Q1 2020 Earnings Call

Al Kildani, Vice President Investor Relations and corporate communications.

Al Kildani: Vice President of Investor Relations and Corporate Communications for Halozyme Therapeutics. Mr. Kildani, please go ahead.

I'm therapy or therapeutic Mr. Kildani. Please go ahead.

[music] good afternoon, and welcome to our first quarter 2020 financial results Conference call.

Al Kildani: Good afternoon, and welcome to our first quarter 2020 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 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 Elaine Sun, our Chief Financial Officer, who will review our financial results for the first quarter of 2020. During the call, we will be making forward-looking statements. I refer you to our ICC filings for a full listing of the risks and uncertainties. I'll now turn the call over to Helen.

In addition to our press release issued today. After the close you can find a supplementary slide presentation that will be referenced on todays call any investor relations section of our website.

Leading the call will be Dr., Helen Torley, Halozymes, President and Chief Executive Officer.

Provide an update on our business and Elaine Sun, Our Chief Financial Officer will review, our financial results for the first quarter 2020.

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.

Helen I. Torley: Thank you, Al, and it's really a delight to welcome Elaine to her first call as our Chief Financial Officer at Halozyme. I'd like to open this call by addressing two topics of greatest interest to Halozyme investors today, one specific to our company and one affecting all companies. And those are, firstly, the recent FDA approval of Janssen's Darzalex Faspro Utilizing Enhanced Technology, and then the impact on our business from the COVID-19 pandemic. This is our first call since receiving the very exciting news on the 1st of May that Janssen received U.S. FDA approval for the subcutaneous formulation of Darzalex utilizing our enhanced technology, which will be commercialized under the brand name Dar This represents one of the most significant events in the history of our company.

Thank you al and it's a really I'd like to welcome Elaine to her first call as our Chief financial Officer at Halozyme.

I'd like to open this call by addressing two topics of greed of interest to the Halozyme investors today, one specific to our company one affecting all companies and those are firstly the recent after the approval of Janssens Darzalex bass pro utilize or enhanced technology and then the impact on our business from the Kopec 19 pen Danny.

As our first call since receiving the very exciting news up there on the first of me the Janssen recede U.S. FTC approval for the 70 pennies formulation of Darzalex utilizing our enhanced technology, which will be commercialized with the brand name Darzalex bass pro.

This represents one of the most significant events in the history of our company.

Helen I. Torley: This approval is for a product utilizing enhancements that is both fast-growing and a blockbuster drug in its IV form, with many years of exclusivity remaining. The US approval follows on the heels of Janssen's recent receipt of a positive CHMP opinion for subcutaneous Darzalexutilizing at hands from the European Medicines Agency, which also recommended approval. This event generally means that marketing clearance in Europe is also on the horizon, potentially arriving in mid

This approval is for a product utilizing in terms of is both fast growing and a blockbuster drug and its I'd form with many years of exclusivity remaining.

The U.S. approval follows on the heels of dances recent receipt of a positive he tempe opinion for subcutaneous darzalex utilizing hands from the European Medicines Agency would also recommended approval.

Event generally means that marketing clearance in Europe is also on the horizon potentially a writing in mid 2020.

I don't know on slide three Darzalex, Hasbro utilizing enhanced technology with Brent any broad label covering side of the seven indications for which the IP form is currently approved.

Helen I. Torley: As you will note on slide 3, Darzalex FAS Pro Utilizing Enhanced Technology was granted a broad label covering 5 of the 7 indications for which the IV form is currently approved. We estimate that this label allows Darzalex Faspro, used in hands, to address the majority of multiple myeloma patients, based on our assessment of analyst estimates for how Darzalex IV is used today. Importantly, this is the first time the FDA has approved a product utilizing the hands for indications based on single-arm studies. We view this as the first demonstration of an approach the FDA actually alluded to at the ODAC meeting for rituximab in 2017, during which it was stated that it might not be necessary to do large, complex comparative studies for each and every indication when evaluating the hands in combination with an already approved drug. In this case, Janssen submitted for approval based on two studies. The first is the Columba Phase 3 study, which examined subcutaneous daratumumab in the hands compared to IV daratumumab in about 500 patients. The second study is a Phase II single-arm study called Pliades that examined daratumumab SC in three earlier treatment lines in combination with different multiple myeloma treatments.

We estimate that Mislabel allows darzalex bass pro utilizing enhanced to address the majority of multiple myeloma patients based on our assessment of analyst estimates for had darzalex Ivy its used today.

Importantly, this is the first time the F.D. has approved a product utilizing enhanced for indications based them single arm studies.

We view this as the first demonstration of an approach the f. the actually alluded to at the ODAC meeting for Rituximab in 2017 during which he was stated that it might not be necessary to do large complex comparative studies for each and every indication when evaluating in hand in combination with an already approved drug.

In this case gets and submitted for approval based on two studies.

First is the Columbus Phase three study, which examines subcutaneous there are two of them up with enhanced compared to Ivy Daratumumab in about 500 patients.

The second study is a phase two single arm study called Platy, which examines our to my bad I see in three earlier treatment lines in combination with different multiple myeloma treatments.

Helen I. Torley: We believe this is a huge win and very encouraging for the clinical development plans for all of our other enhanced collaboration partners. Most importantly, we view this as a terrific advance for patients suffering from multiple myeloma who are currently receiving treatment with IV Darzalex. We believe the ability to reduce the administration time from what is often 4 to 6 hours down to 3 to 5 minutes will offer tremendous convenience to patients and value to the healthcare system.

We believe this is a huge went and very encouraging for the clinical development plans for all of our other enhanced collaboration partners.

Most importantly, we view this as a terrific it bounce for patients suffering from multiple myeloma. We're currently receiving treatment with IB Darzalex, we believe the ability to reduce the administration time from what is often four to six hours down to three to five minutes will offer tremendous convenience to patients and value to the health care system.

This up like every day, but obviously to D. the health care system is strange, but the ongoing impact from covert 19 pandemic and perhaps even more valuable at this time.

Helen I. Torley: This applies every day, but obviously today the health care system is strained with the ongoing impact of the COVID-19 pandemic, and perhaps it's even more valuable at this time. This brings us to slide four, and the second topic of great interest to investors, and that is the COVID-19 pandemic. This has obviously created enormous challenges for so many people around the globe.

This brings us piece like sports and the second topic of great interested investors and that is the cold like 19 pandemic.

This is obviously created enormous challenges for so many people around the globe.

Helen I. Torley: Top of mind for everyone at Halozyme are those directly impacted by the disease, as well as those on the front lines of treating patients. The Halozyme team is committed to doing our part to help the community, and I could not be prouder of how our employees have joined in this effort. Now, despite the challenges posed by COVID-19, I'm pleased to say we are maintaining our overall progress in our mission of providing patients with disruptive solutions that can lead to better patient experiences and outcomes. Let me now provide you with an update as to where the company stands today, operationally and financially during the pandemic. Halozyme remains in a strong financial position today. With our nine partnerships, four products now approved, and multiple programs in development, we have a robust, diverse business model poised to generate solid growth and earnings. We have a strong balance sheet, and we remain confident in our long-term growth outlook.

Top of mind for everyone at Halozyme are those directly impacted by the disease as well as those on the front lines of treating patients.

He was on team is committed to doing our part helping the community I couldn't be prouder of how our employees have joined in this effort.

Despite the challenges posed by Cobot 19.

Pleased to see we are maintaining our overall progress in our mission of providing patients with disruptive disruptive solutions that can lead to better patient experiences and outcomes.

Let me now provide you with an update as to where the company stands today operationally and financially during the pandemic.

Halozyme remains any strong financial position today.

There are nine partnerships for products now approved a multiple programs and development, we have a robust diverse business model place to generate solid growth and earnings.

We have a strong balance sheet and we remain confident in our long term growth outlook.

We've taken many measures to protect the health and wellbeing of our workforce.

Helen I. Torley: We've taken many measures to protect the health and well-being of our workforce. During this pandemic, the health and safety of our employees, their families, and our local communities are our highest priority. As we began to see the emerging pandemic in February, we assembled a COVID-19 preparedness team to develop a plan for maintaining business continuity should the situation worsen. In mid-March, we successfully transitioned the majority of our staff to working from home and implemented a limited rotation for the small number of essential on-site employees in anticipation of a shelter-in-place mandate from the State of California.

During this pandemic health and safety ever employees their families and our local communities is that are a highest priority.

As we began to see the emerging pandemic in February we assembled the cobot 19 preparedness team to develop a plan for maintaining business continuity to the situation worsen.

In mid March we successfully transitioned the majority of our staff to working from home and implemented a limited rotation for the small number of essential onsite employees in anticipation of a shelter in place mandate from the state of California.

Helen I. Torley: I'm pleased to report that we were able to quickly and successfully transition the majority of our staff to working from home, and we've been able to maintain a high level of productivity. In addition to the proactive planning by our business continuity team and the hard work and commitment of our employees, we were able to do this because of the nature of our collaboration-driven business model. And as we think ahead to the time when our workforce returns to the office, our preparedness team has already developed a plan that we will continue to refine based on national, state, and local guidelines.

I'm pleased to report that we were able to quickly and successfully transitioned the majority of our staff to working from home and we'd be able to maintain high level of productivity.

In addition to the proactive planning buyer business continuity team and the hard working commitment our employees, who are able to do this because of the nature of our collaboration driven business model.

