Halozyme Therapeutics Inc (HALO) 2021 Q1 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Halozyme First Quarter 2021 Financial Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Al Kildani, Vice President of Investor Relations and Corporate Communications. Thank you. Please go ahead.

Thank you. Good afternoon, and welcome to our first quarter 2021 financial results conference call. In addition to our press release issued today after the close, you can find a supplementary slide presentation that will be referenced on 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 Elaine Sun, our Chief Financial Officer, who will review our financial results for the first quarter.

On today's call, both GAAP and non-GAAP financial measures will be discussed. The non-GAAP or adjusted financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and slide presentation. During the call, we will be making forward-looking statements. I refer you to our SEC filings for a full listing of the risks and uncertainties.

I'll now turn the call over to Helen.

Thank you, Al. I'm pleased to report that our first quarter results provided a strong start to 2021 for Halozyme. We reported first quarter revenues of $89 million, fueled by record quarterly royalties of $36.9 million, GAAP earnings per share of $0.19 and non-GAAP adjusted earnings per share of $0.37.

Our partners made critical progress in the clinic with therapies using ENHANZE. In the first quarter, we achieved 2 of the expected 4 Phase III trial starts for 2021, which is defined as first patient enrolled, and we also achieved 2 of the expected 5 Phase I trial starts for 2021.

Additionally, we completed a successful convertible note offerings of $805 million on attractive terms and use a portion of the proceeds to retire a large portion of our existing convertible note and to repurchase $75 million worth of shares through an accelerated share repurchase, further demonstrating our commitment to capital return.

We achieved these strong results against the backdrop of the ongoing global COVID pandemic. This has been accomplished by the strong performance and hard work of our partners, our contract manufacturers and suppliers and the entire Halozyme team.

Let me now discuss our royalty revenue growth, which is illustrated on Slide 3. We achieved our highest ever level of quarterly royalties during the first quarter at $36.9 million. This represented 119% growth year-over-year and 15% sequential growth, following what had previously been our record quarterly royalties. This strong growth is primarily being driven by the successful ongoing global launches of Janssen's subcutaneous forms of DARZALEX, which utilized our ENHANZE technology.

We continue to project the doubling of royalty revenues for the full year 2021, driven primarily by the continued growth of DARZALEX SC and also by growth in Roche's Phesgo. We're delighted with this robust growth and its high-margin recurring revenue stream.

Let me turn now to Slide 4, where I'll provide highlights of our key commercialized products. We have 5 products that are now approved in most major global markets using our ENHANZE technology. Globally, more than 500,000 patients have received commercial products utilizing ENHANZE. Let me begin with the most recently launched products, which represent our Wave 2 launches, DARZALEX SC and Phesgo.

During the first quarter, Janssen's parent, Johnson & Johnson, reported worldwide sales of DARZALEX, including both the IV and SC forms, of $1.37 billion, up 42% year-over-year on an operational basis.

Janssen does not provide a breakdown of DARZALEX sales by indication or route of administration. However, they did comment that the impressive growth was attributable to share growth across all lines of therapy and increased penetration of the subcutaneous formulation in the U.S. and Europe and also continued DARZALEX penetration in the frontline setting, aided by recently approved line expansions that penetrate new patient population, posting nearly 3 points of share growth in frontline in the U.S. this quarter.

During the first quarter, Janssen also reported several important achievements that are expected to support the future growth of subcutaneous DARZALEX. These include U.S. SC accelerated approval and Health Canada approval for the indication of newly diagnosed develops with light chain amyloidosis for the use of DARZALEX FASPRO, in combination with bortezomib, cyclophosphamide and dexamethasone. I'll note that there were no previously approved therapies for this disease. And also the approval from Japan's Ministry of Health, Labor and Welfare for the subcutaneous formulation of DARZALEX for the treatment of multiple myeloma.

Accordingly, Halozyme recognized $5 million in milestone revenue. With strong operational momentum, expansion into new geographies and expansion into new indications, we continue to expect that DARZALEX will be a strong driver of royalty growth for Halozyme.

