Halozyme Therapeutics Inc (HALO) 2023 Q4 法說會逐字稿

Hello, and welcome to the Halozyme fourth-quarter and Fiscal Year 2023 financial and operating results conference call. (Operator Instructions)

I will now turn the conference over to Tram Bui. Please go ahead.

Thank you, operator. Good afternoon and welcome to our fourth-quarter and full year 2023 financial and operating results conference call. And in addition to the press release issued today, after the market closed, you could find a supplementary slide presentation that will be referenced during today's call in the Investor Relations section of our website.

Leading the call will be Dr. Helen Torley, Halozyme's President and Chief Executive Officer, who will provide an update on our business; and Nicole LaBrosse, our Chief Financial Officer, who will review our financial results as well as our outlook.

On today's call, we will be making forward-looking statements as outlined on slide 2. I would also refer you to our SEC filings for a full list of risks and uncertainties. During the call, both GAAP and non-GAAP financial measures we'll be discussing. Certain non-GAAP or adjusted financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and slide presentation. I'll now hand the call over to Dr. Helen Torley.

Thank you, Tram, and good afternoon, everyone. Moving to slide 3. We're very pleased to report our strong financial and operating results in the fourth-quarter and for the full year of 2023. These results are driven by our two leading differentiated drug delivery technologies in hand in our auto-injectors and also by our two commercial XYOSTED and Hylenex.

Moving to Slide 4. For 2023, we delivered a 26% year-over-year increase in total revenue to $829 million and reached a record $448 million in royalty revenue, which represents a 24% year-over-year increase. Strong operational performance drove another year of double-digit earnings growth with adjusted EBITDA increasing 19% to $426 million and non-GAAP diluted earnings per share growth of 25% to $2.77 for the full year 2023. We also deployed $400 million to shareholders through share repurchases, reflecting strong cash flow and disciplined capital allocation priorities.

Moving to slide 5. Our achievements and our partner progress in 2023 contributed to the strong performance and pave the path for our strong long-term outlook. The total number of enhanced commercial products increased in 2023 from five to seven with the approval of Agennix VYVGART Hytrulo for generalized myasthenia gravis in the US and Europe and the approval of Tecentriq subcutaneous in Great Britain.

We also had multiple positive Phase 3 data readouts supporting regulatory submissions for approval of ENHANZE subcutaneous formulations. We call that we have 100% success rate for approval of products delivered subcutaneously with ENHANZE when the Phase 3 trials have met their endpoints.

VYVGART Hytrulo Phase 3 data and CIDP was the first positive Phase 3 readout. And upon approval creates an expanded commercial opportunity in a condition where there is high unmet need today, argenx have already submitted the supplemental BLA for this indication using a priority review voucher, which would support a potential approval by mid-year of 2024.

We were also very excited with the positive data announcements from two additional Wave 3 products, Roche's ocrelizumab subcutaneous with ENHANZE and Bristol-Myers Squibb's nivolumab subcutaneous with enhanced supporting global regulatory submissions and potential launch in 2024 for ocrelizumab subcu and in 2025 for nivolumab subcu.

We also continue to advance and expand our pipeline. Johnson & Johnson presented data at Asco from the Phase 1 amivantamab subcu with ENHANCE trial. An important observation that was highlighted was a dramatically lower rate of infusion-related reactions with the subcutaneous at 16% compared to 67% reported with intravenous amivantamab which is commercializes Rybrevant.

Infusion related reactions can include mild symptoms such as chills, breathlessness and nausea, but can also be severe making this reduction if confirmed in Phase 3 study very meaningful to physicians. We are delighted that Johnson & Johnson recently announced strong progress with the Phase 3 study, that the project will support submission of regulatory filings in 2024 for subcutaneous amivantamab with ENHANCE.

Another significant achievement was ViiV advancing testing of their broadly neutralizing antibody N6LS for HIV. Also in 2023, we reached an important milestone for our new high-volume auto-injector as we successfully demonstrated the feasibility of administering a subcutaneous injection of 10 milliliters of a representative biologic immune globulin 10% with ENHANZE in approximately thirty seconds using our high volume auto-injector.

And we were pleased adding new ENHANZE partner Acumen Pharmaceuticals in the fourth-quarter. We're delighted to be working with them to develop a subcutaneous delivery option for ACU193 bringing together Acumen and deep understanding of Alzheimer's and the amyloid beta oligomers with our enhanced platform.

