PresentationFor this session, we have the Halozyme President and CEO, Helen Torley. Thank you for your time today. Greatly appreciate you being here. And maybe just to set the scene a little bit, if you'd like to make some opening remarks, Helen, that would be amazing.Good morning, everyone. Welcome to Morgan Stanley's Global Healthcare Conference. I'm Sean Laaman, the Head of the SMid-Cap Biotech Equity Research team here at the firm. For important disclosures, please see Morgan Stanley research disclosure ...

Halozyme Therapeutics FY Conference Summary Company Overview - **Company**: Halozyme Therapeutics (NasdaqGS: HALO) - **Industry**: Biotechnology - **Focus**: Drug delivery platforms, specifically subcutaneous drug delivery using ENHANZE® technology Key Points and Arguments Business Model and Revenue Growth - Halozyme's ENHANZE® platform allows for large volume delivery of biologics, enhancing patient convenience and treatment adherence [2][3] - Projected total revenue for the year is between $1.27 billion to $1.335 billion, with royalty revenue expected to be $825 million to $860 million, representing a year-over-year growth of 44% to 51% [3][18] - Key products driving growth include Darzalex Faspro, Phesgo, and Vyvgart Hytrulo, which have been recently launched and are showing strong market performance [3][4][18] Market Trends and Opportunities - There is a growing global trend towards subcutaneous drug delivery, particularly in markets like China, where patients prefer simpler administration methods [5][6] - The recent national reimbursement approval for Phesgo in China has led to significant growth, indicating strong market potential for subcutaneous therapies [5][6] Regulatory Environment - Positive changes in FDA regulations have streamlined the approval process for subcutaneous therapies, benefiting Halozyme and its partners [8][9] - The company is actively engaging with CMS regarding the Inflation Reduction Act (IRA) and its implications for ENHANZE® products, emphasizing the clinical benefits and cost savings associated with subcutaneous delivery [10][11][13] Financial Strategy and Capital Allocation - Halozyme has been returning capital to investors through share repurchases, totaling approximately $1.85 billion since 2019 [4][32] - The company maintains a strong cash flow with a projected adjusted EBITDA margin of 73% to 75% by 2028, allowing for continued investment in business growth and potential acquisitions [29][30] Innovation and Future Growth - Halozyme is exploring additional drug delivery platforms beyond ENHANZE®, with a focus on technologies that can enhance patient care and expand its product offerings [40][41] - The company is confident in its ability to maintain leadership in the hyaluronidase space due to its extensive experience, safety database, and established partnerships [48][49] Competitive Landscape - Halozyme's unique business model, which minimizes R&D costs while benefiting from partner success, positions it favorably against competitors in the drug delivery space [29][43] - The company is actively pursuing new partnerships and product developments, with expectations to sign additional ENHANZE® agreements in the near future [44][45] Legal Considerations - Ongoing litigation with Merck regarding patent infringement is viewed as an opportunity to protect intellectual property without risk to current revenue streams [50][51] Additional Insights - The launch of the prefilled syringe for Vyvgart Hytrulo has demonstrated the potential for expanding the prescriber base and enhancing patient convenience, which could be replicated across other products [34][36] - The company is optimistic about the long-term revenue projections, driven by the increasing adoption of subcutaneous therapies and the durability of its royalty streams [24][25][30]

Core Insights - Stock markets are reaching new records as investor confidence grows regarding potential Federal Reserve rate cuts due to a softening labor market and rising inflation from tariffs [1] Company Summaries - **Halozyme Therapeutics, Inc. (HALO)**: A biopharmaceutical company focused on oncology treatments and drug delivery technology. Expected earnings growth of 46.1% in 2025, with a 9.1% increase in broker ratings over the past four weeks. Currently holds a Zacks Rank 1 [7][8][10] - **Leidos Holdings, Inc. (LDOS)**: A global leader in science and technology serving defense, intelligence, civil, and health markets. Projected earnings growth of 9.2% in 2025, with a 5.6% increase in broker ratings over the past four weeks. Currently holds a Zacks Rank 2 [9][11][10] - **TransUnion (TRU)**: A leading provider of risk and information solutions. Expected earnings growth of 4.1% in 2025, with a 5% increase in broker ratings over the past four weeks. Currently holds a Zacks Rank 2 [11][12][10]

