SAN DIEGO, Nov. 12, 2019 /PRNewswire/ -- Halozyme
Therapeutics, Inc. (NASDAQ: HALO) today reported financial results
for the third quarter ended September 30, 2019 and provided an
update on its recent corporate activities and outlook.
"We have transitioned our strategy to focus solely on our
high-growth, high-margin ENHANZE® drug delivery
technology," said Dr. Helen Torley,
president and chief executive officer. "With profitability
anticipated in the second quarter of 2020 and a long runway for
growth with ENHANZE®, we are in a strong position to
build value and return capital to investors."
Third Quarter 2019 and Recent Highlights Include:
- In November 2019, the Company
announced strategic actions to reposition the Company with a focus
solely on its ENHANZE® drug delivery technology
following the announcement that the HALO-301 Phase 3 study did not
meet its primary endpoint. In order to implement this strategic
shift, the Company initiated an organizational restructuring to
close its oncology operations. Headcount will be reduced by
approximately 55%, or approximately 160 positions, with over 80% of
the reduction completed in early January
2020. Upon completion of the restructuring and after booking
all related one-time charges, Halozyme anticipates becoming a
sustainably profitable company beginning in the second quarter of
2020.
- In November 2019, the Company
announced that the Board of Directors has authorized the initiation
of a capital return program to repurchase up to $350 million of the Company's outstanding common
stock over the next three years. The Board will regularly review
this capital return program in connection with a balanced capital
allocation strategy.
- In October 2019, collaboration
partner Roche nominated one new undisclosed target to be studied
utilizing the ENHANZE® technology, triggering a
$10 million milestone payment to
Halozyme.
- In October 2019, collaboration
partner Bristol-Myers Squibb initiated a Phase 1 study of
relatlimab in combination with nivolumab utilizing the
ENHANZE® technology.
- In September 2019, Roche
announced that the global Phase 3 FeDeriCa study met its primary
endpoint. The FeDeriCa study investigated a fixed-dose combination
of pertuzumab (Perjeta®) and trastuzumab
(Herceptin®) for subcutaneous administration using
Halozyme's ENHANZE® drug delivery technology in
combination with intravenous chemotherapy. Additional data from the
FeDeriCa study will be the subject of a presentation at the San
Antonio Breast Cancer Symposium in December, followed by regulatory
submissions to health authorities worldwide anticipated in early
2020.
- In September 2019, a Halozyme
collaboration partner initiated a Phase 1 study in healthy
volunteers for an undisclosed target utilizing the
ENHANZE® technology.
- In August 2019, Roche initiated a
Phase 1 study with OCREVUS® (ocrelizumab) utilizing the
ENHANZE® technology in patients with multiple
sclerosis.
Third Quarter 2019 Financial Highlights
- Revenue for the third quarter was $46.2
million compared to $25.6
million for the third quarter of 2018. The year-over-year
increase was primarily driven by higher product sales of bulk
rHuPH20 to Janssen of $20.1 million.
Revenue for the quarter included $16.6
million in royalties, which compared to $18.7 million in the prior year period. The
decrease in royalties was mainly driven by lower sales of
Herceptin® SC by Roche, partially offset by higher sales
of RITUXAN HYCELA™ in the U.S. by Roche and higher sales of HyQvia
by Takeda.
- Research and development expenses for the third quarter were
$30.5 million, compared to
$35.5 million for the third quarter
of 2018. The decline in expenses was driven by reduced clinical
trial activity as the Company approached the topline results
readout from HALO-301.
- Selling, general and administrative expenses for the third
quarter were $18.0 million, compared
to $14.9 million for the third
quarter of 2018. The increase is due to an increase in personnel
expenses related to support of the Company's oncology
operations.
- Net loss for the third quarter was $25.0
million, or $0.17 per share,
compared to a net loss in the third quarter of 2018 of $27.9 million, or $0.19 per share.
- Cash, cash equivalents and marketable securities were
$238.0 million at September 30, 2019, compared to $354.5 million at December
31, 2018.
Financial Outlook for 2019
Halozyme is updating its 2019 financial guidance ranges:
- Total revenues are now expected in the range of $195 million to $205
million, compared with prior guidance of $205 million to $215
million, primarily driven by the movement of a planned Phase
3 trial start from 2019 to 2020, offset in part, by a new unplanned
target nomination. Included in that total, royalties are expected
in the range of $67 million to
$69 million, compared with prior
guidance of $72 million to
$74 million;
- Operating expenses in the range of $255
million to $265 million, and
operating expenses excluding cost of product sales of $215 million to $225
million, both of which are unchanged from prior guidance.
