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Halozyme Therapeutics, Inc. (HALO) Q4 2022 Earnings Call Transcript

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Halozyme Therapeutics, Inc. (NASDAQ:HALO) Q4 2022 Earnings Conference Call February 21, 2023 4:30 PM ET

Company Participants

Tram Bui - Vice President, Investor Relations and Corporate Communications

Dr. Helen Torley - President and CEO

Nicole LaBrosse - Chief Financial Officer

Conference Call Participants

Mohit Bansal - Wells Fargo

Mike DiFiore - Evercore ISI

Jason Butler - JMP Securities

Jessica Fye - JPMorgan

Corinne Jenkins - Goldman Sachs

Vikram Purohit - Morgan Stanley

Dan Tarjan - SVB Securities

Operator

Good afternoon. My sanction is Regina, and I will beryllium your convention usability today. At this time, I would for illustration to invited everyone to nan Halozyme Fourth Quarter and Full Year 2022 Financial and Operating Results Conference Call. All lines person been placed connected shut up to forestall immoderate inheritance noise. After nan speaker’s remarks, location will beryllium a question-and-answer session. [Operator Instructions]

Please statement that this arena is being recorded. I will now move nan telephone complete to Tram Bui, Halozyme’s Vice President of Investor Relations and Corporate Communications. Please spell ahead.

Tram Bui

Thank you, Operator. Good afternoon. And invited to our 4th fourth and afloat twelvemonth 2022 financial and operating results convention call. In summation to our property merchandise issued coming aft nan marketplace close, you could find a supplementary descent position that will beryllium referenced during today’s telephone successful nan Investor Relations conception of our website.

Leading nan telephone will beryllium Dr. Helen Torley, Halozyme’s President and Chief Executive Officer, who will supply an update connected our business; and Nicole LaBrosse, our Chief Financial Officer, who will reappraisal our financial results for nan 4th fourth and afloat twelvemonth 2022, arsenic good arsenic guidance for 2023.

On today’s call, we will beryllium making forward-looking statements. I mention you to our SEC filings for a afloat database of consequence and uncertainties. During nan call, both GAAP and non-GAAP financial measures will beryllium discussed. Certain non-GAAP aliases adjusted financial measures are reconciled pinch nan comparable GAAP financial measures successful our net property merchandise and descent presentation.

I will now move nan telephone complete to Helen Torley.

Dr. Helen Torley

Thank you, Tram, and good afternoon, everyone. I americium very pleased pinch our 4th fourth and afloat twelvemonth 2022 results, which continues to bespeak beardown financial and operational capacity crossed nan full company, creating affirmative momentum and positioning Halozyme for an breathtaking 2023.

In 2022, we extended our activity arsenic a subcutaneous supplier transportation level institution done nan continued description and advancement of our ENHANZE portfolio and done nan acquisition of Antares Pharma and nan mini measurement auto-injector platforms. The acquisition besides resulted successful a diversification of our revenues pinch nan summation of nan auto-injector and specialty to package and products businesses.

Moving to descent three, we achieved grounds gross of $660 cardinal successful 2022, an summation of 49% year-over-year. This beardown capacity was chiefly driven by nan continued maturation of our ENHANZE portfolio includes revenues from our acquired auto-injector and specialty merchandise businesses.

Fourth 4th 2022 gross was $181 million, an summation of 78% complete nan aforesaid play successful nan anterior year, resulting from continued maturation of ENHANZE royalty revenues, incremental merchandise income and royalties from our mini measurement auto-injectors and income of XYOSTED, our commercialized testosterone replacement therapy product.

As we look ahead, we entered nan New Year pinch compelling maturation opportunities. Our ENHANZE capabilities support our extremity to grow nan number of existent and caller partners utilizing ENHANZE, our precocious measurement auto-injectors positive ENHANZE and our mini measurement auto-injectors.

As a result, Halozyme is good positioned for continued growth. This maturation is reflected successful our guidance for 2023. We task grounds revenues of $815 cardinal to $845 million, maturation of 23% to 28% complete 2022 and we task EBITDA of $415 cardinal to $440 million, maturation of 30% year-over-year growth.

In 2023, we person aggregate drivers of caller opportunity contributing to near- and semipermanent growth. These see 2 imaginable caller commercialized launches for ENHANZE for subcutaneous efgartigimod and subcutaneous atezolizumab. Current partners advancing caller targets into nan session and advancing their improvement programs. And it is our extremity to subject successful caller ENHANZE agreements and ENHANZE positive high-volume auto-injector statement and a mini measurement auto-injector agreement.

Moving now to descent four, I will supply an overview of nan royalty gross projections. For 2023, we task full royalty revenue, including ENHANZE and our auto-injector devices of $445 cardinal to $455 million, maturation of 23% to 26% from royalty gross of $360 cardinal successful 2022. This guidance reflects continued projected maturation from our beardown 4th fourth performance, successful which full royalty gross was a grounds $106 million, which represented 69% maturation complete nan 4th fourth of 2021.

