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spk13: Good afternoon, everyone. My name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Halifax Fourth Quarter and Full Year 2021 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. At this time, I would like to hand things over to Mr. Al Khaldani.
spk08: Please go ahead, sir.
spk09: Good afternoon and welcome to our fourth quarter and full year 2021 financial results conference call.
spk03: In addition to our press release issued today after the close, you can find a supplementary slide presentation that will be referenced during today's call in the investor relations section of our website. Leading the call will be Dr. Helen Torley, Halozyme's president and chief executive officer, who will provide an update on our business, and Nicole Labroff, our new chief financial officer, who will review our financial results for the fourth quarter. On today's call, both GAAP and non-GAAP financial measures will be discussed. The non-GAAP or adjusted financial measures are reconciled with comparable GAAP financial measures in our earnings press release and slide presentation. During the call, we will be making forward-looking statements. I refer you to our SEC filings for a full listing of the risks and uncertainties. I'll now turn the call over to our CEO, Helen Torley.
spk10: Thank you, Alan. I'm very pleased to welcome Nicole to the call and to have her assume her new role as our Chief Financial Officer after doing such a terrific job as our VP of Finance and as our Controller. I'm going to begin today with a brief review of our record 2021 financial performance, which has created strong momentum entering 2022. Total revenues in 2021 grew 66% year-over-year to $443 million. Operating income grew 91% to $276 million. And non-GAAP earnings per share for the year was $2. All of these measures are within the range of our final 2021 guidance. The strong 66% revenue growth was driven by royalty revenue growth of 130% year-over-year a $40 million upfront milestone payment for the signing of our 11th Enhanced Collaboration Agreement with VEED Healthcare, and additional development and commercial milestones associated with launch progress and the strong momentum in our development portfolio, where we achieved our goal of 10 new partner study starts in 2021. This strong progress and resulting revenue growth allowed us to continue to demonstrate our strong commitment to capital return through completion of our $550 million share buyback plan ahead of schedule in October of 2021, and announcement of a new three-year $750 million share repurchase program, inclusive of a $150 million accelerated share repurchase program, which was initiated in December of 2021. These achievements and the resulting momentum have positioned us well for continued revenue and operating income growth in 2022 and beyond. In January, we provided our 2022 guidance. For full year 2022, we expect revenues of $530 million to $560 million, which represents growth of 20% to 26%, driven primarily by projected royalty revenue growth of approximately 50%. Also contributing to our revenue projections, this year we have included a new deal milestone payment in our guidance, based on our expectation for a new agreement to be signed in 2022. Operating income is projected to be $350 to $380 million, showing robust growth of 27% to 38%. We expect non-GAAP earnings per share of $2.05 to $2.20, recalling that in 2022, we're seeing the impact of our first year of tax expense, which is projected at $0.55 to $0.60 per share. With that overview, let me now provide some additional details, beginning with the royalty revenue growth starting with a summary of 2021 results shown on slide three. Royalties during the fourth quarter were $62.6 million. This represented 96% growth year-over-year and 7% sequential growth. This resulted in full-year 2021 revenues and royalties of $204 million, representing approximately 130% year-over-year growth from $89 million in 2020. Royalty revenue growth continues to be driven primarily by the successful ongoing global launches of Janssen's subcutaneous forms of Darzalex, which utilizes our enhanced technology. Based on the strong momentum of this high margin recurring revenue stream, we project continued royalty revenue growth in 2022, with growth of approximately 50% to approximately $300 million. Moving on to slide four, we have five commercialized products utilizing PAMs that are contributing to our royalty revenues. It's estimated that these products have been used to treat more than 600,000 patients globally. Our wave two products, Janssen's Darzalex SubQ and Roche's Bezgo, are the current royalty revenue growth drivers and have substantial growth opportunities ahead for each of them. Turning to slide five, I'll review Darzalex. During its fourth quarter call, Janssen's parent, Johnson & Johnson, reported that following strong fourth quarter sales, total Darzelek sales in 2021, including both IV and sub-Q, were $6 billion, scoring a remarkable 42.3% on an operational basis over 2020. J&J further stated that the fourth quarter growth was driven by a combination of share gains, increased penetration of the subcutaneous formulation in the U.S. and Europe, and continuing launches globally. Notably, Darzalex share increased across all lines of therapy, with nearly eight