This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk05: Good afternoon. My name is Chantal and I will be your conference operator today. At this time, I would like to welcome everyone to the Halo Zyme third quarter 2022 financials and operating results conference call. All lines have been placed on mute to prevent any background noise. After your 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 followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Please note, this event is being recorded. I will now turn the call over to Tram Lui, Halozyme's Vice President of Investor Relations and Corporate Communications. Please go ahead.
spk03: Thank you, Operator. Good afternoon and welcome to our third quarter 2022 Financial and Operating Results Conference call. In addition to the press release issued today after the market closed, you could find a supplementary slide presentation that will be referenced during today's call in the Investor Relations section of our website. Beginning the call will be Dr. Helen Torley, Halazan's President and Chief Executive Officer, who will provide an update on our business, and Nicole Labrosse, our Chief Financial Officer, who will review our financial results for the third quarter ended September 30, 2022. On today's call, we will be making forward-looking statements. I refer you to our SEC filings for a full list of risks and uncertainties. During the call, both GAAP and non-GAAP financial measures will be discussed. The non-GAAP or adjusted financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and slide presentation. I will now turn the call over to Helen Torley.
spk07: Thank you, Trom, and good afternoon, everyone. I'm pleased that our third quarter results continue to reflect both strong financial and operational performance across the business. I'll begin on slide three and what is excellent news. I'm delighted to announce that we achieved an all-time high quarterly royalty revenue of almost $100 million in the third quarter. This represents strong growth of 70% over prior year third quarter and continues to demonstrate the strength of all of our enhanced business. Total quarterly revenue was $209 million, also a record, with strong growth of 80% over same period prior year. Our total revenue growth results from our diversified portfolio, which includes growing enhanced revenues resulting from royalty and milestone revenue, incremental product sales and incremental royalties resulting from the sales of Teva's EpiPen, which utilizes our small volume auto-injector, and also from sales of Zyacid, our specialty commercial testosterone replacement therapy. We're pleased with this strong momentum and the growing diversification of our revenues. Over the past several years, and supported by the acquisition of Antares in May, we have built a leading subcutaneous drug delivery platform company with a specialty business that is compelling growth opportunities, diversified revenue streams, and extended revenue durability. We look forward to leveraging our enhanced capabilities to support current and new partners utilizing Enhance, our autoinjectors, and our autoinjectors plus Enhance, with the goals of increasing their product's competitiveness and reducing the burden of treatment for patients. With a dedicated focus on operational excellence for the combined business, our vision remains to deliver disruptive solutions that significantly improve patient experiences and positively influence outcomes. Based on strong year-to-date results, our communication with partners, and planned expenditures for the year, we're also reiterating our guidance for 2022. As previously disclosed, we expect total revenues of $655 million to $685 million for the full year 2022. We expect revenue from royalties to increase greater than 70% year over year to approximately $350 million to $360 million. I'll now move to slide four and provide more detail on our royalty revenue performance in the quarter. We're very pleased with the continued robust growth of this high-margin recurring revenue stream. In the third quarter, total royalty revenue was $99.6 million, representing 70% growth over the third quarter of 2021 and 17% sequential growth. These results include our enhanced royalties and the auto-injector device royalty stream. Our Wave 2 products, Starselect Subcutaneous and Fezgo, continue to drive our overall strong royalty revenue growth. The robust and rapid adoption of Darzalex SubQ in U.S. and Europe demonstrate that adoption shows no real barriers in both geographies. Fezgo, growing rapidly in Europe, demonstrates the acceptance of the fifth SubQ product with Enhance. Enhance SubQ products have clearly shown that they were adopted by peers, physicians, and patients worldwide. This bodes well for our Wave 3, 