Our Wave 2 products, DARZALEX subcutaneous and Phesgo proceed to thrust nan beardown royalty gross growth. The robust and accelerated take of DARZALEX subcutaneous successful nan U.S. and Europe show that take faces nary existent barriers successful either geography. As maturation increasing quickly successful Europe demonstrates nan acceptance of our 5th merchandise motorboat utilizing ENHANZE. The beardown take of our ENHANZE subcutaneous products by physicians and patients worldwide supports our excitement for nan upcoming Wave 3, 4 and 5 merchandise launches.

I will now move to descent five, which focuses connected DARZALEX, which is continuing connected its singular maturation trajectory. DARZALEX FASPRO, nan subset type of DARZALEX successful nan United States continued to turn stock of full sales, achieving 86% stock of full income of DARZALEX by nan extremity of nan 4th fourth of 2022. Importantly, full DARZALEX income successful 2022 besides continued to show beardown growth.

Janssen’s genitor Johnson & Johnson reported afloat twelvemonth 2022 worldwide income of DARZALEX, including some nan IV and subcutaneous forms of $8 billion, an summation of almost 40% year-over-year connected an operational basis. For nan 4th quarter, worldwide income of DARZALEX were much than $2 billion, an summation of almost 34% year-over-year connected an operational basis.

Johnson & Johnson highlighted connected their year-end results telephone that nan summation successful DARZALEX income was driven by stock gains successful each regions, continued beardown marketplace maturation and continued uptake of FASPRO.

With nan opportunity for much usage successful frontline therapy, expert projections for DARZALEX full gross are estimated to execute much than $16 cardinal successful yearly income by 2028. We foretell DARZALEX FASPRO will proceed to turn for years to travel arsenic a consequence of this beardown maturation successful DARZALEX wherever nan immense mostly of usage is and will proceed to beryllium DARZALEX subcutaneous.

Our 2nd Wave 2 commercialized merchandise is Roche’s Phesgo, which is simply a operation of Perjeta and Herceptin for subcutaneous injection for patients pinch early and metastatic HER2-positive bosom cancer.

In 2022, Phesgo continued to saw a bully uptake pinch Roche reporting CHF714 cardinal successful income for nan afloat twelvemonth 2022, good underway to becoming a $1 cardinal brand. With 33% conversion successful nan early motorboat countries, Phesgo offers a 5-minute to 8-minute subcutaneous management clip compared to ours pinch modular intravenous administration. On their caller 4th fourth call, Roche stated that they expect continued maturation and important conversion to Phesgo to continue.

On descent six is an overview of our Waves of imaginable launches. Focusing connected Wave 3, these products correspond a mixed group of royalty gross opportunities pinch imaginable launches projected betwixt 2023 and 2025. The Wave 3 products are subcutaneous efgartigimod, atezolizumab, nivolumab and ocrelizumab.

Our semipermanent maturation trajectory is further supported by our Wave 4 products pinch imaginable launches successful nan 2025 to 2027 timeframe. Wave 4 is comprised of 10 partner products, 2 of which are successful aliases astir to commencement Phase 3 and nan remaining 8 are successful ongoing Phase 1 objective testing aliases person completed Phase 1 testing.

I will move now to descent 7 and opportunity a fewer words astir why I americium truthful excited astir nan imaginable that is represented by our Wave 3 launches. Firstly, each of nan Wave 3 products are approved successful astatine slightest 1 denotation arsenic an intravenous administration. This is an important derisker successful position of improvement risk. Secondly, each of nan imaginable on soon betwixt this twelvemonth and 2020. Thirdly, further derisking nan opportunity 2 of these products, subcu efgartigimod from argenx and Roche’s subcu atezolizumab person completed affirmative Phase 3 studies and are presently nether regulatory reappraisal pinch nan imaginable for support determination and motorboat successful 2023. And nan 4th cardinal constituent is that nan opportunity represented present successful position of expert projections for full merchandise income is $30 cardinal successful 2028, importantly higher than nan opportunity for our Wave 2 products that are driving our beardown royalty gross maturation to-date.

Let maine now supply immoderate much item connected each product. A summary of nan ongoing indication-seeking studies for nan Wave 3 products is provided connected descent right. Beginning pinch argenx, successful November of 2022, argenx announced nan acceptance of their Biologics License Application for subcutaneous efgartigimod utilizing ENHANZE for nan curen of adults pinch generalized myasthenia gravis and besides nan submission of a trading authorization exertion to nan European Medical Agency. In January of 2023, argenx provided an update that nan PDUFA day has been extended to June 20, 2023, to let nan FDA capable clip for a reappraisal of nan information that has been submitted.

We are excited that subcutaneous efgartigimod has nan imaginable to beryllium nan first of our Wave 3 partner launches pinch U.S. support and commercialized motorboat projected successful nan 2nd half of 2022. As argenx’s flagship pipeline product, efgartigimod is being developed for nan curen of aggregate autoimmune illness indications pinch subcutaneous improvement of six indications, of which 4 indications are only for subcu delivery.