And as we think it came to a time when our workforce returns to the office are prepared and his team has already developed a plan that we will continue to refine based on the national state and local guideline.

With regard to our business program Oh, no describe what we know today, what we don't forget known as the global community works to fight to covert 19.

Helen I. Torley: With regard to our business programs, I'll now describe what we know today and what we don't yet know as the global community works to fight COVID-19. To date, based on recent partner feedback, we continue to project that the majority of our clinical study starts that we expected in 2020 will still occur in 2020, with delays of between one to two quarters from the original planned date. We know of one non-milestone-bearing clinical trial start that has been delayed as a result of COVID-19, where we do not yet have information on the new target start date, and also of two Phase 1 trials where enrollment has been impacted, resulting in an expected longer time to study completion. Moving to the new enhanced deals, we have one of the broadest slates of ongoing discussions with both biotech and pharma companies that we've ever We did see some slowing in the pace of discussions in March and April.

To date based on latest partner feedback, we continue to forget but the majority of our clinical study starts we expected in 2020, well still occur.

In 2020 with the lease up between one to two quarters from the original plan date.

We know of one non milestone bearing clinical trial start that has been delayed as a result of cobot 19, where we do not not yet have information on the new targets dark meat and also have two phase one trial, where enrollment has been impacted resulting in an expected longer time to study completion.

Moving to new enhance deals we have one of the broadest slates of ongoing discussions with both biotech and pharma companies that we've ever had.

We did see some slowing in the pace of discussions in March and April.

Helen I. Torley: Based on company feedback, we expect this will revert to the usual pace of conversations in the second quarter. Now, I will move to an update on our supply chain. We're working closely with our contract manufacturers to ensure the safety and reliability of our supply. We're in frequent contact with our CMOs to hear updates and to ensure the integrity of our API supply. Based on this feedback, we currently do not expect an interruption in our ability to supply our API or HiLinux as a result of COVID-19.

Based on company feedback, we expect this will revert to the usual piece of conversations in the second quarter.

Let me not move to an update on our supply chain.

We're working closely with their contract manufacturers to ensure the safety and reliability oversupply.

We're in frequent contact with our CMO here updates and to ensure the integrity of our Apiay supply.

Based on this feedback we currently do not expect an interruption and our ability to supply our E <unk> or Highland acts as a result of covert 19.

Helen I. Torley: Our contract manufacturers continue to operate as an essential business during the pandemic and have communicated that they have not identified any significant risk, delay, or concern resulting from COVID-19 that may have a substantial effect on delivery of any product. We'll obviously continue to monitor the operations of our contract manufacturers and their ability to continue to provide us with our products. Turning now to regulatory affairs, while regulators have curtailed some activities during the pandemic, we're pleased to report that our major initiatives with regulatory agencies around the globe appear to be proceeding at a normal pace.

Our contract manufacturers continue to operate as an essential business during the pandemic and have communicated that they have not identified any significant risk delayed or concern, resulting from pelvic 19 that may have a substantial the effect on delivery of any product.

Well, obviously continue to monitor the operations of our contract manufacturers and their ability to continue to provide us with our product.

Turning now to regulatory out by regulators have curtailed some activities during the pandemic. We're pleased to report that our major initiatives with regulatory agencies around the globe appears to be proceeding at a normal pace I.

Helen I. Torley: As an example, earlier this month, Danson received USFDA approval for DARThletics Fast Pro Utilizing in Hands after submission of its BLA in July of 2019. Jensen also received a positive CHMP opinion for Darzalec's SC Utilizing Enhance in late April following their July 2019 submission in Europe, demonstrating things are on track. And we're also pleased to note that Janssen submitted their NDA in Japan for Darzalex SC, utilizing ENHANCE, in late April. And looking ahead, after submitting the BLA with the FDA for the subcutaneous fixos combination of Progetta Herceptin, using in hands, in December of 2019, an action date of October 18, 2020 was assigned. We're certainly encouraged that the FDA and the EMA remain highly engaged with our partners during the pandemic. So, in summary, based on all of the latest updates from our partners and suppliers, as well as our planned expenditures, we feel confident maintaining our guidance for 2020 at this time. It's obviously difficult to predict how the pandemic recovery will unfold in the coming quarters.

I think examples earlier this month at Johnson receipt U.S. ft approval for Darzalex bass pro utilizing enhanced after submission of its be late in July of 2019.

That's an ultra received a positive teach M. P opinion for Darzalex I see utilizing and hence in late April fallen their July 2019 submission in Europe, demonstrating things are on track.

We're also pleased to note the Janssen submitted their Andy in Japan for Darzalex I see utilizing enhanced in late April.

And looking ahead after submitting to be early with the ask the for the subcutaneous fixed dose combination of Perjeta herceptin utilizing it hands in December of 2019 action date of over it Oh Tolbert, 18th 2020 was a sign.

We are certainly encouraged that the ft and the M- remain highly engaged with our partners during dependent.

So in summary, <unk> based on all of that make us updates from our partners and suppliers as well as our planned expenditures, we feel confident maintaining our guidance for 2020 at this time.

And obviously difficult to predict how depend demick recovery will unfold in coming quarters. Therefore, we will continually monitoring the situation or abide updates if new information observer I emerges.

Helen I. Torley: Therefore, we will continually monitor the situation and provide updates if new information emerges. In summary, despite the challenges posed by the COVID-19 pandemic, we've continued to execute very well in our strategy and remain in a strong position to drive future growth for Halozyme. I'll move now to a deeper update on our key partner programs, beginning on slide five with Darzaleh. In its current IV form, Darzalex generated approximately $3 billion in sales in 2019 and grew approximately 50% globally in the first quarter of 2020 compared to the first quarter of 2019. Analysts currently project sales for Darzalek's franchise at $3.9 billion in 2020 and $7.8 billion in 2024.

In summary, I. Despite the challenges posed by coping 19 pandemic, we've continued to execute very well in our strategy and remain any strong position to drive future growth for Hilton.

I was not a deeper update on our key partner programs beginning on slide five with Darzalex.

In its current Ivy form Darzalex generated approximately $3 billion and sales in 2019 and grew approximately 50% globally in the first quarter twentytwenty compared to the first quarter of 2019.

Analysts currently protect sales for DARPA like franchise of 3.9 billion in 2000 27.8 billion in 2024.

Janssen has stated that the Scott subcutaneous formulation of Darzalex utilizing enhanced is a core part of this feature growth strategy supporting their goals of expansion into the frontline setting in addition to treatment in the community setting.

Helen I. Torley: Jensen has stated that the subcutaneous formulation of Darzalex, Utilizing Enhanced, is a core part of this future growth strategy, supporting their goals of expansion into the frontline setting, in addition to treatment in the community setting. The potential value proposition of Daratumumab SC within HAD is strong. With U.S. approval just granted and EU approval potentially in mid-2020, we're extremely excited about the launch of Darzalex Faspro utilizing Enhance and what this means for our Enhance franchise. We believe Darzalex Faspro will provide the strongest validation to date of the commercial potential of our enhanced drug delivery technology. And after an initial period post-launch during which formulary approvals, EMR orders, and reimbursement are established, we expect the uptake of Darzalex Faspro with Enhance will be robust, resulting in strong growth in royalty revenues for Halozyme.

The potential value proposition of Dar Tim amount I see within had a strong.

With the U.S. approval, just granted an EU approval potentially in mid 2020, we're extremely excited about the launch of Darzalex, Hasbro utilizing hands and what this means for our enhanced franchise.

We believe Darzalex bass pro will provide the strongest validation to date of the commercial potential over enhanced drug delivery technology.

And after an initial period post launch during which formulary approvals Im our orders and reimbursement are established we expect the uptick of Darzalex aspirin within enhance at will be robust, resulting in strong growth in royalty revenues for halozyme.

Helen I. Torley: Turning now to slide six, on the next product we expect our partners to launch, the subcutaneous fixed-dose combination of Progetta and Herceptin, utilizing enhanced technology, which is indicated for patients with early and metastatic HER2-positive breast cancer. The subcutaneous fixed-dose combination of Progetta and Herceptin is an important first, combining two therapeutic antibodies in a single fixed-dose formulation, utilizing enhanced, enabling a 5-8 minute subcutaneous injection compared with a 1.5-2.5 hour injection for the sequential IV administration of Herceptin and then Progetta. According to Rocio's first quarter financial results, Progetta IB sales experienced 22% global growth driven by continued updates in the early breast cancer space. Analysts currently project $4.1 billion in global sales in 2020 for Progetta, growing to more than $5.4 billion in 2024.

Turning back to slide six in the next product, we expect our partners to launch the subcutaneous fixed dose combination of projected intersecting utilizing enhanced technology, which is indicated for patients with early and metastatic hertwo positive breast cancer.

The subcutaneous fixed dose combination of forget energy sector is an important first combining two therapeutic antibody any single fixed dose formulation utilizing enhanced.

Enabling a five to eight minutes subcutaneous injection compared with a one and a half to two and a half hour injection at for the sequential I'd administration of Herceptin and then for data.

According to Roche's first quarter financial results forget the IB sales experienced 22% global growth driven by continued uptake in the early breast cancer space.

Plus currently project $4.1 billion in global sales and Twentytwenty per per data going to more than $5.4 billion in twentytwenty for.

As we announced in February Roche's BLE filing in the U.S. was accepted by the Ft and assigned an action date October 18th 2020.