points of share growth in the United States. Turning now to the performance of Darzalex SC using Enhance, which is shown on the right of the slide, Darzalex back-growth in the United States grew again during the quarter and achieved 76% share of total Darzalex sales in the month of December, an increase from 72% share of total sales at the end of September. We estimate that Darzalex SC achieved an annualized share of approximately 58% of total Darzalex sales in 2021. And we project continued strong Darzalex SC growth and resulting growth in our royalty revenues, driven by continued growth in the worldwide total Darzalex sales, which were projected by analysts to increase to approximately $10 billion in 2025, and continued growth in the annualized subcutaneous share to notably higher than the current 58%. Beyond this strong commercialization and financial performance, key developments for the subcutaneous Darzalex franchise for Janssen in the quarter included an FDA approval for Darzalex Faspro in combination with Kyprolis and Dexamethasone, which was for patients with relapsed or refractory multiple myeloma who received one to three prior lines of therapy. This represented the ninth indication for which Darzalex Faspro has been approved in the United States. An approval was also received from the China National Medical Products Administration for the use of Darzalex Aspro for the treatment of newly diagnosed primary light chain amyloidosis. I'll move now to our second of our week two products and driver of royalty revenue growth, and that's Fezgo. In the fourth quarter, Roche reported fourth quarter Fezgo sales of 127 million Swiss francs, up from 117 million Swiss francs in the third quarter. Fesco sales for the year were 340 million Swiss francs. We continue to expect strong quarter-over-quarter growth of Fesco as a result of the ongoing launches in Europe and the rest of the world following attainment of reimbursement and continued penetration into oncology accounts in the United States. Let me move now to slide six and a discussion of the enhanced development portfolio. It is our goal to continuously expand the number of products that are in development and to advance products to later stages of development and launch, as in many cases, this is associated with milestone revenue payments to Halo then. I'll begin with an overview of the enhanced partner product pipeline as of February 2022. I'm pleased to report that our enhanced partners initiated four new phase one trials in the fourth quarter, each for a new product that resulted in an expansion of our development portfolio. Specifically, in December, Veeve initiated enrollment of a Phase I study to evaluate cabotegravir administered subcutaneously with Enhance, and Janssen also initiated a Phase I clinical trial evaluating their small molecule brocodrine with Enhance. In November, Roche initiated a Phase I study combining an undisclosed therapy and target with Enhance, and in October, Takeda initiated a phase one study to assess the tolerability and safety of immune globulin subcutaneous 20% solution within HEMS. These new programs are reflected in the updated pipeline chart on slide six. With these four phase one study initiations, we exceeded our goal of five new phase one trial starts in 2021, achieving a total of six. We also achieved our goals to have three products in phase three development and to expand the total number of programs in development. Looking ahead for 2022, we expect further pipeline progress and expansion with at least five new phase two or three trial starts for existing enhanced partner programs and four new products utilizing enhanced to enter phase one development by the end of 2022. Staying on slide six, let me now provide a brief update on the next set of potential launches, which we call our wave three launches. All of our Wave 3 potential launch products are currently approved as IV drugs and are in Phase 3 development as a subcutaneous drug within HANDS. Based on historical development timelines, these represent potential launches in the 2023 to 2025 timeframe and include Bristol-Myers Squibb's Nivolumab, Roche's Atizolizumab, and Ogenix's F-Cartezomod. Analysts project that the total revenue potential for both the IV and sub-Q formulations for this next set of our potential launches will exceed $20 billion in 2025. What will be key for Halosan is the pace of conversion from IV to sub-Q and the peak conversion share attained. Let me move to Organics' expert Tutimod, which now has the brand name Lifeguards. FiveGuard was approved in its IV form by the FDA in December of last year for the treatment of patients with myasthenia gravis. It is currently leading the race to become the first of our Wave 3 product launches with the potential for approval in 2023. Moving to the subcutaneous development, Argenix has integrated and enhanced broadly in its strategy and vision for F-Cortisimod with five Phase 3 studies for five distinct indications now ongoing. The most advanced SC study is for myasthenia gravis. Excitingly, Ergenics now expects top-line data from an ADAPT-SC study of F-cortisumab with enhanced or myasthenia gravis in the first quarter of this year. Three additional top-line data readouts of SCF cortisumab studies are expected in the next 12 months or so, with data from the PEMFIGUS study in the fourth quarter of