Halozyme Therapeutics, Inc.

Question, press star one again. Please note, this event is being recorded. I'll now turn the call over to Tram Bui, Holozymes Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you, operator. Good afternoon, and welcome to our third quarter 2024 financial and operating results conference call. In addition to the press release issued today after the market closed, 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, Hale-Assam's President and Chief Executive Officer, who will provide an update on our business, and Nicole Labrosse, our Chief Financial Officer, will review our financial results as well as our outlook. On today's call, we will be making forward-looking statements as outlined on slide two. I would also 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. Certain 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 Dr. Helen Tworley.

Thank you, Drummond. Good afternoon, everyone. Let me start in slide three. I am very pleased to report we delivered strong third quarter financial results with a 34% increase in total revenues to reach an all-time high of $290 million in the quarter. This was largely driven by royalty revenue, which increased 36% to another record amount of $155 million. This performance reflects the continued expansion and broadening of adoption of our enhanced drug delivery technology with continued strong growth of Darzalex subcutaneous Fezgo, and FiveGuard High Trullo. Based on our strong year-to-date performance, we are raising our total revenue, our royalty revenue, adjusted EBITDA, and non-GAAP earnings per share guidance ranges for the full year. Notably, this year we now expect to deliver high double-digit revenue growth of 17% to 23%, and an impressive adjusted EBITDA growth of 40% to 47%. Nicole will go into more detail on this in a moment. Operationally, it was also another strong quarter. Two current partners nominated new targets for enhanced under expanded licensing agreements, adding new revenue in terms of milestones and reinforcing the value of our leading drug delivery technology. We've also continued our focus on securing new enhanced deals and also new agreements for our small and our high volume auto injectors with discussions continuing and advancing. Roche, one of our most tenured partners, gained two significant regulatory approvals, with the FDA approval for concentric subcutaneous with enhanced and for ocrebit subcutaneous with enhanced. And adding to this, multiple partners continue to expand their geographic approvals and advance their clinical development programs. These achievements are key drivers of our current and future growth trajectory. They reinforce our leading position in rapid large volume subcutaneous drug delivery and illustrate the well-proven success and predictability of our platform technology. I'll now move to slide four, and we'll provide some more details on these recent accomplishments. In September, we were delighted to announce two highly anticipated partner approvals, which reinforce Enhance's track record of 100% phase three to regulatory approval success. The U.S. approval of ROCHA's two centers Hybrisa with Enhance represents the availability of the first and only subcutaneous anti-PD-L1 cancer immunotherapy. Approval was granted for all of the adult IV-tocentric indications, with treatment delivered as an approximately seven-minute subcutaneous injection. Roche also received U.S. approval of Ocrevus Zinubil with Enhance, which is our eighth partnered product approval, and further extended Enhance's reach into neurology. With Ocrevus Zinubil, Multiple sclerosis patients can now receive their treatment as a 10-minute subcutaneous injection given twice a year compared to a multi-hour treatment for the intravenous also given twice a year. This dramatic simplification of treatment also creates the opportunity for patients to receive their treatment outside an IV infusion facility potentially closer to their home. These two recent approvals add to the significant growth opportunity we have right in front of us building on and adding to the recent European launches of Ticentric and Ocrevus subcutaneous with Enhance. Let me move now to the partner agreement expansion. Enhance is the gold standard for rapid subcutaneous large volume drug delivery. This has been established over the last 10 years as a result of the strong safety track record and the unmatched history of global regulatory approvals and commercial success. This success is supporting productive conversations with existing partners who have experienced firsthand the success they can achieve with Enhance. We're pleased that this has resulted in five new target nominations in the quarter. In early October, we announced that Ergenix expanded their agreement for the exclusive license to Enhance by nominating four additional targets. Based on