Helen I. Torley: As we announced in February, Roche's BLA filing in the U.S. was accepted by the FDA and assigned an action date of October 18, 2020. Roshi expects to launch this drug in the U.S. this year. Regulatory submissions have also been completed in the EU.

Well she expects to launch this drug <unk> in the U.S. is here.

Regulatory submissions have also been completed in the you and we expect that fall in a positive teach him p. opinion approval would occur in 2021.

Helen I. Torley: And we expect that following a positive CHMP opinion, approval would occur in 2021. On its most recent quarterly call, Roche indicated that it sees the SC-Progetta-Herceptin combination utilizing enhanced technology as offering an advance and an advantage for the strained healthcare system, and in the past, it has also alluded to the fact that the combined product may offer some interesting pricing flexibility in the very competitive breast cancer sector. I'll turn now to slide 7.

On its most recent quarterly call Roche indicated that sees the S. C presenter herceptin combination utilizing enhanced technology offering and advance and an advantage for the strain health care system.

And then the past is also alluded to the fact that the combined product may offer some interesting pricing flexibility in the very competitive breast cancer segment.

I'll turn now to slide seven as illustrated on this slide are the currently commercialized products that are approved or in development within hands.

Helen I. Torley: Illustrated on this slide are the currently commercialized products that are approved or in development within HANDS. These are eight very successful products, and we now have multiple examples to support that these carry a low risk of development within hands.

These are eight very successful products.

We now have multiple examples to support that these carry a low risk of development within hands.

When a product is already approved the pathway to approval it within Hans has been in non inferiority PK study to identify the dose and then usually a phase three study that focuses on demonstrating noninferiority of the selected PK and efficacy endpoints to.

Helen I. Torley: When a product is already approved, the pathway to approval with ENHANCE has been a non-inferiority PK study to identify the dose, and then usually a Phase III study that focuses on demonstrating non-inferiority of the selected PK and efficacy endpoints. To date, all approved products that have had a successful Phase 1 and moved to Phase 3 have been approved. Now, excitingly, based on FDA feedback, many of our current partners are discussing leaner development programs designed to gain a full set of labeled indications for the IV without the need to do a separate controlled clinical trial for each indication. This faster development time allows earlier access for more patients to an IC formulation, and the breadth of the label that was just granted to Darzalex Fast Pro Utilizing Enhance certainly provides encouraging evidence of this development strategy

To date, all approved products that have had a successful phase one and moved to phase three have been approved.

Now Excitingly based on F. D feedback many of our current partners are discussing leaner development programs designed to gain a full set of labeled indications for the IB without the need to do a separate controlled clinical trial for each indication.

This faster development time allies earlier access for more patients to and I see formulation potentially.

The breadth of label that was just granted the Darzalex bass pro utilizing enhanced certainly provides encouraging evidence of this development strategy.

I'll move nights, a slight eight until Youre currently commercialized product.

Roche continues with its global commercialization of products utilizing our enhanced technology, including my Sarah Recut, Some high Sela and subcutaneous herceptin with enhanced.

Although royalty revenues from these products are anticipated to decline modestly this year as a result of the ongoing impact from bio Similars. Most recently commented that it has seen an increased level of interest from physicians Incept Phoenix Herceptin.

Helen I. Torley: I'll move now to slide 8 and to our currently commercialized product. Roche continues with its global commercialization of products utilizing our enhanced technology, including Mabthera, Rituxan HiFella, and Subcutaneous Herceptin with Enhance. Although royalty revenues from these products are anticipated to decline modestly this year as a result of the ongoing impact from biosimilars, Roche recently commented that it has seen an increased level of interest from physicians in subcutaneous receptors. While it's too early to call this a trend, it is certainly worth noting in the current environment where reducing the amount of time spent in the presence of others is desired.

While it said too early to call. This a trend it is certainly worth noting in the current environment for reducing the amount of time and the presence of others is desired.

Moving now to our development products on slide nine you can see a summary of the pipeline products that are being developed utilizing in hand.

Based on the most current information we have from our partners our target for nine new trial start in Twentytwenty is unchanged.

The phase two trial, we projected has been accomplished and I'll detail. This in a moment and we continue to protect three phase three trial start and five new phase one start in 2020.

Let me just provide to a program updates.

With regard to the fees to start just mentioned or Jennings recently initiated their phase two study of CRE teach him on utilizing our enhanced technology in see I'd patients that they had announced in December of 2019.

Helen I. Torley: Moving now to our development products, on slide 9, you can see a summary of the pipeline products that are being developed using in-hand. Based on the most current information we have from our partners, our target for nine new trial starts in 2020 is unchanged. The Phase 2 trial we projected has been accomplished, and I'll detail this in a moment. And we continue to project three Phase 3 trial starts and five new Phase 1 starts in 2020. Let me just provide you with two program updates.

The study has an innovative design intended to result in a faster time to go no go decision for advancement till potential phase three study.

In addition, organics is evaluating bridging strategy for F. Her teach him on within hand in my senior Gratis.

Moving that to Alexia on the recently informed us that they no longer plan to evaluate Aleksey on 18 10 in the renal basket study as they had announced in January of this year.

There was no milestones associated with this study.

And moving back to site and the progress of our enhanced portfolio is projected to drive the strong growth in milestone revenues between now and the end of 2022.

Helen I. Torley: With regard to the Phase II starch, as mentioned, Urgenix recently initiated their Phase II study of F-cortigemod, utilizing our enhanced technology in CIDP patients that they had announced in December of 2019. This study has an innovative design intended to result in a faster time to a go-no-go decision for advancement to a potential phase 3 study. In addition, Organics is evaluating a bridging strategy for F-carotidia mod with Enhance in myosinia gravis. Moving now to Alexion, they recently informed us that they no longer plan to evaluate Alexion 1810 in the renal basket study as they had announced in January of this year. There was no milestone associated with this study.

Based on the latest information we have from partners. We continue to protect cumulative milestone revenues in the next three years of $350 million to $450 million.

This growth and predicted milestone revenues is being driven by the larger milestone payments associated with you target approval and the increasing the number of products advancing to later stage development. Many of which are also associated with larger milestones.

And this near term mountain revenue precedes the royalty revenues and is an important and strong indicator of future royalty revenue potential, which we project to be approximately $1 billion in twentytwenty seven based on a non risk adjusted revenue protection for programs currently in or planning to be in development.

Helen I. Torley: Now moving back to slide 10, the progress of our enhanced portfolio is projected to drive strong growth in milestone revenues between now and the end of 2022. Based on the latest information we have from partners, we continue to project cumulative milestone revenues in the next three years of $350 to $450 million. This growth in projected milestone revenues is driven by the larger milestone payments associated with new target approvals and the increase in the number of products advancing to later stage development, many of which are also associated with larger milestones. And this near-term milestone revenue precedes royalty revenues and is an important and strong indicator of future royalty revenue potential, which we project to be approximately $1 billion in 2027, based on a non-risk-adjusted revenue projection for programs currently in or planning to be in development.

Let me turn now to slide 11, and an overview, our our approach to capital return.

As a reminder, our first priority is to drive the growth of our enhanced business by maximizing the value of our current collaboration I'm working to sign new collaboration partners.

The strong free cash flow. Our next priority is returning capital to investors via share repurchases.

Elaine will discuss the details of our recent share repurchase activities in just a moment.

And in addition to our commitment to capital return, we will evaluate the potential for new technology platform expansion through acquisition.

The goal of accelerating our long term revenue growth.

In evaluating Vince we are seeking an approach out whether its high growth and high margin similar to our enhanced business.

And with that update the I'm very pleased not turn the call overtaken lane for a discussion of the first quarter financial results.

Thank you Alan and I could not be more excited to join here was nine during.

Such a drilling time for the company I'll start by turning to slide 12 for a review of our first quarter revenues.

Total revenue for the first quarter were $25.4 million compared to $56.9 million in the prior year period.

A reminder, that first quarter 2019 reflected the signing of a new collaboration agreement regard genex that resulted in a $30 million upfront payments.

Helen I. Torley: Let me turn now to slide 11 and an overview of our approach to capital returns. As a reminder, our first priority is to drive the growth of our enhanced business by maximizing the value of our current collaborations and working to sign new collaboration parts. With a strong free cash flow, our next priority is returning capital to investors via share repurchase. Elaine will discuss the details of our recent share repurchase activities in just a moment. In addition to our commitment to capital return, we will evaluate the potential for new technology platform expansion through acquisition with the goal of accelerating our long-term revenue growth. In evaluating this, we are seeking an approach where there is high growth and high margin, similar to our enhanced business. Now with that update, I'm very pleased now to turn the call over to Elaine for a discussion of the first quarter financial results.

Royalty revenue for the quarter was $16.8 million, a decrease of 6%, which is consistent with our ceded expectations coming into the year driven by ongoing pricing pressures in the biosimilar.

Product sales of $8.1 million in the quarter compared to $8.4 million in the prior year period.

We compete expected product sales for BP I will fluctuate in future periods the from the needs of our collaboration partners.

Collaboration revenue in the quarter totaled up $24 million compared with $30.6 million year ago with the different attributable to the signing of the oncogenic deal that I mentioned a moment ago.

On slide 13, you'll find a more detailed breakdown of our first quarter piano.

I'll begin with total operating expenses, which were $28.6 million in the first quarter.

I'm from $54 million in the prior year period.