this year and from ITP and the CIDP studies in the first quarter of 2023. We're also pleased to add that in December, Ergenix initiated a trial of subcutaneous F-cortisomide in bullous pemphigoid, the fifth indication to be evaluated. The projected size of the addressable populations and the large unmet need that exists in each of these indications are resulting in analysts projecting a multi-billion dollar opportunity for F-cortisomide. Moving now to the additional Wave 3 products that Roche's atavolizumab and BMS's Opdivo continue to progress in their Phase 3 studies, evaluating SC delivery with enhanced. And these also have the potential for launch in the 23 to 25 timeframe. Now I'll move to the top of this slide are the products that are in or have completed Phase 1 development. We call these our Wave 4 potential launch products. and they have the potential to launch in the 2025 to 2027 timeframe. Clearly, this pipeline represents a broad, diverse, and exciting set of opportunities. Today, I'll focus on highlighting a series of new studies in HIV, where ENHANCE is being studied in both small and large molecules. We're delighted that Deeb initiated a phase one study of the HIV therapy cabotegravir in combination with ENHANCE, Veve has previously indicated that it expects Phase I data from this study and from another study with Enhance, which will include their broadly neutralizing antibody N6LS, in 2022. Veve is clearly moving at a rapid pace and we're delighted to be supporting them in their mission for HIV patients. In addition, Janssen initiates a Phase I study of their small molecule product, Wilcovarine with Enhance. This is the third target Janssen is now studying with Enhance. And finally, Jansen and Zeed together have indicated they plan to explore the possibility of an ultra-long-acting version of Cabinuva, using Enhance. Cabinuva is a co-packaged antiretroviral medication for the treatment of HIV, containing both cabotegravir and rotovirin. Let me move now to slide seven, and our pipeline progress to date really has been able to drive collaborative revenues for Halazine, which are a key contributor to our cash flow and have enabled our commitment to capital return through share buyback. Over the last several years, we've provided three-year guidance on milestone revenue, which is shown in the green bars. Represented in the blue bars is our performance against that. I'll just make some key points here. Firstly, our three-year milestone revenue projections have increased over time with the maturing and the expansion of our portfolio. Secondly, we have met or are in track to meet our guidance in each of the periods. Please note that last month we updated our outlook for the three-year period of 2022 to 2024, during which we expect to increase milestones again to $450 million to $500 million in total milestones, resulting from a mix of development, commercial, and new agreement milestones. Let me move now to slide eight, an the long-term outlook for an enhanced franchise. As we project forward to 2027, we continue to see the potential to achieve approximately $1 billion in royalty revenues based on Wave 1, 2, and 4 products, which are the currently approved products and the products that are projected to be in clinical development with enhanced by the end of 2022. Now, note this is a non-risk-adjusted projection and does assume global launches in all indications. Looking even beyond 2027 to 2031, we see a clear path to and the potential for royalty revenues to exceed $1 billion. We're providing this projection today to help our investors better understand the drivers of revenue durability based on our knowledge of our programs, our plans, and also the confidential terms spelled out in our collaboration agreements. The continued growth potential post-2027 is driven by four factors. Firstly, the ongoing growth of the products that are creating the $1 billion potential, some of which will be launching in the 2027 timeframe and will be early in their growth cycle. Secondly, we project and expect that there will be new product launches that are not reflected in the current financial projections and would represent our Wave 5 launches. These new products will result from our current partners, but also new partners, advancing additional subcontainers products into development in late 2022 and beyond. The third factor is the potential to be granted more co-formulation patents, which have the effect of extending the duration of time we receive royalties. As a reminder, we typically receive royalties for a minimum of 10 years after the first commercial sale. In addition, the co-formulation patents can also potentially allow the base royalty rate to remain unchanged for an extended period following expiry of the RUPH20 base composition of matter patents. I'm pleased to report that several partners recently filed new co-formulation patent applications related to products in the enhanced development pipeline. I'm looking forward to being able to provide further updates on these applications as this information becomes public. Now, the fourth factor is the potential for our current and new partners to utilize our new, more extended room temperature stable RUPH20, which has the potential to launch post-2027 and as IP coverage to 2032 in Europe and 2034 in the United States. Now, let me just address a question