Multiple information readouts are projected successful 2023, including information successful chronic inflammatory demyelinating polyneuropathy successful nan 2nd 4th of 2023 and for idiopathic thrombocytopenic purpura and Pemphigus successful nan 2nd half of nan year. Analysts foretell imaginable full efgartigimod yearly gross of astir $5 cardinal successful 2028.

The motorboat of nan intravenous type is surely disconnected to a beardown commencement successful nan early motorboat countries. In its preliminary results for nan 4th quarter, argenx noted beardown expert and diligent request for Vyvgart and reported full quarterly nett merchandise revenues of $175 cardinal and afloat twelvemonth 2022 gross of $402 million.

Moving now to Roche. Roche is 1 of our longest-standing and knowledgeable partners pinch ENHANZE, and we are delighted to collaborate pinch them connected 2 of our Wave 3 opportunities, subcutaneous atezolizumab and subcutaneous ocrelizumab.

Beginning pinch atezolizumab. In November of 2022, Roche announced nan submission of a Biologics License Application to nan FDA and a Marketing Authorization Application to nan EMA for subcutaneous atezolizumab pinch ENHANZE. Subcutaneous atezolizumab has nan imaginable to beryllium much convenient for patients and physicians pinch an approximate 7-minute subcutaneous management clip compared to 30 minutes to 60 minutes for IV treatment. With nan PDUFA day of September 15, 2023, Roche expects atezolizumab to beryllium only subcutaneous anti-PDL1 connected nan marketplace for a afloat year.

We are excited to spot nan continued maturation of Tecentriq. In its caller net call, Roche reported IV Tecentriq revenues accrued 14% year-over-year to CHF3.7 cardinal for afloat twelvemonth 2022.

Transitioning now to Roche’s OCREVUS for aggregate sclerosis. OCREVUS achieved income of much than CHF6 cardinal successful 2022, representing an summation of 17% year-over-year for Roche. Currently, location are 2 IV regimens approved for use. We see during some nan curen and nan study schedule, nan scope of clip for patients receiving IV OCREVUS is 3.5 hours astatine nan fastest to 6 hours astatine nan longest.

The Phase 3 proceedings for subcutaneous ocrelizumab is ongoing aliases subcutaneous, nan target full management and study clip for nan first and 2nd dose is 1 hour, pinch nan extremity that for each consequent dose, nan information supports regulators approving a 10-minute management and study time. As you publication retired from this study is expected successful mid-2023.

Moving to our 4th Wave 3 merchandise nivolumab, BMS continues to advancement pinch its Phase 3 study of subcutaneous nivolumab, utilizing ENHANZE successful patients pinch renal compartment carcinoma. And BMS besides precocious initiated a 2nd Phase 3 study of nivolumab subcutaneous pinch ENHANZE successful patients pinch melanoma. On its caller 4th fourth call, BMS noted OPDIVO IV income of $8.2 cardinal for afloat twelvemonth 2022, an summation of 10% year-over-year aliases 14% excluding FX.

In summary, Wave 3 represents important much derisked near-term caller royalty gross opportunity for Halozyme, pinch that opportunity driven by nan timing of support of nan subcutaneous versions of nan narcotics wrong nan projected 2023 to 2025 clip model and besides nan velocity and highest of conversion to subcutaneous.

Let maine now conscionable make a little remark connected nan ENHANZE pipeline advancement successful 2022. I americium very pleased to study that we proceed to beforehand and grow our ENHANZE pipeline, supporting 12 caller partner study starts, gathering our 2022 extremity to support initiation of astatine slightest 10 caller studies.

These starts included supporting partners advancing 2 caller products pinch ENHANZE into nan session and supporting initiation of 3 caller Phase 3 programs, nan last measurement successful improvement anterior to regulatory submission. In addition, we supported initiation of an further 7 caller studies designed to further research and perchance grow nan floor plan of ongoing partner subcutaneous programs.

In 2022, this pipeline advancement contributed powerfully to nickname of nan astir $109 cardinal successful full collaboration gross pinch notable milestones recognized for Phase 3 study initiations for amivantamab subcu and nivolumab+relatlimab subcu.

In 2022 and beyond, our extremity is to proceed to grow nan number of products successful improvement and to beforehand products done improvement to regulatory support and launch, adding aggregate caller royalty gross streams.

I will now move to our Wave 4 merchandise campaigner pipeline, which is shown connected descent nine. We person 10 merchandise candidates successful our Wave 4 pipeline, which if they proceed successful improvement and to support and motorboat correspond imaginable gross drivers betwixt 2025 and 2027.

The 2 astir precocious products again is amivantamab and BMS’ fixed-dose operation of nivolumab+relatlimab pinch ENHANZE, which are successful aliases soon to commencement Phase 3 development. Both of these products are already approved arsenic IV treatment, an important subcutaneous improvement derisk.

In 2022, Janssen initiated a Phase 3 study of lazertinib+amivantamab pinch ENHANZE successful patients pinch EGFR mutated precocious aliases metastatic non-small compartment lung cancer. In 2022, Bristol-Myers Squibb besides initiated nan Phase 3 study called RELATIVITY-127, which has nan extremity of demonstrating that supplier vulnerability levels of nivolumab+relatlimab fixed-dose operation of ENHANZE is not inferior to intravenous management of nan aforesaid combination. And this is being studied successful patients pinch antecedently untreated metastatic aliases unresectable melanoma. We are expecting nan first diligent to beryllium dosed successful this study successful early 2023.

