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| --- | --- | --- | |----------------------------------------------------------|-------|-------| | | | | | Halozyme Therapeutics, Inc. | | | | Fourth Quarter and FY 2023 Financial & Operating Results | | | | | | | | NASDAQ: HALO | | | | February 20, 2024 | | | | | | | In addition to historical information, the statements set forth in this presentation include forward-looking statements including, without limitation, statements concerning the Company's expected future growth, financial performance (including ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-32335 HALOZYME THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) ___________________________ Delaware 88-0488 ...

HALOZYME REPORTS FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL AND OPERATING RESULTS Reiterating 2024 Financial Guidance: Total Revenue of $915-985 Million, Representing YOY Growth of 10-19%, Adjusted EBITDA of $535-585 Million, Representing YOY Growth of 26- 37% and Non- GAAP Diluted EPS of $3.55-3.90, Representing YOY Growth of 28-41% Fourth Quarter Revenue Increased 27% YOY to $230 million; GAAP Diluted EPS of $0.65 and Non- GAAP Diluted EPS of $0.82 1 SAN DIEGO, February 20, 2024 -- Halozyme Therapeutics, ...

Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $216 million, an increase from $209 million in the prior year period, driven by higher enhanced product sales and royalty growth [27][120] - Royalty revenue for Q3 2023 increased 15% year-over-year to approximately $114 million, continuing to be a key driver of revenue growth [16][56] - EBITDA guidance was raised to $430 million to $445 million, up from $420 million to $440 million, representing growth of 37% to 41% over 2022 [12][29] - Non-GAAP diluted earnings per share guidance was increased to $2.70 to $2.80, reflecting an annual growth of 22% to 27% [30][57] Business Line Data and Key Metrics Changes - The ENHANZE technology and high volume auto-injector are expected to drive strong and durable long-term revenue growth for the company [8] - XYOSTED demand in Q3 2023 continued to grow, contributing to a 32% increase in year-to-date demand compared to 2022, with projected sales of approximately $100 million in 2022 [24] - The approval of VYVGART Hytrulo is expected to expand the commercial opportunity in a condition with significant unmet need, with growth of 22% quarter-over-quarter to $329 million in Q3 2023 [126] Market Data and Key Metrics Changes - Roche reported Q3 2023 DARZALEX sales of approximately $2.5 billion, an increase of about 21% year-over-year, with projections for annual sales to reach $17 billion by 2028 [125] - Roche's IV Tecentriq revenues for year-to-date 2023 were CHF2.8 billion, an increase of 11% year-over-year [48] - Analysts predict that efgartigimod will be a multi-billion dollar annual revenue brand by 2028 [126] Company Strategy and Development Direction - The company plans to continue investing at similar levels to grow the business in 2024, with a strong balance sheet and projected EBITDA growth [41] - The company is focused on seeking growth opportunities through M&A while maintaining a disciplined capital allocation strategy [7][55] - The Wave 3 products are projected to achieve approximately $35 billion in sales by 2028, significantly higher than the $20 billion projected for Wave 2 products [50] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the Wave 3 products being largely derisked, with four launches expected between 2023 and 2025 [3] - The company is optimistic about the potential for OCREVUS subcutaneous to significantly increase market access and patient convenience [39] - Management highlighted the strong performance and momentum in the quarter, indicating confidence in meeting updated revenue guidance [120] Other Important Information - The company announced an accelerated share repurchase of $250 million, bringing total buybacks since 2019 to $1.3 billion [26][121] - The company is focusing on expanding its ENHANZE partnerships and has made strong progress in advancing its high volume auto-injector technology [43][134] Q&A Session Summary Question: Can you comment on the timeline for the Auto-Injector technology development? - The timeline for developing an Auto-Injector from concept to product is estimated to be around two years, depending on the product type and necessary studies [32][62] Question: What are the drivers of XYOSTED growth this quarter? - The growth is driven by converting patients from intramuscular testosterone therapy to XYOSTED and ensuring prior authorizations are filled [69][79] Question: What is the expected conversion rate for OCREVUS from IV to subcutaneous? - The conversion rate is difficult to predict, but there is optimism for significant growth based on the value proposition and patient convenience [66][101] Question: Why is the deal with Acumen non-exclusive? - The deal is non-exclusive because there is already another partner with non-exclusive access to the amyloid beta target, allowing for multiple partnerships [76][115] Question: What are the economic terms associated with the Auto-Injector contracts? - The economic terms will likely include development down payments and product sales, similar to current ENHANZE contracts [108][109]

Dollar amounts, as presented, are rounded. Consequently, totals may not add up. (1) Amount represents incremental costs including legal fees, accounting fees and advisory fees incurred for the Antares acquisition. (2) Amounts relate to amortization of the inventory step-up associated with purchase accounting for the Antares acquisition. (3) Amounts relate to fair value gain on contingent liability, inventory write-off and impairment of TLANDO® product rights intangible assets due to the termination of the T ...

