Q3 2020 Halozyme Therapeutics Inc Earnings Call
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Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to turn the conference over to Al Chaldani, Vice President of Investor Relations and Corporate Communications for Halozyme Therapeutics. Mr. Chaldani, please begin.
At this time, all participants are listening only mode.
After the speaker's presentation, there will be a question and answer session to ask a question. During the session. You want me to press Star one on your telephone. Please be advised that todays conference is being recorded if you require any further assistance. Please press star zero.
Let's turn the conference over to Al Kildani, Vice President of Investor Relations and corporate communications for Halozyme Therapeutics Mr. Kenny please begin.
Al Chaldani: Good afternoon, everyone, and welcome to our third 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 third quarter of 2020.
Good afternoon, everyone and welcome to our third 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 on today's call. The investor Relations section of our website.
Leading the call will be Dr., Helen Torley, Halozymes, President and Chief Executive Officer, who will provide an update on our business and the lanes on our Chief Financial Officer, who will review our financial results for the third quarter 2020.
Al Chaldani: During the call, we will be making forward-looking statements. I refer you to our SEC filings for a full listing of the risks and uncertainties. I'll now turn the call over to Helen. Thank you.
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 will now turn the call over to Helen.
Thank you all.
Helen I. Torley: I'm pleased to report strong financial results for the third quarter of 2020, evidenced by revenue of $65.3 million, which is 18% growth over Q2, and earnings per share of $0.25, which is 32% growth over Q2. As we'll describe in detail, the strong third quarter results were driven by a combination of growth in royalties, which grew 51% sequentially, primarily as a result of Darzoic subcutaneous uptake, and also as a result of substantial progress by our partners in their drug development pipeline. Based on these results and our outlook for the fourth quarter, we are pleased to announce we are raising our full year revenue guidance to $250 to $260 million from $230 to $245 million, which is a 28 to 33% increase over prior year revenue.
I'm pleased to report strong financial results for the third quarter of Twentytwenty evidenced by revenue of $65.3 million, which is 18% growth over Q2 and earnings per share of 25 cents, which is 32% growth over Q2.
I will describe in detail the strong third quarter results were driven by a combination of growth and royalties, which grew 51% sequentially primarily as a result of the Darzalex subcutaneous uptake and also as a result of substantial progress by our partners with their drug development pipeline.
Based on these results and our outlook for the fourth quarter. We are pleased to announce we are raising our full year revenue guidance to $250 million to $260 million from $230 million to $245 million, which is a 28% to 33% increase over prior year revenue.
Helen I. Torley: We're also increasing our earnings per share guidance to $0.80 to $0.85 from our prior guidance of $0.60 to $0.75. As these results demonstrate, the vision we described for the future of our company approximately one year ago when we transitioned our business to focus on Enhance is now truly bearing fruit in the form of growing revenues, earnings, and cash flow. This has also enabled us to deliver on our commitment to return capital to shareholders in a meaningful way. In the third quarter, we repurchased $58.9 million worth of shares, or approximately 2.1 million shares, resulting in $312.4 million in capital returned to investors via our share repurchases in less than one year as part of the authorized three-year $550 million share buyback program.
Were also increasing our earnings per share guidance to 80 to 85 cents from our prior guidance of 60 to 75 cents.
As these results.
Our results demonstrate division, we described for the future of our company approximately one year ago, when we transitioned our business to focus on and hence it's not truly bearing fruit in the form of growing revenues earnings and cash flow.
This is has also enabled us to deliver on our commitment to return capital to shareholders in a meaningful way.
In the third quarter, we repurchased $58.9 million worth of shares or approximately 2.1 million shares resulting in $312.4 million in capital return to investors via our share repurchases in less than one year as part of the authorized three year $550 million.
Share buyback program.
Helen I. Torley: All of this progress was made possible by our partners and the Halozyme team, who adapted very effectively to the many changes imposed by COVID-19 on business and our lives. As a result, we're in a strong position as we close out 2020 and look forward into 2021. Turning now to slide three, I'll discuss our growth in royalties. We are delighted by the strong growth in royalties, and I wanted to provide some context for this achievement. As illustrated on the left, in the third quarter, revenue from royalties grew 44% year-over-year and 51% sequentially.
All of this progress was made possible by our partners and the hit us on team adapting very effectively to the many changes imposed by COVID-19 on the business and our life.
As a result, we're in a strong position as we close out 2020.
Forward into 2021.
Turning now to slide three I will discuss our growth and royalties we.
We are delighted by the strong growth in royalties and I wanted to provide some context for this achievement.
As illustrated on the left in the third quarter revenue from royalties grew 44% year over year and 51% sequentially.
Helen I. Torley: We're delighted to be embarking upon a period of projected strong growth in royalties propelled by the launch of Darzalex Faspro in the U.S. and Darzalex SC outside the U.S. I'm pleased to report that we now project full-year royalty revenue growth of 14 to 22% compared to the prior year, resulting in projected 2020 royalty revenues of $80 to $85 million. Let me now provide some additional color on the substantial Darzalex launch. Janssen received regulatory approvals for the US and EU in May and June respectively, meaning that the third quarter was the first full quarter of sales. During the third quarter, Janssen's parent, J&J, reported worldwide sales of Darzalex, including the IV and SC forms, of $1.1 billion, up 44% year-over-year on an as-reported basis.
We are delighted to be embarking upon a period of projected strong growth from royalties propelled by the launch of Darzalex fast, bringing the U.S. and Darzalex SC outside the U.S.
I'm pleased to report that we now project full year royalty revenue growth of 14% to 22% compared to the prior year resulted in projected 2020 royalty revenues of $80 million to $85 million.
Let me now provide some additional color on the subcutaneous darzalex launch.
Janssen received regulatory approvals for us in you and sorry for us than to you in May and June respectively, meaning that the third quarter was the first full quarter of sales.
During the third quarter Janssens parent JNJ reported worldwide sales of garlic, including the IB NFC forms of $1.1 billion up 44% year over year on an as reported basis.
Helen I. Torley: While J&J does not provide a breakdown of sales between the IV form of the drug and the sub-Q form used in the hands, we can share, based on our evaluation of syndicated sales data, that the launch is off to a strong start in the U.S. and in countries outside the United States. We project continued growth in royalties for Darzalex Faspro and Darzalex SC as adoption and conversion increase in the already-launched countries, and new launches occur in additional countries following reimbursement confirmation. Turning now to Additional Positive Data Readout and Potential Label Expansion for Darzalex Faspro and Darzalex SC. On October 21, Janssen Development Partner GenMab announced data from the second part of the Phase 3 Cassiopeia study, evaluating daratumumab as maintenance treatment in patients with newly diagnosed multiple myeloma, eligible for an autologous stem cell transplant, who had achieved a response during Part 1 of this trial. The study met the primary endpoint of progression-free survival at a preplanned interim analysis.
While Jay does not provide a breakdown of sales between Ivy form of the drug and the Subcu form utilizing hands, we can share based on our evaluation of syndicated sales data that the launch is off to a strong start in the us and in countries outside the United States.
We project continued growth and royalties of Darzalex fast broke and ours like SC adoption and conversion increase in the already launch countries and new launches occurred in additional countries following reimbursement confirmation.
Turning now to the additional positive data readout and potential label expansion for Darzalex fast grow under our feet.
On October 20, Onest Janssen development partner Genmab announce data from the second part of the Phase III Casio PK study evaluating daratumumab as maintenance treatment in patients with newly diagnosed multiple myeloma eligible for autologous stem cell transplant, who had achieved a response during part one of this trial.
The study met the primary endpoint of progression free survival at a preplanned interim analysis.