that comes up, and that's the potential to provide similar impact. And specifically, let me address what we see are several unique dynamics around the loss of RUPH20 exclusivity. As a reminder, the base composition of matter patents for RETH20 lasts until 2024 in Europe and 2027 in the United States. Often with biotech products, with exclusivity lost, there can be a sharp drop in revenue, sometimes referred to as a patent cliff. This is a result of biosimilar companies launching and taking a substantial share of the innovator product and also price erosion. We do not believe this will be the case with our enhanced portfolios. considering the product composition and the projected IP coverage we have. Distinctly from the usual dynamic, our $1 billion royalty revenue potential is not based on a single product. It's based on more than 20 products. We also project and expect that multiple sub-Q products with Enhance will be protected with co-formulation patents. And for a bi-similar company contemplating Enhance where only a portion of the $1 billion may be addressable, This represents high cost and complexity for a more limited reward. Further adding to our conviction regarding the durability of our royalty revenues, many of our partner products are patent protected beyond 2027. In addition, our partners have a strong focus on safe and reliable R.E.P.' 's 20 drug products, also known as our API. With more than 600,000 patients now treated within hands, we have a well-characterized and established safety track record including strong data on immunogenicity, a key question new and current partners focus on. We are continuously improving our API, and we're now investing to create a next-generation, higher-yield, low-cost API. We believe our winning combination of our high-quality API plus low cost will result in continued strong collaboration with our partners and strong durability of our revenues. Now, we're excited by the ongoing momentum and growth potential of our enhanced technology franchise. At the same time, we are continuing to evaluate the potential for new technology platform expansion through acquisition. Our goal with M&A is to identify a platform where we see a clear path to operationalize that platform, just as we've done with enhanced, and deliver incremental value over and above the acquisition price. With that, I'm now going to turn the call over to Nicole for a discussion of our fourth quarter and full year financial results. Nicole?
spk12: Thank you, Helen. Before I begin, I would like to again note that we now report key measures on a non-GAAP basis in addition to the GAAP basis and also provide financial guidance on a non-GAAP basis. We consider these non-GAAP financial measures to be important because they provide useful measures of our operating performance. exclusive of factors that do not directly affect what we consider to be our core operating performance, such as stock-based compensation and amortization, as well as unusual events in the related tax effects. Please refer to our press release and filings for reconciliation of GAAPs and non-GAAPs net income and earnings per share. With that, let me turn to slide 9, where I'll focus on some highlights from our fourth quarter results. Royalty Revenue for the quarter was $62.6 million, a 96% increase over the prior year period of $32 million. This was driven primarily by the continued strong uptake of Janssen's continuous star selects, utilizing enhance. Collaboration Revenue for the fourth quarter was $12.3 million, as compared to $57.3 million in the prior year period. In Q4 2021, there were no new upfront license payments as compared to a $30 million upfront license payment from Horizon in Q4 2020. Lastly, GAAP EPS was $0.46 and non-GAAP EPS was $0.42 per diluted share. And now, let me turn to slide 10 for a review of the full year 2021 easel. I'll briefly touch on some highlights here. with more details available in our press release and 10-K files with the SEC today. Total revenues grew 66 percent at $443.3 million in 2021, off of an already substantial revenue base in 2020. The biggest contributor by far to this increase was higher revenues from royalties of $203.9 million, up 130 percent from 2020. Product sales of $104.2 million were up sharply from $56 million, mainly due to higher sales of RZPH20 to our partners Janssen and Roche. Collaborative revenues, driven by our partner's pipeline progress, were $135.2 million, up from $123 million in the prior year, benefiting from substantial sales milestones from Janssen related to Dargolex SC in our new enhanced collaboration agreement with VEE. Operating income for the full year was $275.9 million, up 91% from $144.3 million in 2020. Earnings per share for 2021 reached the highest levels in the company's history. GAAP EPS was $2.74, up from $0.91 in the prior year. As a reminder, GAAP EPS included a one-time tax benefit from the reversal of our tax valuation allowance, representing approximately $1.05 per share. Non-GAAP EPS for the year was $2 per share, up from $1.12 in the prior year. Now let me turn to slide 11 for a review of our 2022 financial guidance. I am pleased to review our strong guidance for 2022. which was first introduced earlier this year on January 10th. We expect total revenues of $530 million to $560 million, representing growth of 20 to 26% over 2021 total