Financial Performance - Total revenues for Q3 2023 reached $216.033 million, a slight increase from $208.976 million in Q3 2022, while year-to-date revenues for 2023 were $599.214 million compared to $478.620 million in 2022, representing a 25.2% increase[15]. - Net income for Q3 2023 was $81.837 million, up from $61.634 million in Q3 2022, with year-to-date net income of $196.206 million compared to $144.427 million in 2022, reflecting a 36% increase[15]. - Operating income for Q3 2023 was $88.279 million, compared to $83.292 million in Q3 2022, with year-to-date operating income of $236.539 million versus $193.022 million in 2022[15]. - Total revenues for the three months ended September 30, 2023, were $216.0 million, compared to $209.0 million for the same period in 2022, representing a growth of 3.0%[110]. - Net income for the three months ended September 30, 2023, was $81.8 million, an increase from $66.8 million in the same period of 2022, reflecting a growth of 22.5%[110]. - Basic earnings per share for the third quarter of 2023 was $0.62, up from $0.45 in the same quarter of 2022, reflecting a 37.8% increase[172]. Cash and Assets - Cash and cash equivalents increased to $274.227 million as of September 30, 2023, compared to $234.195 million at the end of 2022, marking a 17% increase[13]. - Total assets grew to $1.892 billion as of September 30, 2023, up from $1.841 billion at the end of 2022, indicating a 2.8% increase[13]. - The company’s total stockholders' equity increased to $249.181 million as of September 30, 2023, from $169.798 million at the end of 2022, representing a 46.7% increase[13]. - As of September 30, 2023, total available-for-sale marketable securities amounted to $209.1 million, with gross unrealized losses of $0.2 million[112]. - The total estimated fair value of cash equivalents and available-for-sale marketable securities as of September 30, 2023, was $381.3 million, an increase from $320.3 million as of December 31, 2022, representing a growth of 19.1%[115]. Research and Development - Research and development expenses for Q3 2023 were $17.321 million, slightly higher than $16.705 million in Q3 2022, with year-to-date R&D expenses totaling $55.027 million compared to $44.041 million in 2022[15]. - Research and development expenses include salaries, benefits, and contract services, charged to operating expenses as incurred[97]. Collaborations and Licensing - The company has collaborations and licensing agreements with major pharmaceutical companies including Roche, Takeda, and Pfizer, which contribute to its revenue through royalties and milestone payments[29]. - The company has established ENHANZE collaboration agreements, granting partners worldwide licenses to develop products using its proprietary rHuPH20 enzyme[62]. - Revenue from collaborative agreements includes upfront payments and milestone payments, reported separately in the financial statements[93]. Product Sales and Royalties - Proprietary product sales include XYOSTED, TLANDO, and Hylenex recombinant, primarily sold to wholesale distributors and specialty pharmacies[82]. - Revenue from product sales is recognized upon delivery to wholesalers, reflecting variable considerations such as returns and discounts[83]. - Royalties for the three months ended September 30, 2023, were $114.4 million, compared to $99.6 million in 2022, reflecting a year-over-year increase of 14.5%[118]. - Product sales, net for the three months ended September 30, 2023, totaled $86.6 million, up from $61.4 million in the prior year, indicating an increase of 41.0%[118]. Debt and Financing - The company completed the sale of $720.0 million in aggregate principal amount of 1.00% Convertible Senior Notes due 2028, with net proceeds of approximately $702.0 million after fees[131]. - The company issued $805.