The second product that is to launch is the Phesgo, the fixed-dose combination of 2 of Roche's antibodies, Perjeta and Herceptin, administered in a 5- to 8-minute subcutaneous injection compared to an administration time for several hours for the IV.

Phesgo was launched in the U.S. in the third quarter of 2020 and in the initial European launch markets during the first quarter of 2021. The European launches followed regulatory approval in Europe in late December of 2020.

In the first quarter, Roche reported Phesgo sales of CHF 29 million. We anticipate the continued adoption and use in the U.S. and additional launches in Europe throughout 2021 once reimbursement is in place will result in robust growth.

Following the initial -- the strong initial launch of DARZALEX SC in 2020, we project DARZALEX SC will continue to be the key driver of royalty revenues and royalty revenue growth for Halozyme in 2021.

Let me move now to the Wave 1 launch product. Roche continues with its global commercialization of MabThera SC, also called Rituxan Hycela and subcutaneous Herceptin and Herceptin Hylecta. We project continued decline in royalties from these mature products as a result of the ongoing impact of biosimilar competition. And Takeda's HYQVIA continues to post growth, albeit on a smaller base of revenues.

Let me now move to Slide 5 and a discussion of the ENHANZE development portfolio. I'll begin with an overview, and then I'll move to a review by partner. What is very exciting is that we project the expansion and maturing of our development pipeline to 16 products by the end of 2021, including an expectation that 4 products will be studied in Phase III clinical trials and a total of 12 products will be in or will have completed Phase I clinical trials.

As highlighted on Slide 5, in the first quarter, we saw strong progress with 4 new clinical trial starts, including 2 Phase III studies and 2 Phase I. Today, we have 2 products that are in Phase III, argenx's efgartigimod and Roche's atezolizumab. And we expect 2 additional Phase III starts this year, one of which is BMS's nivolumab. The product in Phase III programs comprise our potential Wave 3 launches. Based on historical development time lines, the 4 Phase III products represent potential launches in the 2023 to 2025 time frame.

As I mentioned, we have 12 products that we project will be in or completing Phase I by the end of 2021. These products form our potential Wave 4 product launches, where if development continues, these could launch in the time window of 2025 to 2027. We believe this advancing pipeline of products utilizing ENHANZE is setting up the potential for multiple ways of future product launches that will deliver long-term growth in revenues, cash flow and profitability.

Now let me provide the brief discussion by partner, and I'll begin with Bristol-Myers Squibb. Bristol recently posted an overview of the design of its planned Phase III study of subcutaneous nivolumab for the treatment of clear cell renal cell carcinoma on clinicaltrials.gov. With a steady start in sight, accordingly, we recognized $25 million in milestone revenue in the first quarter. We're very excited for this important next step for subcutaneous nivolumab as one of our potential Wave 3 launches. In parallel, Bristol is continuing with an exciting set of immuno-oncology target clinical study, having publicly announced selection of 5 of the available 11 targets.

In addition to nivolumab, Bristol has 3 ongoing or completed Phase I studies with ENHANZE. These include studies of anti-CD73, TIM-3 and the fixed-dose combination of nivolumab and relatlimab.

Let me move now to our newest partner, Horizon Therapeutics. We're delighted to share that, as announced by Horizon last week, not only have we initiated a Phase I study of TEPEZZA utilizing ENHANZE, but they've already completed patient dosing. The trial is a small single dose Phase I pharmacokinetic trial, evaluating use of ENHANZE with TEPEZZA.

If development is successful, Horizon hopes to potentially shorten drug administration time, reduce health care practitioner time and offer patients suffering from thyroid eye disease, additional flexibility and convenience. This development represents remarkably fast progress, given that we signed our collaboration agreement with Horizon in November of last year. We look forward to further developments in this exciting program for a drug that has anticipated peak sales potential of $3.5 billion according to Horizon.

Let me now move to argenx. Argenx has 2 targets in development using ENHANZE efgartigimod and ARGX-117. Argenx continues with the execution of its 4 Phase III trials for 4 separate potential indications for efgartigimod SC utilizing ENHANZE.

Let me briefly describe these 4 registration enabling studies. In February, argenx announced a go-decision for its ADHERE registration trial, evaluating subcutaneous efgartigimod with ENHANZE in chronic inflammatory demyelinating polyneuropathy, or CIDP.

