Halozyme (HALO) Fourth Quarter Earnings Top, Royalty Drives Revenue – February 23, 2022


Halozyme Therapeutics, Inc. (HALO Free Report) reported fourth-quarter 2021 adjusted earnings of 42 cents per share (excluding stock-based compensation expense), which beat Zacks’ consensus estimate of 40 cents. The company’s earnings were 56 cents per share in the prior year period.

Total revenue decreased 16.2% year-over-year to $102 million, primarily due to lower revenue under collaboration agreements and product sales, which were partially offset by significant royalty payments, in particular from NOT A WORD (JNJ free report). The top line, however, beat Zacks’ consensus estimate of $97.1 million.

Halozyme inventory is down 30.5% over the past year, compared to the industry’s 38.6% decline.

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Quarterly Highlights

Halozyme’s revenue includes product sales, royalties and revenue from collaborative agreements.

Several companies are using Halozyme’s ENHANZE technology to develop a subcutaneous formulation of their currently marketed drugs. The company has commercialized five joint drugs based on this technology, including J&J’s Darzalex subcutaneous formulation and rockit’s (RHBY Free report) Phesgo.

Royalty revenue was $62.6 million in the fourth quarter, up 96% from the prior year quarter, primarily due to strong sales growth of J&J’s subcutaneous Darzalex and, to a lesser extent, Roche Phesgo. Royalties generated more than 60% of the company’s total revenue. Strong demand for J&J’s subcutaneous Darzalex, multiple label expansions and continued launches in new territories as well as additional contribution from Roche Phesgo are likely to drive Halozyme’s strong royalty income.

Product sales, solely from the sale of bulk APIs to collaborators using the ENHANZE platform for drug development, were $27.1 million in the quarter, down 16.7% compared to the quarter of the previous year. The company provides APIs to ENHANZE partners such as J&J and Roche.

Revenue from collaboration agreements was $12.3 million, down 78.5% year over year. The company had recorded an upfront licensing payment of $30 million from one of its partners in the fourth quarter of 2020, which was absent during the reported quarter.

Research and development ([R&D] including stock-based compensation) expenses increased 37% year-over-year to $10.1 million due to increased costs to support additional ENHANZE goals.

Selling, general and administrative (SG&A, including stock-based compensation) expenses were $13.8 million, up 32.1% from the same period last year.

Annual results

Halozyme reported revenue of $443.3 million in 2021, up 65.7% year-over-year, primarily due to strong royalty growth. The company’s earnings for 2021 were $2.00 per share, down from $1.12 per share a year ago.

Orientation 2022

Halozyme maintained its 2022 revenue and profit guidance released last month. The company expects total revenue in 2022 to be between $530 million and $560 million, indicating 20-26% year-over-year growth.

Company expects royalty revenue to grow approximately 50% year-over-year to $300 million driven by strong adoption of a subcutaneous formulation of J&J’s Darzalex as well than to the growth of Roche’s Phesgo. Product sales and collaboration revenue are expected to be flat year-over-year.

Company expects adjusted earnings to be between $2.05 and $2.20 per share (excluding stock-based compensation expense), implying year-over-year growth from 2.5% to 10%.

Zacks Ranking and Stocks to Consider

Halozyme currently carries a Zacks rank #5 (strong sale).

A top-ranked company in the medical sector is Pharmaceutical College (COLL Free Report), sporting a Zacks Rank #1 (Strong Buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Earnings per share estimates for Collegium have risen from $3.52 to $5.86 for 2022 in the past 30 days. COLL has gained 18.8% since the start of the year.

Collegium has recorded a negative earnings surprise of 22.76%, on average, over the past four quarters.


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