Halozyme Therapeutics, Inc.

I will now turn the call over to Tram Bui, Halozyme's Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you, Operator. Good afternoon and welcome to our fourth quarter and full year 2024 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. Leading the call will be Dr. Helen Torley, Hale-Zyme's President and Chief Executive Officer, who will provide an update in 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 risk 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 Toiley.

Thank you, Tom, and good afternoon, everyone. Our strong fourth quarter results concluded what proved to be an exceptional year for Halazim. I will start by recapping our record-breaking performance in 2024. Total revenue exceeded $1 billion for the first time, growing 22% over prior year. We also raised our financial guidance twice during the year, and I'm pleased to report that four-year results exceeded our raised guidance for royalty revenue, adjusted EBITDA, and non-GAAP EPS. We estimate that 1 million patients have now received drugs delivered subcutaneously with Enhance, establishing an unsurpassed and we believe unsurpassable safety database to inform regulators and new partners. Importantly, multiple impressive milestones were achieved in 2024 that will accelerate our near-term and long-term growth and extend the durability of the royalty revenue streams. Four major products or new indications within HANCE received approval in a major region, adding future growth. Current partners nominated five new targets to advance into the clinic for subcutaneous development, expanding opportunity. We extended the patent protection of Enhanze in Europe out to 2029 with issuance of a new patent with the effect of maintaining our royalty rate for Darzalex subcutaneous and Amivantamab subcutaneous unchanged at the mid single digit rate for the next five years until March of 2029. And we also remain confident in the opportunity for the US patent reissue, which will have the same effect of extending full royalty rate, in this case, from September of 2027 to March of 2029, noting that this is currently not reflected in our five-year financial outlook. This remarkable financial and operational performance, plus our continued business expansion, will deliver strong revenue and earnings growth for many years to come. Moving now to slide four, I'll just call out a few financial highlights before I provide more details on the key business drivers. Our strong fourth quarter performance resulted in record full-year 2024 results. Strong royalty revenue growth of 27% in 2024 resulted in $571 million in royalty revenue, exceeding our raise guidance, and that was the key driver of total revenues exceeding $1 billion. And the strong revenue performance coupled with our careful management of expenses resulted in 2024 net income increasing an impressive 58% year over year to $444 million. As we discussed in January on our 2025 and multi-year guidance call, the momentum and opportunity we have across our business gives us confidence that we are firmly on track to deliver another record year and to meet our targets in 2025 and beyond. I'm pleased to reiterate our 2025 guidance, including for total revenue, where we project $1.15 billion to $1.225 billion, representing growth of 13% to 21% year-over-year. This continued strong growth will be primarily driven by three products, DARS-Lex Subcutaneous, Fezgo, and 5-Gar Hytrulo. Let me begin with DARS-Lex on slide 5. For the fourth quarter of 2024, Johnson & Johnson reported worldwide sales of Darzalex grew almost 24% on an operational basis to $3.1 billion, with full-year revenue reaching $11.7 billion. We are delighted that Darzalex growth and total revenue was driven by demand for Darzalex subcutaneous within hands, which represents 95% share of total Darzalex sales in the United States. and has a similar high share of sales outside the United States too. Darflex growth was driven by share gains of over three points across all lines of therapy and importantly by six points of growth in the longer treatment duration frontline setting. Darflex now represents J&J's largest product with strong continued growth projected for many years. This growth is a result of investments Johnson & Johnson has made in new studies to increase access to Darzalex subcutaneous width enhanced for more early stage and frontline patients, further expanding the commercial opportunity. As examples, in 2024, Darzalex subcutaneous width enhanced gained US and European regulatory approval for newly diagnosed patients who are eligible for autologous stem cell transplant in a combination regimen. A supplemental BLA has also been submitted for FDA approval for Darzalex subcutaneous within hands as part of a quadruplet regimen for newly diagnosed multiple myeloma patients for whom autologous stem cell transplant is deferred or they are ineligible. And we're also anticipating US and European approval for smoldering multiple myeloma. Each of these represents a compelling growth opportunity for Darzalex subcutaneous. These advancements support analyst projections of more than $17 billion in total revenue for Darzalex in 2028, with virtually all of this coming from Darzalex Subcutaneous within hands. And recall, we