Moving now to slide 6. With our strong track record of success and progress, as we look ahead, we have high confidence in the visibility of our revenue, and we were delighted to recently share our 2024 guidance on our 5-year financial outlook for the company.

For 2024 we're delighted to project continued strong growth of revenue with a guidance range of $915 million to $985 million, representing 10% to 19% year-over-year growth. Royalty revenue remains our top driver of our revenues and is projected to be $500 million to $525 million, representing growth of 12% to 17%. As a result of our disciplined approach to expense management and our business model. We are projecting adjusted EBITDA in the range of $535 million to $585 million, a remarkable 26% to 37% growth.

Our focus now on the 5-year financial outlook, total revenue is projected to reach $1 billion in 2025 and grow to greater than $1.5 billion in 2027 and 2028, with royalty revenue continued to be the key driver projected at $1 billion in 2027. And impressively, we project adjusted EBITDA will grow faster than revenue in every year of the 5-year outlook to an impressive $1 billion in 2028 with a 5-year CAGR of 23%.

I'll now turn to slide 7 and review royalty revenue drivers in a bit more detail. Our Wave 2 products, DARZALEX/FASPRO and Phesgo launched in 2020 have driven the impressive royalty revenues and growth illustrated on this chart and have many years of impressive growth ahead for them.

Moving now to slide 8. DARZALEX FASPRO enabled by ENHANZE. With subcutaneous penetration in excess of 90% in the US, total brand growth has become the key driver for understanding subcutaneous performance for this product.

In 2023 total DARZALEX sales continued to deliver strong growth for Johnson & Johnson, increasing approximately 23% year-over-year on an operational basis to $9.7 billion. It's strong growth was driven by share gains in all regions and continued growth in the first-line setting.

Supporting future growth and first line it is notable to highlight that Johnson & Johnson recently submitted a supplemental BLA to the FDA to support a new indication for DARZALEX FASPRO with ENHANZE for multiple myeloma in newly diagnosed adult patients who are eligible for autologous stem cell transplants.

The results from the Perseus study recently published in the New England Journal of Medicine supported this submission. The addition of DARZALEX FASPRO to standard of care treatment resulted in a statistically significant and clinically meaningful improvement over today's standard of care alone and progression-free survival complete response or better and minimal residual disease negativity.

As we look forward, ANALYST continues to expect annual sales of DARZALEX to grow to approximately $17 billion by 2028, driven in large part behind the first line opportunity.

I'll move now to Phesgo, which is illustrated on slide 9. Phesgo offers the potential for patients with breast cancer to receive treatment at a simple subcutaneous injection over five minutes after the first dose and a total treatment and observation time of about 20 minutes to 38 minutes, which compares to 2.5 hours to 7.5 hours total treatment and observation time for the IV.

With its strong value proposition, Phesgo sales continued at an impressive rate of growth in 2023, increasing 64% to CHF1.1 billion for the full year as Roche continued to expand into additional markets, but also driving global conversion rate higher. Roche reported a 39% conversion rate in 46 launch countries. As we look at regional uptake, strong growth and contribution was reported for all regions.

US sales were CHF423 million, growing at 48% and now representing close to 40% of total revenue. EU is growing at 52%, and international was reported to be growing at greater than 150%. Roche has stated that he expects continued growth of Phesgo with increasing conversion from the IV treatment projector, which reported sales of CHF3.8 billion in 2023. With Roche projecting peak conversion of approximately 50%. We were excited to see the strong performance and the future growth that lies ahead for Phesgo.

And then move to slide 10 and a focus on our Wave 3 products and product candidates. What you see in the left panel are the 2023 launches. And as you move across the slide to the right, the multiple product, regional and indication launches that are projected this year and next.I will highlight the positive Phase 3 data and regulatory submissions have been reported by our partners for all products with the exception of amivantamab, it has not yet reported its Phase 3 data.

We are very excited with the large opportunity for the Wave 3, which is now comprised of five products that are projected by analysts to generate total sales of approximately $35 billion in 2028. I will start with VYVGART Hytrulo with ENHANZE, which was approved in generalized myasthenia gravis in the US in June of 2023 and in Europe in November.

VYVGART Hytrulo with ENHANZE offers myasthenia gravis patients in new, faster treatment delivery option delivered by health care practitioners in just 30 seconds to 90 seconds. Notably, the European approval also allows for patient self-administration subcutaneously.

With the VYVGART Hytrulo subcutaneous launch just six months ago, our argenx focus has been on broadening commercial coverage and securing the data growth, which was accomplished in January of this year. With this, we project growing adoption from VYVGART Hytrulo.