4, and 5 product launches. Moving now to slide five, which focuses on Darzalex. Darzalex Fast Bro, which is a subcutaneous version of Darzalex in the US, continued its remarkable growth story in Q3, achieving 85% share of total sales of Darzalex. And at the same time, total Darzalex sales also continued to demonstrate strong growth. On their third quarter update call, Janssen's parent Johnson & Johnson reported worldwide sales of Darzalex, including both the IV and subcutaneous forms, of $2 billion, an increase of more than 38% year-over-year on an operational basis. The increase in Darzalex sales was driven by share gains in all regions, continued strong market growth, and continued uptake of FASBRO, the subcutaneous formulation, within hands. Also illustrated in the slide is an update on analyst consensus for Darzalex total revenue. It is now projected to achieve $12 billion in sales in 2025, with strong continued growth driven by increased penetration into the earlier lines of treatment. I'll move now to Fezgo. On their third quarter call, Roche reported strong sales of Fezgo, a combination of Progetta and Herceptin for subcutaneous injection for patients with early and metastatic HER2-positive breast cancer. As sales continue to show a strong uptake in Europe and the U.S., Fesco revenue was 526 million Swiss francs for the first nine months of 2022, an increase of 150% year over year. Fesco's faster subcutaneous administration in just minutes compared to ours with standard intravenous administration has contributed to lower health care costs and use of resources and is rapidly becoming the lead in many markets. On the third quarter call, Roche reported 30% conversion in the early launch countries and stated that they expect Fesco to be an important medicine for years to come. Shugai, a member of the Roche group, also recently filed for regulatory approval in Japan, which could represent another opportunity for continued Fesco growth. Moving now to slide six, our next waves of potential launches are illustrated here. Focusing on wave three, these products represent the next set of royalty revenue opportunities with potential launches projected between 2023 and 2025. The wave three products are subcutaneous F-critizumab, atezolizumab, nifolimab, and ocrelizumab. Our future growth trajectory is also supported by potential launches of our wave four products in the 2025 to 2027 timeframe. Wave four is comprised of 11 partner products 10 of which are in ongoing Phase 1 clinical testing or have completed Phase 1 testing. I'm pleased to note that one of the Phase 4 products, Janssen's amivantamab, recently advanced into Phase 3 clinical testing. Slide 7 highlights the recent advancements in our Wave 3 products during the third quarter. In September, Argenix announced the submission of a biologics license application, or a BLA, to the FDA for the enhanced-enabled subcutaneous escritigimod for the treatment of generalized myasthenia gravis. Escritigimod subcutaneous is on track to be the first of our wave-free potential partner launches with potential U.S. approval anticipated in 2023. Escritigimod is an intravenous drug which has the brand name Vivegard. It's Argenix's flagship product, and it has been developed as an IV and a sub-Q for multiple autoimmune disease indications. Analysts project multi-billion dollar revenue potential for F-cortisumab. As the intravenous version, F-cortisumab has been approved and launched in the U.S., Japan, and as of September, also in Germany, for the treatment of adult patients with generalized myasthenia gravis. On their recent third quarter call, Argenix noted strong physician and patient demand for Viagard and reported total quarterly net product revenues of $131 million with 2,000 patients on treatment. In addition to the already submitted BLA application for myasthenia gravis, we are excited to be partnering with Ergenix to evaluate F-protegemod subcutaneous within hands in five additional autoimmune indications and expect multiple data readouts projected in 2023, including data in idiopathic thrombocytopenic purpura, chronic inflammatory demyelinating polyneuropathy, and also pemphigus. I'll move now to Roche. Roche is our most experienced partner with Enhance, and we're delighted that two of our four Wave 3 opportunities are with Roche. These are Decentric Subcutaneous and Aquavis Subcutaneous. Recently, Roche reported that their IV Decentric revenues increased 10% to 2.7 billion Swiss francs for the first nine months of the year, demonstrating continuous strength for this important product. We're looking forward to U.S. and European regulatory submissions for Roche's Decentric with Enhance. Supporting this, in August, Roche announced that its Phase III study evaluating the subcutaneous formulation