Core Insights - The company, Halozyme, is a pioneer in the use of hyaluronidases for large volume subcutaneous delivery, which has led to the development of its core platform, ENHANZE, licensed to major pharmaceutical companies for transforming IV drugs to subcutaneous administration [1] Group 1 - The company has achieved 10 approvals to date, indicating significant progress in its product offerings [2]

Financial Data and Key Metrics Changes - The company raised its revenue guidance for FY 2025 to $1.3 billion, with royalties from the ENHANZE® platform expected to be between $825 million and $860 million, representing a year-over-year growth of 46% to 51% [5][6] - EBITDA is projected to be at least $865 million, indicating a growth in the high 30% range [6] - The company has returned $1.8 billion to shareholders through share repurchases since 2019, including $303 million in the current year [7] Business Line Data and Key Metrics Changes - The ENHANZE® platform has achieved 10 approvals to date, with significant contributions from products launched between 2020 and 2023, including Darzalex® subcutaneous, VYVGART® Hytrulo, and Fesgo® [4][6] - VYVGART® Hytrulo has shown remarkable growth, achieving $1 billion in revenue in the second quarter, with a 100% year-over-year growth driven by its subcutaneous launch [10][11] - The company anticipates additional launches for Opdivo®, Tecentriq®, Ocrevus®, and Rybrevant®, which are expected to contribute meaningfully in 2026 and beyond [6][12] Market Data and Key Metrics Changes - The company is experiencing strong adoption of its subcutaneous delivery technology, with Darzalex® growing at 20% year-over-year and projected to reach $18 billion by 2028 [10] - Ocrevus® subcutaneous has already treated 6,500 patients worldwide, with 50% being new to the drug, indicating market expansion [17] Company Strategy and Development Direction - The company is focused on expanding its delivery platforms and exploring new partnerships, particularly in oncology, inflammation, immunology, neurology, and nephrology [23][24] - Halozyme is actively pursuing new deals and expects to sign at least one additional deal this year, which should progress into clinical trials next year [46] - The company is also looking for new drug delivery platforms that align with its revenue profiles to enhance growth [56] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued strong revenue growth driven by multiple catalysts, including new product approvals and market expansions [54] - The company is confident in its ability to influence policy discussions regarding the Inflation Reduction Act and its potential impact on revenue [30][31] - Management highlighted the importance of ongoing litigation with Merck, which could result in additional revenue streams if successful [37][40] Other Important Information - The company has a robust pipeline with nine products in development, including two in phase three trials, which could provide additional growth opportunities [47] - The co-formulation patent for VYVGART® Hytrulo could extend royalties until 2042, indicating a long revenue tail for the product [51] Q&A Session Summary Question: How is the long-term growth outlook for VYVGART® Hytrulo? - Management indicated that VYVGART® Hytrulo has significant growth potential, with ongoing studies to expand its indications and a strong market presence [12][11] Question: What is the launch trajectory for PD-1s like Opdivo® and Tecentriq®? - Management noted that Opdivo® is seeing good adoption, with a five-minute subcutaneous injection being attractive to physicians and patients [15][14] Question: How is the company addressing the Inflation Reduction Act? - Management is actively engaging with policy discussions and believes that the clinical benefits of their subcutaneous delivery technology will be recognized [26][30] Question: Can you provide an update on the Merck litigation? - Management confirmed that they are pursuing legal action against Merck for patent infringement and are confident in their position [36][37]