Let maine now modulation to an update connected our auto-injector and specialty merchandise businesses opening connected descent 10. Our acquisition of Antares past year, further strengthened our activity successful supplier delivery, creating nan opportunity to create a high-volume auto-injector by combining ENHANZE pinch our auto-injector know-how.

In nan 4th quarter, we continued our discussions connected nan opportunity for our precocious and mini measurement auto-injectors pinch existent and caller imaginable partners. Our high-volume multi-injector for accelerated transportation of up to 10 ml enabled ENHANZE offers a genuinely differentiated opportunity for patient-friendly, high-volume subcutaneous curen transportation that tin beryllium utilized crossed nan spectrum of illness areas for some mini molecule narcotics and biologics.

In 2022, nan squad made important advancement connected nan improvement of nan moving prototype. The prototype is fresh for objective testing and we expect to initiate and complete quality feasibility studies by midyear 2023. Our extremity successful 2022 is to summation an statement pinch a existent aliases a caller partner to elaborate connected nan civilization improvement of a high-volume auto-injector.

I will move now to our commercialized business, which includes XYOSTED and TLANDO arsenic shown connected descent 11. Beginning pinch XYOSTED, this is our play virtually painless subcutaneous testosterone replacement treatment, which is patients delivered by auto-injector. Our extremity successful 2023 is to turn XYOSTED to complete $100 cardinal successful gross arsenic a stepping chromatic to accelerate maturation successful 2024 and beyond.

In 2022, successful nan 7 months since nan acquisition, we focused connected expanding XYOSTED demand, identifying opportunities to trim gross-to-net deductions and identifying and processing plans to reside points-of-prescription leakage that we person identified.

While we person continued to execute caller play precocious medicine levels each period successful 2022, Q4 XYOSTED gross came successful somewhat little than our expectations, driven by a operation of little request and little nett value than projected.

As we commencement 2023, year-to-date, I americium pleased to spot that XYOSTED request is disconnected to an fantabulous start, pinch nan maturation complete Q4 exit connected way pinch our scheme to present $100 cardinal successful revenues successful 2023. Our maturation strategy focuses connected converting patients from nan astir communal curen approach, which is intravascular injections.

IM testosterone injection tin beryllium associated pinch symptom and tin require expert aliases healthcare practitioner administration. XYOSTED pinch its play virtual painless subcutaneous injection delivered by a patient-administered auto-injector offers a caller attack that whitethorn reside these challenges.

We besides stay focused connected gaining entree for TLANDO, our oral testosterone treatment. We person not yet reached statement pinch drugstore use managers connected an due rebate rate. Until entree is established, we are projecting debased gross for TLANDO successful 2023.

Closing connected Antares, our full gross since nan acquisition was $113 million, which came successful somewhat beneath our projected scope of $115 cardinal to $125 million, which we person provided astatine nan clip of nan acquisition.

Before I manus nan telephone complete to Nicole, fto maine reiterate our committedness to our strategical maturation and superior allocation priorities shown connected descent 12. Our extremity continues to beryllium to maximize gross maturation and durability. We are continuing to return superior to our shareholders pinch our stock buyback plan.

We person now completed $350 cardinal of nan $750 cardinal three-year programme that was approved by nan Board of Directors successful December of 2021. Our extremity successful 2023 is to repurchase up to an further $150 cardinal pending marketplace conditions and different factors arsenic portion of this plan.

And we are besides continuing to measure M&A opportunities, seeking further platforms aliases companies pinch derisk assets, platforms aliases technologies wherever we spot nan opportunity for important gross maturation and gross durability.

I will now move nan telephone complete to Nicole, who will talk our financial results for 2022 and nan outfit for 2023. Nicole?

Nicole LaBrosse

Thank you, Helen. 2022 was a twelvemonth marked by beardown financial performance. Halozyme recorded grounds gross arsenic a consequence of increasing ENHANZE royalties and nan summation of nan Antares business. We completed nan acquisition of Antares that met our expectations successful being accretive to gross and non-GAAP EPS.

We besides strengthened our equilibrium expanse done a strategical refinancing stepping into a little liking complaint that mixed pinch our rate generation, puts america successful a beardown superior position pinch a nett debt-to-EBITDA ratio of 3.2% astatine year-end.

And arsenic Helen mentioned, we stay committed to deploying superior done our stock repurchase programme to complement our EPS growth. With our 2022 repurchases, our stock buyback programs person resulted successful nan repurchase of 30.6 cardinal shares since 2019, which contributed $0.32 to non-GAAP net per stock for nan afloat twelvemonth 2022.

I will now move to descent 13 for our 4th fourth 2022 financial highlights. Here, I will attraction connected full gross for nan 4th quarter, which was $181.5 million, a 78% summation compared to $102 cardinal for nan 4th fourth of 2021. The summation was driven by an summation successful royalty revenue, chiefly attributable to subcutaneous DARZALEX and nan summation of merchandise income arsenic a consequence of Antares acquisition.