Argenx has continued enrollment after the planned safety and efficacy assessment and expect to include approximately 130 patients to support potential registration of SC efgartigimod for the treatment of CIDP. In January, argenx initiated its Phase III ADDRESS trial in pemphigus vulgaris and foliaceous to serious skin barrier diseases associated with painful blistering, and these studies continue to enroll.

Moving now to the third registration trial and potential indication. Argenx met with the FDA in the first quarter to discuss the potential for a bridging study of SC efgartigimod in myasthenia gravis, or MG. Following FDA feedback, argenx has moved forward with a small focused trial designed to enable a fast path to registration for SC efgartigimod. And Argenx also continues with its fourth potential indication of a Phase III trial evaluating SC efgartigimod with ENHANZE for immune thrombocytopenic purpura.

Efgartigimod, which analysts project to a multibillion-dollar potential if one of our potential Wave 3 launches in the 2023 to 2025 time frame, and we're delighted with the progress to date. And lastly, on argenx, development continues with its second nominated target, ARGX-117, which is being evaluated and a recently initiated Phase I study in healthy volunteers.

Let me now move to Roche. Roche's 2 products in development with ENHANZE, Tecentriq and Ocrevus. The Phase III trial evaluating Tecentriq SC with ENHANZE in stage IV non-small cell lung cancer is ongoing. Tecentriq, which is already a multibillion-dollar franchise, also represents one of our Wave 3 potential launch products with the potential to launch in the 2023 to 2025 time window. And Roche also continues with it's Phase I study, evaluating SC administration of ocrelizumab or Ocrevus with ENHANZE. Ocrevus is another approved blockbuster product and is indicated for patients with multiple sclerosis.

I'll move now to Janssen. In addition to the successful launch of subcutaneous forms of DARZALEX, Janssen continues with a Phase I study of amivantamab, their EGFR and cMET bispecific antibody with ENHANZE in advanced solid tumors.

We're pleased with the progress our partners are making and advancing therapies using our ENHANZE technology. All of this progress I've just described is setting up multiple ways of future potential approvals and launches that can drive long-term revenue growth for Halozyme. And just before I close on the ENHANZE partners, I'd like to report progress on the second program that entered Phase I clinical testing during the first quarter.

In June of 2019, we announced the Cooperative Research and Development Agreement, or CRADA, with the National Institute of Allergy and Infectious Diseases' Vaccine Research Center, or VRC, which is part of the National Institutes of Health. The CRADA enabled us to use our ENHANZE technology to develop subcutaneous forms of broadly neutralizing antibodies against HIV for the treatment of HIV.

I'm pleased to report that the program recently dosed the first patient in the ENHANZE arms of the VRC-609 Phase I trial, which will investigate the safety, tolerability, dose and pharmacokinetics of the broadly neutralizing antibody N6LS, which will be administered intravenously and subcutaneously with ENHANZE in healthy adults.

As you have heard, our partners are making impressive progress across a broad development pipeline in diverse indications. And beyond this existing pipeline, there's also the potential for us to drive additional growth through new ENHANZE deals. Here, we continue to have a broad slate of discussions with both biotech and pharma companies. As to timing, while I'm confident we will find additional deals as ever, the timing is difficult to predict. And there's also the potential for growth for our current partners, nominating new targets and advancing them into the clinic. With more than 20 open slots available, we're excited for the growth opportunity that also exists here.

Let me move now to Slide 6 to discuss how our pipeline progress drives revenues for Halozyme. We are reiterating our 3-year outlook for projected revenues from milestones. You can see here that for 2021 through 2023, we continue to project $400 million to $450 million in milestone revenues. This reflects our expectations for partner upfront development and commercial milestones during that period. The blue bars represent our 3-year outlook since 2019, and the green bars represent actual annual milestone revenues demonstrating that we're performing well against these projections.

This near-term milestone revenue is an important and strong indicator for future royalty revenue. We project royalty revenue potential of approximately $1 billion in 2027 based on a non-risk-adjusted revenue projections for programs that we currently have line of sight to and assuming global sales in all indications.

