Yahoo Finance Halozyme (HALO) Q1 Earnings Disappoint, Revenues Rise Y/Y
Halozyme Therapeutics, Inc. HALO reported first-quarter 2023 adjusted earnings of 47 cents per share, which missed the Zacks Consensus Estimate of 48 cents. The bottom line also lagged our model estimates of 54 cents per share. The company recorded earnings of 47 cents per share in the year-ago period.
Total revenues increased 38% year over year to $162.1 million, primarily driven by higher royalty payments from J&J JNJ for subcutaneous Darzalex (daratumumab).
The addition of product sales following the acquisition of Antares Pharma in May 2022, and higher collaboration revenues also boosted the top line.
Revenues, however, fell short of the Zacks Consensus Estimate of $174 million. The figure also missed our model estimates of $180.4 million.
Shares of Halozyme were up almost 5% in after-hours trading on Tuesday, following the company’s results. The stock plunged 46.3% in the year-to-date period compared with the industry’s decline of 5.5%.
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Quarterly Highlights
Halozyme’s top line comprises of product sales, royalties and revenues under collaborative agreements.
Several companies are using HALO’s ENHANZE technology for developing a subcutaneous formulation of their currently marketed drugs. Halozyme has five marketed partnered drugs based on this technology, including the subcutaneous formulation of J&J’s Darzalex and Roche’s RHHBY Phesgo.
Royalty revenues totaled $99.6 million in the first quarter, up 43% from the year-ago quarter’s level. This was mainly due to robust demand for J&J’s subcutaneous Darzalex and Roche’s Phesgo. Royalty revenues accounted for nearly 61.4% of the company’s net revenues during the reported quarter.
Product sales came in at $60.7 million, significantly higher than the year-ago quarter’s figure. HALO supplies API to ENHANZE partners like J&J and Roche that contribute to product revenues.
Revenues under collaborative agreements were $1.7 million, down 93% from the year-ago quarter’s level.
Research and development expenses increased 51.2% year over year to $18 million. This was mainly due to planned investments in the ENHANZE technology, as well as a rise in compensation costs related to the Antares Pharma acquisition.
Selling, general and administrative expenses totaled $37.4 million compared with $13.8 million in the year-ago period.
The rise was mainly on account of higher compensation expenses related to the ongoing combined larger workforce for Antares Pharma acquisition. It was also due to an addition of commercial resources for the sales and marketing of testosterone replacement therapy products.
2023 Guidance
Halozyme maintained its previously issued financial guidance for 2023.
It expects total revenues in the range of $815-$845 million for 2023, indicating year-over-year growth of 23-28%. This improvement reflects continued strength of Darzalex SC and Phesgo, using ENHANZE technology, along with strong growth in royalty and products.
Revenues from royalties are anticipated to increase approximately 23-26% to $445-$455 million year over year.
EBITDA is projected in the band of $415-$440 million (excluding amortization costs), implying year-over-year growth of more than 30%.
The company expects adjusted earnings in the range of $2.50-$2.65 per share (excluding stock-based compensation expense), indicating an improvement of more than 10% year over year.
Recent Updates
In January, partner Roche announced that the biologics license application was accepted by the FDA for atezolizumab subcu, which was developed using ENHANZE.
The target action date for the same is Sep 15, 2023. Also, partner argenx’s target action date for efgartigimod subcu using ENHANZE was extended by the FDA to Jun 20, 2023, from Mar 20, 2023.
The potential approval for the above two candidates will increase HALO’s marketed partner drugs count from five to seven.
Halozyme Therapeutics, Inc. Price and Consensus
Halozyme Therapeutics, Inc. price-consensus-chart | Halozyme Therapeutics, Inc. Quote
Zacks Rank & Another Stock to Consider
Halozyme currently carries a Zacks Rank #2 (Buy).
Another top-ranked stock for investors interested in the same sector is Ocuphire Pharma OCUP, sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Loss per share estimates for Ocuphire Pharma have narrowed from 29 cents to 24 cents for 2023 and from 86 cents to 81 cents for 2024, in the past 60 days.
The company’s shares have surged 65.2% in the year-to-date period. Ocuphire’s earnings beat estimates in three of the last four quarters and missed the mark once, the average surprise being 23.85%.
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