this expansion, Ergenix has now exclusively licensed Enhance for a total of six targets including Vivecar Hytrulo. As part of the agreement, Argenix will make a $30 million payment to Halosim for the four new targets. There are potential future milestone payments related to development progress, regulatory approvals, and sales attainment of up to $85 million per new target. We are very excited to expand our relationship with Argenix, who is an innovative leader in immunology. As their partner of choice for rapid large volume subcutaneous drug delivery, we appreciate their patient centric mission that is so closely aligned with our own commitment to approving the lives of patients through our innovative drug delivery technologies. In the quarter, we've also expanded their existing global collaboration and licensing agreement, which gives them exclusive access to our enhanced drug delivery technology for one additional undisclosed target. Now with that overview, I'll move now to discuss the progress of our milestone and royalty generating subcutaneous commercial products, starting with Johnson & Johnson's Darzalex on slide five. In the quarter, worldwide sales for Darzalex increased almost 23% on an operational basis to represent the first asset in the J&J portfolio to reach $3 billion in a single quarter. Darzalex growth was primarily driven by share gains of four points across all lines of therapy, with 7.7 points of growth in frontline setting, as well as continued market growth. With conversion to Darzalex FastPro within hands exceeding 90% share of sales in the United States, and with very high conversion rates outside the United States, Subcutaneous Darzalex is the driver of this remarkable continued strong Darzalex growth. Further expanding Darzalex Subcutaneous Indications and Opportunity, During the quarter, J&J announced additional new approvals and regulatory submissions. U.S. and European approval were recently received for an additional indication for Darzalex with enhance in newly diagnosed multiple myeloma patients who are eligible for autologous stem cell transplant in combination with bortezomib, lenalidomide, and dexamethasone. The company also announced the submission of a supplemental BLA to the Food and Drug Administration for approval of a new indication of Darzalex Faspro as part of a quadruplet regimen for the treatment of adult patients with newly diagnosed multiple myeloma for whom autologous stem cell transplant is deferred or who are ineligible. With that, I'll now turn to Roche's Fezgo, which is shown on slide six. Fezgo, which is a fixed combination of Progetta and Herceptin within HANS, continues to demonstrate excellent growth momentum. Sales increased 58% to 1.2 billion Swiss francs for the first nine months of 2024. Uptake remained strong as additional countries launched with 55 countries now launched. Conversion of Progetta has also increased to 43% in those countries. Fesco is in a strong trajectory and is well positioned to reach and exceed 50% conversion by 2026. Also shown in the slide is updated analyst revenue consensus for Fezgo. With the strong growth and momentum I've just discussed, Fezgo is now projected to become a $3.5 billion brand in 2028. As all of this $3.5 billion in sales represents subcutaneous sales on which Halazime is paid in mid-single-digit royalty, Fezgo represents another strong growth opportunity for Halazime. Moving now to additional highlights on Roche's two most recent launch products, which are shown on slide seven. I'll start with Ticentric Hybrisa. Following European approval in January of this year, we were very pleased that similarly to Europe, the U.S. approval was granted for all of the adult IV indications. Ticentric Hybrisa, co-formulated with Enhance, allows for an approximately seven-minute subcutaneous injection compared to 30 to 60 minutes for the IV infusion. Dementializing the opportunity, Roche reported Tocentric revenue of 2.7 billion Swiss francs for the first nine months of 2024. Analysts predict that Tent-Centric will achieve $5 billion in 2028. Roche has stated that they expect the majority of the sales of Subcutaneous Tocentric will come from conversion of the intravenous portion. Let me move now to Roche's Okavis Renewal. I'm particularly excited for the U.S. launch following the Food and Drug Administration approval in September. This approval follows closely on the European approval, which occurred in June of this year. Ocrevus' maneuver with Enhance expands our reach in neurology and offers multiple sclerosis patients a treatment administration time of just 10 minutes via subcutaneous injection with Enhance, which compares to multiple hours required for the IV infusion. The subcutaneous formulation offers patients all of the benefits that they expect from Ocrevus in terms of the strong clinical profile and every six