Helen I. Torley: Based on the data, Gansen plans to discuss the potential for a regulatory submission with health authorities, and the data are expected to be presented at an upcoming medical meeting. On September 10th, we announced that Janssen submitted a Supplemental Biologics License application to the FDA seeking approval for Darzalex-Faspro, utilizing Halozyme's enhanced technology, for the treatment of patients with Leytain Amyloidosis, which is a rare and potentially fatal disease for which there are currently no approved therapies. The supplemental BLA was based on positive phase 3 data from the Andromeda study. There are an estimated 30,000 to 45,000 patients in the United States and the European Union who have light-chain amyloidosis. Notably, only the subcutaneous version of Darzalex within the hands was selected to be studied for this indication.
Based on the data downs and plans to discuss the potential for a regulatory submission with health authorities and the data are expected to be presented at an upcoming medical meeting.
On September 10th we announce that Janssen submitted a supplemental biologics license application to the FDA seeking approval for Darzalex bass pro utilizing halozymes ENHANZE technology for the treatment of patients with light chain amyloidosis, which is a rare and potentially fatal disease for which there are currently no approved therapies the.
Supplemental BLE was based on positive phase three data from the Andromeda study.
There are an estimated 30 to 45000 patients in the United States and European Union, who have light chain amyloidosis.
Notably only the subcutaneous version of Darzalex with ENHANZE was selected to be study for this indication and upon positive regulatory opinion darzalex as seat would be specifically approved for this indication we look forward to a future decision on acceptance of this filing by the FDA.
Helen I. Torley: And upon positive regulatory opinion, Darzalex SC would be specifically approved for this indication. We look forward to a future decision on whether to accept this filing by the FDA. As I just highlighted, not only is the launch of subcutaneous Darzalex off to a strong start, but Janssen also has a robust development program with the potential to further expand the patient population that can be treated with Darzalex SC, and we look forward to providing further updates in this area. Now, I will move now to slide 4 for a discussion of the additional products that are commercialized in the U.S. and rest of the world utilizing Roche continues with its global commercialization of Mapthera or Rituxan Hycella and subcutaneous Herceptin and Herceptin Hylecta.
As I just highlighted not only is the launch of subcutaneous doors like after a strong start Janssen also has a robust development program with the potential to further expand the patient population that can be treated with darzalex as seat and we look forward to providing further updates in this area.
Let me move now to slide four for a discussion of the additional products that are commercialized in the us and rest of world utilizing our enhanced technology.
Rose continues with its global commercialization of MEP, Sarah or reset some nice fella and subcutaneous herceptin and herceptin highlights.
Helen I. Torley: Royalties from these more mature products are projected to decline modestly this year, primarily as a result of the ongoing impact from biosimilars. However, we do expect to see future growth in the Roche portfolio of products driven by Fezco, which was recently launched in the United States. Fezco is a fixed-dose combination of two drugs that are the backbone of treatment for early and metastatic HER2-positive breast cancer, specifically Progetta and Hercept
Royalties from these more mature products are projected to decline modestly this year, primarily as a result of the ongoing impact from bio similars.
We do expect to see future growth in the roast portfolio of products driven by FESCO, which was recently launched in the United States.
There was a fixed dose combination of two rows drugs that are the backbone of treatment for early and metastatic hertwo positive breast cancer, specifically perjeta and herceptin.
Helen I. Torley: Fesco was in the early launch stage and, as a result, did not contribute meaningfully in the quarter, with Roche reporting third-quarter sales of 7 million Swiss francs. This is not unexpected as Roche is working through all of the steps to support full access in the United States, including gaining formulary approvals and inclusion into electronic medical records. Based on the timing of the application for FESGO in Europe and assuming standard review time, we see the potential for approval of FESGO in Europe in the first quarter of 2021. In Europe, gaining reimbursement approval will be a key step for launch, and this can take up to six to nine months in several of the key European markets. Rounding out our discussion of the current products, on September 15, Takeda Pharmaceutical announced that the European Medicines Agency approved a label update for Hecutia, broadening its use and making it the first and only facilitated subcutaneous immunoglobulin replacement therapy in adults, adolescents, and children with an expanded range of secondary immunodeficiencies. Takeda will now be able to target this segment of the market, which, according to Takeda, is estimated to represent about 15% of IgG use in the U.S. and EU.
That goes in the early launch stage and as a result did not contribute meaningfully in the quarter with Roche reporting third quarter sales of 7 million Swiss francs. This.
This is not unexpected as roche's working through all of the steps to support full access in the United States, including gaining formulary approvals and inclusion into the electronic medical records.
Based on submission timing for phase two in Europe, and assuming standard review time at we see the potential for approval of fares go in Europe in the first quarter of Twentytwenty one.
In Europe, gaining reimbursement approval will be a key step for launch and this can take up to six to nine months and several of the key European markets.
Riding out our discussion of the current products on September 15th Takeda pharmaceutical announced that the European Medicines Agency approved a label update for Hyqvia broadening its use and making it the first and only facilitated subcutaneous immunoglobulin replacement therapy, and adult adolescents and children with an expanded range of sales.
Country Immunodeficiencies.
Takeda will now be able to target this segment of the market, which according to Takeda is estimated to represent about 15% of IBG use in the us and you.
Helen I. Torley: I'll move now to slide 5 and discussion of our Partners Development Pipeline. I'm pleased to update the progress our partners are making in the clinic with drugs utilizing our enhanced technology. At the beginning of the year, we projected nine study starts in 2020. I'm pleased to say that, based on recent partner communications, this remains our expectation. To date, three studies have started, and we project that an additional six studies will be ready to start in the fourth quarter. Let me recap the three trials that have already started.
I'll move now to slide five and a discussion of our partners development pipeline.
I am pleased to update the progress our partners are making in the clinic with drugs utilizing our ENHANZE technology.
At the beginning of the year, we projected nine study starts in 2020.
Im pleased to say that based on latest partner communications. This remains our expectation.
To date three studies have started and we project an additional six studies will be ready to start in the fourth quarter.
Let me recap the three trials that have already started.
These are the organics phase two trial of our two month in CTP, which began in the second quarter.
Helen I. Torley: These are the Ergenics Phase 2 Trial of F-Cartizumab in CIDP, which began in the second quarter; BMS's Rilat-Lamab plus Nivolumab Phase 1 study, which also began in the second quarter, and what we call the CAPRISA study, which began in the third quarter. Let me just say a word about this CAPRISA study. This is a study that's being conducted by the Center for AIDS Program of South Africa, or CAPRISA, in conjunction with the Vaccine Research Center, a division of one of the institutes within the NIH. The study is evaluating the safety, tolerability, and pharmacokinetics of a sub-human monoclonal antibody administered in the hands to HIV-negative and HIV-positive women in South Africa. Turning now to the six remaining studies, we predict that three phase three or registration trials will start in the fourth quarter. These are the recently announced organic EFKAR-DigMOD study in Pemphigus vulgaris and foliaceous.
BMS is reluctant amount plus nivolumab phase one study, which also began in Q2.
And what we call the Caprices study, which began in Q3, let.
Let me just say a word about this a couple of study.
This is a study that's being conducted by the center for AIDS program of South Africa, or Crisa in conjunction with the vaccine Research Centre a division of one of the institutes within the anti H.
The study is evaluating the safety Tolerability and pharmacokinetics of a subcu human monoclonal antibody administered with ENHANZE in HIV negative and HIV positive women in South Africa.
Turning now to the six remaining studies.
We project, a three phase III or registration trials will start in the fourth quarter.
These are the recently announced organic effort to each month study intend tickets Bulgaria on Felicia.