These guidance ranges include anticipated one-time restructuring
costs of $25 million to $27 million that will be booked in the fourth
quarter of 2019. The restructuring costs were offset by expense
savings related to the closing of the Company's oncology
operations;
- Operating cash burn of $50
million to $60 million,
compared with prior guidance of $40
million to $50 million;
- Year-end cash, cash equivalents and marketable securities
balance is unchanged at $220 million
to $230 million.
Webcast and Conference Call
Halozyme will webcast its Quarterly Update Conference Call for the
third quarter of 2019 today, Tuesday, November 12, 2019 at
4:30 p.m. ET/1:30 p.m. PT. Dr. Torley will lead the call,
which will be webcast live through the "Investors" section of
Halozyme's corporate website and a replay will be available
following the close of the call. To access the webcast and
additional documents related to the call, please visit halozyme.com
approximately fifteen minutes prior to the call to register,
download and install any necessary audio software. The call may
also be accessed by dialing (877) 824-0907 (domestic callers) or
(647) 689-5655 (international callers). A telephone replay will be
available after the call by dialing (800) 585-8367 (domestic
callers) or (416) 621-4642 (international callers) using replay ID
number 6597916.
About Halozyme
Halozyme Therapeutics is a biotechnology company focused on
novel biological and drug delivery approaches. Halozyme's
proprietary enzyme rHuPH20 is used to facilitate the delivery of
injected drugs and fluids and potentially reduce the treatment
burden of other drugs to patients. Halozyme has licensed its
rHuPH20 technology, called ENHANZE®, to leading
pharmaceutical and biotechnology companies including Roche,
Baxalta, Pfizer, Janssen, AbbVie, Lilly, Bristol-Myers Squibb,
Alexion and argenx. Halozyme derives revenues from these
collaborations in the form of milestones and royalties as the
Company's partners make progress developing and commercializing
their products being developed with ENHANZE®. Halozyme
is headquartered in San Diego. For
more information visit www.halozyme.com.
Safe Harbor Statement
In addition to historical information, the statements set forth
above include forward-looking statements including, without
limitation, statements concerning the Company's future financial
performance including expectations for profitability and reduced
expenses, plans to implement an organizational restructuring
including anticipated reductions in employee headcount, plans to
focus its operations solely on its ENHANZE® drug
delivery technology, and the Company's plans to initiate a share
repurchase program. Forward-looking statements regarding the
Company's ENHANZE® drug delivery technology may include
potential growth of the ENHANZE® business, the possible
activity, benefits and attributes of ENHANZE®, the
possible method of action of ENHANZE®, its potential
application to aid in the dispersion and absorption of other
injected therapeutic drugs, the number of collaborative targets
actually chosen, whether such products are ultimately developed or
commercialized, whether milestones triggering milestone payments
will be achieved, and statements concerning facilitating more rapid
delivery of injectable medications through subcutaneous delivery
that involve risk and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements.
The forward-looking statements are typically, but not always,
identified through use of the words "believe," "enable," "may,"
"will," "could," "intends," "estimate," "anticipate," "plan,"
"predict," "probable," "potential," "possible," "should,"
"continue," and other words of similar meaning. Actual results
could differ materially from the expectations contained in
forward-looking statements as a result of several factors,
including unexpected fluctuations or changes in revenues, including
revenues from collaborators, unexpected delays or results of the
Company's organizational restructuring, unexpected expenditures and
costs, unexpected delays in the execution of the planned share
repurchase, unexpected results or delays in the growth of the
Company's ENHANZE® business, unexpected results or
delays in the development and regulatory review of
ENHANZE® products, regulatory approval requirements,
unexpected adverse events and competitive conditions.
Contact:
Al Kildani
Vice President, Investor Relations and Corporate Communications
858-704-8122
ir@halozyme.com
Halozyme
Therapeutics, Inc.