of dicentric or tesolizumab was enhanced in patients with advanced non-small cell lung cancer met its co-primary endpoint. The study showed non-inferior levels of dicentric in the blood when injected subcutaneously compared to intravenous infusion in immunotherapy-naive patients with advanced or metastatic non-small cell lung cancer for whom prior platinum therapy had failed. The safety profile of the subcutaneous formulation with enhanced was also consistent with IV Ticentric. Subcutaneous Ticentric, upon approval, has the potential to reduce the treatment time for Ticentric to 3 to 8 minutes as a subcutaneous delivery, down from 30 to 60 minutes for IV treatment. Moving to Ocrevus. ROSE is experiencing strong recruitment for the phase 3 trial of subcutaneous ocrelizumab or Ocrevus with Enhance and expects hotline data for this trial in 2023. Ocrevus as an intravenous treatment, according to ROSE's remarks on the third quarter update call, is currently the number one treatment in the U.S. and EU5 for multiple sclerosis, both in terms of total share and new to brand share. Total revenues for the first nine months were 4.4 billion Swiss francs. With more than 250,000 patients treated globally, Roche also commented that Ocrevus is experiencing higher persistence than other multiple sclerosis drugs. Completing the phase 3 product, BMS continues to progress with their phase 3 study of subcutaneous nivolumab, or Avivo, utilizing Enhance in patients with renal cell cancer. BMS also recently initiated a second phase 3 study of nivolumab subcutaneous with Enhance in patients with melanoma. In addition, as you may be aware, the fixed dose combination of IV nivolumab and rilatilamab, called Obduolac, is now approved in the United States and Europe for the treatment of certain patients with advanced melanoma. We look forward to the results of the phase one study of subcutaneous administration of nivolumab and rilatilamab within hands and an update on future development plans by Bristol-Mars Squibb. The cumulative revenue opportunity for the wave three products is substantial. analyst projections for IV and subcutaneous versions increasing from $19 billion in 2022 to $27 billion in 2025. Kelazan's royalties from this large commercial opportunity will depend upon the timing of approval of the subcutaneous version within the projected 2023 to 2025 time window and the speed and peak of conversion to subcutaneous. I'll move now to our Wave 4 product and slide 8. Our goal is to continue to expand the number of products in development and to advance products to later stages of development towards regulatory approval and launch. Our goal for 2022 is to support initiation of at least 10 new studies, including achieving more than six new phase two or phase three trial starts for existing enhanced partner programs and to advance two new products to enter the clinic this year. I'm pleased to report that we are on track to meet this goal. Supporting this progress, in September, Janssen initiated a phase three study of lezatrinib, platamivantamide with enhanced in patients with epidermal growth factor receptor mutated advanced or metastatic non-small cell lung cancer. Also in the third quarter, we recognized $48 million in collaboration revenue, the majority related for Samara Squibb and Roche progressing towards development events. We are pleased with the continued progress by our partners. With four products in wave three with the potential to launch beginning next year in 2023, and a robust set of 11 wave four launch opportunities, we have multiple potential growth drivers of robust future royalty revenue growth. Moving to slide nine, our acquisition of Antares further strengthened our leadership in drug delivery. In the third quarter, we had multiple productive discussions with current partners, as well as potential partners on enhanced On our current small-volume auto-injectors, and also the opportunity to collaborate on a high-volume auto-injector, enable injections of up to 10 milliliters within hands. By combining an innovative auto-injector platform within hands, we see a unique opportunity for patient-friendly, high-volume, subcutaneous treatment delivery that can be utilized across a spectrum of disease areas for both small-molecule drugs and for biologics. We currently are conducting feasibility studies and expect to have a working prototype of our high-volume auto-injector by year-end that can then be incorporated into clinical testing. Our goal remains to expand the number of companies licensing both our enhanced and our auto-injector technologies. Let me now turn your attention to our specialty business, which includes Zyastad, Zalando and Nocturna. We remain focused on accelerating growth of diastate, our weekly, virtually painless