The Roche phase three study with the centric.
And we recognized $32 million and milestone payments in the third quarter, including $50 million for the organics and $17 million or to centric related to progress to date towards these two studies start.
Helen I. Torley: The Roche Phase III study was concentric, and we recognized $32 million in milestone payments in the third quarter, including $15 million for Ergenics and $17 million for Tecentric, related to progress to date towards these two study starts. A third phase 3 study is also projected to be ready to start in the fourth quarter, but this is currently undisclosed at the request of the partner. And we continue to expect our partners to be ready to start three additional phase one studies in the fourth quarter. Let me now provide a brief partner-by-partner discussion of these programs. I'll begin with Ergenics, which has nominated two targets to date, the Human Neonatal Fc Receptor, which F-critigymod is designed to block, and complement component C2 with ARGX117.
A third phase three study is also projected to be ready to start in the fourth quarter. This is currently undisclosed at the request of the partner.
And we continue to expect our partners to be ready to start three additional phase one studies in the fourth quarter.
Let me now provide a brief partner by partner discussion of these programs.
I'll begin with organics out which was nominated two targets to date, the human neonatal FC receptor, which expertise newmont is designed to block and complement components C with NRG X 107.
Our genomics is progressing three separate studies at this time for Scf particular month within hens.
Our Dennis recently provided an update that enrollment in its phase to adhere study, which is evaluating effort to demod with ENHANZE in CDP is progressing well.
Helen I. Torley: Argenix is progressing three separate studies at this time for SCF protegemod with Enhance. Organics recently provided an update that enrollment in its Phase 2 ADHEAR study, which is evaluating F-cartigemod within hands in CIDP, is progressing well. Organics expects a go-no-go decision to expand the trial up to 130 patients will occur after the first 30 patients are treated in Part A of the study, and expects the decision will occur to expand in the first half of 2021. With regard to SC F-cortigemod with enhanced myasthenia gravis, Organic plans to meet with the FDA during the current quarter to discuss a bridging strategy for SC based on the positive results of its ADAPT trial, which evaluated the IV form of F-cortigemod in myasthenia gravis.
Organics expects a go no go decision to expand the trial up to 130 patients will occur. After the first 30 patients are treated in part of the study.
And expects the decision will occur to expand in the first half of 2021.
With regard to SC efforts, along with ENHANZE in my senior Gravest organic plans to meet with the FDA during the current quarter to discuss the bridging strategy for NFC based on the positive results of its adapt trial, which evaluated the IB form of particular note in my senior gravity.
Genex's stated it will communicate its plans as soon as it has written minutes from the meeting.
We look forward to learning of the next steps for this exciting program, which could result in the initiation of testing of SC expertise month within hands in my senior grab it in a registration study in Twentytwenty one.
Helen I. Torley: Eugenics has stated it will communicate its plans as soon as it has written the minutes from the FDA meeting. We look forward to learning of the next steps for this exciting program, which could result in the initiation of testing of SDS for tigemode within hands in myosin or gravis in a registration study in 2021. Ergenics also recently announced that it plans to evaluate SCF curgingimod within the hands in its Phase 3 address trial in Pemphigus vulgaris and foliation, which they indicated is on track to start this quarter. Pemphigus is a serious skin barrier disease that is associated with painful blistering.
Our genomics also recently announced that it plans to evaluate scf curtain Jamaat within hens in its phase III addressed trial, and Pentecostal Garrett and foliation.
Which the indicated is on track to start this quarter.
Pemphigoid. This is a serious skin barrier disease, which is associated with painful blistering.
The phase three address trial will be a randomized double blind placebo controlled study, where the objective is to assess the efficacy safety and tolerability in up to 150 newly diagnosed are relapsing patients with moderate to severe PEM figures.
Helen I. Torley: The Phase III Address Trial will be a randomized, double-blind, placebo-controlled study where the objective is to assess the efficacy, safety, and tolerability in up to 150 newly diagnosed or relapsing patients with moderate to severe pemphigus. The primary endpoint will assess the proportion of patients who achieve complete remission on a minimal steroid dose at 30 weeks. As noted earlier, the advancement of this program to this stage triggered recognition of $15 million of revenue during the third quarter. Now, turning to the second organics nominated target. ARGX 117
The primary endpoint will assess the proportion of patients who achieved complete remission on a minimal steroid dose at 30 weeks.
As noted earlier the advancement of this program to the stage triggered recognition of $50 million of revenue during the third quarter.
Now turning to the second organics nominate targets.
Our Gtx 7117 organic sometimes they recently initiated a phase one study evaluating RG ICT 107 in healthy volunteers with data expected in mid Twentytwenty one.
Eric 107 is targeting see two for the treatment of multi focal motor neuropathy, or emend and and a severe autoimmune disease.
Helen I. Torley: Organics announced they recently initiated a Phase 1 study evaluating ARGX 117 in healthy volunteers with data expected in mid-2021. ARJX117 is targeting C2 for the treatment of multifocal motor neuropathy, or MNMN, a severe autoimmune disease. We expect to receive a milestone payment in the near term related to the subketotic dance component of this study. As you have heard, Urgenix is making rapid progress in the clinic with subcutaneous forms of its drugs using in-hands and is evaluating a broad range of potential indications with the goal of accommodating patient preference and to adjust to the new norm where patients may not always have easy access to all sites of care. Building on this progress and vision, we were delighted to expand our collaboration and licensing agreement with Argenyx last month.
We expect to receive a milestone payment in the near term related to the subject to dance component of this study.
As you have heard at organics is making rapid progress in the clinic with subcutaneous forms of its drugs utilizing enhance and are evaluating a broad range of potential indications with the goal of accommodating patient preference and to adjust to the new norm, where patients may not always have easy access to all sites of care.
And building on this progress envision we were delighted to expand our collaboration and licensing agreement with organics last month.
As a result, our Dennis will now have the ability to exclusively access our enhanced technology for three additional targets upon nomination for a total of up to six target under the existing and newly expanded collaboration.
Let me move now to Roche.
In September we announced at Roche presented a poster with data from part one of its phase one B study evaluating a teaser lives AMAP artist centric for subcutaneous administration using ENHANZE in patients with locally advanced or metastatic non small cell lung cancer.
Helen I. Torley: As a result, Argenyx will now have the ability to exclusively access our enhanced technology for three additional targets upon nomination, for a total of up to six targets under the existing and newly expanded collaboration. Now, let me move now to Roche. In September, we announced that Roche presented a poster with data from Part 1 of its Phase 1b study evaluating Tzelizumab or Ticentric for subcutaneous administration in hens in patients with locally advanced or metastatic non-small cell lung cancer. This data was presented at the European Society for Medical Oncology Virtual Congress. The poster concluded that atezolizumab, administered in the hands, provided similar exposure as atezolizumab IV and that the results supported further development of subcutaneous atezolizumab in a confirmatory phase 3 study.
This data was presented at the European Society for medical of oncology Virtual Congress.
The poster concluded that a teaser lumara utilizing enhanced provided similar exposure as a tool realism of Ivy and that the results supported further development of subcutaneous if you lose a map in a confirmatory phase three study.
In October roast provided details of the planned phase three trial design on clinical trials Dot Gov.
Significant progress towards the start of the centric phase III trial trigger recognition of $17 million in revenue during the third quarter.
And in addition at Roche continues with its phase one study, which is evaluating Subcu administration of Ocrelizumab or service with enhanced.
I'll move now to Bristol Myers Squibb.
BMS is progressing three separate target utilizing enhanced across four distinct programs.
Specifically BMS continues with four phase one programs.