revenue. In terms of the components of our revenues, we expect revenue from loyalties to increase approximately 50% over revenues from loyalties in 2021 to approximately $300 million. Product sales and collaborative revenues in total for 2022 are expected to be at similar levels to what we achieved in 2021. We expect GAAP operating income of $350 million to $380 million, representing growth of 27% to 38% over 2021 GAAP operating income. This includes an incremental $20 million operating expense investment to maximize, enhance, and extend royalty revenue durability. Even with this important investment, we expect operating margins greater than 65%. We expect GAAP diluted earnings per share of $1.90 to $2.05. Again, in 2021, we recorded a one-time non-cash income tax benefit of approximately $1.05 per share. When comparing with the prior year, it's important to note that 2022 will be the first fiscal year in which we will report income tax expense as part of our income statement. We expect non-GAAP diluted earnings per share of $2.05 to $2.20. Income tax expense is projected to be 55 to 60 cents per share. The company's earnings per share guidance does not consider the impact of potential future share repurchases beyond the accelerated share repurchase initiated in December of 2021. But we now turn to slide 12 for a summary of our approach to value creation and capital return in our strong progress to date. We have been consistent regarding our balanced capital allocation priorities. These include maintaining a strong balance sheet, capital return via share repurchases and commitment to driving both internal and external growth via M&A. We have a strong balance sheet with cash, cash equivalents, and marketable securities as of the end of the fourth quarter of $740.9 million. We continue to expect our strong projected free cash flows, driven by our enhanced franchise, will support both our commitment to capital return as well as funds both internal and external growth via M&A. Demonstrating our continued commitment to capital return, in the fourth quarter of 2021, we completed our initial three-year $550 million share buyback program one year early. Under the program, which began in November 2019, we repurchased a total of 22.3 million shares for $550 million. at an average price per share of $24.72. Further demonstrating our commitment to capital return, in December 2021, we announced a new three-year $750 million share repurchase program that was authorized by our board and immediately initiated $150 million accelerated share repurchase program. With that, I'll now turn the call back to Helen. Thank you, Nicole.
spk10: I'd like to thank the terrific Halodime team, our partners, and all of our collaborators for the hard work that resulted in the strong 2021 performance. In 2022, we'll continue to deliver growing revenues, growing operating income, and expanding our pipeline, resulting in both strong near-term and long-term growth. I thank you for joining us today, and with that, we'd now be delighted to take your questions. Operator, would you please open the call for questions?
spk13: Thank you. And once again, ladies and gentlemen, it is star one. If you would like to ask a question today, we'll go first to Charles Duncan, Cantor Fitzgerald.
spk00: Yeah. Hey, thanks for taking the question and congratulations on a great year, Helen and team. Thanks. Quick question in terms of royalty growth. You mentioned roughly 50% royalty growth this year. And I guess I'm kind of wondering if you could provide a little color on what the kind of puts and pulls to that royalty growth could be. Is that primarily driven by additional fast pro growth, or does fees come into the picture? And then I guess as a follow-up to that, when you think about the 70% 6% or so, you know, adoption rate for FASPRO versus DARS-IV. I guess I'm wondering where do you think that can go?
spk10: Yeah, thanks, Chas. So in terms of the royalty growth, the growth is driven by both FASPRO and by FESGO. As we mentioned in the prepared remarks, we see growth for each of them. Because FastPro is a bigger brand, it is going to be a larger contribution, but we're excited about the contribution we're going to see from FezGo as well, which is going to come from additional launches outside the U.S. and more adoption outside the U.S., which lags the U.S. a bit, but also continued penetration into accounts in the U.S. as well. So those are our two key royalty growth drivers. Specific to Darzalex, while the exit, as you saw, was 76%, our average share in the year, Chas, was just 58%. And so if you just think about the key drivers of our royalty revenue growth, first of all, we've got a very fast-growing brand in Darzalex. At $6 billion in 2021, but analysts are projecting it's going to be $10 billion by 2025. So if you like, the whole pie is going to get bigger. And then our share will grow from the average share of 58% considerably above that. And I think a good benchmark is it's already at 76% at the end of last year. We're going to see more area under the curve sales as we continue to see growth to even catch up to that average of 76%. Frankly, there are very few barriers, I think, to why a patient wouldn't use sub-Q over IV given the potential for reduced treatment time and also reduced infusion-related reactions. So we see a lot of growth to come.