project earning royalties in Darzalex Subcutaneous until 2032. I'll now move to our second key driver, which is Roche's Fezgo, shown on slide six. Fezgo is the combined therapy of Progetta, Herceptin, and Enhance, which is given in a single, seven-minute subcutaneous injection for the treatment of breast cancer. We believe Fezgo is an underappreciated asset that has been garnering growing adoption globally. In the fourth quarter, Roche reported that Fezgo grew to 500 million Swiss francs, representing an increase of 72% year over year, and reached 1.7 billion Swiss francs, or approximately 2 billion US dollars for full year 2024. Fesco had strong uptake across all regions with conversion climbing to 46% in the 55 launch countries. Roche commented that they project conversion will continue to increase and will exceed 50% in 2025. With these strong results and expectations for continued growth, Analysts project FezGo will reach $3.4 billion in revenue in 2028, all of which is subcutaneous use within HANZ. And recall, we project earning mid-single-digit royalties on FezGo until 2030. Let me now transition to Ergenix's ViveGuard and ViveGuard Hotrula within HANZ on slide 7. Ergenix pre-announced preliminary results in January, with total ViveGuard, including ViveGuard Hotrula within HANZ, fourth quarter sales reaching $737 million for full year revenue of $2.2 billion. This remarkable launch success is driven predominantly by continued growth and adoption in generalized myasthenia gravis, where Vivegard Hetrula with Enhance was approved in 2023. Vivegard Hetrula with Enhance is playing a key role in Vivegard growth by expanding the number of physicians using Vivegard, adding those who do not wish to, or who cannot administer IV infusions. The ease of use of subcutaneous delivery is also enabling Vivegardt to move earlier in the treatment paradigm, expanding the addressable population. And note that we project earning royalties in Vivegardt-Hartullo through the early 2040. Further innovations that will expand the Vivegardt-Hartullo with enhanced opportunity is projected in the United States in April of 2025. with the potential FDA approval of a pre-filled syringe treatment option for Vivecart Hertrula with Enhance for all of the currently approved indications. Halotham co-created the pre-filled syringe with Ergenix, which may allow patient self-administration in just 20 seconds. Ergenix is also expecting the pre-filled syringe to be approved in Europe, Japan, and Canada in 2025. Helazam will receive the same royalty rate on the pre-filled syringe delivery as we receive on the vial, also through the early 2040s. Let me move now to the second indication, which is chronic inflammatory delamyelinating polyneuropathy, or CIDP, which is a subcutaneous 5-part hetrula with enhanced only indication. This is an exciting new growth driver that is really just beginning following the mid-2024 approval in the United States. and the end of 2024 approval in Japan. Argenix has seen strong interest in adoption, with more than 1,000 CIDP patients already receiving Vivegard-Hartullo. The patient testimonials shared by Argenix tell a powerful story of how Vivegard-Hartullo is helping CIDP patients regain their lives. Strong progress has been made in gaining that all-important coverage and access with now 90% of covered lives having access to five-part Hirtulo for CIDP under favorable or highly favorable policies. The brand is also benefiting from a halo effect of Ergenix being able to promote CIDP next to generalized myasthenia gravis to open up new prescribers. Already, 25% of prescribers for CIDP were physicians who had not previously been seen by Ergenix. In 2025, Argenix projects to continue on this powerful trajectory and also to expand the number of global approvals in CIDP. And not only are we just at the beginning in terms of these two indication launches, as you can see on slide eight, Kelozyme's journey with Argenix on their next wave of innovation for ViveGuard highlights the many exciting opportunities for many years to come with multiple active subcutaneous programs within hands in development including in thyroid eye disease and ocular myasthenia gravis. And as we look out even further, our journey with Ergenix was enhanced in 2024 with four new nominations within hands, which creates new opportunity and reinforces our leadership position as Ergenix's rapid, large volume, subcutaneous delivery technology of choice. I'll move now to slide nine, we had three additional significant approvals in 2024 for Olkervis Zenuvel, Ticentric Hybrisa, and Updivo QVantage. Based on benchmarks, we assume it will take six to nine months in the United States and more than 12 months in Europe to achieve robust access coverage and reimbursement. Given the recent approvals, we have projected minimal contribution from these products in our 2025 revenues, with contributions becoming more meaningful in 2026 and beyond. Let me begin with Roche's Ocrevus Zenuvel, which received EMA and FDA approval for the treatment of multiple sclerosis in 2024. Ocrevus Zenuvel with Enhance allows for an approximately 10-minute subcutaneous injection, which compares with multiple hour infusions that is typically required for the IV administration time. Roche