Revenue for nan 4th included $106 cardinal successful royalties, an summation of 69%, compared to $62.6 cardinal successful nan anterior twelvemonth period. Lastly, for nan quarter, GAAP diluted net per stock was $0.42 and non-GAAP diluted net per stock was $0.48.

I will now move to descent 14 for a reappraisal of nan afloat twelvemonth 2022 results. I will concisely touch connected immoderate highlights present pinch much specifications disposable successful our property merchandise and 10-K revenge pinch nan SEC today.

Total revenues grew 49% to $660.1 cardinal successful 2022, disconnected of an already important gross guidelines successful 2021 of $443.3 million. The main contributor to this summation was higher gross from royalties of $360.5 million, up 77% from 2021. Product income of $191 cardinal were up sharply from $104.2 cardinal successful 2021 owed to nan merchandise publication from nan Antares acquisition. Collaborative revenues of $108.6 cardinal saw a alteration from anterior twelvemonth of 20% from $135.3 million, resulting from less partner milestone driving events.

Now for nan twelvemonth is amortization disbursal of $43.1 cardinal arsenic a consequence of nan Antares acquisition, successful which we acquired intangible assets that are amortized complete a useful life related to nan auto-injector exertion level and proprietary products.

Research and improvement expenses were $66.6 million, compared to $35.7 cardinal successful 2021. Selling, wide and administrative expenses were $143.5 million, compared to $50.3 cardinal successful 2021. These increases were chiefly owed to nan acquisition and an summation successful compensation disbursal related to nan ongoing mixed larger workforce.

GAAP EPS was $1.44, compared to $2.74 successful 2021. As a reminder, 2021 GAAP EPS included a onetime taxation use from nan reversal of our taxation valuation allowance, representing astir $1.05 per share.

Non-GAAP EPS for nan twelvemonth was $2.21, an summation from $2 successful nan anterior twelvemonth and an awesome accomplishment arsenic 2022 reflects our first twelvemonth recognizing income taxation expense, impacting 2022 non-GAAP EPS by astir $0.50 per share.

Cash, rate equivalents and marketable securities were $362.8 cardinal connected December 31, 2022, compared to $74.9 cardinal connected December 31, 2021.

Now fto maine move to our 2023 guidance connected descent 15, which we are reiterating and was first provided connected January 10th of this year. For nan afloat twelvemonth 2023, we expect full revenues of $815 cardinal to $845 million, representing maturation of betwixt 23% to 28% complete 2022 full revenue. We expect gross from royalties to summation betwixt 23% to 26% complete gross from royalties successful 2022 to a scope of $445 cardinal to $455 million.

We expect EBITDA of $415 cardinal to $440 million, representing maturation of much than 30% complete 2022 EBITDA and excludes nan effect of amortization costs related to nan Antares acquisition.

We expect non-GAAP diluted net per stock of $2.50 to $2.65. Our net per stock guidance does not see nan effect of imaginable early stock repurchases.

With that, I will now move nan telephone backmost complete to Helen.

Dr. Helen Torley

Thank you, Nicole. 2022 was a transformational twelvemonth for Halozyme. We made awesome strides arsenic a mixed institution pinch our 1 squad civilization that enhanced our activity successful supplier transportation and supported our continued growth.

2023 will beryllium different twelvemonth pinch important maturation opportunities. Highlights see nan imaginable commencement of our Wave 3 merchandise launches pinch 2 imaginable approvals successful 2023 for subcutaneous efgartigimod and subcutaneous atezolizumab, continued advancement successful nan improvement of our high-volume auto-injector pinch ENHANZE, nan extremity of signing caller collaboration agreements crossed our level and continued gross maturation resulting from our commercialized products.

I will extremity by thanking our Halozyme squad and our partners and collaborators for nan beardown advancement made successful 2022. I americium excited regarding our 2023 scheme that is resulting successful our beardown gross and EBITDA maturation guidance.

And pinch that, we would beryllium now delighted to return your questions. Thank you, everyone, for joining america today. Operator, would you please unfastened nan telephone for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first mobility will travel from nan statement of Mohit Bansal pinch Wells Fargo. Please spell ahead.

Mohit Bansal

Great. Thank you for taking my mobility and congrats connected each nan progress. Maybe 1 mobility we get a batch is, do we person immoderate clarity connected really Inflation Reduction Act will dainty ENHANZE products astatine this point, particularly nan products which person longer patent protection owed to nan co-formulation patterns? Thank you.

Dr. Helen Torley

Thanks, Mohit. At this time, we are still awaiting CMS to supply regulations and nan specifications arsenic to precisely really it’s going to beryllium implemented and truthful location still is not a clarity. We evidently are watching that intimately and we will supply an update arsenic it becomes clearer.

And obviously, nan mobility really is, whether it’s a subcutaneous, which person a different BLA filing and a quality that motorboat day would restart a different clock. And so, nary reply we tin springiness them that yet, Mohit, but that’s decidedly of liking to america and our partners.

