Shares of Halozyme Therapeutics HALO have gained 35.1% this year against the industry’s decline of 18%.
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The company’s ENHANZE drug delivery technology helps develop subcutaneous formulations of drugs. Several companies, including Roche RHHBY, Takeda, J&J JNJ, AbbVie, Lilly, Bristol-Myers and others, are using this technology to develop subcutaneous formulations of their currently-marketed drugs.
The upside can be attributed to the strong demand for one of its partnered drugs — J&J’s Darzalex SC/Drazalex Faspro. The demand for this drug is likely to remain robust for the next few quarters and drive the momentum in Halozyme’s shares.
In the third quarter 2022, Halozyme’s earnings and revenues beat estimates. Adjusted earnings were up 35% year over year on the back of 80.1% growth in revenues. The company continues to expect growth of 48%-55% in 2022 revenues. It expects the majority of the gain in revenues to be driven by robust demand for its partner, J&J’s subcutaneous Darzalex, growth in Roche’s Phesgo and additional royalty revenues from auto-injector devices following the Antares acquisition.
Darzalex SC/Drazalex Faspro is a subcutaneous (SC) formulation of J&J’s popular intravenous (IV) cancer drug, Darzalex, developed using Halozyme proprietary ENHANZE technology for easier administration compared to IV.
Halozyme has five marketed partnered drugs developed using its ENHANZE technology. Apart from Darzalex SC/Drazalex Faspro, other key partnered drugs of Halozyme include the SC formulation of three drugs from Roche’s portfolio — Herceptin, Phesgo and Rituxan. Another commercialized partnered drug includes Takeda’s subsidiary, Baxalta’s Hyqvia, which is approved for treating immunodeficiency.
Apart from marketed partnered drugs, there are multiple drugs under development as part of Halozyme’s collaborations with different pharma/biotech companies. The company has 12 collaborations and five marketed partnered drugs based on this technology. The marketed partnered drugs are driving royalties for Halzoyme, while the under-development drugs indicate the potential for additional royalties.
Roche is developing SC formulations of its popular immunotherapy, Tecentriq, and multiple sclerosis drug — Ocrevus — across 12 potential targets in different stages of clinical studies.
In August, Roche announced that the phase III study evaluating subcutaneous (SC) Tecentriq with ENHANZE met its co-primary endpoints. q. Roche intends to submit the data for regulatory approval to health authorities globally, including the FDA and the European Medicines Agency (EMA), resulting in Halozyme's revenue recognition of $19 million for associated milestones.
In September, Halzoyme’s partner, argenx ARGX announced the submission of a biologics license application (BLA) to the FDA for the SC formulation of its efgartigimod in generalized myasthenia gravis. A potential approval will likely boost Halozyme revenues through additional royalties in 2023.
Halozyme expects to generate $1 billion in annual royalties from its ENHANZE technology by 2027.
Halozyme acquired Antares Pharma in May 2022, adding an industry-leading auto-injector platform to complement its ENHANZE technology. The company believes that the addition of Antares’ leading auto-injector platform will help it to become a leader in the drug-delivery space. The platform may also offer a broad licensing opportunity. The acquisition also adds testosterone replacement therapies — Xyosted, Tlando and Nocdurna— to Halozyme’s portfolio. Halozyme believes that the acquisition of Antares will accelerate its growth going forward.
The company expects adjusted earnings to be in the range of $2.10-$2.25 per share in 2022, reflective of the projected accretion from the Antares Pharma acquisition.
Halozyme Therapeutics, Inc. Price
Halozyme Therapeutics, Inc. price | Halozyme Therapeutics, Inc. Quote
Halozyme currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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