Financial Data and Key Metrics Changes - The company raised its revenue guidance for FY 2025 to $1.3 billion, with royalties from the ENHANZE® platform expected to be between $825 million and $860 million, representing a year-over-year growth of 46% to 51% [5][6] - EBITDA is projected to be at least $865 million, indicating a growth in the high 30% range [6] - The company has returned $1.8 billion to shareholders through share repurchases since 2019, including $303 million in the current year [7] Business Line Data and Key Metrics Changes - The ENHANZE® platform has achieved 10 approvals to date, with significant contributions from products launched between 2020 and 2023, including Darzalex® subcutaneous, VYVGART® Hytrulo, and Fesgo® [4][6] - VYVGART® Hytrulo has shown remarkable growth, achieving $1 billion in revenue in the second quarter with a 100% year-over-year growth rate [10][11] - The company anticipates additional launches for Opdivo®, Tecentriq®, Ocrevus®, and Rybrevant®, which are expected to contribute meaningfully starting in 2026 [6][12] Market Data and Key Metrics Changes - The company is experiencing strong adoption of its subcutaneous delivery technology, with Darzalex® growing at 20% year-over-year and projected to reach $18 billion by 2028 [10] - Ocrevus® subcutaneous is expected to expand the market by $2 billion, with 50% of patients being new to the drug [17] - The company is actively pursuing partnerships in oncology, inflammation, immunology, neurology, and nephrology, focusing on subcutaneous delivery opportunities [22] Company Strategy and Development Direction - The company aims to enhance patient convenience through at-home delivery of biologics, aligning with industry trends [5] - There is a focus on expanding the ENHANZE® platform and exploring new drug delivery technologies to drive growth [58] - The company is also looking for M&A opportunities to add new delivery platforms that align with its revenue model [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued growth of royalty revenues, driven by multiple product catalysts and new indications [56] - The company is optimistic about the potential for new partnerships and product advancements, which will contribute to durable revenue growth [51][58] - Management is actively engaging with regulatory bodies to clarify the implications of the Inflation Reduction Act on their products [25][30] Other Important Information - The company is involved in litigation with Merck regarding patent infringement related to modified hyaluronidases, with potential for significant financial outcomes depending on the court's decision [36][37] - The company has a robust pipeline with nine products in development, including two in phase three trials, which could provide additional revenue streams [49][50] Q&A Session Summary Question: How is the long-term growth outlook for VYVGART® Hytrulo? - Management highlighted that VYVGART® Hytrulo has significant growth potential, with ongoing studies to expand its indications and a strong market presence [11][12] Question: What is the launch trajectory for PD-1s like Opdivo® and Tecentriq®? - Management indicated that Opdivo® is seeing good adoption, with a five-minute subcutaneous injection being attractive to physicians and patients [15][16] Question: How is the company addressing the Inflation Reduction Act? - Management is actively seeking to influence policy discussions and believes that their products will not be adversely affected by the IRA [25][30] Question: Can you provide an update on the Merck litigation? - Management explained that the litigation is ongoing, with expectations for a lengthy process, but expressed confidence in their position regarding patent infringement [36][37] Question: What are the timelines for new partnerships and product developments? - Management is optimistic about signing at least one new deal this year, with several products in the pipeline expected to progress into clinical trials [48][49]

Core Insights - The article discusses the importance of a hybrid investment strategy, specifically GARP (Growth at a Reasonable Price), which combines elements of both value and growth investing to navigate market uncertainties [1][2][3] GARP Investment Strategy - GARP investing prioritizes the price/earnings growth (PEG) ratio, which relates a stock's P/E ratio to its future earnings growth rate [5][6] - A lower PEG ratio, ideally below 1, indicates both undervaluation and future growth potential [6] - The article highlights that while P/E ratios can indicate discounts, the PEG ratio adds a growth perspective, making it a more comprehensive metric for investors [6][7] Screening Criteria for GARP Investments - Successful GARP investments should meet several criteria, including: - PEG Ratio less than the industry median - P/E Ratio (using F1) less than the industry median - Zacks Rank of 1 (Strong Buy) or 2 (Buy) - Market Capitalization greater than $1 billion - Average 20-Day Volume greater than 50,000 - Percentage Change F1 Earnings Estimate Revisions greater than 5% - Value Score of less than or equal to B [8][9][10] Featured GARP Stocks - **Halozyme Therapeutics (HALO)**: A biopharmaceutical company with a discounted PEG and an expected growth rate of 31% [11][12] - **Phibro Animal Health (PAHC)**: A diversified animal health company with a discounted PEG and P/E, and a long-term growth rate of 15% [13][14] - **Leidos (LDOS)**: A global science and technology leader with a discounted PEG and P/E, and a historical growth rate of 14.6% [15][16] - **PDD Holdings Inc. (PDD)**: A multinational commerce group with a discounted PEG and P/E, and a long-term expected growth rate of 9.7% [17][18]