The overall decrease in total operating expenses resulted from our ship.

Na Sun: Thank you, Helen, and I could not be more excited to join Halozyme during such a thrilling time for the company. I'll start by turning to slide 12 for a review of our first quarter revenues. Total revenue for the first quarter was $25.4 million, compared to $56.9 million in the prior year period. As a reminder, the first quarter of 2019 reflected the signing of a new collaboration agreement with Argenix that resulted in a $30 million upfront payment.

Strategic focus to the Companys enhance drug delivery technology in November of last year and related restructuring, which is largely been completed.

Cost of product sales were $5.8 million up from $4.6 million.

And research and development expenses of $10.2 million decreased from $31.3 million in the prior year period decreasing 67% as a result of the fact that we halted our peg page 20 oncology drug development activities in November of last year.

<unk> expenses were $12.6 million down from $18 million in the prior year, primarily due to the reduction in force and just continuation of our peg Peach 20 related launch expenses that were part of the restructuring initiated in November last year.

Na Sun: Royalty revenue for the quarter was $16.8 million, a decrease of 6%, which is consistent with our stated expectations coming into the year, driven by ongoing pricing pressures in the face of biosimilars. Product sales of $8.1 million in the quarter compared to $8.4 million in the prior year period. We continue to expect that product sales of API will fluctuate in future periods based on the needs of our collaboration partners.

Net loss for the quarter was $6.1 million or four cents per share compared to net income of $1.8 million or one cents per share in the first quarter 2019.

Cash cash equivalents in marketable securities were $368.2 million.

Na Sun: Collaboration revenue in the quarter was $0.4 million compared with $30.6 million a year ago, with the difference attributable to the signing of the Argenics deal that I mentioned a moment ago. On slide 13, you'll find a more detailed breakdown of our first quarter P&L. I'll begin with total operating expenses, which were $28.6 million in the first quarter, down from $54 million in the prior year period. The overall decrease in total operating expenses resulted from our shift in strategic focus to the company's enhanced drug delivery technology in November of last year and the related restructuring, which has largely been completed. Cost of product sales were $5.8 million, up from $4.6 million, and Research and Development Expenses of $10.2 million decreased from $31.3 million in the prior year period, decreasing 67% as a result of the fact that we halted our PEG-PH20 oncology drug development activities in November of last year. SG&A expenses were $12.6 million, down from $18 million in the prior year, primarily due to the reduction in force and discontinuation of our PEG-PH20-related launch expenses that were part of the restructuring initiated in November last year.

At March 30, Onest 2020, compared to $421.3 million at December 31st 2019, and the decrease reflects the impact from our operating loss and share repurchase activity during the first quarter of 2020.

Now I'll turn to slide 14 for a discussion of our 2020 financial guidance.

We continue to monitor the impact or because it 19 pandemic on our business and receive updates from our partners and suppliers answer their plan and timeline.

Based on that leadership permission in our planned expenditures for the year our guidance for 2020 remains unchanged and the guidance that we first provided for the year on June 14th.

We continue to expect total revenues to be in a range of 230 million to $245 million an earnings per share is expected to be in a range of 60 to 75 cents.

In addition, we continue to forecast our first quarter are sustainable profitability will occur in second quarter. This year.

With respect to our expense structure will continue to watch operating expenses closely.

And we expect to achieve annualized operating expenses, excluding cost of goods sold in the range of $65 million to $75 million for the fourth quarter with the expectation the movie towards the higher end of the range.

I'll now detail, our recent share repurchase activity.

In summary, we completed $251.6 million a share repurchases to good.

Leaving $298.4 million available under the $550 million three year share repurchase program that was authorized by our board of directors in November 2019.

Na Sun: Net loss for the quarter was $6.1 million, or $0.04 per share, compared to net income of $1.8 million, or $0.01 per share, in the first quarter of 2019. Cash cash equivalents and marketable securities were $368.2 million at March 31st, 2020, compared to $421.3 million at December 31st, 2019, and the decrease reflects the impact of our operating loss and share purchase activities during the first quarter of 2020. Now I'll turn to slide 14 for a discussion of our 2020 financial guidance. We continue to monitor the impact of the COVID-19 pandemic on our business and receive updates from our partners and suppliers as to their plans and timelines. And based on that latest information and our planned expenditures for the year, our guidance for 2020 remains unchanged from the guidance that we first provided for the year on January 14.

In January 2020, we announced or plan to repurchase up to $150 million worth of shares in the year.

And of this we repurchased 3.2 million shares during the first quarter I'd weighted average price of $16 in 15 cents per share worth approximately $51.6 million.

We plan to repurchase up to an additional $98 million worth of shares during twentytwenty tending market conditions and other factors.

And with that I'll turn the call back to Helen.

Thanks, very much Helane in knees uncertain times I'm very pleased to see Halozyme remains in a strong financial position as a company focused solely on enhanced with profitability on the horizon and he demonstrated commitment to maximize value for shareholders by returning capital to our investors.

The recent announcement of ask the approval for Darzalex fast pro with a momentous event for the company and there are many additional exciting events and anticipated in the remainder of two dozen 20 as is shown on slide 15.

Na Sun: We continue to expect total revenues to be in the range of $230 million to $245 million, and earnings per share are expected to be in the range of $0.60 to $0.75. In addition, we continue to forecast that our first quarter of sustainable profitability will occur in the second quarter of this year. With respect to our expense structure, we'll continue to watch operating expenses closely.

Personally apco stays out of course is the expected U.S. launch of Darzalex bass Pro which will result in a milestone payment to handle time.

This event is a key driver of our expectation that we will report our first quarter of sustainable profitability for the second.

Quarter of 2020, the current quarter.

With janssens receipt of a positive cgmp opinion, we anticipate marketing approval in Europe for subcutaneous darzalex utilizing an hands around mid year.

Na Sun: And we expect to achieve annualized operating expenses excluding cost of goods sold in the range of $65 million to $75 million by the fourth quarter, with the expectation that we'll be toward the higher end of the range. I'll now detail our recent share repurchase activity. So, in summary, we've completed $251.6 million of share repurchases to date, leaving $298.4 million available under the $550 million three-year share repurchase program that was authorized by our Board of Directors in November 2019. In January 2020, we announced our plan to repurchase up to $150 million worth of shares in the year. And of this, we repurchased 3.2 million shares during the first quarter at a weighted average price of $16.15 per share, worth approximately $51.6 million. We plan to repurchase up to an additional $98 million worth of shares during 2020, pending market conditions and other factors. And with that, I'll turn the call back to Helen.

And with an F. The action date of October 18th 2020, we anticipate approval and launch of the fixed dose combination of pretend herceptin in the U.S. later this year.

And we can expect continued momentum in the clinic as I detailed for a partner programs utilizing a hands leading to three new phase three trial starts and five new phase one trial starts.

With key milestones on the horizon, and a clear path towards sustainable growth in revenues earnings and cash flow halozyme anything any strong position to deliver additional value to our shareholders.

And none of this would be possible without strong talent at halozyme team and as ever I'd like and by thanking everyone on the team for your tremendous effort and the strong results for the first quarter.

We know we'd like to take your questions. Operator, Please would you open the call.

At this time, if you'd like us to question over the full lunch. Please press Star then one on your telephone keypad, we'll pause from almost tripled its una roster.

Your first question comes from a line of Docomo CMO capital markets. Your line is open.

Thank you good afternoon, and thanks for taking my question.

First question for you approval of Darzalex fast pro.

You know why Gibson did not.

Pursue the combination with Pomalyst did they see that is not a big enough opportunity.

Helen I. Torley: Thanks very much, Elaine. In these uncertain times, I'm very pleased to say Halozyme remains in a strong financial position as a company focused solely on improving, with profitability on the horizon and a demonstrated commitment to maximize value for our shareholders by returning capital to our investors. The recent announcement of FDA approval for Darzalex Faspro was a momentous event for the company, and there are many additional exciting events anticipated in the remainder of 2020, as shown on slide 15. Firstly, of course, is the expected U.S. launch of Darzalex Faspro, which will result in a milestone payment to Halozyme. This event is a key driver of our expectations that we will report our first quarter of sustainable profitability for the second quarter of 2020, the current quarter. With Janssen's receipt of a positive CHMP opinion, we anticipate marketing approval in Europe for subcutaneous Darzalex in hands around mid-year. And with an FDA action date of October 18, 2020, we anticipate approval and launch of the fixed-dose combination of Progetta and Nerceptin in the U.S. later this year.

And.

According to the cgmp positive opinion.

It doesn't include all current Darzalex indications does that mean that we should expect seven out of the seven indications for the EU approval.

Alright, Thank said, though with regard to pomalidomide them. The filing which was you know is based on the Columbus and played a study did not include any data looking at Subcu Daratumumab with Pomalidomide and so I think that is the key reason that the approval was not them granted now.

If you go onto clinical trials top golf you will see there is a subcu daratumumab study ongoing with Pomalidomide that has that potential read that date of mid 2021. So I think it's no question about it never getting approved it just it will await that data.

With regard to the C.H.M.P. opinion, I think the key difference is that them in Europe.

The they have a slightly different set of indications in Europe. They do have one transplant eligible indication, which is different from the U.S. and they do not have the pomalidomide indication. So he is a tool set but it's not in a matching set to the seven U.S. indications I, but I believe it might be six but if you compare the labeled indicate.