Helen I. Torley: In October, Roche provided details of the planned Phase III trial design on ClinicalTrials.gov. Significant progress towards the start of the Decentric Phase 3 trial triggered recognition of $17 million in revenue during the third quarter. And in addition, At-Rose continues with its Phase I study, which is evaluating sub-Q administration of ocrelizumab, or Ocrevus, with Enhance. Now, I'll move now to Bristol Morris
These are with Nivolumab BMS is anti Cdseventy three.
Relentless lab in combination with Nivolumab.
Additionally, at BMS initiated in the second quarter of Twentytwenty Phase one two study of Entolimod in combination with Nivolumab utilizing our ENHANZE technology.
We are excited that our current partners continue to provide new growth opportunities for enhanced.
I can say, we already have line of sight to several additional potential additional new target selections by current partners and plans to progress from phase one to phase redevelopment in Twentytwenty one.
Helen I. Torley: VMS is progressing three separate targets, utilizing ENHANCE, across four distinct programs. Specifically, BMS continues with all its Phase I programs, which are with nivolumab, BMS's anti-CD73 antibody, and rilatinumab in combination with nivolumab.
We look forward to providing more updates as additional programs are nominated and enter or advance in the clinic.
And let me just comment on new ENHANZE deals.
Helen I. Torley: Additionally, BMS initiated, in the second quarter of 2020, a Phase I-II study of ipilimumab in combination with nivolumab, utilizing our enhanced technology. We're excited that our current partners continue to provide new growth opportunities for Enhance. And I can say we already have line of sight to several potential additional new target selections by current partners and plans to progress from Phase 1 to Phase 3 development in 2021. We look forward to providing more updates as additional programs are nominated and enter or advance in the clinic. And let me know; just comment on the new enhanced deals.
It remains the case that we have a broad slate of ongoing discussions with both biotech and pharma companies I continue to be pleased with the pace of these discussions and remain confident that we will sign additional deals as ever that the timing is hard to predict.
Turning now to slide six I will discuss our outlook for anticipated growth in milestone revenues.
The growth and the progress all of our enhanced portfolio is projected to drive strong growth in milestone revenue in the coming years based.
Based on the latest information partners, we continue to project cumulative milestone revenues in the Twentytwenty to Twentytwenty, two three year period of between $350 million to $450 million.
This near term milestone revenue proceeds royalty revenues and is an important and strong indicator for future royalty revenue, which we project to have the potential to be approximately $1 billion in 2020 seven based on our non risk adjusted revenue projections for programs that are currently in are in planning for development.
Helen I. Torley: It remains the case that we have a broad slate of ongoing discussions with both biotech and pharma companies. I continue to be pleased with the pace of these discussions and remain confident that we will sign additional deals. However, as ever, the timing is hard to predict.
Helen I. Torley: Turning now to slide 6, we'll discuss our outlook for anticipated growth in milestone revenues. The growth in and progress of our enhanced portfolio is projected to drive strong growth in milestone revenues in the coming years. Based on the latest information from partners, we continue to project cumulative milestone revenues in the 2020-2022 three-year period of between $350-450 million. This near-term milestone revenue precedes royalty revenues and is an important and strong indicator for future royalty revenues, which we project to have the potential to be approximately $1 billion in 2027, based on our non-risk-adjusted revenue projections for programs that are currently in or in planning for development. Turning now to slide 7, we'll discuss our approach to value creation and capital return.
Turning now to slide seven out, we'll discuss our approach to value creation and capital return.
Our first priority is always to drive the growth in our ENHANZE business by maximizing the value of our current collaborations and working to sign and advance new collaboration partners.
With strong projected free cash flow. Our next goal is returning capital to investors via share repurchases through our three year $550 million share repurchase program.
We have demonstrated our commitment to this goal by already repurchasing more than $312 million worth of shares or approximately 57% off the amount authorized in less than one year.
We will continue pursuing share repurchase.
Repurchases under this program for the remaining period of the authorization pending market conditions and other factors.
In addition, we continue to evaluate the potential for new technology platform expansion through acquisition with a goal of accelerating our long term revenue growth.
Helen I. Torley: Our first priority is always to drive growth in our enhanced business by maximizing the value of our current collaborations and working to sign and advance new collaboration partners. With strong projected free cash flow, our next goal is returning capital to investors via share repurchases through our three-year, $550 million share repurchase program. We've demonstrated our commitment to this goal by already repurchasing more than $312 million worth of shares, or approximately 57% of the amount authorized, in less than one year. We will continue pursuing share repurchases under this program for the remaining period of the authorization, pending market conditions and other factors.
In evaluating this we are seeking an approach that has high growth potential and high margin like our ENHANZE business.
As we look longer term, we are confident that halozyme strong financial position will enable us to continue delivering value to shareholders via capital return.
And with that update I'll now turn the call over to Elaine for a discussion of our third quarter financial results.
Thank you Helen let me start by turning to slide eight for a review of our third quarter revenues.
So with Helen indicated we saw strong growth in the quarter as our partners continued to execute on our commercial and development plans.
Total revenue for the third quarter was $65.3 million, an increase of 41% compared to $46.2 million in the prior year period.
I will now discuss the three components of our revenue right.
Na Sun: In addition, we continue to evaluate the potential for new technology platform expansions for acquisition with the goal of accelerating our long-term revenue growth. In evaluating this, we are seeking an approach that has high growth potential and a high margin, like our enhanced business. As we look longer term, we are confident that Halozyme's strong financial position will enable us to continue delivering value to shareholders via capital return. And with that update, I'll now turn the call over to Elaine for a discussion of our third quarter financial results. Thank you, Helen.
Revenue from royalties for the quarter was $23.9 million a year over year increase of 44%.
And as Alan discussed our royalties returned to growth sooner than expected primarily due to the successful launch of subcutaneous darzalex utilizing enhanced technology by our partner yes.
Product sales were $9 million in the quarter compared with $29.2 million in the year ago period during which there was a large sale of bulk are you ph 20 to ensign in preparation for their launch of sub two darzalex.
Collaboration revenue in the quarter totaled $32.3 million up from zero point $4 million in the year ago period. As a result of recognizing revenue for expected milestone payments from our partners are genentech and Roche related to their progress to date toward phase III studies start.
Na Sun: Let me start by turning to slide eight for a review of our third quarter revenues. As Helen indicated, we saw strong growth in the quarter as our partners continued to execute on their commercial and development plans. Total revenue for the third quarter was $65.3 million, an increase of 41% compared to $46.2 million in the prior year period. I'll now discuss the three components of our revenue. Revenue from royalties for the quarter was $23.9 million, a year-over-year increase of 44%.
Let me move to slide nine and you'll find a more detailed breakdown of our third quarter PNM.
So beginning with total operating expenses, which were $25 million in the third quarter down 65% from $70.8 million in the prior year period.
The overall decrease in total operating expenses resulted from our shift in strategic focus to the company's enhance drug delivery technology in November of 2019, and the related restructuring, which has now been completed.
Na Sun: And as Helen discussed, our royalties returned to growth sooner than expected, primarily due to the successful launch of subcutaneous Darzalex, utilizing enhanced technology by our partner Janssen. Product sales were $9 million in the quarter, compared with $29.2 million in the year-ago period, during which there was a large sale of bulk RUPH-20 to Janssen in preparation for their launch of Sub-2 Darzalex. Collaboration revenue in the quarter totaled $32.3 million, up from $0.4 million in the year-ago period as a result of recognizing revenue for expected milestone payments from our partners Argenix and Roche related to their progress to date toward phase three study starts. Let me move to slide nine, and you'll find a more detailed breakdown of our third quarter P&L.