spk00: Okay, very good. One quick pipeline question, and that is on F-cortisomab. You mentioned possible data here in the near term as guided by your partner. And I guess I'm wondering if you could lay out, provide a little bit of an outline on the kind of work that you're doing to prepare for regulatory approval, as that would be a new partner that you'd support in those efforts.
spk10: Yeah, good question. So as you're mentioning now, the data readout is sometime in the first quarter. The study that's going to read out is their phase three study, which is measuring reduction in IgG levels at day 29. And our genetics has also stated that they're awaiting additional data that's coming from longer-term studies to complete their package. So we're following our normal process, Chas. We will be ready with all of the sections that are needed related specifically to our drug product. And all of that, with our five approvals to date, we've become very proficient and quick at doing that. So everything is very nicely on track to support our GENICs when they are ready to submit their BLA.
spk08: Up next, we'll take a question from Michael D. Fiore, Evercore ISI.
spk14: Hi, guys. Thanks so much for taking my question. Congrats on the great quarter and a phenomenal year. Just two for me, if I may. Number one, just regarding your next-gen higher-yield, low-cost API, I know you said you just started investing behind that. When can we expect this to become available? And the second part to that is that does this have any unique IP that may push out the 2024-2027 dates? And as a follow-up, on slide six, I'm not sure if I'm missing something, but I noticed that Alexion 1720 and Bristol CD73 are no longer on that chart. Any color as to what happened there would be great. Thank you.
spk10: Yeah, so let me begin with the next generation high-yield, low-cost API. We have just very recently begun investing in that, Mike, and so we're still in the process of development and optimization. So we don't have a specific timeline yet of when it will be introduced, but we are working as fast as we can to have that ready. But think in terms of several years. in terms of having that fully scaled up tested stability and all the other things that we need to do. So several years for that to come. It does not have unique IP because it is enhanced. Now, you will recall that in January, we also announced the development of a new RUPH20, which is not enhanced. That one does have unique IP associated with it out to 2032 in Europe and 2034 in the United States. So let me move then to the question of the pipeline. Yes, you're absolutely correct. Let me start with CD73. Very recently, BMS, based on the overall data that they have been seeing on the drugs that are addressing that target with IV, indicated to us that they wouldn't be proceeding with development of that product as a sub-Q, and so we did remove it from our pipeline chart. And again, very, very recently, Alexion also indicated to us that they would not be proceeding with the C5 target, and they actually returned that target to us. So always some puts and takes in the pipeline. We're obviously excited to see the six new products starting in 2021, but we did see these programs for different reasons not proceed. In the case of CD73, it just doesn't seem to be that attractive a target in immuno-oncology.
spk06: Got it. Thank you very much.
spk08: Up next, we'll hear from Corrine Jenkins, Goldman Sachs.
spk12: Hey, good afternoon. Maybe first, just one. You announced, obviously, this new RSU PH20 back in January, and I'm curious if the news of that product has shaped, is that all your conversations with potential partners or even existing partners thinking about new product targets and partnerships?
spk10: Yeah, thanks, Karine. Absolutely. We're still in the process of rolling it out and getting into deeper conversations with all of our current partners, but I can say that we're seeing some interest in that and that concept. And the two areas that we've talked about where it might be interesting is exactly where we're seeing some interest. Partners who are considering developing small molecules where more extended room temperature stability may be attractive to them. And also, current partners who are developing drugs where they are more interested in a longer IP perhaps because their own product does not have as extended an IP. So very much the current partner is very interested in it and we're beginning to introduce it in our new partner discussions as well because we have seen certainly since the announcement of the DEEDS deal more interest by companies who are pursuing small molecules and so it's a great additional offering to discuss with them. talking about when that might be possible to integrate into their clinical program, but obviously in-hands available now to do that.
spk12: That's helpful, thank you. And then maybe, I'm not sure if you have this visibility, but in terms of what percentage of total DARS-like sales are FASPRO, XUS, I'm curious if you have any color on not trending. And Karam, is that for the subcutaneous portion of the sales?
spk10: Yeah, for FASCRO versus the IV. Yeah. Unfortunately, Janssen doesn't provide that level of detail, so we're not in a position to be able to share that. I can say, though, and we can go back to comments that Janssen themselves made in about June or July of last year, at that point in time, they were saying XUS, the FASCRO conversion was 60%. So, we do expect, just based on the growing fast food sales in the U.S. and outside the U.S., we have seen conversion rise considerably from that 60% reported at that time, but we can't give specifics.