Turning now to Slide 7. I'll review our approach to value creation and capital returns. We've been consistent regarding our 3-year -- our 3 capital return priorities. These include maintaining a strong balance sheet, capital return via share repurchases and commitment to driving both internal and external growth. We have a strong balance sheet for cash and cash equivalents of $764 million following the successful completion of our 2027 convertible note offering in March.

We anticipate the strong projected free cash flow driven by ENHANZE will support both our ongoing commitment to capital return as well as our longer M&A strategy. We've made strong progress with our 3-year $550 million share repurchase program, with approximately $426 million completed to date at an average price of $21.99. And in addition to supporting the ongoing growth of our ENHANZE technology franchise, we continue to evaluate the potential for new technology platform expansion through acquisition with the goal of accelerating and extending long-term revenue growth.

We see the opportunity to create incremental value for other platform technologies, applying Halozyme's proven partnering and commercialization capabilities. With ENHANZE still early in its growth cycle, we have the opportunity to be highly selective here.

And with that update, I'm going to turn the call now over to Elaine for a discussion of the first quarter financial results. Elaine?

Thank you, Helen. Before I begin, I'd like to note that with this quarter's results, we'll begin reporting key measures on both a non-GAAP adjusted as well as a GAAP basis, and we'll also provide financial guidance on a non-GAAP basis. We consider these non-GAAP financial measures to be important because they provide useful measures of our operating performance, exclusive of factors that do not directly affect what we consider to be our core operating performance, such as stock-based compensation, amortization as well as nonrecurring or unusual events. And I'd ask you to refer to our press release and filings for a reconciliation of GAAP to non-GAAP net income and earnings per share.

So with that, let me now turn to Slide 8 for a review of our first quarter revenue. Total revenue for the first quarter was $89 million compared to $25.4 million in the prior year period. In terms of revenue composition, we saw growth from all 3 sources of revenue in the first quarter.

Revenue from royalties for the quarter was $36.9 million, a 119% increase over the prior year period. This was driven primarily by the continued strong uptake of subcutaneous DARZALEX utilizing ENHANZE by our partner, Janssen.

Product sales were $21.8 million in the quarter, up 167% from the prior year period product sales of $8.1 million. Growth in product sales was driven by higher bulk API sales to our ENHANZE partners, Janssen, Roche and argenx.

Demonstrating continued progress by our partners, collaboration revenue in the quarter totaled $30.3 million, up from $0.4 million in the prior year period. And during the quarter, we recognized $25 million in milestone revenues from Bristol-Myers related to the upcoming start of their Phase III trial for subcutaneous nivolumab with ENHANZE. In addition, the approval of DARZALEX with ENHANZE in Japan and its anticipated launch resulted in $5 million in milestone revenues to Halozyme.

Turning to Slide 9, you'll find a more detailed breakdown of our first quarter P&L. Let me begin with total operating expenses, which were $38.3 million in the first quarter, up 34% from $28.6 million in the prior year period. The overall increase in total operating expenses resulted from higher cost of product sales, which were $18.2 million compared with $5.8 million in the prior year period. And this increase in COGS was attributable to the markedly higher level of API sales versus the prior year period in support of our partners' products and programs in the first quarter.

Research and development expenses of $9 million, decreased 11% from $10.2 million in the prior year period. And SG&A expenses were $11.1 million, down 12% from $12.6 million in the prior year period. Total operating expenses, excluding COGS, were $20.1 million for the first quarter compared with $22.8 million in the prior year period, consistent with the expectations we laid out as part of our annual guidance last quarter. GAAP operating income for the quarter was $50.7 million compared to a GAAP operating loss of $3.2 million in the prior year period, reflecting our strong growth in revenues and leverageable business model.

On a GAAP basis, net income for the quarter was $27.9 million or $0.19 per diluted share. This compared with a net loss of $6.1 million or $0.04 per share in the prior year period. As I mentioned, we'll now also be reporting key results, such as net income and diluted earnings per share on a non-GAAP adjusted basis. In the first quarter of 2021, the largest adjustment made to arrive at non-GAAP net income and diluted earnings per share was for a $21 million onetime inducement expense related to the repurchase of a significant portion of our 2024 convertible notes. This is also a noncash expense.

