On January 10, 2022 Halozyme Therapeutics, Inc. (NASDAQ: HALO) reported 2022 financial guidance and commented on its outlook for the upcoming year (Press release, Halozyme, JAN 10, 2022, View Source [SID1234598472]).
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"Halozyme had another strong year of financial performance in 2021 with record revenues and profitability driven by strong growth of our wave 2 partner products including the subcutaneous forms of DARZALEX and Phesgo," said Dr. Helen Torley, president and chief executive officer. "Also in 2021, we made substantial progress expanding the future opportunity set for our ENHANZE technology. We signed an exciting new collaboration agreement with ViiV Healthcare to advance the use of our technology in infectious disease and small molecule applications. In 2022, we project at least four new products utilizing ENHANZE will enter Phase 1 development, resulting in at least twenty partner programs in our pipeline. We look forward to strong continued total and royalty revenue growth, advancement of at least five ENHANZE partner programs into Phase 2 and 3 development, and potential new ENHANZE collaborations and new target nominations. We are also making strategic investments to further drive revenue growth and extend revenue durability. These include investments to expand robust API supply of high yield ENHANZE and development of a new rHuPH20, with extended room temperature stability, and with patent protection to 2032 in Europe and 2034 in the US."
Anticipated 2022 Key Events:
Projected growth of approximately 50% in the Company’s high-margin, recurring revenue stream from royalties to approximately $300 million driven by continued uptake of wave 2 launch products, subcutaneous DARZALEX (daratumumab) and Phesgo (pertuzumab, trastuzumab and hyaluronidase) utilizing ENHANZE technology;
At least five new Phase 2/3 starts for existing ENHANZE programs;
At least four new products utilizing ENHANZE entering Phase 1 development by the Company’s collaboration partners resulting in at least 20 products in development by end of 2022, compared to 16 at the end of 2021;
Data from ENHANZE collaboration partner argenx SE for Phase 3 study of efgartigimod SC utilizing ENHANZE technology in myasthenia gravis expected in the first half of 2022;
Investments to further drive revenue growth and extend revenue durability, including:
New, higher yield ENHANZE API;
New rHuPH20, with extended room temperature stability, and with patent protection to 2032 in Europe and 2034 in the US;
At least one new global collaboration and license agreement for ENHANZE, which is included in Company revenue guidance;
Up to $250 million in share repurchases, inclusive of $150 million accelerated share repurchase announced in December 2021, as part of the $750 million three-year share repurchase plan authorized by Halozyme’s board of directors in December 2021 demonstrating the Company’s continued commitment to a balanced capital allocation strategy.
2022 Financial Guidance:
Revenue
For 2022, Halozyme expects total revenue of $530 million to $560 million, representing growth of 23-26% over 2021 expected total revenue. The Company expects revenue from royalties to increase approximately 50% over expected revenue from royalties in 2021, to approximately $300 million. Product sales related to API and revenue under collaborative agreements are expected to be overall similar to 2021.
Operating Income
For 2022, Halozyme expects GAAP operating income of $350 million to $380 million, representing growth of 32-36% over 2021 expected GAAP operating income, resulting in operating margins greater than 65%. This strong growth is anticipated despite higher projected operating expenses excluding cost of product sales resulting from the Company investing in new initiatives to drive revenue growth and extend revenue durability.
Net Income and Earnings per Share
The Company notes that 2022 will be the first full fiscal year in which Halozyme will record income tax expense as part of its income statement, reflecting Halozyme’s strong profitability.
Net Income
For 2022, Halozyme expects GAAP net income of $270 million to $295 million and Non-GAAP net income of $290 million to $315 million.1
Earnings per Share
For 2022, Halozyme expects GAAP diluted earnings per share of $1.90 to $2.05. In 2021 the Company recorded a one-time, non-cash income tax benefit of $142 million or $0.97 per share, related to the reversal of its tax valuation allowance in the third quarter.
Non-GAAP diluted earnings per share are expected to be $2.05 to $2.20.1 The company notes that 2022 will be the first full fiscal year in which the company will record income tax expense, projected to be $0.55-$0.60 per share.
The Company’s earnings per share guidance does not consider the impact of potential future share repurchases.
Table 1. 2022 Financial Guidance
Guidance Range
Net Revenue
$530 to $560 million
GAAP Operating Income
$350 to $380 million
GAAP Net Income
$270 to $295 million
Non-GAAP Net Income
$290 to $315 million1
GAAP Diluted EPS
$1.90 to $2.05
Non-GAAP Diluted EPS
$2.05 to $2.201
Footnotes:
1. Reconciliations between GAAP reported and non-GAAP financial information and adjusted guidance measures are provided at the end.