has been very consistent with their comments that they believe the subcutaneous formulation within hands will expand the addressable market and grow the brand, adding prescribers and patients who did not have access to an infusion suite. In its most recent earnings call, Roche commented that the launch is progressing very much as planned, with more than 2,500 patients on Ocrevus Zenuvo globally. In the United States, they're seeing positive signals with 50% share of new Ocrevus subcutaneous patients being naive to Ocrevus. This is great news for two reasons. Firstly, it demonstrates market expansion and growth for Ocrevus, which is being driven by subcutaneous Lenovo. Secondly, the remaining 50% is coming from early conversion to subcutaneous Ocrevus from the very large patient pool who are on intravenous Ocrevus. Focusing on market expansion and growth Roche commented that they are seeing accounts that have not used Ocrevus IV in the past who are now prescribing subcutaneous Ocrevus. With the permanent J-code expected in April and projected to accelerate uptake, Roche further commented that they are confident that Ocrevus Xenuvo represents an incremental 2 billion Swiss francs or more than $2 billion opportunity for the brand. With full-year 2024 sales reaching 6.7 billion Swiss francs, or approximately 7.7 billion US dollars, this represents a very attractive growth opportunity for Halozyme. We project receiving mid-single-digit royalties on Ogrevis and Nuvo until 2030, and at a step-down rate until at least 2034. We're also excited that rosacea-decentralized Pagbresa was enhanced in FDA approval in September of 2024. The approval was for all of the IV indications and offers patients and providers with a more convenient treatment option within approximately seven minutes subcutaneous injection. Total to centric revenue represented 3.6 billion Swiss francs or approximately 4 billion US dollars in 2024. Roche plans to drive IV to subcu conversion and believes that subcutaneous formulation will be productive off the brand. and recall that we project receiving royalties onto Centra-Cabrisa until 2040. Moving now to Bristol-Myers Squibb's Opdivo QVantage, which was approved by the FDA in December of 2024 and represents our ninth approved product within hands. I will also note that the European submission is currently under review. Bristol-Myers Squibb commented recently that they were excited for the launch and what it could mean for patients, physicians, and the durability of their immuno-oncology business, with the new subcutaneous formulation helping to extend the reach and impact of their immuno-oncology franchise into the next decade. With their sales team out in the field relaying the benefits of Opdivo Q-Vantage, Bristol shared that the early feedback has been positive for the shorter injection time compared to IV nivolumab. Initial positive feedback they highlighted is in use in the adjuvant patients, and in patients who were treated in combination with the Eurovite, such as in first-line metastatic melanoma and renal cell carcinoma. Bristol expects that 30 to 40% of Opdiva IV could be converted to subcutaneous. Similar to any launch, reimbursement dynamics are going to take time, and BMS projects conversion will accelerate in the second half of 2025 after they transition to a permanent J-code in July. Opdivo Q-Vantage represents another very attractive conversion opportunity for Halosam. Opdivo, which is a brand name for IV Nivolumab, grew 7% excluding FX in the fourth quarter to $2.5 billion and reached $9.3 billion in annual sales in 2024. Now, I may also take this opportunity to comment on Amidvantamab Subcutaneous, which would represent our 10th approved partner product. Recall, amivantamab is included in our longer-term projections, as we consider it de-risked following strong Phase III data. Recently, Johnson & Johnson announced that they had received a positive opinion from the Committee for Medicinal Products of Human Use of the European Medicines Agency, recommending an extension of marketing authorization for the subcutaneous formulation of amivantamab with enhance, in combination with the lecithrinib, in the first-line treatment of adult patients with advanced non-small cell lung cancer. The European Commission approval is typically granted 67 days after the recommendation, which would support approval in the April 2025 timeframe. We're excited for the amivantamab sub-Q potential approval and what this could mean for patients. The subcutaneous formulation of the amivantamab offers an improved treatment experience for patients reducing administration time to approximately five minutes compared to anything from two to four hours for the IV. Importantly, there is also a five-fold reduction in infusion-related reactions. Moving now to the U.S. timeline, in December, Johnson & Johnson announced that they had received a complete response letter for amibantamab subcutaneous, which was related to observations as part of a standard pre-approval inspection at a manufacturing facility. J&J highlighted that the CRL is unrelated to the product formulation or the efficacy and safety data submitted in the regulatory application, and that the FDA is not requesting any additional clinical studies. They