subcutaneous testosterone replacement treatment, which is delivered by autoinjector. Every month, we are achieving new weekly high average prescription performance and believe there is still a significant opportunity to grow our share of the total testosterone replacement therapy market. To dimensionalize this, each market share point represents more than $20 million in incremental sales. With a growth rate that outpaces the overall testosterone replacement therapy market, our plan is to continue to switch patients from intramuscular injections, which can be associated with pain and can require physician or healthcare practitioner administration. Intramuscular testosterone represents about 75% of the approximately 8.5 million annual testosterone replacement therapy prescription market volume to date. We also recently launched Telando, our twice-a-day oral testosterone replacement treatment. Our access team remains focused on gaining and expanding coverage by payers for Telando. We expect that our negotiations with the pharmacy managers will be similar in duration to other commercial launches, which can take 6 to 12 months until access is established. I'll move to slide 10 now. Before I hand the call over to Nicole, let me reiterate our commitment to our strategic growth and capital allocation priorities. In summary, we expect to enhance our growth by investing in the growth of our drug delivery business and our commercial business. We continue to return capital to shareholders with our share buyback, and we will also continue to seek opportunities for external growth, noting that our current focus remains on driving operational excellence of the Antares acquisitions. I'll now turn the call over to Nicole to discuss our third quarter financial results. Nicole?
spk08: Thank you, Helen. I'll begin on slide 11. We are excited to report our first quarter reflecting a full quarter contribution from the Interiors Acquisition, which was accretive to Q3 revenue and non-GAAP EPS. We continue to project that the Interiors Acquisition will be accretive to revenue and non-GAAP EPS for the full year of 2022. Through this acquisition, we added a new platform technology in commercial products that adds to revenue and can extend the durability of our revenue while being accretive in the first seven months. Total revenue for the third quarter was $209 million compared to $115.8 million in the prior year period. The year-over-year increase of 80% was primarily driven by an increase in royalty revenue and the addition of product sales as a result of the Ontario's acquisition, as well as an increase in revenues under collaborative agreements due to milestones recognized from BMS and Roche. Royalty revenue for the third quarter was $99.6 million, an increase of 70% compared to $58.6 million in the prior year period. The year-over-year increase was primarily driven by continued strength in uptake from Janssen's subcutaneous Darzalex utilizing enhanced. Cost of sales for the third quarter were $47.3 million, compared to $18.6 million in the prior year period. The year-over-year increase was primarily driven by an increase in product sales as a result of the Ontario's acquisition, including adjustments to reflect the amortization of the inventory step-up at fair value. research and development expenses for the third quarter were $16.7 million compared to $8.5 million in the prior year period. Selling, general, and administrative expenses for the third quarter were $34.5 million compared to $13.2 million in the prior year period. The year-over-year increase in R&D and SG&A expenses was primarily due to the Ontario's acquisition and an increase in compensation expense related to the combined larger workforce. Operating income was $83.3 million compared to $75.6 million in the prior year period. Q3 2022 includes the impact of amortization of intangibles of $27.2 million related to Dentary's acquisition. On a GAAP basis, diluted earnings per share was 44 cents compared to $1.48 in the prior year period. On a non-GAAP basis, diluted earnings per share was 74 cents compared to 55 cents in the prior year period. When comparing to the prior year, it's important to note that 2022 is our first year of recording income tax expense, which impacted current period GAAP and non-GAAP diluted APS by 9 cents per share. In August, we completed the sale of $720 million convertible notes. We used the proceeds to refinance our floating rate secured bank debt and replaced it with unsecured 1% coupon notes. We also repurchased a majority of the remaining 2024 notes that were significantly in the money. We continue to have access to pro rata bank debt through our revolving credit facility. In August, we increased the size of the revolving credit facility from $350 million to $575 