The successful launch of VYVGART with $1.2 billion in revenue in 2023 supports the unmet needs that exist for the treatment of generalized myasthenia gravis and the attractiveness of the VYVGART clinical profile. VYVGART Hytrulo as the potential to expand the number of physicians using VYVGART and to expand use in the earlier lines of treatment.

And then move to an exciting additional opportunity for VYVGART Hytrul in that CIDP or chronic inflammatory demyelinating polyneuropathy. Based on organics, is research and recent comments, 42,000 patients receive treatment today for CIDP. It's a condition where there's a high unmet need. Just 20% of patients get remission on the current standard of care treatment and 50% of patients report that they remain dissatisfied with the current burden of symptoms.

The 61% reduction in risk of relapse with VYVGART Hytrul versus placebo shown in the ADHERE study would upon approval offer an important new option for patients. And I highlight that this indication will be available only as a subcutaneous treatment enabled by ENHANCE. With the recent submission and use of their prior to review voucher organic projects, the possibility of approval for this new indication in the United States in mid-2024.

Moving next to Tecentriq. Tecentriq as an IV remains a key growth driver for Roche, with revenue growing 9% year-over-year to CHF3.8 billion in 2023. Tecentriq subcutaneous with ENHANZE was granted regulatory approval in Great Britain last year and in the European Union in January of 2024 for all of the approved IV indications. It is given as an approximate a seven minute subcutaneous delivery, which compares to 30 minutes to 60 minutes for the IV infusion. With UK conversion already reaching 18% essentially in one-quarter. Roche believes that the opportunity for subcutaneous adoption remains significant. The US approval is projected in September of this year.

Moving to Ocrevus. Ocrevus as an IV is a leading treatment in the US and EU five for multiple sclerosis with more than 300,000 patients treated globally and a higher retention rate than other multiple sclerosis medicines. For the full year Ocrevus has generated an impressive CHF6.4 billion, which we estimate to be about USD7 billion. In revenue for Roche, which represents 13% year-over-year growth.

Ocrelizumab subcutaneous with enhanced creates the possibility for people living with multiple sclerosis to receive their treatment and just 10 minutes twice a year, which compares to 3.5 hours to 6.5 hours for the IV treatment and observation time. Most commented on their recent quarterly call that they project the addition of availability of ocrelizumab subcu, which is enabled with ENHANZE to create a stand-alone blockbuster opportunity.

As we've seen with DARZALEX subcutaneous, the availability of the subcutaneous delivery option can result in or accelerate market growth. We predict the availability of ocrelizumab subcutaneous and hence concrete increased growth in two key ways.

Firstly, filing current multiple sclerosis centers to increase the number of patients treated as a result of improved throughput based on shorter time needed for each patient, occupying an infusion chair. And secondly, by expanding the number of treatment centers by enabling multiple sclerosis centers that do not have IV infrastructure today to start administering ocrelizumab subcutaneously. Following the completed regulatory submissions in the US, EU and UK in 2023, we project the approval of ocrelizumab subcutaneous to represent our eight ENHANZE royalty revenue generating products in 2024.

Our next Wave 3 product is Bristol-Myers Squibb's nivolumab subcutaneous with ENHANZE, which is the brand name of Opdivo as the IV Opdivo ID sales were $9 billion in 2023, increasing 9% year-over-year, showing continued strong growth.

In January, Bristol-Myers Squibb presented the detailed results of CheckMate 67T. The Phase 3 IV versus subcutaneous registration enabling study at [SCOGI]. As announced previously, the trial met the primary endpoint of noninferiority of the two co-primary endpoints C average over 28 days and C min, a key powered secondary endpoint of overall response rate was also reported.

Noninferiority was also demonstrated with the overall response rate of 24.2% for the subcutaneous and 18% for the IV. Given in just five minutes, nivolumab subcutaneous has the potential to be practice-changing and to improve the patient's treatment experience. Bristol-myers Squibb commented that the subcutaneous could potentially extend the franchise through the end of this decade and into the early 2030s, with the subcutaneous approval projected to cover up to 75% of the IV indications.

And lastly, we were excited to have recently added Johnson & Johnson's amivantamab subcutaneous with Enhanze into our Wave 3 potential launches with the potential for launch in 2025. Johnson & Johnson recently indicated that they expect Phase 3 data from Paloma 3 trial for amivantamab with ENHANZE plus [less active] in 2024, supporting US and European regulatory filings also in 2024.Amivantamab is already approved as an IV under the brand name Rybrevant with Johnson & Johnson projecting Rybrevant will become a multibillion-dollar brand.