are working closely with the FDA to bring subcutaneous amivantamab to patients as quickly as possible and are confident in a path to resolution. J&J has publicly commented that they believe amivantamab has a $5 billion revenue potential. Moving now to slide 10, we are confident in reaching our $1 billion royalty revenue projection in 2027. And indeed, we project we will exceed that. This confidence is driven by the expectation for the continued strong growth of our two lead assets, Darzalex and Fezgo, which represent a $20 billion total opportunity. And the layering of the four recent launches of Weibgart Haertsuelo, Cassandra Caipresa, Ocrevus Zenuvo, and Opdivo QVantage, plus the upcoming potential launch of adjuvantamab subcutaneous. Analysts project these five products represent an even greater opportunity in 2028 of $35 billion. I know that you agree that the near-term revenue growth to 2028 is very strong, and I often get the question, what's next? The good news is that the launched and launching products that we've just reviewed continue to provide very strong revenue post-2028, and we project several current pipeline products will contribute additional meaningful revenue post-2028 too. Let me walk you through some of the specifics which are shown on slide 11. Fesco is projected to continue to grow post-2028 and earn Halos M royalties at its full unchanged mid-single digit rate until 2030. Darth Lake's fast-growing subcutaneous is projected to remain our largest revenue driver until 2032, in Europe earning Halosam royalties at its full unchanged mid-single rate until March of 2029, and to continue to earn as royalties at half that rate until 2032. In the United States, we are confident that the pending new manufacturing IP will be issued which would also result in Halozyme earning royalties at the unchanged mid-single-digit rate until March of 2029 and continue to earn as royalties at half that rate until 2032. This is not currently reflected in our long-term guidance. Viagra Hytrulo is projected to earn Halozyme royalties for all of its indications sold either in the vial or through the pre-filled syringe at its full unchanged current mid-single-digit royalty rate until March of 2029, and then to continue to earn royalties until 2033 at a mid-single-digit rate even after a step down in the royalty rate. Royalties will continue until the 2040s after a further step down in rate. Moving to Okavis & Nuvo, this is projected to earn Halo's Emeraldies at the full mid-single digit rate until 2030, and at a step-down rate until at least 2034. And with Decentric Hybrisa projected to earn Halo's Emeraldies at its full mid-single digit rate until the 2040s, and Obdivo QVantage projected to earn Halo's Emeraldies until at least 2034, you can see why we project continued strong revenue from the current launch products beyond 2028. In addition, we're confident that the more advanced de-risk products from our pipeline will contribute revenue post-2028. For example, Optivo fixed-dose combination with Relatlamab and TAC881 are two additional de-risk revenue growth drivers post-2028. And we also anticipate additional products from our current Phase 1 pipeline, new nominations from existing partners, and from new deals will add additional royalty revenue streams. Now let me turn to the very important topic of new deals and new nominations. Our discussions continue with multiple companies regarding enhanced new nominations, enhanced new deals, our high volume auto-injector, and our small volume auto-injector. I'm going to start with some very exciting news on our small volume auto-injector. I'm pleased to announce that yesterday we signed a development agreement for our small volume auto-injector with one of our current partners for a commercial product. Moving to enhanced, Recall, we have two paths for growth. The first is gaining new nominations by current partners, and the second is through signing new deals. Beginning with the new nominations. In 2024, we made excellent progress with current partners, selecting five new targets for Enhance. In 2025, we will continue to work closely with partners to identify opportunities to select new nominations from their currently available open slots. Recall these additional new nominations, together with our current expanded pipeline, drive durability of revenue post-2029. And moving to the new enhanced deals, we are in active discussions with multiple companies. In 2025, our goal is to advance to collaboration and licensing agreements with at least one. And moving to our high-volume auto injector, our goal is to advance to a development agreement this year. I'm often asked why we've not yet signed a deal with a high-volume auto injector. What's the holdup? Our high-volume auto injector is a real innovation, which means some components are not available off the shelf. Some parts needed to be invented and designed. In 2024, we made progress with this, securing an exclusive supply for a high-volume primary container. This accomplishment has significantly de-risked the high-volume auto injector for partners and we're actively engaged in discussions with several parties. With that, let me now turn the call over to Nicole, who will discuss our financial results in more detail.