Helen I. Torley: And we can expect continued momentum in the clinic, as I detailed, for our partner programs utilizing ENDS, leading to three new Phase III trial starts and five new Phase I trial starts. With key milestones on the horizon and a clear path toward sustainable growth in revenues, earnings, and cash flow, Halozyme is in a strong position to deliver additional value to our shareholders. And none of this would be possible without the strong, talented Halozyme team.

And so you'll see the key differences Europe has transplant eligible but down Pomalidomide is not approved in Europe for use with that our team up from my it from my recollection.

Okay, great. Thank you and.

The with the bought approval.

Darzalex to include all the syndication.

Did you consider an opportunity to revise guidance upward.

Would there be a possibility upside to the royalties and instead of being slightly down to be flat or even up.

Helen I. Torley: And, as ever, I'd like to end by thanking everyone on the team for your tremendous efforts and the strong results for the first quarter. I would now be delighted to take your questions. Operator, please would you open the call?

Yeah I you know, we always want to just see how the lawn shag goes there's always the mechanics that need to be in place. So that will take several months as you know to get the J code the m. ours et cetera.

Operator: At this time, if you would like to ask a question over the phone lines, please press star then 1 on your telephone keypad. We will pause for a moment to compile the Q&A roster. Your first question comes from the line of Doe Kim of BMO Capital Markets.

So we have not them updated our guidance on it but oh, we will obviously, what's the trend and add once those out particular things are in place, including certain get reimbursement and the ability to order out we do believe there will be very robust update all that daratumumab.

Doe Kim: Your line is open. Thank you. Good afternoon, and thanks for taking my question.

Great. Thanks for taking my question.

Helen I. Torley: My first question for the approval of Darzalex Fast Pro is, do you know why Gansin did not, by the way, make the decision to pursue the combination with Pomelis, did they see that as not a big enough opportunity? And according to the CHMP positive opinion, it doesn't include all current DARS-Leq indications. Does that mean that we should expect seven out of seven indications for the EU approval?

Thank you.

Your next question comes from line of just to clarify your line is open.

You guys. Good afternoon. Thanks for taking my questions I'm just following up on the comments you made in prepared remarks about the slight shift in timelines as it relates to trial starts I'm trying to think about your anticipated milestones. This year and wondering if you can offer any color on the.

Helen I. Torley: All right, thanks, Adil. With regard to pomalidomide, the filing, which was, you know, based on the Columbia and Pleiades studies, did not include any data looking at sub-Q daratumumab with pomalidomide. And so I think that is the key reason that the approval was not granted. Now, if you go onto clinicaltrials.gov, you will see that there is a sub-Q daratumumab study ongoing with pomalidomide that has a potential readout date of mid-2021. So I think it's not a question of it never getting approved; it just will await that data.

Cadence as milestones over the course of 2020, yes at a minimum should we have relatively low ics expectations for the milestones.

In the second quarter given.

Ah covert nineteens kind of pronounced impact this quarter.

Oh, so our most of the obvious they are made up of the potential approvals as well as the clinical studies starts and the second quarter out with the expectation that them Janssen is launching in the U.S.. We already know we're going to have a nice that milestone related to that but I would say that for the clinical.

Helen I. Torley: With regard to the CHMP opinion, I think the key difference is that in Europe, they have a slightly different set of indications. They do have one transplant-eligible indication, which is different from the U.S., and they do not have the pomalidomide indication. So it is a full set, but it's not on a matching set to the seven U.S. indications, but I believe it might be six. But if you compare the labeled indications, though, you'll see the key difference is Europe has transplant-eligible patients, but pomalidomide is not approved in Europe for use with daratumumab from my recollection.

Study starts.

They are spread over the second third and fourth quarter, but perhaps more in the third and fourth quarters. So you would see more of those clinical studies starts then for the European approval of found.

There are two mab, we expect that made you are falling into third quarter. So hopefully that gives you some cadence of between the two that are some commercial milestones more near term with a clinical studies being a little bit more weighted towards the third and fourth quarter.

Okay. So sequence and then just within the kind of maintenance of your overall revenue guidance did the mix of milestones versus royalties shifted at all a year. There any milestones there you kind of nudging into 2021, possibly being offset by royalty is better than you previously mom.

Helen I. Torley: Okay, great. Thank you. With the broad approval of Darzalex to include all those indications, did you consider an opportunity to revise guidance upward? Would there be a possibility, on the upside, for royalties, instead of being slightly down, to be flat or even up?

Helen I. Torley: Yeah, you know, we always want to just see how the launch goes. There's always the mechanics that need to be in place, though, that will take several months, as you know, to get the J-code, the EMRs, etc. So we have not updated our guidance on it, but we will obviously watch the trend. And once those particular things are in place, including certainty of reimbursement and the ability to order, we do believe there will be a very robust update.

Adult.

No overall it pretty much was the inline with our original plan for the year Jeff.

Great. Thank you.

Your next question comes from the line of Joe.

Touching a Cerro your line is open.

Hey, guys. Thanks for taking my questions here I just wanted to follow up on something you alluded to earlier and I know Youve previously spoken about the time. It takes you know for underlying formularies to change, but you know for Darzalex fast for I Wonder if there are any expectations of seeing formulary exception, especially.

Doe Kim: Great Thank you for taking my questions.

Helen I. Torley: Thank you.

Jessica Macomber Fye: Your next question comes from the line of Jessica Fye. Your line is open. Hey guys, good afternoon. Thanks for taking my questions. Just following up on the comments made and prepared remarks about the slight shift in timelines as it relates to trial starts, I'm trying to think about your anticipated milestones this year and wondering if you can offer any color on the cadence of milestones over the course of 2020. I guess, at a minimum, we should have relatively low expectations for the milestones in the second quarter given COVID-19's kind of pronounced impact this quarter.

In light of the current corporate environment, and I guess as a follow up to that maybe anything you've seen what's your legacy products and their use.

And the current environment any potential read through they may provide to early darzalex bass pro usage. Thanks.

Yes, Thanks, Joe one I havent seen dancing make any comments about dumb any expectations of different formulary HM expectations them, but I do know that we are hearing in general that them up there is a desire to not have patients in infusion rooms for a long period of time I think the most pertinent Coleman.

Helen I. Torley: So our milestones are obviously made up of the potential approvals as well as the clinical study starts. And in the second quarter, with the expectation that Janssen is launching in the U.S., we already know we're going to have a nice milestone related to that.

Comes from Roche's, a recent earnings call out where I think it was bill Anderson commented on seeing an increase in demand of Herceptin SC for exactly at that reason people not wanting to be in the infusion suite, so well I've no specific information to support the hypothesis do I think the environment as you point out is one where subcu.

Helen I. Torley: But I would say that for clinical study starts, they are spread over the second, third, and fourth quarters, perhaps more in the third and fourth quarters. So you would see more of those clinical study starts then. For the European approval of daratumumab, we expect that mid-year, falling into the third quarter. So hopefully, that gives you some cadence between the two that are some commercial milestones more near term, with the clinical studies being a little bit more weighted towards the third and fourth quarters.

It's a number off the needs less time in hospital less exposure to other other patients and hopefully the formula Reais and other groups are going to pay attention to that and them operate in a way that supports a faster approval, but I've no date at sport that at this point in time.

Jessica Macomber Fye: Okay, that makes sense. And then just within the kind of maintenance of your overall revenue guidance, did the mix of milestones versus royalties shift at all? I.e., are there any milestones that are kind of nudging into 2021 possibly being offset by royalties better than you previously modeled?

Okay got it thanks, and just I guess as a quick follow up you mentioned you expect.

Updates to to Darzalex.

Helen I. Torley: No, overall, it pretty much was in line with our original plan for the year, Jess.

Hi, good internal guidance and how you're thinking about that is that something we should expect on your QQ earnings call.

Jessica Macomber Fye: Great. Thank you. Your next question comes from the line of Joe. Catanzaro, your line is open.

Let me clarify the statement <unk>, what I said, Joe is we will watch and see where it goes I'm very comfortable with the current guidance. If we see a different uptake than we had down modeled that is worthy of note that we obviously will update at this point in time, but I intend to with my remarks to say we're come.

Joseph Michael Catanzaro: Hey guys, thanks for taking my questions here. I just wanted to follow up on something you alluded to earlier. And I know you've previously spoken about the time it takes for underlying formularies to change. But, you know, for Darzalex Vazpro, I wonder if there are any expectations for seeing formulary exceptions, especially in light of the current COVID environment. And I guess as a follow-up to that, maybe anything you've seen with your legacy products and their use in the current environment and any potential read through they may provide for early Darzalex Vazpro usage. Thanks.

So with our trajectory and we'll monitor and see if there's a major deviation for that that would result in a need to change the guidance.

Okay got it that's very clear thanks, so much for taking my questions.

Thank you.

Your next question comes from the line of Jason Butler of JMP Securities. Your line is open.

Hi, Thanks for taking the questions just a one on.

Helen I. Torley: Yeah, thanks, Joe. I haven't seen Janssen make any comments about any expectations about different formulary expectations, but I do know that we are hearing in general that there is a desire to not have patients in infusion rooms for a long period of time. I think the most pertinent comment comes from Roche's recent earnings call, where I think Bill Anderson commented on seeing an increase in demand for Herceptin SC for exactly that reason, people not wanting to be in the infusion suite. So, while I have no specific information to support the hypothesis, Joe, I think the environment, as you point out, is one where Sub-Q fits a number of needs, less time in the hospital, less exposure to other patients, and hopefully But I have no data to support that at this point in time.