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the strategy of "buying high, hoping to sell even higher" [1] - The Zacks Momentum Style Score helps define momentum characteristics, with Halozyme Therapeutics (HALO) currently holding a Momentum Style Score of A [2] Group 2: Zacks Rank and Performance - Halozyme Therapeutics has a Zacks Rank of 1 (Strong Buy), indicating strong potential for outperformance [3] - Stocks rated Zacks Rank 1 and 2 with Style Scores of "A or B" tend to outperform the market over the following month [3] Group 3: Price Performance - HALO shares increased by 1.85% over the past week, while the Zacks Medical - Biomedical and Genetics industry declined by 1.54% [5] - Over the past month, HALO's price change is 20.6%, significantly outperforming the industry's 1.4% [5] - In the last quarter, HALO shares rose by 36.4%, and over the past year, they gained 19.8%, compared to the S&P 500's 8.34% and 14.94% respectively [6] Group 4: Trading Volume - HALO's average 20-day trading volume is 2,149,351 shares, which serves as a bullish indicator when combined with rising stock prices [7] Group 5: Earnings Outlook - Over the past two months, 5 earnings estimates for HALO have increased, raising the consensus estimate from $5.44 to $6.18 [9] - For the next fiscal year, 5 estimates have also moved upwards, with no downward revisions [9] Group 6: Conclusion - Given the strong performance metrics and positive earnings outlook, HALO is positioned as a 1 (Strong Buy) stock with a Momentum Score of A, making it a promising investment option [11]

Company Performance - Halozyme Therapeutics (HALO) shares have increased by 20.6% over the past month, reaching a new 52-week high of $74.44 [1] - The stock has gained 53.4% since the beginning of the year, outperforming the Zacks Medical sector, which saw a -2.1% gain, and the Zacks Medical - Biomedical and Genetics industry, which had a 3.6% return [1] Earnings and Revenue - Halozyme has consistently beaten earnings estimates, with the latest report on August 5, 2025, showing an EPS of $1.54 against a consensus estimate of $1.23, and revenue exceeding estimates by 13.84% [2] - For the current fiscal year, earnings are projected at $6.18 per share with revenues of $1.32 billion, reflecting a 46.1% increase in EPS and a 29.58% increase in revenues [3] - The next fiscal year is expected to see earnings of $7.56 per share and revenues of $1.59 billion, indicating year-over-year changes of 22.33% and 20.91%, respectively [3] Valuation Metrics - Halozyme's current valuation metrics show a trading multiple of 11.9X current fiscal year EPS estimates, below the peer industry average of 21.1X [7] - The stock trades at a trailing cash flow basis of 15.8X, matching its peer group's average, and has a PEG ratio of 0.38, suggesting it is not in the top tier from a value perspective [7] Zacks Rank and Style Scores - Halozyme holds a Zacks Rank of 1 (Strong Buy) due to favorable earnings estimate revisions from analysts [8] - The stock has a Value Score of B, a Growth Score of D, and a Momentum Score of A, resulting in a combined VGM Score of B [6][9] Industry Comparison - Kamada Ltd. (KMDA) is a notable peer with a Zacks Rank of 2 (Buy) and strong earnings performance, having beaten consensus estimates by 44.44% last quarter [10][11] - The Medical - Biomedical and Genetics industry is positioned in the top 40% of all industries, indicating positive market conditions for both HALO and KMDA [12]

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