Cost of product sales were $5.6 million compared with $22.3 million in the year ago period with the decrease attributable to the same large sales bulk are you page 20. The reason that I mentioned, a moment ago related to their preparations for the launch of sub sea Darzalex.
Research and development expenses of $7.7 million decreased 75% from $30.5 million in the prior year period as a result of halting our pegphtwenty oncology drug development activities in November of last year.
And SDN expenses were $11.7 million down 35% from $18 million in the prior year, primarily due to the reduction in force and discontinuation of page 20 related launch readiness expenses following the companys restructuring.
And I'm pleased to report that net income for the quarter was $36.2 million or 25 cents per share compared to a net loss of $25 million or 17 cents per share in the third quarter of 2019.
Na Sun: So beginning with total operating expenses, which were $25 million in the third quarter, down 65% from $70.8 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 2019 and the related restructuring, which has now been completed. Cost of product sales were $5.6 million, compared with $22.3 million in the year-ago period, with a decrease attributable to the same large sale of bulk RUPH-20 to Janssen that I mentioned a moment ago, related to their preparations for the launch of Subseq Gartholex. Research and development expenses of $7.7 million decreased 75% from $30.5 million in the prior year period as a result of halting our And SG&A expenses were $11.7 million, down 35% from $18 million in the prior year, primarily due to the reduction in force and discontinuation of PEG-TH20 related launch readiness expenses following the company's restructuring.
And this marks our second consecutive quarter of what we expect will be sustainable profitability and cash flow generation going forward for halozyme.
With respect to our cash position cash cash equivalents and marketable securities were $346.7 million as September Thirtyth 2020, compared to $421.3 million at December 31, 2019.
This decrease reflects the impact from our operating loss in the first quarter and share repurchase activity through the first three quarters of 2020.
Now, let me turn to slide 10 for a discussion of our 2020 financial guidance.
Based on the latest information from our partners and our planned expenditures for the year I'm pleased to share our increased guidance for 2020.
We now expect total revenues of $250 million to $260 million up from our prior guidance of $230 million to $245 million, which would represent year over year growth of 28% to 33%.
Of that total we expect revenue from royalties to comprise $80 million to $85 million.
We had previously anticipated flat royalties year over year in 2020. However, we are now in a position to increase our expectations based on the early sales trends for subsea darzalex utilizing in hand.
Looking at the other components of our projected 2020 revenue guidance range. We further expect revenue under collaborations of $115 million to $120 million driven by new clinical trial starts and commercial milestones.
In addition, we expect a substantial increase in.
Revenue in the fourth quarter, resulting in projected full year product sales between 52 and $57 million.
Na Sun: And I'm pleased to report that net income for the quarter was $36.2 million, or $0.25 per share, compared to a net loss of $25 million, or $0.17 per share, in the third quarter of 2019. And this marks our second consecutive quarter of what we expect will be sustainable profitability and cash flow generation going forward for Halozyme. With respect to our cash position, cash, cash equivalents, and marketable securities were $346.7 million as of September 30, 2020, compared to $421.3 million as of December 31, 2019.
Excluding nonrecurring expenses related to the wind down of our former oncology operations in the first half 2020.
We continue to expect annualized operating expenses, excluding cogs to be at the top end of our guidance of $65 million to $75 million in the fourth quarter of 2020 or between 18 and $19 million for the quarter.
Moving to earnings per share, we are increasing our guidance range to 80 to 85 cents up from our prior guidance range of 60 to 75 cents.
During the quarter, we continued our share repurchase activities under our three year or $550 million share repurchase program that was authorized by our board a year ago and in the third quarter, we repurchased $59 million worth of our common shares or 2.1 million shares at a weighted average price of $27 and 50.
Seven cents.
Our commitment to capital return driven by a diversified portfolio of partnered products and programs sustainable profitability and a strong growth and cash flow outlook has resulted in share repurchases through end of the third quarter of $312.4 million at a weighted average price of $18 and 92.
Na Sun: This decrease reflects the impact of our operating loss in the first quarter and share repurchase activities through the first three quarters of 2020. Now, let me turn to slide 10 for a discussion of our 2020 financial guidance. Based on the latest information from our partners and our planned expenditures for the year, I'm pleased to share our increased guidance for 2020. We now expect total revenues of $250 to $260 million from our prior guidance of $230 to $245 million, which would represent year-over-year growth of 28% to 33%. Of that total, we expect revenue from royalties to comprise $80 to $85 million.
Two cents and all this has been accomplished less than one year into our $550 million three year buyback program.
So we continue to expect we will repurchase up to $150 million in our shares this year.
Which would mean up to an additional $37.6 million that could be repurchased in the fourth quarter pending market conditions and other factors.
So with that ill now turn the call back to Helen.
Thank you Julie we've.
We believe we are still only at the beginning stages of delivering on both the clinical and financial promise of our ENHANZE drug delivery technology, our technology delivers value for our partners, our patients and our Halozyme shareholders.
Na Sun: We had previously anticipated flat royalties year over year in 2020. However, we are now in a position to increase our expectations based on the early sales trends for Sub-T Darzalex using in-hand. Looking at the other components of our projected 2020 revenue guidance range, we further expect revenue under collaboration of $115 to $120 million, driven by new clinical trial starts and commercial milestones. In addition, we expect a substantial increase in API revenue in the fourth quarter, resulting in projected full-year product sales between $52 and $57 million. Excluding non-recurring expenses related to the winding down of our former oncology operations in the first half of 2020, we continue to expect annualized operating expenses, excluding COGS, to be at the top end of our guidance of $65 to $75 million in the fourth quarter of 2020, or between $18 and $19 million for the quarter.
It was I'm is in the strongest financial position ever as a company and we look forward to strong growth in our revenue profitability and cash flow in the coming quarters and years, which will allow us to deliver on our commitment to return capital to shareholders maintain long term sustainable growth and maximize shareholder value.
I'll close on slide 11.
Entering 2020, we established this ambitious set of goals to measure our performance as we completed the company restructuring.
I could not be more pleased with the tremendous progress to date and as you've just heard we predict we will finish the fourth quarter as strongly as this one.
I'd like to end as ever by thanking the amazing Halozyme team for your tremendous efforts and these strong results.
And with that we'd now be delighted to take your questions. Operator. Please would you open up the call for the questions.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or Kashi. Please standby, what we compiled accumulate roster.
Na Sun: Moving to earnings per share, we are increasing our guidance range to $0.80 to $0.85, up from our prior guidance range of $0.60 to $0.75. During the quarter, we continued our share repurchase activities under our three-year, $550 million share repurchase program that was authorized by our board a year ago, and in the third quarter, we repurchased $59 million worth of our common shares, or 2.1 million shares, at a weighted average price of $27.57.
Your first question comes from Charles Duncan from Cantor Fitzgerald. Please go ahead.
Thank you Hi, Helen Aniline, congratulations on some really awesome results in this quarter.
Thank you. Thank you very much.
Yes. So also thanks for taking my questions I had two one is kind of a financial one and one is the pipeline one one with regard to.
The launch of fast Parallon I'm sure you won't be able say too much on this but maybe provide a little bit of color. When you think about the conversion rate thus far how much a bid.
Was driven perhaps by say the covanta environment and how much of that is driven by a substantial difference in the clinical profile of the of the compound or out of the of the drug and where would you expect the conversion rate to end up over time.
Na Sun: Our commitment to capital return, driven by a diversified portfolio of partnered products and programs, sustainable profitability, and a strong growth and cash flow outlook, has resulted in share repurchases through the end of the third quarter of $312.4 million at a weighted average price of $18.92. And all this has been accomplished less than one year into our $550 million three-year buyback program. We continue to expect we'll repurchase up to $150 million in our shares this year, which would mean up to an additional $37.6 million that could be repurchased in the fourth quarter, pending market conditions and other factors. So with that, I'll now turn the call back to Helen. Thank you, Elaine.