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2027, with net proceeds of approximately $784.9 million after fees[138]. - The total principal amount of convertible notes is $1,525 million, a slight decrease from $1,538.5 million as of December 31, 2022[153]. - The total interest expense for the nine months ended September 30, 2023, was $11,825 thousand, compared to $6,336 thousand for the same period in 2022, reflecting an increase of 87%[155]. Stock and Shareholder Returns - The company has a capital return program authorized to repurchase up to $750 million of outstanding stock over three years, with $200 million spent on repurchasing 4.5 million shares in 2022[167]. - As of September 30, 2023, the company has repurchased 12.6 million shares for $500.0 million at an average price of $39.81 per share, with $250.0 million remaining under the $750 million share repurchase plan[168]. - Share-based compensation expense for the three months ended September 30, 2023, totaled $9,367 thousand, up from $6,797 thousand in the same period of 2022, marking a 38% increase[163]. Future Outlook and Developments - Halozyme Therapeutics has not disclosed specific future guidance or new product developments in the provided financial statements[15]. - The company anticipates a potential launch of Tecentriq SC in the U.S. in 2024, following updates to manufacturing processes[183]. - In November 2023, the company entered a global collaboration with Acumen for the use of ENHANZE technology in a clinical stage monoclonal antibody candidate for Alzheimer's disease[183].

Financial Performance - Total revenues for the second quarter of 2023 reached $221.038 million, a 45.0% increase compared to $152.365 million in the same period of 2022[15] - Net income for the second quarter of 2023 was $74.754 million, significantly up from $22.685 million in the same quarter of 2022, representing a 229.5% increase[15] - Earnings per share (EPS) for the second quarter of 2023 were $0.57 (basic) and $0.56 (diluted), compared to $0.16 (basic) and $0.16 (diluted) in the same quarter of 2022[15] - Operating income for the first half of 2023 was $148.260 million, up from $109.730 million in the first half of 2022, marking a 35.0% increase[15] - The company reported a net income of $114,369 million for the six months ended June 30, 2023, compared to a net income of $22,685 million for the same period in 2022[23] - For the three months ended June 30, 2023, total revenues were $221.0 million, compared to $163.4 million for the same period in 2022, representing a 35.3% increase[108] - The net income for the six months ended June 30, 2023, was $114.4 million, up from $96.8 million in the same period of 2022, reflecting an 18.2% increase[108] Cash and Assets - Cash and cash equivalents at the end of June 2023 were $221.165 million, down from $234.195 million at the end of December 2022[13] - Total current assets increased to $765.745 million as of June 30, 2023, compared to $739.013 million at the end of 2022[13] - The company reported a significant increase in accounts receivable, net and contract assets, which rose to $246.179 million from $231.072 million year-over-year[13] - As of June 30, 2023, total stockholders' equity was $151,033 million, an increase from $140,448 million as of March 31, 2023, reflecting a net income of $74,754 million for the quarter[23] - As of June 30, 2023, total assets amounted to $251.8 million, a decrease of 21.4% from $320.3 million on December 31, 2022[113] Liabilities and Equity - Total liabilities decreased slightly to $1.659 billion as of June 30, 2023, from $1.672 billion at the end of 2022[13] - The company reported depreciation and amortization expense of approximately $5.4 million for the six months ended June 30, 2023, compared to $1.9 million for the same period in 2022[122] - Accrued expenses totaled $136.3 million as of June 30, 2023, compared to $126.9 million as of December 31, 2022, an increase of 7.0%[123] Research and Development - Research and development expenses for the second quarter of 2023 were $19.727 million, compared to $15.483 million in the same quarter of 2022, reflecting a 27.5% increase[15] - Research and development expenses include salaries, benefits, and contract services, charged to operating expenses as incurred[95] Revenue Recognition - Revenue is generated from royalties at an average mid-single digit percent rate from ENHANZE technology collaborations, with noncancelable amounts owed once the triggering event occurs[57] - The company recognizes revenue