On August 8, 2023 Halozyme Therapeutics, Inc. (NASDAQ: HALO) ("Halozyme" or the "Company") reported its financial and operating results for the second quarter ended June 30, 2023 and provided an update on its recent corporate activities and outlook (Press release, Halozyme, AUG 8, 2023, View Source [SID1234633971]).

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"Our strong second quarter results with record revenue of $221 million and non-GAAP EPS of $0.74 were complemented with significant commercial and clinical advancements with our ENHANZE product pipeline," said Dr. Helen Torley, president and chief executive officer of Halozyme. "The FDA approval for argenx’s VYVGART Hytrulo with ENHANZE for generalized myasthenia gravis expanded our commercialized partnered products to six products generating royalty revenue. In addition, argenx’s VYVGART Hytrulo achieved positive data in a second indication for CIDP and Roche’s SC ocrelizumab with ENHANZE met the phase 3 study primary and secondary endpoints, which support the near-term additional opportunities for growth. We expect our commercialized partnered products to further expand with the potential FDA approval of Roche’s SC atezolizumab later this year. We also look forward to late-stage clinical data from argenx for ITP and pemphigus, which will support our future growth trajectory. We are well positioned for another record year with our updated guidance."

Recent Partner Highlights:
•In July 2023, argenx reported positive data from the ADHERE study evaluating VYVGART Hytrulo with ENHANZE in adults with chronic inflammatory demyelinating polyneuropathy ("CIDP"). The study met its primary endpoint resulting in a 61% reduction in risk of relapse compared to placebo.
•In July 2023, Roche announced that the Phase III OCARINA II trial evaluating OCREVUS (ocrelizumab) with ENHANZE as a twice a year 10-minute subcutaneous injection met its primary and secondary endpoints in patients with relapsing forms of multiple sclerosis ("MS") or primary progressive MS ("RMS" or "PPMS").
•In June 2023, argenx received U.S. Food and Drug Administration ("FDA") approval for VYVGART Hytrulo injection with ENHANZE for SC use for the treatment of generalized myasthenia gravis in adult patients who are anti-acetylcholine receptor ("AChR") antibody

positive and in July 2023, VYVGART Hytrulo was made available to patients, triggering $33.0 million in milestone payments and the right to receive royalties on net product sales.
•In June 2023, Takeda announced positive results from a pivotal Phase 3 trial evaluating HYQVIA for maintenance treatment of chronic inflammatory demyelinating polyneuropathy ("CIDP") and confirmed regulatory applications were under review in the U.S. and European Union.
•In April 2023, Takeda announced that the FDA approved a supplemental Biologics License Application ("sBLA") to expand the use of HYQVIA to treat primary immunodeficiency in children.

Second Quarter 2023 Financial Highlights:
•Revenue in the second quarter was $221.0 million compared to $152.4 million in the second quarter of 2022. The 45% year-over-year increase was driven by growth in ENHANZE revenue streams with an increase in royalty revenue and an increase in milestone revenue due to the approval and launch of VYVGART Hytrulo as well as the addition of product sales as a result of the Antares Pharma acquisition. Revenue for the quarter included $111.7 million in royalties, an increase of 31% compared to $85.3 million in the prior year period, primarily attributable to subcutaneous DARZALEX (daratumumab).
•Cost of sales in the second quarter was $50.1 million, compared to $33.9 million in the second quarter of 2022. The increase was driven by an increase in product sales as a result of the Antares Pharma acquisition and amortization of inventory step-up associated with purchase accounting for the Antares Pharma acquisition.
•Amortization of intangibles expense in the second quarter was $17.8 million, due to the Antares Pharma acquisition, in which Halozyme acquired intangible assets that are amortized over a useful life related to the auto injector technology platform, XYOSTED and TLANDO.
•Research and development expense in the second quarter was $19.7 million, compared to $15.5 million in the second quarter of 2022. The increase is primarily due to an increase in compensation expense related to the ongoing combined larger workforce as a result of the Antares Pharma acquisition, which added device platform resources in regulatory, quality and manufacturing, as well as planned investments in ENHANZE.
•Selling, general and administrative expense in the second quarter was $38.9 million, compared to $57.5 million in the second quarter of 2022. The decrease was primarily due to one-time transaction costs in the prior year, partially offset by an increase in compensation expense related to the ongoing combined larger workforce, including the addition of commercial resources in sales and marketing for the testosterone replacement therapy products.
•Operating income in the second quarter was $94.5 million, compared to operating income of $34.1 million in the second quarter of 2022. Net Income in the second quarter was $74.8 million, compared with net income of $22.7 million in the second quarter of 2022. EBITDA in the second quarter was $115.1 million, compared with EBITDA of $46.6 million in the second quarter of 2022. Adjusted EBITDA in the second quarter was $115.1 million, compared with Adjusted EBITDA of $87.8 million in the second quarter of 2022.
•Earnings per Share: On a GAAP basis in the second quarter of 2023, diluted earnings per share was $0.56, compared with $0.16 in the second quarter of 2022. On a non-GAAP basis, diluted earnings per share was $0.74, compared with diluted earnings per share of $0.53 in the second quarter of 2022.1
•Cash, cash equivalents and marketable securities were $348.3 million on June 30, 2023, compared to $362.8 million on December 31, 2022. The decrease was primarily due to the repurchase of common stock for $150.0 million in the first quarter of 2023.

Financial Outlook for 2023

The Company is increasing the lower end of revenue and EBITDA guidance ranges to reflect strong second quarter results. In addition, the Company is increasing non-GAAP diluted earnings per share guidance to reflect the impact of share repurchases that occurred earlier in the year. For the full year 2023, the Company now expects:

•Total revenue of $825 million to $845 million, representing growth of 25% to 28% over 2022 total revenue primarily driven by continued strength in Wave 2 products, including DARZALEX SC (daratumumab) and Phesgo (pertuzumab, trastuzumab and hyaluronidase) utilizing ENHANZE, as well as full year auto-injector royalty and product contribution. The Company expects revenue from royalties of $445 million to $455 million, representing growth of 23% to 26%.
•EBITDA of $420 million to $440 million, representing growth of >30% over 2022. EBITDA excludes the impact of amortization costs related to the Antares Pharma acquisition.1
•Non-GAAP diluted earnings per share of $2.65 to $2.75, representing growth of 20% over 20221. The Company’s earnings per share guidance does not consider the impact of potential future share repurchases.