months dosing, while easing the administration burden of receiving treatment. Ocrevus revenue increased 9% to 5 billion Swiss francs for the first nine months of the year, driven by all regions. Roche has commented on the recent quarterly call that they are confident the subcutaneous formulation within hands will expand Ocrevus' footprint in the multiple sclerosis market and represent an incremental $2 billion sales opportunity. The availability of subcutaneous also makes this possible by opening up the treatment opportunity at smaller community hospitals as an example, making it easier for patients to travel to receive treatment. WASH also sees an opportunity for patients to convert from IV Ocrevus II to the subcutaneous version. Roche has commented that they are seeing promising first signals regarding the uptake in the U.S., which is sporting market expansion. About 80% of the new starts on Ocrevus Renewal are coming from patients who are new to brand and who are not switches from Ocrevus IV. Let me move now to Ergenics and Vivecart-Hertullo, which is shown on slide eight. Argenix's ViveGuard continues to experience strong momentum in its first indication of generalized myasthenia gravis. Argenix recently commented that they expect subcutaneous ViveGuard will grow in importance with patients, physicians, and payers. We're pleased that subcutaneous ViveGuard with Enhance is already expanding the market by bringing in new patients and providers to ViveGuard, with patients switching from oral medications to subcutaneous, including patients who don't have easy access to an IV infusion center. Moving now to chronic inflammatory demyelinating polyneuropathy, the second indication. While the launch is recent, Argenix has commented that with the unmet medical need, they are happy to see high awareness for the subcutaneous option amongst patients and physicians. Argenix expects to create fast and broad access for CIDP patients similar to what they accomplished in their launch in myasthenia gravis. We're also looking forward to the approval of a pre-filled syringe for Vivegard-Hertrula with Enhance, which will introduce a more convenient administration option for patients with GMG and also CIDP. The pre-filled syringe filing has a BEDUFA action date of April 10th, 2025. Energenics has also continued to expand its presence in additional regions, Most recently, its BLA for F-criticimod subcutaneous within hands for GMG was approved in China, increasing number of approvals to more than 25 countries globally. Given the strong launch of Viveguard, multiple analysts currently project total sales to reach almost $5 billion in 2028 for just the first two approved indications. We believe there is considerable opportunity to increase the total addressable market for Vivecart as Ergenix continues to advance its pipeline and the product strategy by expanding to additional indications over time. We're pleased to be supporting two registrational studies evaluating Vivecart Hytrulo within hands administered by pre-filled syringe in thyroid eye disease, an indication where there is still a high unmet need. In addition, in October, Argenix initiated a phase three study evaluating Vivegard-Hertullo with Enhance for ocular myasthenia gravis. And also recently, Argenix initiated a phase two trial in kidney transplant recipients with antibody-mediated rejection. Now, beyond Vivegard-Hertullo, Argenix has a robust pipeline of multi-indication assets, including mPasipirabart or ARGX117. As an innovator committed to improving patients' lives Argenix was at the forefront of recognizing the benefit of subcutaneous delivery. The early success of Vivecart and Trullo is a strong proof point in the value proposition of enhanced enabled subcutaneous delivery. And we are very pleased to have expanded our agreement with Argenix from two to six nominations and to be their partner of choice for rapid large volume subcutaneous drug delivery. Let me now move to slide nine for an update additional products that are awaiting regulatory approval and launch. I'll begin with Bristol-Myers Squibb Nivolumab Subcutaneous. Bristol received regulatory filing acceptance in the U.S. last quarter for Nivolumab Subcutaneous with Enhance with a BDUFA action date of December 29th of this year. The European submission is also under review. Once approved, this would represent our ninth approved product with Enhance. Nivolumab subcutaneous within hand has the potential to benefit both patients and physicians with a less than five-minute treatment administration time. Obdivo, which is the brand name for IV nivolumab, is currently $9 billion in annual sales. Bristol has stated that it projects the granted subcutaneous indications will represent 75% of these total sales. They also stated they expect to convert between 30% to 40% of the IV nivolumab to subcutaneous