million. Our balance sheet remains strong with 3.3 times net debt to EBITDA ratio as of September 30, 2022, which we expect to reduce to less than 3.3 times by the end of the year. We continue to execute on our previously announced three-year, $750 million share repurchase program, inclusive of the $150 million accelerated share repurchase initiated in December of 2021, which concluded in June. In the third quarter, we repurchased 2.1 million shares for $90 million. We also entered into an ASR to repurchase $110 million and took initial delivery of 2 million shares for a total of $350 million repurchased under the plan to date. With our 2022 repurchases, our share buyback program have resulted in the repurchase of 30.3 million shares since 2019, positively impacting Q3 2022 non-gas EPS by 14 cents. Moving now to slide 12. Based on the contributions of Ben Perry's transaction and strong year-to-date results, as well as the latest information from our collaboration partners and planned expenditures for the year, we are reiterating our guidance for 2022. As disclosed in our second quarter earnings call, we expect total revenues of $655,685,000,000 for the full year 2022. This includes the projected revenue contributions from the Ontario business, which is expected to contribute $115 million to $125 million to the full year guidance. We expect revenue from royalties to increase by more than 70% over revenue from royalties in 2021 to approximately $350 million to $360 million. Due to an acceleration in some Wave 3 and Wave 4 milestone revenue that we had expected in Q4 and have now recognized in Q3, we have achieved the vast majority of milestones expected in 2022. Collaboration revenues for 2022 are expected to be lower than the levels we achieved in 2021, based on the latest updates for expected timing of partner milestone-bearing events. Product sales from 2022 are expected to increase from 2021 due to the contribution of sales from the Ontario's acquisition. We expect operating income of $240 million to $265 million, which includes one-time transaction costs of approximately $45 million and amortization of approximately $80 million related to Ontario's acquisition. Adjusting for these costs, we expect adjusted operating income of $365 million to $390 million. We expect GAAP diluted earnings per share of $1.20 to $1.35. Adjusting for acquisition-related costs and other adjustments, we expect non-GAAP diluted earnings per share to be $2.10 to $2.25. Representing an increase a 5% to 12% over 2021 non-gas diluted earnings per share. With that, I'll now turn the call back to Helen.
spk07: Thank you, Nicole. As you heard today, we are continuing to build on the momentum for Enhance and our auto injector and commercial business. We achieved a new all-time high for royalty revenue of nearly $100 million in the quarter. We achieved a record $209 million in total revenue in the quarter. and our acquisition is being validated by the progress being made in developing a differentiated large volume auto injector plus enhanced which is projected to expand our subcutaneous offerings to current and new partners and to extend the durability of our royalty revenues you'll hear more of this in 2023 the acquisition also accomplished our goal of diversifying our revenues with the product sales from our small-volume auto-injector agreement and Zystec contributing to our third quarter revenues. I'll close by thanking our Halos MP and our partners and collaborators for the strong progress made during the quarter. Thank you all for joining us today, and with that, we'd be delighted to take your questions. Operator, would you please open the call for questions?
spk05: At this time, I would like to remind everyone, in order to ask a question, please press star 1. Our first question comes from Michael DeFiore with Evercore ISI. Your line is open.
spk10: Hi, guys. Thanks so much for taking my question, and congrats on the quarter. Just three for me. Number one, on the last call, you mentioned that Halo was going to reach out to potential partners to promote your new suite of auto-injector offerings. Any color on the progress made or outcomes achieved on this front My second question is, just thinking through the subcutaneous Ocrevus commercial opportunity, you know, granted that Casimta from Novartis is administered sub-Q once mostly, doing about half the sales and volume of that of IV Ocrevus. And my question is, should we expect a similar trajectory for subcutaneous Ocrevus, or would sub-Q Ocrevus's potential less frequent dosing really matter here and boost sales in that regard? And My last quick housekeeping question is that beginning a lot of questions from investors on the potential impact to Halo, assuming that McKenna will be pulled from the market. Thank you.
