HALOZYME THERAPEUTICS, INC. Q4 FY2024 earnings call

• 2024 was an exceptional year with total revenue exceeding $1 billion, and full-year results exceeding raised guidance for royalty revenue, adjusted EBITDA, and non-GAAP EPS.
• 1 million patients have received drugs delivered subcutaneously with ENHANZE, establishing a strong safety database.
• Four major products or new indications with ENHANZE received approval in a major region in 2024, and current partners nominated five new targets for subcutaneous development.
• Extended patent protection of ENHANZE in Europe out to 2029, and remain confident in US patent reissue.
• 2025 guidance includes total revenue projection of $1.15 billion to $1.225 billion, driven by DARZALEX subcutaneous, Phesgo, and VYVGART Hytrulo.

In 2024, Halozyme's total revenue exceeded $1 billion, growing 22% year-over-year. Royalty revenue saw a 27% growth, reaching $571 million. For the fourth quarter of 2024, revenue was $298 million, a 30% increase from the prior-year period. Royalty revenue in the fourth quarter was $170 million, up 40%, and revenues under collaborative agreements were $48 million, up 70%. DARZALEX subcutaneous had worldwide sales of $3.1 billion in Q4 2024, with full-year revenue $11.7 billion. Phesgo had Q4 revenue of CHF500 million and full-year revenue of CHF1.7 billion. VYVGART Hytrulo had Q4 sales of $737 million and full-year revenue of $2.2 billion.

• 2025 total revenue is projected to be $1.15 billion to $1.225 billion, representing 13% to 21% year-over-year growth.
• Royalty revenues are expected to be $725 million to $750 million, a 27% to 31% year-over-year growth.
• Adjusted EBITDA is expected to be between $755 million and $805 million, a 19% to 27% year-over-year growth.
• Non-GAAP diluted EPS is projected to be $4.95 to $5.35, a 17% to 26% year-over-year growth.
• From 2024 to 2028, royalty revenue, adjusted EBITDA, and non-GAAP earnings per share are expected to more than double, with total revenue close to doubling to $1.7 billion to $1.9 billion in 2028.

• Reimbursement dynamics for new products can delay conversion and adoption, e.g., Opdivo Qvantiq's reimbursement takes time.
• Uncertainties exist regarding the timing and success of pipeline products in development, such as the six products with argenx where data is needed to forecast their contribution.

Q: What is your confidence in new uses beyond 2028 and mitigating earnings reduction?

A: We have 10 approved or soon-to-be-approved products with royalties continuing until the 2030s and some into the 2040s. Pipeline products like Relatlimab Obdivo and TAK-881 are derisked, and new nominations and deals will add to the revenue base.

Q: How does the small-volume auto-injector deal impact partnerships and economics?

A: The small-volume auto-injector deal has fee-for-service and product sales components. The high-volume auto-injector drives new royalty streams and product sales. Conversations with partners are ongoing but take time.

Q: Explain the first quarter royalty decline dynamics and inclusion of pre-filled syringe uptake in guidance?

A: Royalties have annual rate resets, with DARZALEX being a major driver of the quarter-over-quarter decline. The pre-filled syringe approval in April is reflected in guidance as argenx provided projections.

Q: When might we learn details of the small-volume auto-injector deal and what is the definition of mid-single-digit royalties?

A: Details depend on partner confidentiality. Mid-single-digit royalties are defined as plus or minus 5%, typically 3% to 7%.

Q: Thoughts on VYVGART subcu exceeding IV sales and undisclosed products on slides?

A: argenx hasn't provided perspective on VYVGART subcu exceeding IV sales. Undisclosed products are from current partners with open slots.

Q: Leverageability of work on large-volume auto-injectors and status of the $250 million accelerated buyback?

A: Work on high-volume auto-injector components is suitable for multiple partners. The ASR started in December and will run for months, with majority of shares already retired.