The potential new partnerships just the.

The F.D.A. or regulatory environment now since we'd be more excited for enhanced approval that does that in any way impact your outlook for ongoing partnership activities either in terms of level of interest or the the value that you think you can generate out a new deals.

Yeah I'm.

Thanks, Jason I I would say that we had built a very strong slate of potential partners, we were talking to even before the cold 19, pandemic, but but I do agree with you there is definitely a.

A number of incoming calls.

Looking for SC and understanding would it be another way to deliver care. So you just caused a modest increase them, but overall the dynamic we're seeing was already very nicely in place. So hopefully that addresses your question.

Yep Amendment, just one on the a 23 seven royalty guidance and he just based on the updates through the quarter any notable changes in the the different components of products the build to that number or is that essentially everything largely in line with.

Joseph Michael Catanzaro: Okay, got it. Thanks. And just, I guess, as a quick follow up, you mentioned you expect the DARS elects update and internal guidance and how you're thinking about that. Is that something we should expect on your 2Q earnings call?

Helen I. Torley: Let me clarify the statement. What I said, Joe, is we will watch and see where it goes. I'm very comfortable with the current guidance. If we see a different uptake than we had modeled, that is worthy of note that we obviously will update at this point in time. But I intended with my remarks to say we are comfortable with our trajectory and we'll monitor and see if there's a major deviation from that that would result in a need to change the guidance.

How you thought about it earlier in the year.

Yeah, it's largely in line, Jason them, we are reflecting differences and I clinical study timelines and probably more than it changes and the products in or out of the portfolio, but down pretty pretty much sound very similar picture two to one we show before without potential in 2027.

Really being driven by the number of products that we and project having in the clinic at that point in time and approved and in that nice growth trajectory point.

Joseph Michael Catanzaro: Okay, got it. That's very clear. Thanks so much for taking my question.

Okay, great. Thanks for taking my questions.

Helen I. Torley: Thank you.

Thank you.

Sure next question comes from the line of Charles Duncan of Cantor Fitzgerald. Your line is open.

Jason Nicholas Butler: Your next question comes from the line of Jason Butler of JMP Securities. Your line is open. Hi, thanks for taking the questions. Just one on the potential new partnerships, just the FDA or regulatory environment now potentially being more expedited for enhanced approvals. Does that in any way impact your outlook for ongoing partnership activities, either in terms of the level of interest or the value that you think you can generate out of a new deal?

[laughter] I'd, Helen and team. Thanks for taking my questions I apologize if they've been asked I'm juggling calls today, but I guess I'm wondering first of all when you think about the recent approval for sub cutaneous stars Alax one are you.

Your assumptions of what were your assumptions about the use of the drugs. It seems like it was a broader leave all than what we had anticipated I guess, if you think about you know having to supply apiay et cetera, what what what are the key levers here that you're you're looking to pull in the in the near term.

Helen I. Torley: Yeah, thanks, Jason. I would say that we had built a very strong slate of potential partners we were talking to even before the COVID-19 pandemic. But I do agree with you, there is definitely a number of incoming calls looking for FC and understanding whether it would be another way to deliver care. So it has caused a modest increase, but overall, the dynamic we're seeing was already very nicely in place. So hopefully, that addresses your question.

Yeah. Thanks, Charles them as we were getting ready for the potential approval. If you recall, we always talk to buy down the expectation of approval in relapsed refractory, but did highlight that play. These study and the fact that Janssen had filed that and linking it to the comments that had been made other.

Jason Nicholas Butler: And then just one on the 2027 royalty guidance. Any, just based on the updates through the quarter, any notable changes in the different components of products that build to that number, or is essentially everything largely in line with how you thought about it early in the year?

My fellow ODAC to say, perhaps a controlled study wouldn't be needed and so in our scenario planning out we planned for both we plan for this broad label based on play these being added to Columbus, and similarly for our E. P. I production. If you recall 2019 was a year, where we had a lot.

Helen I. Torley: Yeah, it's largely in line, Jason. We are reflecting differences in clinical study timelines, probably more than changes in the products in or out of the portfolio, but pretty much a very similar picture to one that we showed before, with that potential in 2027 really being driven by the number of products that we project having in the clinic at that point in time and that are approved and in that nice growth trajectory point.

Apiay sales and we highlighted that that was both janssen and that Roche buying their apiay in anticipation or successful regulatory pathways and launches in twentytwenty. So we're feeling very good about both of those and that delighted obviously to get five older seven indications in the U.S.

Jason Nicholas Butler: Okay, great. Thanks for taking the questions.

Helen I. Torley: Thank you.

Charles Duncan: Your next question comes from the line of Charles Duncan of Cantor Fitzgerald. Your line is open. Hi Helen and team. Thanks for taking my questions. I apologize if they have been asked. I'm juggling calls today. But I guess I'm wondering, first of all, when you think about the recent approval for subcutaneous Darzalex, what were your assumptions about the use of the drug? It seems like it was a broader label than what we had anticipated. And I guess, as you think about, you know, having the supply API, etc.? What are the key levers here that you're looking to pull in the near term?

And a C. H M. P opinion recommending approval of all of the indications in Europe. It really could not have turned out better in in our view so delighted with that.

Very good and regarding that Apiay, where sue worship manufactured.

And our epi is manufactured in the U.S. it to see demos.

Helen I. Torley: Yeah, thanks, Charles. As we were getting ready for the potential approval, if you recall, we always talked about the expectation of approval in relapsed refractory but did highlight the PLADES study and the fact that Janssen had filed that and linked it to the comments that had been made at the Rituximab and Hicella ODAC to say perhaps a controlled study wouldn't be needed. And so, in our scenario planning, we planned for both. We planned for this broad label based on PLADES being added to Columba. And similarly, for our API production, if you recall, 2019 was a year where we had a lot of API sales, and we highlighted that that was both Janssen and Roche buying their API in anticipation of successful regulatory pathways and launches in 2020. So we're feeling very good about both of those and delighted, obviously, to get five of the seven indications in the U.S. and a CHMP opinion recommending approval of all of the indications in Europe It really could not have turned out better in our review, so we are so delighted with that.

That we have okay.

Okay hundred person and no disruption to their supply so you've experienced.

No both of our C.D. EMOS were in regular contact with them and they're considered essential businesses. They have got the materials and their operating without an interruption related to cope with 19.

Super and then I came in on the end of Jasons question. So I'm not sure. If this is what he's asking but.

I think he was perhaps he was asking about new collaborations and I guess I'm wondering about existing collaboration.

And then the potential use of Herceptin SC relative to the bus bio similars or is there any any new or different feedback you're getting from.

Current collaborators or from the market that suggests that there's greater appreciation of her subcutaneous versus IB value add in this current environment.

Yeah, I would say with regard to Herceptin SC roasted say on their last quarterly call that he had seen an increase them interest in demand for EM Herceptin SC in particular.

Charles Duncan: Very good. Um, and

Helen I. Torley: And regarding that API, where is it manufactured? Our API is manufactured in the U.S. at two CDMOs that we have.

Charles Duncan: Okay. Okay, 100%. And no disruption to that supply that you've experienced.

<unk> positions that wanting to order it for compassionate use but also commercially so up to support the point that I see fits today's environment I think that is very true and all of our existing collaboration partners. We're in constant dialogue with them about the potential to select and move new targets into the clinic.

Helen I. Torley: No, both of our CDMOs, we're in regular contact with them, and they are considered essential businesses. They have the materials, and they are operating without an interruption related to COVID-19.

Charles Duncan: Super, and then I came in at the end of Jason's question, so I'm not sure if this is what he's asking, but I think he would perhaps be asking about new collaborations, and I guess I'm wondering about existing collaborations. And then the potential use of Herceptin SC relative to biosimilars. Is there any new or different feedback that you're getting from current collaborators or from the market that suggests that there is a greater appreciation of subcutaneous versus IV value add in this current environment?

And I can't see I have noticed they increase and that there was already such an active dialogue with right around that has that them that hasn't really changed but and you know I I would expect if we just them I think about this they're already were challenges to receiving IB therapies. In these infusions weeks, we know couple.

Cease constrained we know there aren't enough nurses and we know that the overtime required with some of the therapies to keep the infusion centers opened in the evenings and weekends is is a challenge. So I think covert 19, just adds to what was already a market environment conducive to companies and physicians and patients.

Helen I. Torley: Yeah, I would say with regard to Hercept and SC. Roche did say on their last quarterly call that they had seen an increased interest in demand for Hercept and SC, in particular positions wanting to order it for compassionate use, but also commercially. So to support the point that SC fits today's environment, I think that is very true. All of our existing collaboration partners, we're in constant dialogue with them about the potential to select and move new targets into the clinic. But I can't say I have noticed an increase in that. There is already such an active dialogue around that, Chas, that hasn't really changed.

Considering SC very seriously as an alternate.

Okay very good thank you for taking my questions.

Thank you.

Your next question comes from line of Craig Savant of it shows Goldman Sachs. Your line is open.

Yes. Thank you congrats on the progress and thanks for taking my questions actually Ah.

Yes, and my congratulations to a land on joining and congrats from a role.