On a non-GAAP adjusted basis, net income was $54.3 million or $0.37 per diluted share compared to net income of $1.9 million or approximately $0.02 per diluted share in the prior year period.

With that, let me now turn to Slide 10 for a discussion of our 2021 financial guidance. Our guidance is based on the latest information from our partners and our planned expenses for the year. Consistent with the strong growth we're seeing for our business, we are reiterating our guidance for total revenues of $375 million to $395 million, which would represent year-over-year growth of 40% to 48%.

Moving to the components of revenues. We expect revenue from royalties to double from 2020 level. We expect product sales to increase 50% to 60% from 2020 level, driven primarily by bulk API sales to our ENHANZE partners.

We further expect revenue under collaborations to be in a similar range as the significant milestone revenues generated in 2020, driven by new clinical trial starts and commercial milestones of our partners. And reflecting our leverageable business model, we also continue to expect GAAP operating income for 2021 to be in the range of $215 million to $235 million, which would represent 49% to 63% growth over 2020. Moving to net income. We expect GAAP net income of $190 million to $210 million and non-GAAP net income of $235 million to $255 million.

Moving to earnings per share. We are projecting GAAP EPS of between $1.25 and $1.40, representing growth of 37% to 54% over 2020 GAAP EPS. And non-GAAP earnings per share of $1.55 to $1.70, which would represent 38% to 52% growth over 2020 non-GAAP EPS. As Helen reviewed, we remain committed to returning capital to shareholders. We continue to expect to repurchase up to $125 million in our shares this year, pending market conditions and other factors, which would leave $75 million worth of shares available for share repurchases remaining under our current authorization.

In support of our financial and capital return goals, we completed the sale of $805 million of convertible senior notes due 2027, reflecting the strong cash flow and growth prospects for the company, we were able to secure highly attractive terms with a 25 basis point coupon and 50% conversion premium.

We retired 80% of the previous convertible note, which was deeply in the money. And in doing so, we were able to mitigate dilution. We would have otherwise faced from of the outstanding 2024 convertible senior notes. We also used some of the proceeds to complete a $75 million accelerated share repurchase.

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

Thank you, Elaine. As you just heard, the developing pipeline, coupled with our financial outlets, places Halozyme in the strongest position ever as a company. We look forward to strong growth in revenues, profitability and cash flow in the coming quarters and years, which will allow us to deliver on our commitment to return capital to our shareholders, maintain long-term sustainable growth and maximize shareholder value.

As summarized on Slide 11, we continue to expect multiple important value-driving events throughout 2021. We expect a continued launch momentum for DARZALEX SC and Phesgo with broadening adoption and use in the already launched market and through additional global launches. Two new products are expected to enter Phase III development, resulting in a total of 4 ongoing Phase III programs across 7 indications.

Recall these are the next wave of potential launches, Wave 3, with a time window for launch of 2023 to 2025. We project 5 new Phase I starts, resulting in a total of 12 products in or having completed Phase I testing by the end of the year. These representative development continued our Wave 4 potential launches with the potential to launch in the window of 2025 to 2027. And we will work to create new revenue growth opportunity by seeking to sign new collaboration agreements and advance new targets into development our Wave 5.

As a result of all of this progress, we're in a position to return capital to our shareholders, aiming to complete the planned $125 million share purchase for 2021. And finally, we'll continue to seek to identify and acquire platform that can add to our long-term revenue growth.

None of these results would have been possible without the amazing team we have at Halozyme. And I'd like to, well, say sincere thanks to each and every one of you for these terrific results. And thank you to everyone for your attention today. We'd now be delighted to take your questions. And operator, would you please open the call up for questions.

(Operator Instructions) Your first question comes from DO KIM from BMO.

A question on Opdivo. Bristol is moving forward with the Phase III in renal cell carcinoma. Can you talk about what their clinical strategy is? Have they shared that with you? And are they looking for this Phase III in RCC as an anchor study and do other tumor types in Phase IIs?

