Halozyme (HALO) Q2 Earnings and Revenues Miss Estimates
Halozyme Therapeutics, Inc. HALO reported second-quarter 2020 earnings of 19 cents per share, lower than the Zacks Consensus Estimate of 25 cents. The company had reported a loss of 10 cents in the year-ago quarter.
Total revenues increased 41.2% year over year to $55.2 million primarily due to collaboration payments from Bristol-Myers BMY and Janssen, a subsidiary of J&J JNJ. However, the top line missed the Zacks Consensus Estimate of $69.84 million.
Shares of Halozyme were down 3.7% in after-market trading on Aug 10, following the earnings release. However, the stock has gained 61.5% so far this year compared with the industry’s 5.3% increase.
Quarterly Highlights
Halozyme’s top line comprises product sales, royalties and revenues under collaborative agreements.
Royalty revenues were $15.8 million in the second quarter, down 12.5% from the year-ago quarter. The lower royalties resulted from a decline in sales of its partnered drugs due to biosimilar competition.
Product sales, solely from the sale of bulk rHuPH20 to collaborators using the ENHANZE platform for drug development, decreased 10% to $6.3 million in the second quarter.
Revenues under collaborative agreements were $33 million compared with $15.3 million in the prior-year quarter. The increase was due to recognition of $25 million milestone payment from Janssen related to launch of and first commercial sale of the subcutaneous formulation of J&J’s cancer drug, Darzalex, in the United States and Europe.
Research and development (R&D) expenses declined 73.6% year over year to $9 million mainly due to discontinuation of oncology drug development efforts.
Selling, general and administrative (SG&A) expenses were $11 million, down 36.7% from the year-ago period. The decline was due to lower compensation and commercial-related expenses as a result of a restructuring initiatives announced last year.
Business Developments
In May, the FDA approved the subcutaneous (“SC”) formulation of J&J’s blood cancer drug, Darzalex, which will be available as Darzalex Faspro. The new formulation of the blockbuster drug was developed using Halozyme’s ENHANZE technology. In June, the SC formulation of Darzalex was also approved in Europe.
Moreover, in June, the FDA approved Roche’s RHHBY regulatory application seeking approval for the subcutaneous administration of the fixed-dose combination of Perjeta and Herceptin, Phsesgo, utilizing ENHANZE technology. Roche has also submitted regulatory application in Europe for the same and a decision is expected in 2021.
Meanwhile, the company stated on its earnings call that nine clinical studies are expected to be initiated by its partners in the rest of 2020.
2020 Guidance Maintained
Halozyme maintained its view for revenues and earnings in 2020. The company expects total revenues in 2020 to be between $230 million and $245 million, indicating year-over-year growth of 17-25%. It expects reported earnings to be in the range of 60-75 cents per share.
Halozyme Therapeutics, Inc. Price, Consensus and EPS Surprise
Halozyme Therapeutics, Inc. price-consensus-eps-surprise-chart | Halozyme Therapeutics, Inc. Quote
Zacks Rank
Halozyme currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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