Let me now move to slide 11, where I'll provide an update on our Wave 4 pipeline, which is projected to support our future growth trajectory with potential launches in the 2025 to 2027 timeframe. We currently have a robust pipeline with seven exciting products in development. This reflects amivantamab moving to Wave 3 based on the updated potential launch timing and Amgen's decision to not move forward with a subcutaneous version of Tepezza with ENHANZE. Johnson & Johnson has also made the decision to not proceed with rilpivirine subcutaneous.

The Wave 4 portfolio comprises of products across a range of therapeutic areas, including oncology, neurology, immune disease and HIV. We two products in Phase 3 development. This included Bristol-Myers Squibb's nivolumab with Relatlimab with ENHANZE. For the Phase 3 study is underway. The IV version of dual like is projected by analysts to be a multibillion-dollar brand in 2028.

The goal with the subcutaneous version is to offer a shorter simpler treatment option, reducing patient burden and health care resources. Takeda TAK-881, which is a 20% IGG with ENHANZE for primary immune deficiency is the second Phase 3 development program. This will be the second 20% IGG to launch and will expanded Takeda's immune global offering for patients creating a lower volume and potentially shorter treatment schedule.

Last year, our ViiV collaboration also progressed with subcutaneous delivery of N6LS enabled by ENHANZE. N6LS broadly neutralizing antibody for HIV, and it has advanced into a Phase 2b study in combination with Cabotegravir for a two-drug regimen for HIV treatment. Because of the rapidly changing nature of HIV and its potential to develop resistance to certain treatments. ViiV based on HIV community feedback has stated that there continues to be a need for medicines with unique mechanisms of action like the broadly neutralizing antibodies, which may open up a completely new approach to treating HIV.

Separately, we continue to be pleased to collaborate with our argenx on ARGX-117, now named Empasiprubart. And in addition, we have two remaining programs in Wave 4 that are confidential at the request of our partners.

I'll move now to Slide 12. Let me now spend a moment on our high-volume auto-injector. We were excited last year to demonstrate delivery of 10 miles of a representative biologic co-formulated with ENHANZE in just thirty seconds with our innovative new high-volume auto-injector. ENHANZE is the key ingredient that makes this possible. For patients that can offer the option for home delivery or rapid delivery in the physician's office.

Our goal with the high-volume auto-injector offering is to expand upon established ENHANZE collaborations and add new collaboration partners. I'm pleased to announce that one of our current partners is initiating a human factors test of a high-volume auto-injector to evaluate device usability. This test is scheduled to start this quarter.

I'll turn now to new enhanced deal. We continue to have strong and expanding interest by existing and new partners. While we were disappointed by the slow progress in decision making by companies in 2023, we remain confident in our ability to expand our pipeline in 2024. This year started with expanded interest from potential new partners with a busy schedule of meetings in January and February already with partners expressing interest in ENHANZE a high volume on auto-injector and in some cases, the small-volume auto-injector technology. I look forward to providing updates on progress on new agreements throughout the year.

I'll now turn to our commercial portfolio. XYOSTED, sales achieved $100 million in 2023, demonstrating strong growth as sales attainment met our target revenue for the year and breakeven in the fourth quarter. This performance reflects successful execution of our three-pronged strategy, which includes targeting the switch of patients who are not achieving their treatment goals with intramuscular injections, enhancing adherence with specialty pharmacies, executing educational programs to support patients staying on treatment and continued actions to improve the net sales price.

With a market of more than 9.5 million scripts a year and our share approaching 5%. We see a clear path for continued growth in revenue and EBITDA contribution in 2024 with a CAGR projection of 25% through 2028.

Let me now turn the call over to Nicole, who will discuss our financial results in more detail.

Thank you, Helen.

The fourth quarter marked a strong end to 2023, we delivered double-digit revenue growth and achieved another record quarter of royalty revenue. Adjusted EBITDA and diluted earnings per share growth outpaced the top line, reflecting the significant leverage we generate as we grow royalty revenue.

Let me start with capital allocation on slide 13. We remain committed to our three capital allocation priorities of investing in the business to maximize revenue growth and durability, returning capital to shareholders through share repurchases and adding new growth opportunities through M&A.