Mohit Bansal

Got it. Super helpful. Thank you.

Operator

Your adjacent mobility will travel from nan statement of Mike DiFiore pinch Evercore ISI. Please spell ahead.

Mike DiFiore

Hi, guys. Thanks for taking my mobility and congrats connected nan quarter. Two for me. Number one, I noticed that Merck is conducting a Phase 3 non-small compartment lung crab proceedings of pembrolizumab+hyaluronidase. Any thoughts connected really this whitethorn beryllium different from ENHANZE? And nan 2nd mobility is concerning subcutaneous Vyvgart. Obviously, Vyvgart expected to beryllium a large task successful 2023 and you look to beryllium beautiful bullish connected nan size of nan subcu opportunity. So having said that, why didn’t nan Vyvgart PDUFA hold not lead to a alteration successful your guidance?

Dr. Helen Torley

Yeah. Thanks for those questions. Let maine statesman pinch nan mobility connected Merck. We noted that nan information connected that study start. Mike, we don’t person immoderate specifications arsenic to precisely what Merck is utilizing and really they are proceeding. So we really can’t remark connected that. That would beryllium a question, obviously, amended reside to them.

What we tin opportunity is pinch respect to ENHANZE, we evidently person established versus nan proven well-tested leader successful supporting subcutaneous transportation of narcotics and we do find that our proven way grounds of occurrence pinch 5 approvals, much than 600,000 patients who person received curen pinch ENHANZE supplier really puts america successful a awesome position and a awesome speech position for proceed to grow nan number of deals we have. So that’s each I will opportunity connected that one.

On Vyvgart, arsenic group whitethorn beryllium aware, nan FDA did consciousness that owed to immoderate further information that was submitted during nan reappraisal process that they needed much clip to review. They extended nan PDUFA day by 3 months and truthful now that PDUFA day is June of 2023.

We do person milestones associated pinch support of products, and so, obviously, conscionable pushing retired 3 months doesn’t make immoderate alteration to our guidance that we still expect this to autumn wrong 2023 based connected each nan accusation we person today.

Mike DiFiore

Got it. Thanks truthful much.

Operator

Your adjacent mobility comes from nan statement of Jason Butler pinch JMP Securities. Please spell ahead.

Jason Butler

Hi. Thanks for taking nan question. Two for me. First of all, you pointed antecedently to nan imaginable for an ENHANZE auto-injector business aliases collaboration this year. Is that still your anticipation that, that could occur? And then, secondly, nan objective activity that you are doing, nan feasibility testing, tin you possibly springiness america immoderate parameters astir really you are assessing occurrence aliases advancement pinch that activity successful 2023? Thanks.

Dr. Helen Torley

Yeah. Thanks for that, Jason. Yes. We are so -- we are still readying and actively discussing pinch some existent and imaginable caller partners, nan opening improvement programme of ENHANZE pinch a high-volume auto-injector. So very happy pinch nan advancement of those discussions.

The objective studies of which we -- successful my prepared remarks mentioned, we expect to person information for that midyear is simply a feasibility study. We created a prototype. We tested it successful immoderate different models by nan extremity of past year, which was our goal. But now we want to return it into patients, quality volunteers and fundamentally conscionable show nan feasibility and reliability of it.

So, arsenic an example, nan superior endpoint will attraction connected nan number of devices that fired appropriately and present nan supplier successful nan required magnitude of time. That’s beautiful modular for these types of tests and it’s a bully measurement conscionable to corroborate nan prototype is effective successful doing what it was designed to do.

Jason Butler

Great. Thanks for taking nan questions.

Dr. Helen Torley

Thank you.

Operator

Your adjacent mobility will travel from nan statement of Jessica Fye pinch JPMorgan.

Jessica Fye

Great. Good afternoon. Thanks for taking nan questions. First, tin you elaborate a small spot connected nan studies -- nan floor plan enhancing studies mentioned connected nan past descent of nan platform regarding diligent penchant and on-body device. Just funny to study a small much there. And then, second, pursuing up connected an earlier mobility astir Merck’s subcu pembro that sounds for illustration it’s utilizing hyaluronidase arsenic well. Can you locomotion done why you would not beryllium worried astir partners trying to prosecute a akin approach, creating their ain ENHANZE-ish products pinch hyaluronidase and/or whether you expect Merck to infringe immoderate IP? Thank you.

Dr. Helen Torley

Thanks for those questions, Jess. I will statesman pinch nan floor plan enhancing studies and for everybody that’s connected descent 18 of nan platform that we showed. And I think, Jess, you peculiarly wanted to perceive astir nan diligent penchant study connected nan on-body device.

These are studies that partners are doing for already commercialized aliases late-stage improvement drugs. And it’s each -- these types of studies are done to heighten nan floor plan aliases supply further accusation to pass patients and/or physicians pinch respect to really nan supplier tin beryllium used.

These are tests that are really listed connected clinicaltrials.gov, but we didn’t person support from our partners to really database them here, but you tin find much astir them and beautiful regular and I deliberation breathtaking that partners are continuing to research and grow nan floor plan connected each narcotics that are successful development.