spk08: Okay, helpful. Thank you. Next up is Jessica Five, JP Morgan.
spk01: Hey, guys. Good afternoon, and thanks for taking my question. I'm following up on some of the prior questions. For the RU-PH20 with extended room temperature stability and potential for patient self-administration, when should we expect that to enter the clinic? And can you just talk about the type of product that would most benefit from those characteristics?
spk10: Yeah. With the new RU-PH20, we are still in the process, obviously, of developing it and optimizing it. So, we expect that to be available to partners to integrate into their clinical program in a couple of years. Now, from there, Jess, they need to do phase one and phase three studies, dislike within hands. So, we're estimating this will be available and first potential launch will be post-2027. with the same expedited development pathway we see within hand for just a couple of years so this is ready and we have the right stability and information for partners to integrate it into their clinical development program. As you're thinking about the types of products that it might be useful, I don't want to name a specific product, but if you can think about disease conditions where the patient may be more convenient for them to be carrying around a self-injector, as an example, or a pre-filled syringe that has the drug on their person because it's for a chronic use but where they might want to have it with them and not have their life impacted by having to be tied to home. That's the type of situation where we're seeing partners be very interested in the extended room temperature stability.
spk01: Okay, got it. And maybe just one more for me. For the long-term royalty revenue potential where you're now providing an indication of what that could look like in 2031, going out, you know, beyond the 2027 figure that you've been giving for a while, how did you select 2031 as the kind of out year to provide there?
spk10: Just we elected to show what would happen because there was so much focus, I will say, on 2027. We just selected something to show pretty close to that, but several years out, what the dynamic would be, Jess. Obviously, we could have picked one year before, one year after, but it just was picked to answer that question that there is a strong growth potential for several years after 2027.
spk08: Great. Thank you. Our next question comes from Jason Butler, JMP Securities.
spk02: Hi. Thanks for taking the questions. Just a couple on the pipeline. One on Takeda 881. Can you maybe just speak to how that product could fit into the overall IVIG franchise for Takeda? specifically how a 20% sub-Q formulation could potentially – how the market dynamics could play out there for a sub-Q conversion versus how they played out with Hycuvia. And then just real quick, could you remind us on the Phase 3 timeline, to the extent that we know on nivolumab, and your thoughts on how that product could impact the PD-1 market? Thanks. All right.
spk10: I'm going to say, Jason, with regard to the IBMG market and exactly what Cata is planning, they have not shared their specific plans and positioning for this new agent publicly. So I'm not in a position to go into any details on that. I do see this, though, as an additional offering for them in what is a very strong franchise and a franchise that they have commented is one of their key growth drivers moving forward. But I can't comment on any specific positioning there. For the nivolumab phase three study, that continues being executed by Bristol. They haven't provided any specific timeline. I can comment that on clinicaltrials.gov, they have a primary completion date of December of 2023, which is sometimes a useful indicator as to a rough timeline as to when they expect perhaps the first analysis to be done, but clearly it doesn't always do that. And I think that where Bristol is going with sub-Q therapy, and this is really based on comments that they have made, is they do see the opportunity for patients not to be tied to infusion suites, which are often in hospitals a bit further from the patient's home. And I think the vision for sub-Q is that it's going to allow patients to be treated more in the community and with more ease, and obviously in Bristol's case, as combination therapy of different checkpoint inhibitors to reduce the burden for the patient and also for the caregiver. So we're very excited to see the progress they're making. And recall, they also have a phase one study ongoing with Opdivo and Rilatlamab, which I think is going to be a very interesting combination as well.
spk09: Great. Thanks for taking the questions, Helen.
spk11: Thank you. And next up from Barenburg Capital Markets is Anita Deschant.
spk08: Anita, your line is open. Hello? Hi, can you hear me?
spk07: Yes, ma'am. Please go ahead. We can now, Anita. Thank you. Okay. All right, thanks. I had a quick question on the slide six, the comment about, you know, the expected candidates to enter the pipeline. You say four new products. Now, would that mean that they have an IV version that's already in the market, or would those be brand new, like new molecules and things that the partner is testing in a sub-Q formulation? And as a follow-up, also, if the comments as five new phase two, three starts. Would you be able to give us some specifics on which of those phase one might progress in the development? Thank you.
