Halozyme(HALO)2023-05-10 00:50Financial Data and Key Metrics Changes - The company reported total revenue of $162 million for Q1 2023, a 38% increase year-over-year from $117.3 million in Q1 2022 [10][17] - Royalty revenue for the quarter was $99.6 million, representing a 43% increase compared to $69.6 million in the prior year period [32][126] - EBITDA for the quarter was $74.3 million, compared to $76.4 million in Q1 2022, reflecting a $25 million milestone payment in the previous year that did not recur [20][19] - GAAP diluted earnings per share was $0.29, while non-GAAP diluted earnings per share was $0.47 [20] Business Line Data and Key Metrics Changes - The ENHANZE royalty business is experiencing strong growth, with expectations to add three new agreements in 2023 [3][6] - XYOSTED revenue is projected to reach approximately $100 million in 2023, representing a 20% increase from the run rate following the acquisition [7] - The company anticipates continued strength in ENHANZE wave 2 products, with royalty revenue expected to increase between 23% to 26% over 2022 [21][126] Market Data and Key Metrics Changes - Roche reported Q1 2023 revenues of CHF1.6 billion for OCREVUS, a 14% year-over-year increase, with annualized sales exceeding $7 billion [12] - The subcutaneous formulation of DARZALEX has achieved an 88% market share in the US and over 80% outside the US, driving significant revenue growth [128] - Phesgo sales reached approximately CHF240 million in Q1 2023, a 72% year-over-year increase, with 85% of patients preferring subcutaneous administration [129] Company Strategy and Development Direction - The company aims to expand its product pipeline and advance products through development to regulatory approval, targeting multiple new royalty revenue streams [13][136] - There is a strong focus on enhancing the competitiveness of products through subcutaneous delivery, which is expected to reduce treatment times and improve patient experience [102][124] - The company is actively evaluating M&A opportunities to enhance revenue growth and durability [116] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving goals for 2023, including new ENHANZE deals and continued growth in royalty revenue [6][11] - The company anticipates reaching approximately $1 billion in royalty revenue by 2027, with potential for growth beyond that [104] - Management noted that current partners are awaiting more details from CMS regarding IRA guidance, which has not significantly impacted discussions [24][120] Other Important Information - The company completed $150 million in share repurchases in Q1 2023, fully utilizing the allocated amount for the year [16][90] - Research and development expenses increased to $18 million in Q1 2023, primarily due to a larger workforce and planned investments in ENHANZE [19] Q&A Session Summary Question: How is the IRA guidance impacting conversations with potential partners? - Management indicated that there is still too little detail available to assess any impact, and IRA has not been a frequent topic in discussions with potential partners [24][120] Question: What is the expected impact of the Antares acquisition on earnings? - The Antares acquisition is expected to be accretive to revenue and non-GAAP EPS for the full year 2023 [90] Question: Can you provide more details on planned investments in ENHANZE? - Planned investments focus on developing a high-yield rHuPH20 and a room temperature stable version, which may be suitable for small molecules [88][89] Question: What is the current IV to subcutaneous conversion rate trajectory for other products? - The company expects a target conversion rate of around 60% after three years, with positive progress noted for products like Phesgo [80][95]