With respect to Merck, I think, nan logic we are not worried astir our existent partners wanting to move and create their ain hyaluronidase and commencement incorporating that really focuses connected a number of factors.

The first 1 is that we bring a very beardown information way record. The rumor erstwhile you harvester 2 biologics together is simply a interest astir immunogenicity and pinch 600,000 patients treated, they cognize that, that has been a very well-characterized information profile. First mobility that comes up successful each of our caller woody negotiations is that worry. I deliberation that’s nan first one, Jess.

We besides person established a very beardown narration pinch each of our partners, demonstrating our expertise successful improvement and regulatory and reliability of supply. And if you for illustration nan building of nan intends broken, why hole it, I think, that is different logic that would not see doing that. We evidently are very conscious astir being reliable and a low-cost supplier to our partners. So past reasoning astir that would make nary sense.

And past nan 3rd one, I think, is simply a small spot much strategical for nan partners, and they are, arsenic we look astatine our partners, galore of them are much focused connected processing caller molecular entities to present caller ample gross speeds alternatively than return nan clip and resources to attraction connected successful humble simplification to what it’s costing, for example, successful a royalty rate. And truthful for each of those factors, we deliberation it’s highly improbable that our partners would want to create their ain rUpH20 and pinch nary denotation there.

Jessica Fye

Thank you.

Operator

Our adjacent mobility will travel from nan statement of Corinne Jenkins pinch Goldman Sachs. Please spell ahead.

Corinne Jenkins

Yeah. Good afternoon, everyone. So I deliberation possibly conscionable for explanation for me. I deliberation we person antecedently talked a batch astir nan 5 ml, but now you are talking astir a 10 mL arsenic well. Can you conscionable talk astir wherever you guidelines successful nan improvement of that 10 ml type and what are immoderate of nan gating steps earlier that tin participate nan clinic?

Dr. Helen Torley

Yeah. Thanks for that, Corinne. And our prototype has really been designed pinch elasticity that depending connected what a partner really wants, it tin present thing from 5 ml to 10 ml. And truthful it’s nan aforesaid basal prototype that we person successful development. It’s conscionable nan capable cartridge will beryllium capable to beryllium varied depending connected what measurement nan partner really wants. So this objective testing that we scheme to do this twelvemonth will measure immoderate respective options of measurement up to 10 ml.

Corinne Jenkins

That’s helpful. Thanks. And past arsenic you deliberation astir benignant of your existent portfolio of collaborated products, what information of them autumn nether 10 ml versus 5 mL versus little than that? Is that thing you tin supply clarity on?

Dr. Helen Torley

Yeah. We person mentioned erstwhile we did nan acquisition, that we person a mini number of our partner programs coming that are successful those measurement ranges. We tended to activity connected larger volumes, 15 mls being rather communal for our Boeing, but location are surely a fistful of existent partners who are successful that 5 ml to 10 ml range.

They haven’t provided that accusation publicly, truthful we are not successful a position to do that. But arsenic we said erstwhile we did nan acquisition, this is besides a portion of nan strategy and moving to ENHANZE what nan high-volume auto-injector is to get caller deals and caller collaboration partners.

And I tin opportunity from america evaluating nan landscape, we spot a number of opportunities retired location that whitethorn beryllium utilized for america successful nan early that let america to beryllium delivering that 5 ml to 10 ml unsocial arsenic well. So deliberation of it arsenic immoderate opportunity for nan existent partners, but really this was to unfastened up a full caller marketplace of opportunity for ENHANZE present pinch that.

Corinne Jenkins

Thanks. Maybe conscionable 1 past 1 for me. We person sewage a mates of merchandise launches coming this year. How should we deliberation astir nan way to co-formulation patents for those products? Is that thing we tin get immoderate visibility connected successful nan near-term?

Dr. Helen Torley

Yeah. I tin opportunity that each of our presently marketed products person received aliases pending patents for co-formulation patents. I tin besides say, Corinne, that each of our improvement partners are very actively engaged successful a number of nan ones who person sewage advanced- to late-stage improvement person already revenge applications for co-formulation patents.

Specific by partner is not thing we tin talk astir because that’s partner confidential accusation and I deliberation nan visibility will travel arsenic patents are issued, those go nationalist domain, and astatine that constituent successful time, you will beryllium capable to find them and we will beryllium capable to talk astir them.

But our partners person been unanimous successful their support aliases protecting their inventions and filing co-form patents, which obviously, we are very pleased astir and support, because, successful general, those person benefits to america successful position of nan long of clip we get royalties and they tin besides push retired nan clip for nan spec down. So we are very -- we are aligned and our very progressive attraction connected caller co-form submissions.

Corinne Jenkins

Yeah. Thank you.

Operator

Your adjacent mobility will travel from nan statement of Vikram Purohit pinch Morgan Stanley. Please spell ahead. Vikram, your statement possibly connected mute.

Vikram Purohit

Hi. Can you perceive maine now?

Operator

We can.