based on estimates of royalties earned, with adjustments recorded in the following quarter if necessary[57] - Revenue from licenses is recognized at the point when the license becomes effective, typically at the inception of the agreement[63] - The company recognizes revenue from bulk rHuPH20 sales upon transfer of title to partners, who then bear the risk of loss and have an enforceable obligation to pay[88] - Revenue from collaborative agreements includes upfront payments and sales milestones, reported separately in the income statements[91] Collaborations and Partnerships - The company has collaborations with major pharmaceutical companies, including Roche, Takeda, and Pfizer, which generate royalties from commercial sales of approved partner products[27] - Halozyme's proprietary enzyme, rHuPH20, facilitates subcutaneous delivery of drugs, potentially improving patient experience and outcomes[26] - The company has commercialized auto-injector products and has development programs with several pharmaceutical companies, enhancing its product portfolio[28] - The company anticipates continued growth through its innovative drug delivery technologies and collaborations with biopharmaceutical partners[26] Stock and Shareholder Activities - The company has a capital return program authorized to repurchase up to $750 million of outstanding stock over three years, with $200 million spent in 2022 to repurchase 4.5 million shares[164] - As of June 30, 2023, Halozyme repurchased a total of 12.6 million shares for $500 million at an average price of $39.81 per share under a $750 million share repurchase plan[180] - The company issued 240,223 shares of common stock in connection with stock option exercises during the six months ended June 30, 2023, generating net proceeds of approximately $4.2 million[163] Debt and Financing - The company completed the sale of $720.0 million in aggregate principal amount of 1.00% Convertible Senior Notes due 2028, with net proceeds of approximately $702.0 million after fees[130] - The company issued $805.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2027, with net proceeds of approximately $784.9 million after fees[137] - The company completed the sale of $460.0 million in aggregate principal amount of 1.25% Convertible Senior Notes due 2024, with net proceeds of approximately $447.3 million after fees[142] - As of June 30, 2023, the total principal amount of convertible notes is $1,525 million, a slight decrease from $1,538.483 million as of December 31, 2022[150] Product Development and Approvals - The company is actively developing auto-injector products and has commercialized products like Hylenex and XYOSTED utilizing its technology[178] - NOCDURNA is the first and only sublingual tablet indicated for nocturia treatment, reducing nighttime urination by nearly 50%[187] - TLANDO was granted FDA approval in March 2022 and launched commercially in June 2022[188] - Roche's collaboration includes the development of multiple products using ENHANZE technology, with significant launches such as Herceptin SC and Phesgo[192][193] - Takeda's HYQVIA received FDA approval for adult primary immunodeficiency treatment, with a dosing regimen requiring only one infusion up to once per month[196] Market and Competitive Position - Halozyme's ENHANZE technology is designed to reduce patient treatment burden by enabling fixed-dose subcutaneous dosing compared to weight-based intravenous dosing[26] - Hylenex recombinant is currently the number one prescribed branded hyaluronidase[185] - XYOSTED is the only FDA-approved subcutaneous testosterone enanthate product for once-weekly self-administration[186]

NASDAQ: HALO May 2023 Forward Looking Statements Non-GAAP Financial Measures: Note: This presentation contains product names, trademarks and registered trademarks that are property of their respective owners. | --- | --- | --- | |-------------------------------------------------------------------------|--------------------------------------------------------|-------------------------------------------| | ENHANZE ® | Drug Delivery Platform Technologies \nAuto-Injectors | Commercial Portfolio \nSpecialty Prod ...