nivolumab. Johnson & Johnson's amifantamab subcutaneous width enhancer is also pending regulatory approval and is currently under priority review with the FDA. Approval would represent our 10th launched partner product. Earlier this year, exciting data from the PALOMA3 trial for amivantamab subcutaneous was presented at ASCO. The presenters highlighted a five-fold reduction in infusion-related reactions as compared to the intravenous, a five-fold reduction in treatment time, and also they presented the results of an exploratory analysis, which revealed an improved overall survival rate for the subcutaneous treatment arm. During their last earnings call, J&J highlighted that they believe Riborvan, which is the brand name for amivantamab IV, is one of the three largest underappreciated assets in their portfolio in terms of revenue projections versus what analysts are currently estimating for the back half of this decade. What is clearly exciting is that the five recently launched and soon to be launched products represent almost $35 billion in total brand opportunity. according to analysts and company estimates. This represents an even larger opportunity than the DARS-like subcutaneous and FESCO opportunity, where analyst projections are $20 billion in 2028. As Halosam receives on average amid single digital royalty and subcutaneous sales, you can clearly see how these products will add significant revenue over the next years and result in our projecting to achieve greater than $1 billion in royalty revenue in 2027. Let me now move to slide 10, where I'll mention a few highlights and some of our future potential launch products. Bristol-Myers has continued to advance their phase three study for nivolumab plus rilatilumab with enhance in first line non-small cell lung cancer. The IV combination is already approved and has a brand name of Duolag. Takeda also continues to advance their phase three study with TAG881. their 20% IDG product candidate, which is progressing in a phase three trial for the treatment of primary immunodeficiency. With all of this continued strong growth of our approved product, the exciting launches that are just beginning, and the regulatory and clinical advancements, we are well positioned to continue to deliver double digit top and bottom line growth in the coming years. Let me now transition to slide 11 and I'll make some comments on intellectual property. Our extensive patent estate supports the durability of our revenue streams and we continue to take actions to extend and protect our IP portfolio. In June, we were granted a new patent for Enhanced by the European Patent Office, which extended patent coverage of our technology in that region to March the 6th of 2029. This resulted in an update to our guidance we currently have a similar pending reissue patent in the United States that we're confident will be granted. We look forward to providing an updated financial outlook if that reissue patent is granted with similar claims. And as a pioneer in developing human hyaluronidases for subcutaneous administration of medicines, we were very excited to introduce our MDase patent portfolio that broadly covers modified human hyaluronidases. Halazan created the first soluble human hyaluronidase that was active at neutral pH, which we call Enhance. Notably, we did not stop there. We continued to innovate and experiment. And over many years and thousands and thousands of experiments, we created a large and comprehensive library of modifications, and we characterized those modifications. This groundbreaking work and other research projects created the technology protected by the MDase patents which are distinct from the patents that cover the truncated human hyaluronidase that we license as our enhanced technology. Now, why are we discussing the MDase portfolio now? There really are two key reasons. Firstly, we've recently been issued multiple new MDase patents, bringing the total granted and pending patents to nearly 100. And we wanted to distinguish the MDase patents from enhanced to avoid any confusion. Secondly, as an intellectual property licensor, we always are looking for new opportunities to commercialize our discoveries and to enable others to bring forward new solutions and therapies that help patients. The enhanced technology is the de-risked gold standard for conversion of IV therapies to subcutaneous administration. However, we do recognize that not every drug and biologic supplier might be able to or select to use enhanced. but they do wish to utilize or are utilizing Halazine's pioneering, modified hyaluronidase intellectual property. It's in those cases that the MDase patents are now available for license and would open up new opportunities for Halazine that do not impact our enhanced business. I'll now hand the call over to Nicole, who will discuss our financial results in more detail.