Condensed
Consolidated Statements of Operations
(Unaudited)
(In thousands,
except per share amounts)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues:
|
|
|
|
|
|
|
|
|
Royalties
|
|
$
|
16,609
|
|
|
$
|
18,710
|
|
|
$
|
52,669
|
|
|
$
|
59,643
|
|
Product sales,
net
|
|
29,205
|
|
|
6,269
|
|
|
43,355
|
|
|
17,553
|
|
Revenues under
collaborative agreements
|
|
416
|
|
|
577
|
|
|
46,303
|
|
|
14,434
|
|
Total
revenues
|
|
46,230
|
|
|
25,556
|
|
|
142,327
|
|
|
91,630
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Cost of product
sales
|
|
22,333
|
|
|
626
|
|
|
28,859
|
|
|
4,514
|
|
Research and
development
|
|
30,455
|
|
|
35,540
|
|
|
95,693
|
|
|
113,602
|
|
Selling, general and
administrative
|
|
17,979
|
|
|
14,864
|
|
|
53,323
|
|
|
42,773
|
|
Total operating
expenses
|
|
70,767
|
|
|
51,030
|
|
|
177,875
|
|
|
160,889
|
|
Operating
loss
|
|
(24,537)
|
|
|
(25,474)
|
|
|
(35,548)
|
|
|
(69,259)
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Investment and other
income, net
|
|
1,613
|
|
|
1,910
|
|
|
5,653
|
|
|
5,561
|
|
Interest
expense
|
|
(2,078)
|
|
|
(4,286)
|
|
|
(7,896)
|
|
|
(14,286)
|
|
Net loss before
income taxes
|
|
(25,002)
|
|
|
(27,850)
|
|
|
(37,791)
|
|
|
(77,984)
|
|
Income tax
expense
|
|
13
|
|
|
—
|
|
|
52
|
|
|
220
|
|
Net loss
|
|
$
|
(25,015)
|
|
|
$
|
(27,850)
|
|
|
$
|
(37,843)
|
|
|
$
|
(78,204)
|
|
|
|
|
|
|
|
|
|
|
Net loss per
share:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
(0.17)
|
|
|
$
|
(0.19)
|
|
|
$
|
(0.26)
|
|
|
$
|
(0.55)
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computing net loss per share:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
146,136
|
|
|
143,949
|
|
|
145,435
|
|
|
143,396
|
|
Halozyme
Therapeutics, Inc.
Condensed
Consolidated Balance Sheets
(Unaudited)
(In
thousands)
|
|
|
|
September 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
59,202
|
|
|
$
|
57,936
|
|
Marketable
securities, available-for-sale
|
|
178,796
|
|
|
296,590
|
|
Accounts receivable,
net
|
|
40,744
|
|
|
30,005
|
|
Inventories
|
|
36,051
|
|
|
22,625
|
|
Prepaid expenses and
other assets
|
|
27,248
|
|
|
20,693
|
|
Total current
assets
|
|
342,041
|
|
|
427,849
|
|
Property and
equipment, net
|
|
15,398
|
|
|
7,465
|
|
Prepaid expenses and
other assets
|
|
12,417
|
|
|
4,434
|
|
Restricted
cash
|
|
500
|
|
|
500
|
|
Total
assets
|
|
$
|
370,356
|
|
|
$
|
440,248
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
4,314
|
|
|
$
|
4,079
|
|
Accrued
expenses
|
|
45,679
|
|
|
49,529
|
|
Deferred revenue,
current portion
|
|
3,511
|
|
|
4,247
|
|
Current portion of
long-term debt, net
|
|
54,537
|
|
|
91,506
|
|
Total current
liabilities
|
|
108,041
|
|
|
149,361
|
|
|
|
|
|
|
Deferred revenue, net
of current portion
|
|
1,247
|
|
|
5,008
|
|
Long-term debt,
net
|
|
9,308
|
|
|
34,874
|
|
Other long-term
liabilities
|
|
6,407
|
|
|
2,118
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common
stock
|
|
147
|
|
|
145
|
|
Additional paid-in
capital
|
|
814,095
|
|
|
780,457
|
|
Accumulated other
comprehensive income (loss)
|
|
392
|
|
|
(277)
|
|
Accumulated
deficit
|
|
(569,281)
|
|
|
(531,438)
|
|
Total stockholders'
equity
|
|
245,353
|
|
|
248,887
|
|
Total liabilities and
stockholders' equity
|
|
$
|
370,356
|
|
|
$
|
440,248
|
|
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SOURCE Halozyme Therapeutics, Inc.