Charles Duncan: But you know, I would expect if we just think about this, there already are challenges to receiving IV therapies in these infusion suites because we know capacity is constrained. We know there aren't enough nurses, and we know that the overtime required for some of the treatments to keep the infusion centers open in the evenings and weekends is a challenge. So I think COVID-19 just adds to what was already a market environment conducive to companies, physicians, and patients considering SC very seriously as an alternative.

When I wish you well and then maybe I can ask you a couple of questions. If you don't find.

Maybe can you give us your perspective those of you know what you've seen thus far I'm since you joined and maybe if you can give us a sense of what you're like near term and mid term priorities are maybe another question for you. If I could you know in terms of BD opportunities, it's something that companies talk to as.

Something that they would look at maybe prioritize on a go forward basis can you maybe comments on you know what kind of opportunities here, you know seeing out there and the transacts ability and current valuations in your and your comfort with what you're seeing out there and then maybe my last question I'm Helen for you just in terms.

Helen I. Torley: Okay, very good. Thank you for taking my question.

Graig C. Suvannavejh: Thank you.

Graig C. Suvannavejh: Your next question comes from the line of Graig Suvannavejh of Goldman Sachs. Your line is open. Yeah, thank you. Congratulations on the progress. And thanks for taking my questions. I actually, Let me send my congratulations to Elaine on joining, and congratulations on the role, and I want to wish you well. And maybe I can ask you a couple of questions, if you don't mind. Maybe you can give us your perspective of, you know, what you've seen thus far since you joined, and maybe you can give us a sense of what your, like, near-term and mid-term priorities are, and maybe I can ask you another question, if I could. You know, in terms of business development opportunities, it's something that companies talk about as something that they would look at and maybe prioritize on a go-forward basis.

The label that we saw for regards looks bass pro and.

I think we've got a sense of what pricing is like but could you give us your sense of.

You know, what you see as potential barriers or hurdles or challenges that might prove them.

A rapid adoption of five pro in a relatively conversion from from Ivy Darzalex any color there in terms, how you're thinking about things based at least from a label and pricing would be helpful. Thanks. So much.

Graig C. Suvannavejh: Can you maybe comment on what kind of opportunities you're seeing out there and the transactability and current valuations and your comfort with what you're seeing out there? And then maybe my last question, Helen, for you, just in terms of the label that we saw for Darzalex Fast Pro, and I think we've got a sense of what pricing is like, but could you give us your sense of, you know, what you see as potential barriers or hurdles or challenges that might prevent a rapid adoption of Fast Pro, you know, relative to the conversion from IV Darzalex? Any color there, in terms of Thanks so much.

Great well, let you answer Griggs, our first two questions first.

Great Thank Greg for that message.

You know I think.

Small you know what excites me the most about joining halozyme is really the potentially mean, Hans and I know that.

Helen.

Highlighted from anything you know what impresses me that we've got a commercially validated platform technology utilizing blockbuster products for some of the leading pharma and biotech companies around the world.

And we're early in the growth cycle.

Even ernie being driven by enhanced and we've got strong cash flow generation that we expect from the enhanced business. One of my priorities is clearly one of our priorities is clearly prioritizing return of capital to shareholders consistent.

Na Sun: Great. Elaine, I'll let you answer Graig's first two questions for us.

Na Sun: Great. Thanks, Greg, for that message.

With what we communicated to the market.

Na Sun: You know, first of all, what excites me the most about joining Halozyme is really the potential and enhancement, and I know that Helen's highlighted some of these, but, you know, what impresses me is that we've got a commercially validated platform technology utilized in blockbuster products for some of the leading pharma and biotech companies around the world. And we're early in the growth cycle of revenue and earnings being driven by Enhance. And with that strong cash flow generation that we expect from the Enhance business, you know, one of my priorities is clearly, one of our priorities is clearly prioritizing return of capital to shareholders consistent with what we communicated to the market. With respect to BD opportunities or M&A opportunities, of course, if we find an attractive M&A opportunity that could give us the ability to add another platform technology with attractive growth and margin characteristics like Enhance, we could certainly think about that. And there are certainly opportunities, we think, out there, but we're in no rush to do so given the strong growth profile that we expect with Enhance. Hopefully, that answers your question. Thank you.

With respect to be BD opportunities or M&A opportunity court, if we find an attractive M&A opportunities.

I could give us the.

The ability to add another platform technology with attractive.

Gross margin characteristics like enhanced certainly think about that.

We're and there certainly opportunities we seek out there.

But we're in no rush to do so given strong growth profile that we expect that enhance hopefully that answers your question.

Thank you.

That's great Lane and great with regard to the Darzalex label, Yes, somebody I just mentioned to Chaz that we're obviously delighted with that brought his five of the seven indications for the U.S., which covers we believe the majority of use of that Daratumumab today and the C.H.M.P. recommendation is actually all of the indications in Europe, So broad label great place the stock.

Our with any launched them you always want to make sure reimbursement is going to be in place send them with the change in the U.S. note to get the J codes quarterly out we anticipate that we'll just take a short period of time to get in place and that together with they are getting on the formularies getting loaded in the E.M. Our orders is old just the.

Na Sun: That's great, Elaine. And Greg, with regard to the Darzalex label, yes, I just mentioned to Chas that we're obviously delighted with how broad it is. Five of the seven indications for the U.S., which covers, we believe, the majority of use of daratumumab today, and the CHMP recommendation is actually all of the indications in Europe. So a broad label, a great place to start

Logistical situation that takes them a period of that weeks to months to get in place, but then we anticipate robust uptake based on the value proposition or that there are two men at the three to five minutes and the lower reported rate of infusion related reactions. When we talk to physicians we could.

Helen I. Torley: With any launch, you always want to make sure reimbursement is going to be in place. And with the change in the U.S. now to get JCODES quarterly, we anticipate that will just take a short period of time to get in place. And that, together with getting on the formularies, getting loaded into the EMR orders, is all just a logistical situation that takes a period of weeks to months to get in place. But then we anticipate robust uptake based on the value proposition of daratumumab, the three to five minutes and the lower reported rate of infusion-related reactions. When we talk to physicians, we get a very positive and strong response to that value proposition. So the only barriers are, I believe, reimbursement and just getting these issues in place.

A very positive and strong response to that that value proposition. So the you know the only barriers hour I believed that the reimbursement and the at just that they are getting these up these issues in place there will be a differential in the amount of reimbursement between Subcu, an Ivy I don't know exactly how much that will be.

But again, you've got to think it by the strength of the value proposition the desire for doctors and patients to not be an infusion suites for multiple hours the nursing shortage and all those other factors them I really don't see many barriers to a very robust uptake for daratumumab in the U.S. and also in.

Helen I. Torley: There will be a differential in the amount of reimbursement between sub-Q and IV. I don't know exactly how much that will be, but again, you've got to think about the strength of the value proposition, the desire for doctors and patients to not be in infusion suites for multiple hours, the nursing shortage, and all those other factors. I really don't see many barriers to a very robust uptake for daratumumab in the U.S. and also in Europe upon approval.

Europe upon approval.

Great. Thank you so much book.

Thanks, Greg.

Your next question comes from the line of Arlinda Lee of kind of Court. Your line is open.

Hey, guys. Congrats on the Congress I had a few questions. Maybe this is follow up on some of it.

Graig C. Suvannavejh: Great. Thank you so much both for both.

Graig C. Suvannavejh: Thanks, Greg.

Mentioned earlier.

Linda Lee: Your next question comes from the line of our Linda Lee of Canaccord. Your line is open.

Sure.

Is 80.

A few dara.

Helen I. Torley: Hey guys, congrats on the progress. I had a few questions, maybe just to follow up on some of the points that you mentioned earlier. I'm wondering what the dating on the subcubes, DARA, and progenitor-septic uptake. And you mentioned formulary J codes, and I'm more interested in if there are any logistical hindrances or things that might help in the current situation. And I'm also curious about whether visiting nurses are involved.

Herceptin uptake mention formulary J code.

Mark.

It is.

Yes.

There is.

The logistical.

Or things that might help.

By the current situation and I'm also curious about whether visiting nurses can deliver.

She treatment at home.

And then secondly, I'm also wondering if there's any difference in antibody.

Linda Lee: And then secondly, I'm also wondering if there's any different.

Helen I. Torley: Wikile Delivery in combination, and whether you guys are in discussions with Julia, for example, about remdesivir, converting that to FFQ, I think.

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Combination.

And whether you guys are discussions.

Giulia for example.

She is.

Linda Lee: All right, thank you.

All right. Thank you.

Helen I. Torley: So with regard to the initial questions, I hope you heard my answer to Graig. You know, every injectable product launch has a certain sequence of things that need to happen for it to be doctors be able to freely write. It will be no different for daratumumab, and I expect it will go over a week to months. It will be very nicely in place, and will not be a hindrance to uptake. The label for Darzalex faspro says it must be administered by a health care professional. Whether Janssen plans to have that done in the infusion suite or perhaps support clinics who want to have visiting nurses, I'm afraid I don't know. I don't see a preclusion for it in the label, Arlinda, but I don't know if that's going to be part of the plan for the launch. There will be a better question to ask of Janssen.

So with regard to the initial questions I, Oh, hopefully heard my answer to Gray again, you know every injectable product launch has a certain sequence of things need to happen for it to be adult just the able to freely right. It will be no different for dairy Tim a map and expect it will go over a week sat you tend to months it will be.

