.24%.

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