Yes, Thanks Chaz.
I don't have any data to support them.
The impact of colder than the uptake of Valeant darzalex them fast from the us and them and we also know that there has been successful loans outside the us as well at what I can see is the performance has them.
Certainly exceeded our expectations and weather cold weather has played a role in that down it would seem possible. It had but I don't have any data to support that but we are certainly absolutely delighted with the strong initial uptake.
We don't provide and we haven't provided any specific.
Specific guidance as to what we think that the conversion will be but I would just say that when you think about a patient today facing what has also been four to six hours IB infusion, who could have the option of receiving the treatment and just the three to five minutes in a subcu injection. We certainly think this is a very strong value proposition and.
Helen I. Torley: We believe we are still only at the beginning stages of delivering on both the clinical and financial promise of our enhanced drug delivery technology. Our technology delivers value for our partners, our patients, and our Halozyme shareholders. Halozyme is in the strongest financial position ever as a company, and we look forward to strong growth in our revenues, profitability, and cash flow in the coming quarters and years, which will allow us to deliver on our commitment to return capital to shareholders, maintain long-term sustainable growth, and maximize shareholder value. I'll close on slide 11.
So when we think patients are are definitely going to welcome at both the new start patients, but also the patients currently receiving the IB.
Makes sense appreciate that and then a quick question on the pipeline is define looking at.
Helen I. Torley: Entering 2020, we established this ambitious set of goals to measure our performance as we completed the company restructuring. I could not be more pleased with the tremendous progress to date, and as you've just heard, we predict we will finish the fourth quarter as strongly as this one. I'd like to end, as ever, by thanking the amazing Halozyme team for your tremendous efforts and these strong results. After that, we would be delighted to take your questions. Operator, please would you open up the call for questions? As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound or hash key.
But for.
I guess I Q via.
All of the drugs are primarily using the oncology setting our hematology setting yet you're moving into you know with this diversification with our genomics and NASCAR to some odd.
Into neurology and I guess I'm wondering if you think.
Neurological disorders, or neurology is really a growth opportunity number one and could you see more movement in that in that diversification direction.
Number two what do you think the agency is going to think about in terms of reviewing the profit profile.
Operator: Please stand by while we compile the Q&A roster. Your first question comes from Charles Duncan from Cantor Fitzgerald. Please go ahead. Thank you. Hi Helen and Elaine.
Ill say, then neurology division versus oncology do you think there will be a different risk benefit or do you think thats pretty well established cross agency.
Charles Duncan: Congratulations on some really awesome results this quarter. Thank you. Thank you very much. Yeah, so also, thanks for taking my questions. I had two.
Yeah, I think our as it turns out that many of our initial approvals as you point out sales were in oncology that just happens to be that many of the most successful brands in the world are in oncology and we're delighted to be seeing as not just moving into neurology as you mentioned, but also into auto immune diseases.
Charles Duncan: One is kind of a financial one, and one is a pipeline one. Helen, with regard to the launch of FastPro, I'm sure you won't be able to say too much about this, but maybe provide a little bit of color. When you think about the conversion rate thus far, how much of it was driven perhaps by, say, the COVID environment, and how much of it is driven by substantial differences in the clinical profile of the compound or of the drug? And where would you expect the conversion rate to end up over time? Yeah, thanks, Ches.
So we see continued strong potential to expand outside of oncology into multiple additional indications where patients are receiving their therapies via loan Ivy infusions in urology. We also have opus if you recall that.
Helen I. Torley: You know, I don't have any data to support the impact of COVID and the uptake of Darzalex Faspro in the US. And we also know that there has been a successful launch outside the US as well. What I can say is the performance has certainly exceeded our expectations. And whether COVID has played a role in that, it would seem possible it has, but I don't have any data to support that.
I mentioned that at Roche's is developing so lots of potential any injectable drug with a long infusion. We certainly welcome talking to companies to see whether a subcu would bring benefits like competitive differentiation.
We now have five approvals given by the in depth four so far outside the us and them I do feel that with the comments we've been getting back with each subsequent review there are less and less and I do believe that the safety profile and all of our page 20 is now very well characterized in more than 400.
Helen I. Torley: But we are certainly absolutely delighted with the strong initial uptake. We don't provide, and we haven't provided, any specific guidance as to what we think that the conversion will be. But I would just say that when you think about a patient today facing what is often four to six hours of IV infusion, who could have the option of receiving the treatment in just three to five minutes with a sub-q injection, we certainly think this is a very strong value proposition. And we think patients are definitely going to welcome it, both the new patients who start treatment but also the patients currently receiving the IV. It makes sense.
Sales and patients treated commercially with the drug and so I would not expect the big difference between a neurology division from an oncology divisions, because all that long track record of safety data, we will be able to bring forward.
Okay. That's helpful color. Thank you for taking my questions Congrats guys.
Your next question comes from Jim.
Jim Birchenough from Wells Fargo. Please go ahead.
Charles Duncan: Appreciate that. And then a quick question on the pipeline. If I look at, you know, but for, I guess, high IQBIA, all of the drugs are primarily used in the oncology setting or hematology setting.
Hi, guys, let me add my congratulations on the quarter.
Couple of questions I guess first one just on Darzalex browse pro and Subcu.
Helen I. Torley: Yet you're moving into, you know, with this diversification with Argenic and Escartizumab into neurology. And I guess I'm wondering if you think neurological disorders or neurology is really a growth opportunity, number one, and could you see more movement in that diversification direction? And number two, what do you think the agency is going to think about in terms of reviewing the product profile, you know, say the neurology division versus oncology? Do you think there'll be a different risk benefit, or do you think that's pretty well established across the agency? Yeah, I think, as it turns out, many of our initial approvals, as you point out, Chas, were in oncology. That just happens to be that many of the most successful brands in the world are in oncology, and we're delighted to be seeing us move not just into neurology, as you mentioned, but also into autoimmune diseases. And so we see continued strong potential to expand outside of oncology into multiple additional indications where patients are receiving their therapies via long IV infusions. You know, in neurology, we also have Ocrevus. If you recall, I mentioned that ROSES is developing.
Remind us is there anything in terms of the agreement, where the royalties might fear up with increasing sales versus fixed independent of the level of sales and then I guess.
And question is just as you look at the ramp of guard will exercise pro and early launch of sales go our other payer dynamics or market dynamics that are different between those two products. If you can comment at all and then I have a follow up.
Yes, yes, we don't provide specific details on a contract by contract basis, we certainly in some of our contracts do have tiering, but I can't speak specifically to the Janssen one.
With regard to the launch uptake of sales go versus fast break certainly doesn't appear that Fas pro is out of the gate very fast and I recall. It has been approved in the us and Europe and was approved in May and June respectively, whereas sales go was only approved in the U.S. So far and then at the very.
End of June so really launching in July so I do think timing is a factor.
Helen I. Torley: So lots of potential; any injectable drug with a long infusion; we certainly welcome talking to companies to see whether a sub-Q would bring benefits like competitive differentiation. We now have five approvals given by the FDA, and four so far outside the U.S., and I do feel that with the comments we've been getting back with each subsequent review, there are fewer and fewer, and I do believe that the safety profile of REPH20 is now very well characterized in more than 400,000 patients treated commercially with the drug. And so I would not expect a big difference between a neurology division from an oncology division because of that long track record of safety data we'll be able to bring forward. Okay, that's helpful, Culler. Thank you for taking my questions. Congratulations!