Very Matt nicely in place and will not be a hindrance them at two uptake the label for Darzalex fast Bruce as it must be administered by a health care professionals.

That sounds <unk>, whether janssen plans to have that doesn't mean fusion suite or perhaps support clinics you want to have visiting nurses I'm afraid I don't know I don't see up preclusion for it in the label Arlinda, but I don't know if that's going to be part of them. The plan of the launch that.

<unk> question better asked of Janssen and with regard to cope with 19, we actually and have initiated discussion with a number of companies with regard to the potential of enhanced to allow their drugs to be given subcutaneously, particularly in savings of aprovel access or early disease that treatment and all of those.

Helen I. Torley: With regard to COVID-19, we have actually initiated discussions with a number of companies with regard to the potential of Enhance to allow their drugs to be given subcutaneously, particularly in settings of prophylaxis or early disease treatment. All of those discussions are at an early stage, and so I'm really not in a position to say anything more about any of them at this time. But we do see, particularly in those COVID-19 settings, the benefits of SC where you might want to have a large volume of people be able to be treated in a clinic or in a hospital in a shorter period of time. It seems like SC would be the way to go. But these are early discussions, and I can really say more than that at this time.

Discussions at an early stage and so I'm really not in a position to say anything more about any of them at this time, but Sam we do see a particularly in those cobot 19 settings and the benefits of I see where you up might want to have a large volume of people be able to be treated in a clinic or in a hospital in a shorter period of time.

It seems like M. S C would be the way to go like them early discussions and nothing I can really seem more than that at this time.

Jim Burchina: Your next question comes from the line of Jim Burchina of Wells Fargo. Your line is open. Hi guys, it's Joe on for Jim.

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Your next question comes from the line of June purchase of Wells Fargo. Your line is open.

Hi, guys, it's Joe on for Jim Congrats on the progress and appreciate you taking the questions are two from US are there any updates you can provide on pending or planned IP filings for novel car positions around and hence formulations for the pipeline.

Helen I. Torley: Congratulations on the progress and appreciate you taking the questions. Two from us: are there any updates you can provide on pending or planned IP filings for novel compositions around enhanced formulations for the pipeline? And maybe second, you know, how you view the approval of Darzalex FASPR in the U.S. in terms of de-risking other filings in the U.S. like Progeta Herceptin as an example.

Second you know how you view the approval of dark guards like Strasburg, the U.S. in terms of de risking other filings.

Trajenta herself for example.

All right I am with regard to IP filings I mean, it's a an important part of our strategy as you're aware that time, when we couldn't get co formulation patent Sam It provides additional exclusivity in generally has the impact on our royalty term all of extending the duration and also pushing at the time to the step down so.

Helen I. Torley: All right. With regard to IP filings, it's an important part of our strategy, as you know, that when we can get co-formulation patents, it provides additional exclusivity and generally has the impact on our royalty term of extending the duration and also pushing out the time to step down. So it's something we are very actively working on with our partners. I do see line of sight to additional IP filings. I can't say any more than that at this point in time.

Something we very actively and are working on it with our partners and I do see line of sight to additional IP filings I can't see any at more than that at this point in time at but given the fact that these are possible based on a novelty that has identified Wayne in hands is combined with another proprietary drug.

Helen I. Torley: But given the fact that these are possible based on a novelty that is identified when Enhance is combined with another proprietary drug, we know there are multiple pathways to this. It could be PK data, it could be clinical data, it could be pharmacodynamic data. And so, Joe, to answer your question, yes, there definitely is a line of sight to additional co-formulation patents being filed.

We know there are multiple pathways to this it could be PK data it could be clinical data it could be pharmacodynamic data and so when Joe to answer your question, Yes, Sam that there are about the definitely see line of sight traditional co formulation patents being filed.

One that they darzalex fast pro de risking.

Jim Burchina: On Darzalex Faspro derisking, I think where we see the biggest excitement about what Darzalex Faspro granted was the ability to get a broad set of indications without doing large comparative clinical studies for each and every indication. And as I mentioned, this was really something the FDA spoke about at the Rituxan HiSela ODAC, where for HiSela, Roche had done three separate 500 patient studies for the three indications And what the FDA said was, in the future, that might not be possible, might not be needed. And so what Darzalex clearly demonstrates is the one large comparative study that's done in the relapsed refractory population, but for all the other indications in the front and second line, that was granted based on the Pleiades study, which was a 250 patient study, single arm.

I I think where we see the biggest excitement about what dammit Darzalex bass pro granted was the <unk> ability to get a broad set of indications without doing large comparative clinical studies for each and every indication and as I mentioned this is really something they ask the spoke about at the retention high seller ODAC.

Where or I sell roshe done three separate 500 patient studies for the three indications and what Tom. The after he said was in future that might not be paulson might not be needed.

So what them Darzalex. It clearly demonstrates is the one large comparative studies done in the relapse refractory population, but the only other indications in the front and second line that was granted based on the play these study which was.

A 250 patient study single arm and so I think what the the extrapolation is is the ability once you've demonstrated the non inferiority of efficacy in PK. They ft is going to allow for leaner development plans in circumstances, where they feel as though the.

Jim Burchina: And so I think what the extrapolation is, is the ability, once you've demonstrated the non-inferiority of efficacy and PK, the FDA is going to allow for leaner development plans in circumstances where they feel as though the safety has been well demonstrated. And that is very exciting for us and, obviously, for our partners, meaning a smaller need for the size of clinical programs to get the broad label.

Safety has been well demonstrated and that is very exciting for as an obviously for our partners, meaning smaller needs for the size of clinical programs to get the broad label.

Helen I. Torley: Great. Thanks so much, Helen.

Great. Thanks, so much on.

Okay. Thanks so.

Helen I. Torley: Okay, thank you.

Operator: If you would like to ask a question over the phone lines, please press star then 1 on your telephone keypad. Your next question comes from the line of Joel Beattie of Citi. Your line is open.

Okay, and if you'd like to us to Christian over the phone lines. Please press Star then one on your telephone keypad. Your next question comes from lineup Joel Beatty of Citi. Your line is open.

Joel Beattie: Hi, thanks for taking the question. The question is about strategy for the company. As you become cash flow positive this quarter, does that put any type of timeline on making a decision on next steps regarding either a, you know, some type of acquisition or returning additional cash to shareholders or some other choice?

Hi, Thanks for taking my question question is a both strategy for the company as you become cash flow positive this quarter.

Does that put any type of timeline on making a decision on next steps regarding either a you know some type of acquisition or returning additional cash to shareholders or or some other choice.

Helen I. Torley: I think it's a great one for Elaine to give her perspective on. Sure.

Having I think it's great one for Elaine too well give her perspective on Elaine.

Sure. Thanks, So the question Joel.

Na Sun: Thanks for the question, Joel. We're very excited about the multiple catalysts. In addition to the recent approval of Darzalex FastPro and expected multiple catalysts that we anticipate to drive our earnings and cash flow over the near and long term, we're anticipating continuing to prioritize return of capital to shareholders, as you mentioned, and consistent with what we've communicated to the market. So we anticipate repurchasing up to $150 million in share purchases in 2020, pending market conditions and other factors. We'll continue to evaluate our capital structure to ensure that we're well positioned, but we continue to be very confident in our long-term growth prospects. And so we anticipate continuing to be in a position to return capital to shareholders, again, pending market conditions.

So we're very excited about the multiple catalysts.

In addition to the recent approval of drivers like fast pro.

The.

And expected multiple catalysts that we anticipated Dr. Maher earnings and cash flow, the near and long term.

We're anticipating continuing to prioritize returned capital to shareholders, you mentioned and consistent with what we've communicated to the market. So we anticipate repurchasing up to the $150 million Ginger purchases in 2020 pending market conditions and other factors well, we'll continue to.

Valuate, our our capital structure to ensure that we're well positioned but were can be very confident in our long term growth prospects and so we anticipate competing to.

In position to return capital to shareholders again landmark commissions and other factors.

Joel Beattie: Got it. And how much of those currently purchased for 2020 have been done so far?

Got it how much will ponder purchases for 2020 have been done suffer.

So.

We were able to purchase 52 million nearly $62 million.

Na Sun: So we were able to purchase nearly $52 million earlier this year at an average price of $16.15 per share. And that's on top of the $200 million in share purchases that we completed through the concurrent buyback in ASR prior to that.

Earlier this year at an average price and $16.15 per share and that's on top of the $200 million and share purchases that we completed through that concurrent buyback NSR prior to that.

Joel Beattie: Great, thank you. Transcription by Trans-Expert at Fiverr.com. There are no further questions on the phone lines at this time. I turn the call back over to the presenters.

Great. Thank you.

Sure.

There are no further questions over the phone lines at this time I turn the call back over to Supercenters.

Operator: That's terrific. Well, I really appreciate everybody joining us for today's call. As you heard, despite COVID-19, we're very proud of the progress our partners are making, and especially the continued strong work of the Halozyme team, who have transitioned so well to the different work environment that we have. Thank you so much for your attention. We look forward to updating you next quarter. Goodbye now.

That's terrific well I really appreciate they all have everybody joining us for today's call as you heard despite down that kopec 19 were very proud of the progress our partners are making in especially of the continued strong work all the halozyme team, who transition so well to the different work environment that we have thank you so much.

For your attention we look forward to updating you next quarter.

By now.

Operator: This concludes today's conference call. You may now disconnect.

This concludes todays conference call you may now disconnect.

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