In November 2023, we initiated a $215 million accelerated share repurchase or ASR. This will operate to repurchase our shares for a number of months into 2024. This brings our total share buyback since the inception of the first program in 2019 to $1.3 billion. I am also pleased to announce that our Board authorized a new $750 million repurchase program reflecting our continued commitment to balanced capital allocation and it focus on driving value for shareholders.

Turning now to slide 14. For our detailed financial results for the fourth quarter of 2023. Revenue for the fourth quarter grew 27% to $230 million compared to $181.5 million in the prior year period. Royalty revenue for the quarter was $122.1 million, an increase of 15% compared to $106 million in the prior year period. Driven by continued strong performance of Wave 2 products, subcutaneous DARZALEX FASPRO.

Note that Q4 of 2022 reflected a measurement period adjustment to amortization of intangibles to our current run rate of $17.8 million a quarter. Other operating expenses remained relatively flat period-over-period due to our leverageable business model, resulting in adjusted EBITDA growth of 47% to $121.7 million from $83 million in the prior year period.

Our cash, cash equivalents and marketable securities were $336 million as of December 31, 2023 compared to $483.3 million as of September 30, 2023. The reduction is due to the use of $215 million for the ASR, offset by positive cash generation in the quarter. We ended the quarter with a net leverage ratio of 2.5 times, and we expect to decrease net leverage each quarter with EBITDA growth.

Turning now to slide 15 for our detailed financial results for the full year 2023. I will briefly touch on some highlights here with more details available in our press release and the 10-K filed with the SEC today. Recall that we closed the Antares acquisition on May 24, 2022. And therefore, the year-over-year comparison is impacted by a full year versus a partial year of contribution from Antares business.

Total revenue grew 26% year-over-year to $829.3 million in 2023 off in an already substantial revenue base in 2022 of $660.1 million. The main contributor to this increase was higher revenue from royalties of $447.9 million, reflecting growth of 24% as well as higher ENHANZE product sales and XYOSTED sales growth.

Also note that the revenue growth was offset by the timing of milestones recognized in the prior year. We call that the timing of the milestone for Tecentriq SC in the US was planned for the third quarter of 2023 and is now expected in September 2024. For research and development expenses were $76.4 million compared to $66.6 million in 2022, primarily due to increased compensation expenses resulting from the addition of a new platform, our device platform as well as plan investment in ENHANZE.

Selling general and administrative expenses were $149.2 million compared to $143.5 million in 2022, primarily due to the addition of resources in sales and marketing with the addition of our commercial product sales debt.

Offset by one-time transaction costs related to the Antares acquisition that occurred in the second quarter of 2022 of approximately $38 million. Adjusted EBITDA increased 19% to $426.2 million from $358.9 million in the prior year period. GAAP diluted earnings per share was $2.10 and non-GAAP diluted earnings per share was $2.77. This is compared with GAAP diluted earnings per share of $1.44 and non-GAAP diluted earnings per share at $2.21 in 2022.

Turning now to slide 16 and our 2024 guidance. We are reiterating our top line adjusted EBITDA and non-GAAP diluted EPS guidance for the full year 2024 that was provided in January. We are projecting another year of double digit revenue growth to $915 million to $985 million. With milestones and API sales to be substantially weighted in the second half of the year.

Royalties are growing to $500 million to $525 million with a flattening in the first and second quarter and growth sequentially thereafter. With royalty revenues for the year greater than 50% of total revenue. This directly impacts gross margin expansion, resulting in adjusted EBITDA growth of 26% to 37% to $535 million to $585 million. And when coupled with our 2023 share repurchases, non-GAAP diluted EPS growth is outpacing the top line growth at 28% to 41%, the $3.55 to $3.90.

So with that, I'll now turn the call back over to Helen.

Thank you, Nicole, and thank you to all of the Halozyme team, our partners and collaborators on a strong 2023. I'm very excited of the opportunities that lie ahead for Halozyme.

Our disruptive drug delivery technologies continued to demonstrate strong value to our partners and to patients. As the market leader we are well positioned to capitalize on the significant market opportunities ahead for subcutaneous delivery technologies and to deliver strong durable revenue and EBITDA growth.

And with that, operator, we're pleased to open the call for questions.

Thank you.

Jessica Fye, JPMorgan.

Hey, guys. Good afternoon and thanks for taking my questions. And just a couple of here. I guess first, what are your goals for signing new partnerships this year? And second, how quickly can you deploy the $750 million share repurchase authorization? Thank you.