And we would expect and we had signaled them, but our expectation was that the first few quarters would be very much focused on laying down the ground work for.
Physicians to be able to freely right. These drugs getting EMR as farmers et cetera. So we would expect the first quarters to be slow and down modestly the exception to that is how fast pro is performing as well as Darzalex FC but for phase go as we get all of that in place, we expect 2020 one to be.
A year of robust uptake of says go as well.
And Howard just a second line of bank inquiry just around.
IP.
We get the question often about how to think about the 2027 and 2024.
Charles Duncan: Your next question comes from Jim Bertineau from Wells Fargo. Please go ahead. Hi guys.
Quote unquote patent cliffs for ph 20, so just giving you an opportunity how do you think about it both in terms of new deals post those fine points products in development and products on the market. What do you what do you see in terms of the risks to each of those layers of the business.
Jim Bertineau: Let me add my congratulations on the quarter. There are a couple of questions. I guess first, Helen, just on Darzalex, FazPro, and SubQ, can you remind us, is there anything in terms of the agreement where the royalties might tear up with increasing sales, or is it fixed independent of the level of sales? And then, I guess, the second question is, just as you look at the ramp of Darzalex, FazPro, and the early launch of FezGo, are there pair dynamics or market dynamics And then I have a follow-up. Yeah, we don't provide specific details on a contract-by-contract basis. We certainly, in some of our contracts, do have tiering, but I can't speak specifically to the Janssen one.
Yes, I think what's unique about ENHANZE and the fact that Yasser US patent does expiring 2020 seven recall the construct of our contract is that we will continue to receive a receive royalties for a minimum of 10 years. After the first commercial sales.
So you know thats, a very important factor as you're thinking about the products that are entering the clinic today that could get approved in 2004 or five six in 2020 seven they will be in a very robust part of their growth cycle.
Jim Bertineau: With regard to the launch uptake of FASGO versus FASPRO, it certainly does appear that FASPRO is out of the gate very fast. Now, recall, it has been approved in the U.S. and Europe and was approved in May and June, respectively, whereas FASGO was only approved in the U.S. so far and at the very end of June, so really only launched in July. So I do think timing is a factor and, you know, we would expect, and we had signaled that our expectation was that the first few quarters would be very much focused on laying down the groundwork for physicians to be able to freely write these drugs, getting EMRs, formularies, etc. So we would expect the first quarters to be slow, and obviously, the exception to that is how FASPRO is performing as well as Darzell
Note at the time of the patent expiry, if theres no co formulation patent in place there is a step down to approximately 50% recall. These can be products are in a very attractive growth period. So you've got to layer that on and think about that dynamic as well and our current predictions only include those products that we have line of sight.
Year to date, and so I've already mentioned that in Twentytwenty. One we expect additional partners will bring targets into the clinic. Those are additional launches that are going to continue that overall revenue growth. So that even if there is a step then there is still the potential that we can continue to grow beyond that and then finally, we have this wonderful option.
In all from applying for co formulation patents, which are not all guaranteed to be granted but if theres nobody can be granted and the general effect of those is that baked prolong the time that we can get the duration of the royalties and can push out the time to the step down and so I will say that post 2020 seven Jim the key.
Helen I. Torley: But for FASGO, as we get all of that in place, we expect 2021 to be a year of robust uptake for FASGO as well. Helen, just a second line of inquiry just around IP. And we get the question often about, you know, how to think about the 2027 and 2024 patent cliffs for pH 20. So, just giving you an opportunity, how do you think about it, both in terms of new deals, post those fine points, products and development, and products on the market? You know, what do you see in terms of the risk to each of those layers of the business? Yeah, I think what's unique about Enhance and the fact that, yes, our US patent does expire in 2027.
Takeaway is we can see a very clear path to continued royalty growth. After 227, we know exactly what we need to do that we need to launch more products.
We need to get more co formulation patents and so that that is unique about enhancing them. We're excited about that and what it can mean for their ongoing substantial royalty revenues from our pipeline.
Alan just quickly on that last point can you say, if there's any been any new co formulation patents filed this year are expected to be filed this year without naming any specific products.
Yes, we do have about one partner, who is intending to file a co formulation patent this year.
Helen I. Torley: Recall the construct of our contract is that we will continue to receive royalties for a minimum of 10 years after the first commercial sale. So, you know, that's a very important factor as you're thinking about the products that are entering the clinic today that could get approved in 2004, 5, 6. In 2027, they will be in a very robust part of their growth cycle. Now, at the time of patent expiry, if there's no co-formulation patent in place, there is a step down to approximately 50%. But recall, these could be products that are in a very attractive growth phase. So you've got to layer that on and think about that dynamic as well.
Terrific. Thanks for taking my questions.
Thanks, Jim.
Your next question comes from John Kim from BMO capital markets.
Good afternoon, and congrats on the quarter for myself also.
First off on the performance of Darzalex Assi do you have a sense of.
What the distribution of sales was between the us and the EU and also assessed using the timing of the potential factor between the for the difference between fast growing says go is it.
Possible that we'll see a similar kind of strong quarter for sales go in Fourq, you and does your raised guidance include that possibility.
Yes, let me start them for the for the.
Helen I. Torley: Our current projections only include those products that we have a line of sight for today. And so, I've already mentioned that in 2021, we expect additional partners will bring targets into the clinic. Those are additional launches that are going to continue that overall revenue growth so that even if there is a step down, there is still the potential that we can continue to grow beyond that. And then, we have this wonderful option of applying for co-formulation patents, which are not all guaranteed to be granted, but if there's novelty, they can be granted. And the general effect of those is that they prolong the time that we can get the duration of the royalties and can push out the times of the step down. And so I will say that post-2027, Jim, the key takeaway is we can see a very clear path to continued royalty growth after 2027. We know exactly what we need to do to achieve that.
Second question, we expect European approval. The earliest that will occur is the first quarter of Twentytwenty, one and so as we think about the total potential for Fas go the approved.
Approval in Europe, and 20 to 21, the duration of time it takes to get things in place in the U.S. really does signal towards us thinking the robust gross profit is in Twentytwenty one.
With 28 days in the fourth quarter really being a set up here we.
We don't have an JNJ did not provide them do any specific breakdown between the USM and Europe based on our triangulation of syndicated sales data and reported sales.
We estimate that the majority of sales are occurring in the west, but there has been due to uptake in European markets as well.
So we will look forward to and perhaps jansan, providing some more color on that at a later date.
Great understood. Thank you and a question on the pipeline.
Helen I. Torley: We need to launch more products, and we need to get more co-formulation patents. And so that is unique about Enhance, and we're excited about that and what it can mean for the ongoing substantial royalty revenues from our pipeline. Helen, just quickly on that last point, can you say if there are any new co-formulation patents filed this year or expected to be filed this year without naming any specific products? Yes, we do have one partner who is intending to file a co-formulation patent this year. Perfect. Thanks for taking the questions. Thanks, Jim.
For Roche when they start the phase three four.
As Olin Nab.
Lung cancer.
Do you.
No what their their potential registration path for expanding that therapy beyond.
Current approval in lung cancer and all the other cancers that.
Already approved for.
I will say that some in conversations to each individual partner has with the FDA.
Dealt with them about what the potential scope of indications that might be possible from their proposed clinical development programs and that obviously is proprietary information that is.