Yes. Thanks, Bill, for the question. We are aware of the strategy, but BMS hasn't publicly commented on it. So unfortunately, we can't share any details. What I think we can talk about is the fact that the Rituxan Hycela ODAC, the FDA said that moving forward, because of the more broad experience of rHuPH20, a separate controlled clinical study might not be needed for each and every indication. And we certainly saw that with the approvals of DARZALEX FASPRO and Phesgo while in the same tumor type, we saw a broader indication when the study is conducted.

So I think the way to think about this, DO, is I believe if the FDA would feel that they say and there were no safety questions, there would be a possibility of a broader label in simply renal cell carcinoma, but it really is going to be based on the discussion between the FDA and Bristol-Myers Squibb on the data generated and any outstanding safety questions that might exist.

And any particular reason why they chose renal cell as their first tumor indication?

None that I can hear, DO.

Okay. Understand. And on the commercial side of things, it looks like the launch of Phesgo is much slower than FASPRO. Could you talk about what's driving that difference, whether it's the different cancer markets, breast cancer versus multiple myeloma? Or how your associated partners executing on the launches?

Yes. In terms of the differences between the market, there are several. What we don't have is a specific cause and effect. But one of the key things is timing. For DARZALEX FASPRO, it was approved both in the U.S. and Europe in June of last year, whereas Phesgo was approved in the third quarter in the U.S. and only in December, and it's only now launching in Europe. And so I do think we're going to see some strong growth of Phesgo, particularly as it starts to roll out in the European launch markets.

You highlight some other differences, DO, multiple myeloma in older population, more Medicare covered, whereas the breast cancer patients, perhaps more of a skew towards commercial payers. So there could have been a little bit of more time taken to get on formulary for the commercially focused breast cancer patients, perhaps further leading to a slowing down with Phesgo. But I'll leave you with the takeaway that, yes, that's certainly a very strong start to FASPRO certainly exceeded our expectations for last year, as you know.

I think Phesgo having had the setup for all of their reimbursement and logistics in 2020 is going to start to show good growth in the U.S. And we're particularly excited about the launch trajectory that we hoped to see in Europe, particularly given the demonstrated success we showed with Herceptin subcu a number of years ago. So there'll be good growth happening from Phesgo this year. But as we stated, DARZALEX SC will continue to be the dominant driver of our royalty revenues for 2021.

Your next question comes from Jessica Fye from JPMorgan.

First one is, when you look at Street models, which potential royalty stream do you see as most underappreciated by the Street?

Yes. Let me turn that one over to Elaine to see which growth opportunity you feel is that most underappreciated, Elaine?

Sure. So I think, Jessica, thanks for that question. I think -- look, I think we -- I think the Street has largely focused on DARZALEX FASPRO, which given Helen's comments and our public comments, I think, is certainly driven by the strong performance and initial uptake that we've seen with DARZALEX. I think one thing that we'd like folks to appreciate over time is the breadth of our royalty portfolio and the breadth of the partners. We have 10 partners and nearly 60 targets underlying those different partnerships. And that diversity of programs of our partners and products that we expect in these multiple ways of launches over time that should drive strong royalty growth beyond DARZALEX, Phesgo et cetera, as the larger contributors.

I think, certainly, I'd look to our Wave 3 product launches, in particular, as being those next drivers. And as Helen indicated, certainly with the continued progress of Roche's Tecentriq, the argenx programs and indications that are being pursued for efgartigimod certainly, we see those as potential significant drivers as well as subcutaneous nivolumab with Bristol.

Okay. Great. And with respect to the share repo, just given how much you've already completed in the first quarter. Is there any chance that you'll pull some of the remaining repo on the plan forward into 2021? And are there any other uses of cash beyond repo that look increasingly appealing?

Yes. Let me ask Elaine to address that.

Sure. So as you know, Jessica, we have a balanced capital allocation strategy, and that support of both capital return as well as funding internal and external growth via M&A. We've certainly been very focused on capital return. And I think we're just over 75% of our way through the $550 million 3-year buyback plan, as you alluded to. And we continue to be committed to purchasing up to $125 million for 2021, which would leave $75 million remaining through the end of 2022 through that 3-year plan.