spk10: Thanks for the question, Anita. If we go to that chart and the specific four studies that started in the fourth quarter, I can say that we're pilvering which is Janssen's drug in HIV, is available as an oral and an IM today. It actually is a successful commercial drug, including being part of the combination therapy, Cavanuva, that they are in collaboration with Veve for, which recently got a new updated label to every two months injection. So that one is a commercialized drug. We cannot comment on the Roshan Disclosed Drug because obviously they are not disclosed. We don't want to discuss that. The Takeda, one, this is the 20% ICG. That is a developmental drug. And then Cabotegravir, the HIV drug, as was mentioned, is approved. And so just then moving to your second question with regard to the pipeline, we're very pleased, you probably have noticed on the chart that we are indicating that Roche is close to initiating their phase three study for Ocrevus. The trial design is actually published now on clinicaltrials.gov. This is one of the expected phase two, three starts. The remaining four will come from products that are on this chart, but unfortunately, based on the confidentiality agreements we have, until the partner has announced it, we cannot comment on it. But the good news is these will all be studies done in patients, and so shortly before they start, they will be posted on clinicaldroughts.gov, and we'll obviously provide updates just as soon as we can as to which these products are.
spk07: Thank you. That's very helpful. And just one more question for me. You did talk about looking into some of the potential acquisitions that could happen down the years. Maybe could you provide some color on what that implies when you say you're looking at de-risk assets, whether there would be late stage or maybe close to approval or already approved?
spk10: Yes, thanks. As we are looking at some M&A, we're specifically looking to find a business that is complementary to enhance. And we're looking for something where we have confidence that we're going to be able to deliver value because we can operationalize it. over and above what we would pay for it. So what is ideal is that we can find something that has got, perhaps already has been licensed to partners and demonstrated some clinical or commercial success. Sorry, specifically commercial success. or where it's a pipeline that's got positive phase three data and a clear path to regulatory approval. What we don't want to do is get into some pipeline where there is a lot of technical risk still, Anita, because that obviously doesn't fit our goal of acquiring something to continue to build and extend the durability of our revenue. So to fit our revenue and financial goals, it needs to be more advanced, and that's what we mean by de-risk, that we see a clear path to revenue and revenue growth in the near term.
spk08: Great. Thank you very much.
spk11: Our next question will come from Joe Cantanzaro, Piper Sandler.
spk04: Hey guys, thanks so much for taking my questions and congrats on the progress. I just wanted to follow up on an earlier question. Helen, I think you noted that for CD73, maybe as a target, it just didn't meet Bristol's expectations. But can you say for Alexion 1720, what was the sort of contributing factors that led to that target being returned back to you guys? And maybe similarly, I think You know, amivantamab was in the enhanced pipeline earlier last year and then subsequently came out. What drove that decision? With those two questions, maybe you could just speak at a high level of what you're partnering with enhanced and by specific molecules. Thanks.
spk10: Yeah, for Alexion 1720, I'm afraid I don't have any color on specifically why they returned it, but we can say that, obviously, Alexion has had amazing success with Ultimaris and the more extended IV dosing interval. In previous years, Ludwig did make comments to say that the IV was a little bit to their surprise in that particular patient setting, meeting many of the needs. But we don't have any more color I can provide than that. And the great news is we're now in a position to relicense that target potentially to somebody else, as there are a number of companies who continue to develop exciting products in that space. So we will be obviously seeking to do that just as soon as possible. Yeah, the amivantamab, we are continuing in development with amivantamab with Janssen. They have a specific preference as to how and where we articulate that we're proceeding with amivantamab, so you'll find more details on that in our queue, which is an SEC filing, but based on Janssen's preference, it is not reflected. as clearly on our halo time charts that we use for investor meetings. But just to put a very fine point in it, absolutely, Jensen, continuing with Ami Ventanab as a target sub-Q.
spk09: Okay, got it. That's really helpful. Thanks for taking my question.
spk08: Operator, are there any more questions? There are no further questions at this time.
spk13: Would you like to make any closing remarks?
spk10: Yeah, I'd just like to thank everybody for your attention. Obviously, a great year in 2021. We're set up for continued strong progress and growth in 2022 as well. And we look forward to updating you on our next quarterly call. Thank you so much and good night.
spk13: And once again, ladies and gentlemen, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.
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