spk07: Thanks, Mike. I'll begin with the update on the reach out to partners and potential new partners actually on the autoinjectors and the autoinjectors plus enhanced. I can say that we are engaged in multiple calls and there is a lot of interest, particularly on the higher volume approach as there is no way to deliver volumes of 5 mLs and above today. using an auto injector so um i can just say the conversations are going well there's interest there's good recognition this is a differentiated approach um and and stay tuned as we continue to work on our prototype and hopefully next year in a position to move forward into more um in vivo testing um all the effectiveness of our new auto injector Moving to subcutaneous Ocrevus, I think if we think about the opportunity here, Mike, I mentioned on the call that IV Ocrevus globally is now a $4.4 billion black brand. Patients who are receiving that go in and get an infusion, which although it's sped up over the years, if you actually look at some slides Roche put together, the patients are required to be in the infusion suite for many hours. And I think the way Roche has positioned this as an option for those patients perhaps because they don't want to spend time in the infusion suite or the infusion suites are busy for those patients instead to receive the subcutaneous version of the drug. And so just going down to minutes instead of these hours, I think it's going to be very meaningful for patients with MS, which obviously is a lifelong condition. So we're very excited about that. And if you listen to the Rose calls, they certainly are saying some very positive things about it as well. On McKenna, obviously, we are aware that there was a negative vote. There's been no final decision with regard to that. What I can say about McKenna is it's a very small contributor to the Halazime revenues, and so it will not have any impact on our performance in 22 or 23, whatever the decision is.
spk10: Got it. Very helpful. Thanks so much.
spk05: Our next question comes from Jessica Phi with J.P. Morgan. Your line is open.
spk04: Hey, guys. Good evening. Thanks for taking my questions. On the large volume auto-injector, can you help us understand the timelines or next steps that need to happen between achieving a working prototype and bringing the product to market? And then with Dorsalex FastPro U.S. conversion now at 85%, How do you think about the realistic peak conversion from here and the timeframe it could take to get there? And then lastly, operating expenses, now that we've got a full quarter with Antares in the mix, how should we think about the run rate for OPEX as we look ahead to 2023? Thank you.
spk07: Yeah, I'll start with the first, and then I'll turn it over to Nicole for OPEX. So the large volume autoinjector working prototype at the end of this year, as we talk with different companies, each of them will have a slightly different need as it relates to the autoinjector. So our goal is to start working with one or more companies to then move forward into getting into the clinic and testing the autoinjector, having further developed it. So there'll be a period of further development, Jess, just to get it right for what that partner needs. and then move into clinical development. If this is a product that a partner is already sub-Q and they want to move it into an auto-injector, perhaps today they have a pre-filled syringe and they want an auto-injector, that we estimate will be a pretty straightforward and rapid path because we'll just be seeking to demonstrate non-inferiority. If this was an intravenous drug that the partner wants to move to sub-Q with auto-injector, think of that being more like the pathway for enhanced, phase one study to find the dose, and then a phase three study to demonstrate non-inferiority. And just based on conversations we're having, we believe both those pathways are possible, certainly with the interest being expressed by companies, both sub-Q to auto-injector and IV to sub-Q with auto-injector conversion. Second question with regard to Darzalex 85%, You know, it is hard to estimate just how high it will go. But when you think about the value proposition here where our patients have the option to get three to five minutes sub-Q injection as opposed to a often four plus our IV infusion, we certainly think there is a lot of continued growth possible in here with only a few patients we think electing to remain on the IV, perhaps because they like the community of the infusion suite. And so we do think over time we're just going to continue to see the conversion rate increasing and can't put an estimate on it, but conversion will continue to grow beyond the 85% in the US and the estimated 80% outside the US. And I'll just also say we're excited by the growth of the overall brand. I mentioned on the call that in the third quarter, revenue grew 38% on an operational basis to $2 billion. That really is remarkable, and it's in part because of this increased penetration into the front line that the sub-Q version, based on Janssen's comments, is enabling, which is a large population, but importantly, these patients stay on therapy. So the growth is going to come from share penetration, but also by the fact the overall brand is growing. So we see future growth, absolutely. And I'll turn it to Nicole for the operating expenses.