I would say the specific timing of repurchases is based on different factors, including market conditions, et cetera. But we continue to be focused on capital return.

I think beyond capital return, we continue to think that there -- it is appropriate as part of that balanced capital allocation strategy to continue to fund the substantial internal growth drivers that we have fueled by ENHANZE as well as potential to bring in another external platform technology that could leverage our existing capabilities and expertise to drive additional value long-term for shareholders.

Your next question comes from Jason Butler from JMP Securities.

I just want to make sure I was clear on the DARZALEX first-line multiple myeloma 3% market share. Is that the overall market? Or is that the additional portion that's converted to subcutaneous?

That was the overall market. I believe that was being referred to, right? They didn't break out by subcu, so it's overall.

Okay. Have they been ever broken out?

They didn't broke it, right, I think it's mixture of the 2.

Okay. They've never broken out subcu?

They haven't. They have not.

Okay. Great. And then can you remind us what the light chain amyloidosis total market opportunity is in their view?

Yes. The epidemiology around this is there's about 4,500 incident light chain amyloidosis patients in the U.S. annually. And it's a similar number in Europe. So think about the little opportunity, I think, globally, of being about 10,000 incident patients. The indication is for newly diagnosed. Now this is an accelerated approval Roy (sic) [Jason] and there is -- specifically, there are some conclusions based on cardiac disease. So you need to take that 10,000 and reduce it to get the opportunity. So I think what's exciting here is big unmet need for patients and a nice incremental add as this indication is only approved as a subcu, not as an IV.

Your next question comes from Anita Dushyanth from Berenberg Capital Markets.

Congrats on the progress. I was just wondering, Helen, in the last call, you had mentioned about that you were kind of reengaging with your partners to sort of have them revisit their portfolios, see if they will be able to identify new targets that could move forward into the clinic. I was just wondering so how many sort of new targets that you are likely to see this year or next coming into the print?

As we entered this year, Anita, as you know, we've said 5 new Phase I starts, which represent the line of sight and new targets we had coming in, and we've already started 2 of those. I can tell you our discussions with partners are ongoing. And -- but we have no update I can give you with regard to whether we will extend the number of new starts this year or perhaps some of them could take into next year to actually start just depending on where those targets are in development. But this is an ongoing effort that we're just continuously in. So we're excited about the 5 that we'll add this year. And I'm very confident we'll be adding more next year just based on the discussions we have. Can't be absolutely sure yet based on time line that any will start in -- any additional ones will start in 2021 yet.

Okay. Great. And just one more question on DARZALEX itself. So I think from what J&J had -- or Janssen had talked about it before, there are about 40% of the patients that converted to the subcu form. So eventually, we would expect like the majority of the population to adopt this subcu version. And we could kind of think about that for the other candidate using ENHANZE?

Yes. I do think DARZALEX, as you mentioned, is off to a strong start. And I think the comment on the 40% actually, I believe, was made by us based on data last October that showed that this was from Symphony. They saw that 40% of use in the U.S. was with the subcu. We certainly are delighted with the performance. We know that just based on our royalty revenues, it's even higher than that now in the U.S., and we're seeing good penetration around the world as well.

I think as you think about all of the other products in the portfolio, it really will be dependent on the value proposition that physicians see. And there's no doubt that DARZALEX is a very strong value proposition. But we've got very strong value propositions in the rest of our portfolio.

And what we do is we take a look at what we think the offering brings versus the competition and for patients, and we do a range around as to what we think the peak penetration will be. So you're absolutely right, there's a great opportunity here for other products that have a strong market uptake as well, just based on what we're seeing for DARZALEX, not just in Europe where we've seen strong performance before, but also in the U.S.

Your next question comes from Graig Suvannavejh from Goldman Sachs.

Congrats on all the great progress. I've got 2 questions, if I could. My first just has to do with the broader portfolio, in particular, the 16 products that you list on Slide 5. I'm just wondering if you could maybe remind us if there's certain products where the current IV infusion times are perhaps considered longer perhaps than others that might facilitate greater conversion over to any potential subcu that might get eventually improved?