Thanks, Jeff, I'll take the first one. We certainly are off to a great start in 2024 with a robust set of meetings and forward momentum across all of our opportunities that concludes ENHANZE, the high-volume auto-injector and the small-volume auto-injector. And our focus has been progressing all three of these types of deals, and we're not putting a specific number on it, but we're looking to advance all of these and I look forward to updating you on that progress throughout the year.

Nicole, will you tackle the question on the on the share repurchase new program?

So at the moment, we are actively repurchasing shares today. We call it the towards the end of 2023, we initiated a $250 million accelerated share repurchase program that operates for a number of months into 2024 to buy those shares. So that is active at the moment and we were happy to announce the approval of the new program and that the purpose of that is to continue to execute on our capital allocation strategy and continue to utilize that to continue to look at share repurchases and into 2024 and beyond.

Thank you.

Michael DiFiore, Evercore ISI.

Hey, guys. Thanks for taking my questions and congrats on all the progress in 2023. Just two question from me. With regards to the amyloid beta target from ENHANCE. And obviously, this is a non-exclusive deal. Had there been any more partner companies that have opted into co-licenses target? And any commentary on when we might find out who the other co-licensee is.

Separately, just wondering if there were any had been any development or updates the time lines for the room, temperature and high yield, hyaluronidase and whether any potential partners have expressed interest in this? Thank you.

Thanks, Mike. With regard to amyloid beta, which obviously we were delighted last year to sign the deal with Acumen and we don't have any other partner agreements we can announce with regard to that. But it continues to be an area of focus for us because we do believe there is a strong value proposition for Alzheimer's patients and being able to receive their therapy as infrequent as possible, simple subcu dose, even at home.

And so we remain in active dialogue with regard to that and the company that already had the nonexclusive license use, it really is up to that partner. And I think Mike will depend on whether they are advancing in clinical development. That is not an active program at this point in time. So it really would be up to them if they did decide to disclose it at that period of time, but some definitely an exciting area, and we're delighted to be working with them Acumen.

And for the room temperature stable. Just to remind everybody, this is a different version that then hands another higher on a days which has its own patent life out to 2032 in Europe, in 2034 in the United States.

Now it we brought forward as a possibility to use with our partners who perhaps wanted a product like a small molecule that patients would carry around with them. And obviously, the majority of our products are refrigerated today and so in hands is just perfect for that. And we have advanced the development of that to have established a new cell line for it.

And we are ready to go to scale up. And we're still in conversations, although there are early conversations with at least one partner about potentially moving that forward. But so far, no decision to move forward with that, but we are ready to go to the next stage. And this is a full development.

And just to give an expectation of the time line we'd expect this to be available post 2027 as there is work to be done to finish the scale-up, but also any program going through with the new room-temperature would have to go through our standard Phase 1 Phase 3 program, which an average takes about five years. So hopefully that's helpful in describing the time line for them.

There are few companies interesting, I will say most people enhance is exactly what they need, and that's where we expect the majority of partners to go. But this was an additional offering we thought might work for us, a nice small target number of opportunities, and we'll continue to talk about that.

Great. Thanks so much.

Mohit Bansal, Wells Fargo.

Great. Thank you very much for taking my question. Two questions, if I may. One of your 10-K, there's some comment around cancellation of the ENHANZE partnership with a Horizon. If you could elaborate a little bit more. I know there was not a lot of progress made before the company got acquired by Amgen. But any comment, any color you could provide there?

And the second question is regarding the infusion times reduction right? So for Tecentriq and Opdivo, you're talking about 30 minutes coming down to 5 minutes or so. How big is the factor, I guess, infusion time reaction in terms of conversion? Does it play into like, I mean, some conversions are more like 50% or less as Darzalex is really high conversion story. So could you talk a little bit about that?

With regard to the Amgen agreement now, with [Ripasa], well, all we can say, Mohit, is that very recently Horizon informed us that they were ending the agreement and licensing agreement with ENHANZE, they didn't provide any further information. And so there's no additional information we can share on that. And as you note, that had that not been progressing out with Horizon for a period of time as we've kept everybody informed.

On the infusion times, I'll give a couple of examples that I think can very nicely illustrate that because clearly Darzalex is has got a marvelous improvement for patients, not just reduction in infusion time, but also infusion related reactions. But if we look at them, two examples, I'll use Herceptin where in Europe that was launched several years on the market before biosimilars. As an IV that was about 30 minutes to 60 minutes. And as a subcu, it was 5 minutes.