spk08: Yeah, thanks, Jess. On the operating expense side, what I can say is you will have seen that Q3 is a bit more representative of our go forward run rate now being the first quarter, the first full quarter with the combined entities. Looking at 2022, thinking about next quarter, it is a good representation. One thing that just comes to mind quarter over quarter looking into next quarter is is just a little bit of uptick as we filled some headcount vacancies this quarter. So we'll see the full impact of that in next quarter. And with regards to 2023, more to come there. We have not provided our guidance yet for 2020, excuse me, for 2023. And we plan to do so early next year.
spk05: Our next question comes from David Reisinger with SVB Securities. Your line is open.
spk09: Thanks very much. So I have a couple questions, please. I guess first, I wanted to ask about slide eight, if that's okay. I was hoping that you could just explain that slide in some detail so that I understand what you're trying to convey there and where things currently stand in early November.
spk07: And David, just to confirm, slide eight, just to make sure our numbering is working the same, this is the wave four product status?
spk09: So the title of slide eight is expected in 2022, at least two new product candidates to enter clinic and over six new phase two slash three starts. So I was just wondering in light of that heading, which of those have been disclosed to date and completed to date and what needs to happen over the next, I don't know, less than 60 days?
spk07: All right, perfect. So we can say that in terms of this new Phase 2-3 start, we're very pleased in this call to have noticed that Ami Bantana has moved into Phase 3 clinical testing, as you see listed there. We can also say that at the beginning of the year, From a phase one perspective, on this slide, we saw N6LS, as well as the Shugai drug, which are at the bottom of the slide, move into phase one clinical testing. And then if we take a look at, and maybe all the slides actually are not in this deck, so I do apologize for that. The other studies actually are in the wave three launches. So thank you for catching that, David. And when we post this, we actually have both slides there, so I don't actually know why we're missing our Wave 3. But that will just give you a sense of the products that have moved forward, and we'll need to make sure that we have this all set in the deck that we will provide.
spk09: Okay, thank you. And then just a couple of other questions. So congrats on the imivantumab advance into Phase 3. Just so that I understand your disclosure, how was that Janssen test?
spk07: program previously disclosed by the company what was it named or was it just uh an unidentified j and j program i just don't know how you you handled that disclosure previously so um and we work with our partners on their preference for how things are disclosed in our sec uh filings like uh as an example um our um our k and q um it was disclosed as ambivalent um in our uh presentations for earnings polls, it was undisclosed because, again, we work with our partners and their preference, but it's been disclosed since the beginning in our SEC filing documents.
spk09: Okay, that's very helpful. And then finally, what should we expect the company's normalized non-GAAP tax rate to be in 23 and beyond?
spk08: So David, we haven't provided that level of guidance and out to 2023. What I can say about 2022, and you'll have seen in our results for this quarter, our effective tax rate is about 19%. We did have the ability to reduce that a little bit this quarter, looking at the combined entities and specifically our state tax obligations. So that's the expectation for this year. And we're looking forward to sharing more on next year at a later date.
spk09: Okay. Thank you very much. Congrats on the progress. Thank you, David.
spk05: Thank you. Thank you. Our next question comes from Jason Butler with JMP. Your line is open.
spk00: Hi, thanks for taking the questions. I just had two. Helen, you spoke about the fact that there's interest in both the auto injector as well as combining the auto injector with enhanced. Is there, you know, on balance, to what extent is the interest in one bucket versus the other? And then secondly, just on the specialty business, can you talk about, you know, commercial integration and how you think about getting the specialty business to break even. Do you think you can do it with the current product portfolio alone, or are there strategic things you're thinking about, including bringing in additional products into that business? Thanks.