And then my second question, just wanted to revisit the company's prior comments around looking for additional technologies. And I'm just wondering, as we have been talking about this over the past several quarters, I'm curious if there have been any changes in the BD environment, whether it is the number of potential assets, the quality of the assets or potentially the prices of the assets that may have meaningfully changed?

All right. So turning to Slide 5, I think, Graig, as we're taking a look at the products that are listed here, there are a whole range of inpatient times, as you point out. And obviously, some of them are perhaps 30-minute IV, some of them more range towards the 1.5 to 2 hours. What I think is important is duration of infusion is one aspect. But what we're seeing with our partners is not simply reducing the time of administration there are other, I think, important strategic plays that they are pursuing here.

If we think about some of the products, where the goal might be to get the patients to be able to use the product at home more easily, there a subcu is a significant advantage, obviously, over an IV. We've got other partners who are working to develop drugs in combination. So similar to what Roche succeeded with Phesgo of 2 antibodies together. And that was -- I'll mention that Bristol-Myers Squibb, when they started working with us, have a vision to be able to take care more into the community, oncology setting to make it easier for patients.

And so as you think about what the value proposition is, I think there's the strategies, there's the duration of administration, all very important. And for each of the products that we -- you see listed here as well as the 5 that we expect to start this year, there is a compelling value proposition to supply. This will bring competitive differentiation for each partner for them to take it to the market.

If I could move to the question of BD, yes, as we mentioned, our goal is to treat -- seek to find another platform that we can do what we've done with ENHANZE, which is license it to multiple partners and be able to grow revenues, perhaps beyond what the originator was able to do. And so we are very actively looking at different opportunities at the moment, Graig. I would say the environment has got a good number of assets. Pricing is perhaps a little bit down as to what it was perhaps 4, 5 months ago. So that is a bit of a positive.

But I would say no major change in the overall environment of the assets that we are looking at. And we will take our time. We have the luxury of time based on the strong growth we're projecting for ENHANZE. So we're not rushing into this. We're looking for something that we feel is a great fit for our capabilities and our business model, and we'll complement that effectively. So we're going to find the right thing.

(Operator Instructions) Your next question comes from Joe Catanzaro from Piper Sandler?

Just 2 somewhat related. I'm wondering if you could help contextualize how much of the growth of FASPRO that you're seeing? And its contribution to the top line is perhaps being muted to some degree by the contraction of some of the legacy products. And then somewhat relatedly, I think Genmab said some Nordic countries are seeing 90% FASPRO conversions, while others are around 30%. Do you guys have any sense around the overall conversion rates across the full European geography? And can you actually back into that number based on the royalty you receive?

Yes. I'm -- I would say, let me take the second part first. Yes, we've heard the comments from Genmab and really echo, the Chief Commercial Officer there to say, it is very difficult to get detailed penetration data from Europe. So we can't really comment on that by geography. We have a general sense from our royalties, Joe, is to overall share in Europe versus the U.S., but we certainly don't know on a market-by-market basis, unfortunately.

But obviously, the core message is that we're delighted with the strong uptake that we're seeing in the U.S. where our last reported data was the 40%. But obviously, that has continued and this sense that they talked about some of the Nordic markets being at 90% and other markets at 30%, obviously shows that the value proposition is being well received around the world.

With regard to the growth of FASPRO, we certainly are seeing a contraction to your question on the legacy products. So the ongoing impact of biosimilars on Herceptin and also Rituxan is muting at modestly. So we did predict and stated this year, we expect it to see a continued decline in the royalty revenues. That is continuing at the pace we expected. And it does somewhat with DARZALEX FASPRO. But on a relatively modest basis, we're obviously very pleased with the growth that we're seeing in FASPRO this year.

That was our last question at this time, I will now turn the call back over to the presenters.

All right. Well, we really appreciate everyone for your support and for your attention. As you've heard, we continue to execute very well against our strategy, and we're excited with the progress that our partners are showing in their development, all more ENHANZE-enabled products. We look forward to future launches of Wave 3 and 4, following on the great success we're seeing with our Wave 2 launches. Thank you so much for your attention, and we look forward to seeing you next quarter. Goodbye now.

This concludes today's conference call. Thank you for participating. You may now disconnect.