Halozyme Therapeutics (HALO) Investor Update summary

Patent developments and impact on royalties

• A new European product-by-process patent for ENHANZE was granted, extending royalty protection for key products in Europe until March 6, 2029, about five years longer than previously estimated, and is valid in 37 countries.

• The new patent ensures the starting royalty rate for Janssen's licensed products, including DARZALEX SC, in Europe is maintained until 2029, delaying any reduction in rates.

• Similar U.S. patent protection is pending, with expectations that, if granted, it will also expire in March 2029.

• Collaboration patents for co-formulated products further extend royalty periods and maintain higher rates beyond ENHANZE patent expirations, with some terms extending into the 2030s and 2040s.

• The patent portfolio includes composition, method of use, and manufacturing method patents, providing broad protection for ENHANZE innovations.

Financial guidance and outlook updates

• 2024 royalty revenue guidance increased to $520M–$555M, up from $500M–$525M, reflecting the higher royalty rate in Europe and 16–24% YoY growth.

• Total 2024 revenue guidance raised to $935M–$1,015M, with adjusted EBITDA now projected at $555M–$615M, and non-GAAP diluted EPS at $3.65–$4.05.

• Five-year royalty CAGR increased to 20% from 18%, with total revenue CAGR now at 16% versus 14% previously, and adjusted EBITDA CAGR at 25%.

• Projected achievement of $1B in total revenue by 2025 and $1.5B by 2027, with adjusted EBITDA margins expected to reach up to 75% by 2028.

• Royalty projections assume new product launches and do not yet include potential pipeline additions or future M&A.

Business development, innovation, and product pipeline

• The new patent is expected to be well received in business development discussions, providing additional value to partners.

• No anticipated change in the pace of business development due to the new patent, as partners focus on ENHANZE's competitive advantages.

• Ongoing innovation and collaboration IP efforts continue, but no additional ENHANZE-specific IP expected to extend beyond March 2029.

• Wave four products in Phase III may be added to guidance once de-risked, with updates provided as approvals approach.

• Active evaluation of M&A opportunities to enhance revenue growth and durability, focusing on drug delivery and adjacent areas.