spk07: all right yeah i i would say that on balance there there is more um interest and i think excitement with regard to enhance with the large volume auto injector frankly because that's not something that is available in any format for for our partners on the marketplace today um small volume auto injectors there are other versions we do not think they're as differentiated or as customizable as ours But where the novelty and innovation is coming is the ability to deliver up to 10 mLs rapidly via autoinjector, which is what we are seeking to develop with high volume, Jason. So definitely the high volume within hands getting the greatest interest. And with regard to specialty, I commented on the call that the testosterone market is a growing market and a large market. And every 1% share we can gain with our products is about $20 million. And so there absolutely is a path, and it's our goal to be able to break even on this just simply with the products that we have in the portfolio today today. Definitely a lot of opportunity and liking the recent growth we're seeing in our diocese.
spk00: Great. Thanks for taking the questions.
spk05: Our next question comes from Corinne Jenkins with Goldman Sachs. Your line is open.
spk01: Good afternoon, everyone. Maybe one from me. As you think about indications that may be most appropriate for an auto injector delivery method, versus maybe indications that aren't necessarily as appropriate for an auto-injector delivery method for whatever reason. How does that compare to kind of the existing partner portfolio that you have?
spk07: Karina, as I think about that, I think if it's an indication where the patient is more likely to be administering it at home, that is a more obvious place for an autoinjector just off the top of my head. And so that can be both small molecules and biologics where the product label does not suggest there's any need for physician supervision. So perhaps areas more like autoimmune disease, neurology, psychiatry, those types of areas. However, I would also say there is nothing to preclude auto-injectors being delivered by healthcare professionals in an office setting as well, because that really is a nice, quick, convenient way to deliver drug as well. And so, yeah, I think hopefully that is helpful. Just to like say anything can be delivered via auto-injector, we believe, but I would say think about it both as an at-home delivery, which was probably areas outside oncology, but even in an in-office setting, perhaps areas like oncology, it might be more suitable there.
spk01: Okay, helpful. And then can you just frame for us some of the potential drivers for subcutaneous adoption in the context of what's a pretty competitive PD-1, PD-L1 landscape, and just any context that you can provide there would be helpful.
spk07: Yeah, we certainly are excited about the progress we're seeing with both Tocentric making progress and Updivo making progress to have sub-Q versions. You know, the way I look at it, we start first with what the company's strategy is. And both Roche and Versil have talked about the importance for patients in reducing the treatment burden, which the shorter sub-Q would do. The opportunity to combine drugs, BMS is doing that, obviously, with Updivo and Relatlamab, further reducing the burden. And importantly, competitive differentiation. It is very clear that everybody is moving towards more convenient delivery of check point inhibitors. And obviously, R sub Q is enabling that. I think the next comes into the patient benefit. Is there any benefit that even goes beyond convenience like we've seen with some of our other products? And so we believe that the positioning of the sub-Q products within HANS is going to place both Bristol and Roche in a very nice position against the competition in PD-1, PD-L1, and importantly, really do a lot to support patients by reducing the burden they're going through as they're receiving their cancer therapy.
spk01: Okay, thanks. And just a quick point of clarification, when you have the combinations like nivolumab and rilatilumab, Are those in a single co-formulation within HANZ or are they two separate autoinjectors?
spk07: That one is the, just like Fezgo, it's the two drugs within HANZ in a single index.
spk01: Great. Thank you.
spk06: Again, if you would like to ask a question, please press star 1. We have reached the end of our question and answer session.
spk05: I'll now turn the call back over to Helen for closing remarks.
spk07: Thank you very much, everybody. As you've heard, we're very excited with the continued momentum of Enhance, also our auto injector progress, as well as our commercial business. We look forward to providing updates next quarter over the continued success and growth of Halazine. Thank you.
spk05: This concludes today's conference call. You may now disconnect.
Disclaimer