And in that case, it got to 60% share of sales conversion in just three years. And we're seeing a very similar picture, I think with Phesgo slight difference where the IV can be as much as 2 hours to 2.5 hours. The subcu is more in the range of five to seven minutes, but again, a very nice global conversion, as I mentioned on the call already, 40% conversion, very close to that in the 46 launch countries and certainly showing strong adoption with 40% of sales also coming from the United States now.

And so I think those are two examples that say reduction in time from an hour-long IV to a 5-minute subcu is very attractive in the market, it helps the patient. It reduces health care costs. And I think in the world where not just outside the US, but in the US, we're also seeing major infusion suite capacity constraints, there is a growing desire and need to be able to have more patient throughput. And the subcu is fitting very well into that in the US and outside the US, which is why I think we're seeing such nice growth of Phesgo in all regions of the world.

Mitchell Kapoor, H.C. Wainwright.

Hey, Ron, thanks for taking the question. I wanted to ask a little bit about your expectations for any kind of coverage barriers within next launch of subcutaneous versions of products. I guess whenever I think about Tecentriq, the impressive 18% conversion in the first quarter of launch in the UK is great. And I'm wondering more broadly view, see any kind of pushback from payers whenever you're thinking about the next products coming to launch?

Yes. Mitchell, on that from a we can look to the history of what's happened with all of the products that have been launched. And we always think about these things, as outside the US and then inside the US. I think outside the US, some of the payers in Europe and in particular recognize the importance of subcu for reducing the cost of care. And then there tends to be very robust adoption. Indeed, sometimes I'm mandated conversion to subcu because of the very beneficial impact on patients and the health care system. So would not presume any barriers at all outside the US.

In the US as well there's always a period which we usually model is about six months where you do need to get the reimbursement and pay in place. There's automatic coverage in Medicare, but physicians like to wait for the J-code, which is now issued quarterly. So as an example, after six months, VYVGART Hytrulo got there.

So but once that J-code in place, the confidence in reimbursement increases. And so I would say just think about it as a little bit of a slow uptake for the first six months and then no real barrier. Same is true with commercial coverage.

In general, our partners have priced the IV and the subcu, certainly on a WAC basis similarly. I imagine, there is also similar in market prices to the payers and what that continues to happen. And we hear and see that access is very similar achieved for the IV and subcu. So no barriers there. And you could believe that there is even an opportunity with them some thoughtful strategies to have subcu be preferred given some of the healthcare costs, and that's certainly something we are thinking about.

We are beginning to talk about with payers and also talk about with them some of the government payers as well because subcu offer so many benefits to the health care system. So equal playing field to date, maybe can move to have more preferred playing field in the US in the future.

Jason Butler, JMP Securities.

Hi. Thanks for taking the questions. Two from me. Just following on from the comments around Horizon, is there now an opportunity to see and for IGF 1R in thyroid eye disease, a new exclusive license with a new party or it only a nonexclusive license that becomes available with the termination of the Horizon partner shipments?

Second question is just can you speak to the partnership interest on ENHANZE alone versus ENHANZE plus any Antares auto-injector at this point? Thank you.

All right. With the the ending of the agreement with Horizon, we actually are in a position to license the idea for one target exclusively or non-exclusively depending on the partner need and interest. So we can do either Jason.

On the conversations we're having today. I would say there's an equal weighting of interest and enhance and enhance the high volume auto-injector and really fit that the balances, depending on the volume of expected drug, if it's a drug that's more than 10 ml clearly, we're focused on just in hand, but we've got some interesting conversations with drugs that are more in that 2 ml to10 ml and that's where the conversation focuses on the combination of enhancing the high-volume auto-injector.

Okay, great. Thank you.

Joe Cantie Zorro, Piper Sandler.

Everybody. Thanks for taking my question. And we just had one quick one on Takeda's IVIG portfolio. And I guess I was wondering how we should think about HyQvia historical royalty contribution and then potential impact it may or may not see with the CIDP label expansion. And I guess I'm asking that because I recall seeing somewhere that CIDP indication where IVIG. sees the most on use, though. So any comments there would be helpful. Thanks.

Yes, we continue to see growing royalty contribution to Halozyme from sales of HyQvia. So at Takeda has certainly continued to execute and see growing adoption in the area of primary immune deficiency.

I agree when we look at the market of the use of IVIG is 20% to 25% is reported to be an CIDP. So, it's that certainly is a high use area. It's an area where patients stay on therapy for a prolonged period of time. And we certainly would expect that the addition of this indication not just in Europe, but also in the US will offer a new growth opportunity upon approval for the HyQvia.