Dr. Helen Torley

We can, Vikram.

Vikram Purohit

Okay. Great. Thanks for taking my mobility and sorry astir that. So we had 1 mobility connected subcutaneous ocrelizumab. So assuming nan Phase 3 information present is positive, really do you foresee uptake for a subcu oc should ramping successful this market, peculiarly fixed immoderate caller competitory developments present successful nan aggregate sclerosis space? Thanks.

Dr. Helen Torley

Yeah. And truthful we are expecting, based connected latest comments from Roche, nan information midyear, which pinch nan extremity of taking therapy from nan curen and study clip for a minimum of 3.5 hours to 6 hours down to nan first doses pinch subcu being an hr for injection and observation, and ultimately, nan extremity is 10 minutes if nan information supports that.

So you tin spot what a translator that will beryllium for patients who are receiving MS therapy, lifelong and having to spell to an infusion suite. And truthful I do deliberation that based connected that floor plan and beryllium capable to get to a elemental 10-minute injection, this will beryllium very competitory pinch nan different products that are disposable connected nan market. Roche has not commented connected circumstantial uptake, but they person commented that they spot an breathtaking marketplace for nan subcu action and delivery.

Operator

[Operator Instructions] Your adjacent mobility will travel from nan statement of David Risinger pinch SVB Securities. Please spell ahead.

Dan Tarjan

This is Dan Tarjan connected for Dave. Two questions for us, please. So, one, tin you supply immoderate much colour connected your portfolio of Phase 1 candidates and including nan humanities connected Phase 1 campaigner successful really advancing to Phase 3 and besides nan emblematic clip statement for a Phase 3 go/no-go determination aft campaigner enters Phase 1. Second question, immoderate modeling colour you tin supply connected nan first 4th of 2023 and nan pursuing quarters? Thank you.

Dr. Helen Torley

All right. So our -- pinch respect to nan Phase 1 candidates, that those really coming would beryllium what we are calling our Wave 4 products simply, conscionable move to that page, right? So that will beryllium listed connected page nine. And arsenic you tin imagine, Dan, it really does each dangle connected nan individual partners plans and programs arsenic to precisely what that clip statement is.

The 2 products that are astatine nan apical of nan database successful that lawsuit atezolizumab and nivolumab moved beautiful quickly from their extremity of Phase 1 into nan Phase 3 decision. In different cases, we person studies that are ongoing, specified arsenic ARGX-117 and repilvary [ph]. So those are still progressive studies and truthful you wouldn’t move forward.

There is 1 study there, teplizumab. I deliberation we person talked astir that before, wherever we heard comments from Horizon to opportunity they were evaluating going guardant successful options pinch and without Page 20 and truthful we are still waiting for a last determination connected nan scheme there.

But I would opportunity conscionable based connected those examples, nan mostly of nan studies present listed are still ongoing successful nan Phase 1 pinch teplizumab being 1 that’s completed. And truthful erstwhile those studies are vanished and a determination is made and often there’s a speech pinch nan FDA astir nan creation of nan Phase 3 study.

It usually is measured successful months of time, I think, six months positive aliases minus, is simply a reasonable clip framework for a transition, we mightiness spot betwixt a Phase 1 and a Phase 3 for a partner who is wanting to move quickly to move guardant into Phase 3 development. If I americium sorry, tin you conscionable repetition nan 2nd question, you trim retired a small spot for us.

Dan Tarjan

Yeah. No problem. So nan 2nd mobility was, immoderate modeling position for nan first 4th of 2023 and nan pursuing quarters?

Dr. Helen Torley

Yeah. I will inquire Nicole to reside that.

Nicole LaBrosse

Yeah. Happy to share. So while we don’t supply guidance connected a quarterly basis. What I tin opportunity is we look guardant to Q1, from a gross perspective, we are capable to stock that full collaboration revenue. We are forecasting to beryllium comparatively level successful 2023 versus 2022 and we do person statement of show to milestones opening successful nan 2nd 4th of nan twelvemonth and really being much weighted into nan 2nd half of nan year. So that tin springiness you a small spot of statement of show to expectations.

And past erstwhile I talk astir possibly looking astatine royalty. So conscionable to reiterate, our royalty guidance for nan afloat twelvemonth is $445 cardinal to $455 million. While what we do spot successful Q1 is sequential maturation to beryllium flattening successful nan first 4th and past turn sequentially location aft passim nan twelvemonth and that’s really a driver of seasonality pinch our EpiPen. We person FX reset astatine nan commencement of nan twelvemonth and besides looking into Q1, we are expecting minimal true-up successful nan first quarter.

Dr. Helen Torley

And truthful I will conscionable adhd that we wanted to supply that spot of color. We are very excited astir nan continued maturation that we are going to spot successful nan consequent quarters some successful position of our royalties but besides milestones that are a small -- that will statesman successful Q2, arsenic Nicole said.

Dan Tarjan

That’s very helpful. Thank you.

Operator

We person nary further questions astatine this time. Ladies and gentlemen, that will reason today’s meeting. Thank you each for joining. You whitethorn now disconnect.

Editor: Naga



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