For the, I think you also wanted to talk about some the new 20% version that's obviously still in development. And we are very excited to be advancing that in Phase 3 development with Takeda and that we're looking forward to working with Takeda to get that to approval as well and get it used in as many indications as possible.

Okay. Thank you. That's helpful. Thanks very much.

David Risinger, Leerink Partners.

Hi, it's Jason drawn for Dave. I think you for taking my questions. So regarding the long-term projections from your January presentation, but just please provide some perspective on the forecast of annual collaboration revenue of $130 million to $160 million, including key drivers and expected contributions.

Yes, I will ask Nicole to address that.

So we're still looking at those projections where we have an annual collaboration revenue of $130 million to $160 million and the drivers are coming from several contributions from our partnerships, one of them being development milestones. So as our partners move through clinical stages, we receive milestones as those targets are achieved.

We also have regulatory registrational first commercial sales based milestones and then continuing sales-based milestones post the launch of a product. We also included within that range $30 million to $60 million that is related to our expectation of achieving new collaborations and new study starts a new programs progressing through the clinic. So that that is the pieces that make up that collaboration revenue.

Okay. Thanks so much. Very helpful.

(Operator Instructions)

Corinne Johnson, Goldman Sachs.

Yes, good afternoon, everyone. It's maybe a question for me on the nature of the auto-injector partnership conversations. What are some of the key questions that your potential partners are asking and where do you think they're going to have them as comfortable versus where are there any sort of consistent sticking points that you can help them work through.

I would say, and obviously, we always start. And so it's not a question, but one of the important things we always communicate is the long track record of success and the multiple approvals our platform has attained to occur in Corinne. Now Halozyme has delivered over 40 million devices to partners and in use ourselves. So that long track record of success and the track record of approvals of drug device combinations is pretty much unmatched, we believe in the industry.

So we always start by making sure they understand that some that we just to have an incredible experience base. We then go on to talk about the fact that our high volume injector is based on an extrapolation of this already approved and highly reliable based auto-injector. And again, that is a source of them. I think that pleases them to hear that, that this is something that is tried and tested because what we understand is that there have been some particularly on-body injectors that have been tried over the last several years that have not delivered with the reliability that was required.

And so that is a question that I have really on reliability, wanted to be sure that this some is going to be able to be delivering for the patient every time. And of course, that's another of the advantages of our Antares platform is that it is tested to the highest levels of reliability for several of our products like the EpiPen, and it's called the 5-9s of reliability, but it's 99.999% fire on-time and well.

And so the biggest thing is just get them helping them understand this is them built on an incredible background platform with great experience from our engineers, track record of success with regulators. But I think the team has done over 20 human factor studies very successfully also to support regulatory filings and getting them to understand that I see that is it a large focus of the conversation.

And then I mentioned in December, and I think it's still true. These are scientists. These are engineers. They want to have a chance to hold and test the device themselves and so on. That's what we're doing. But we're delighted today to announce that one of our partners is advancing in the human factors test on usability. And I think we're going to continue to see that as we are talking to partners so when that some that I think Corrine would be how I would address that question.

Great. That was really helpful and comprehensive. And then maybe one more from me. Just you know it's been a couple of years since you did the Antares acquisition. How are you thinking about the fit for that commercial business within the broader portfolio? Is it still something you think makes sense strategically?

Yes, maybe when we did the acquisition, we talked about the commercial business as bringing a diversification of our revenue. And as some Nicole and I both talked about in the call last year, we achieved $100 million and turned EBITDA positive at the end of the year.

So beginning this year, XYOSTED, the leading commercial product is going to be contributing to EBITDA. And as we talked about in January, is projected to exceed $150 million in EBITDA contribution by 2028. And so it is a great fit from the point of view or adding Antero revenues, diversifying our revenues, but also contributing meaningful EBITDA even on our very large revenue base that we project in 2028.

So that's how we view it as in terms of the strategy fit. It is also a wonderful demonstration of the effectiveness and reliability of our small-volume auto-injectors because recall XYOSTED, is a once a week 8 second subcutaneous testosterone replacement that is virtually painless. And so it's a very good thing for us. To demonstrate our effectiveness in managing and delivering autoinjectors, but also the high reliability of our device. So lots of strategic fit for it.

Okay, great. Thank you.

There are no further questions at this time. This will conclude today's call. We thank you for joining. You may now connect to your line.