Jim Bertineau: Your next question comes from Joe Kim from BMO Capital Markets. Good afternoon, and congratulations on the quarter for myself also. First, on the performance of Garzilek's SE, do you have a sense of what the distribution of sales was between the US and EU? And also, if you think that timing is a potential factor for the difference between FastPro and Fezgo, is it possible that we could see a similar kind of strong quarter for Fezgo and 4Q, and does your RAISE guidance include that possibility? Yeah, let me start with the second question. We expect that European approval will occur the earliest in the first quarter of 2021. And so as we think about the total potential for FESGO, the approval in Europe in 2021, the duration of time it takes to get things in place in the US really does signal to us thinking the robust growth of FESGO will be in 2021, with the fourth quarter really being a setup year. We don't have, and J&J did not provide, though, any specific breakdown between the US and Europe.
They property all each of those companies. So while we are aware of it we unfortunately arent able to talk but what we do know is that the other attempts and wholesaler ODAC did say that a separate study may not be needed for each and every indication as we go forward and we know that all of our partners who are aware of that engage in.
Discussions with the FTC to try and identify what is the right size clinical program for all of the indications that they want.
That's great. That's very helpful. Thank you very much.
Your next question comes from Jessica Fye from JP Morgan. Please go ahead.
Hey, this is with Brendan on for Jess Thanks for taking our questions.
So with how lumpy share repo has been.
So we get some color on how genes approached those decisions and that's sort of going to be your strategy moving forward.
All right, let me ask Ilene to address that.
Sure. Thanks for the question so I think.
We've indicated that we have a tone.
Total three year share buyback program that was approved by the board in November 2019 were about 50, 650, or so percent of the way there.
Joseph Michael Catanzaro: Based on our triangulation of syndicated sales data and reported sales, we estimate that the majority of sales are occurring in the US, but there has been good uptake in European markets as well. So we look forward to perhaps Janssen providing some more color on that at a later date. Great, I understand. Thank you. And a question on the pipeline. For Roche, when they start phase three for atezolizumab in lung cancer, do you know what their potential registration path for expanding that therapy beyond its current approval in lung cancer and all the other cancers that it's already approved for? I will say that in conversations that each individual partner has with the FDA, they talk with them about, you know, what the potential scope of indications that might be possible from their proposed clinical development programs. That obviously is proprietary information that is the property of each of those companies. So while we are aware of it, we are unfortunately aren't able to talk.
With only one year into the program.
To date Weve repurchased about.
Just over $312 million of our common shares about 16.5 million shares.
Today at an average price of 80 92.
This year, we purchased of that 112.4 million at an average price of 2076, obviously, our stock has traded up I think reflecting the strong growth potential of our.
Of our partners products and programs and the strong growth trajectory for Halozyme, we continue to have I think.
A lot of confidence in terms of the diversified portfolio.
That halozyme represents of the multiple blockbuster products and programs of our partners.
And our share buyback program I think we'll we'll continue to reflect that.
Okay. Thanks, and then just looking at sales Joe you mentioned a couple times.
Helen I. Torley: But what we do know is that the FDA at the Rituxan-Hyphala-ODAC did say that a separate study may not be needed for each and every indication as we go forward. And we know that all of our partners who are aware of that engage in discussions with the FDA to try and identify what is the right size clinical program for all of the indications that they want. Great, that's very helpful. Thank you very much.
You just mentioned really robust year heading into 2021 here.
Do you have any color or expectation you can give us.
Core timeline on getting you.
You reimbursement contracts set up there.
Yes, we know with the May do a standard review.
Based on when Roche indicated they had submitted the application we would expect.
Joseph Michael Catanzaro: Your next question comes from Jessica Fye from J.P. Morgan. Please go ahead. Hey, this is with Brennan on for Jess.
A positive if there is a positive opinion approval in the first quarter of Twentytwenty one.
Jessica Macomber Fye: Thanks for taking our questions. So, with how lumpy share repo has been, can we get some color on how your team has approached those decisions and if that's sort of going to be your strategy moving forward? All right, let me ask Elaine to address that.
Okay, great. Thanks for taking the questions.
Your next question comes from Jason Butler from JMP Securities. Please go ahead.
Hi, Thanks for taking my.
Na Sun: Sure, thanks for the question. So I think we've indicated that we have a total three-year share buyback program that was approved by the board in November of 2019. We're about 56, 50 or so percent of the way there, with only one year into the program. To date, we've repurchased about just over $312 million of our common shares.
The questions and let me add my congrats on the quarter.
Howard just wanted to follow up on a couple of comments you made about.
Hi.
And.
You said, we're toxin hike, where the FDA adcom comment that normal indications may need separate trials is there anything that you know.
You're welcome.
Your dialogue with partners and FDIC that suggests this perspective is shared broadly across the agency versus being specific.
Na Sun: We continue to have, I think, a lot of confidence in terms of the diversified portfolio that Halozyme represents of the multiple blockbuster products and programs of our partners. And our share buyback program, I think, will continue to reflect that. Okay, thanks.
With that review is a division or specific to oncology or hematology.
Yes.
As I think Chad pointed out the majority of our products have been in the oncology Division and I'd say, that's where many of the conversations are happening, but there are also conversations happening with some of the other divisions based on the stage of the programs, but there are less of those.
Jessica Macomber Fye: And then just looking at SESCO, you've mentioned a couple times that you expect a really robust year headed into 2021 here. Do you have any color or expectations you can give us for the timeline on getting new reimbursement contracts set up there? Yeah, we know if the EMA does a standard review, based on when Roche indicated they had submitted the application, we would expect a positive opinion and approval in the first quarter of 2021.
But I do think given if we triangulate as to what the the he might have in their mind and we see that true darzalex them with them at the they're not receiving the palmolive.
Helen I. Torley: Okay, thanks for taking our question. Your next question comes from Jason Butler from GMP Securities. Please go ahead.
Solidified with their tumor mab indication initially for the sub Q because there wasn't any data supporting it and there might have been a safety question and so what I think is logical for the no matter. The division to support is to look at this from the perspective is there any theoretical reason why the addition of R&D.
Jason Nicholas Butler: Hi, thanks for taking the questions. And let me add my congratulations on the quarter. Helen, just wanted to follow up on a couple comments you made about, you know, FDA. And you said, we're toxic and high clear the FDA adcom comment, but not all indications may need separate trials. Is there anything that you know, that you're, you know, in your dialogue with partners and FDA that suggests this perspective is shared broadly across the agency versus being specific to that review, the division, or specific to oncology or hematology? Yeah, as I think Chas pointed out, the majority of our products have been in the oncology division, and I'd say that's where many of the conversations are happening. But there are also conversations happening with some of the other divisions based on the stage of the programs, but there are fewer of those.
20 would add a new safety question in the majority of cases that is not going to be the case and therefore, we don't think thats going to be.
An issue, but there will be instances, where the ft. Ducey. Please generate data there isn't any data on this is a theoretical concern. So I think that is the logic. The SP will apply and I think and it could happen in any of the divisions.
And I'll, just say again, we have a we have a robust safety.
Safety database with now over 400000 patients treated commercially which I I do think really does help.
Jason Nicholas Butler: But I do think, I mean, if we triangulate as to what the SDE might have in their minds, and we see that through Darzalex, with them not receiving the pomalidomide with daratumumab indication initially for the sub-Q because there wasn't any data supporting it, and there might have been a safety question. And so what I think is logical for the SDE, no matter the division it supports, is to look at this from the perspective of, is there any theoretical reason why the addition of REPH20 would add a new safety question? In the majority of cases, that is not going to be the case, and therefore, we don't think that's going to be an issue. But there will be instances where the SDE does say, please generate data, there isn't any data, and this is a theoretical concern.
With the understanding that they that very well established unclear at strong safety profile of Ari page 20.
Okay, Great and then in terms of the additional trial phase three study for me undisclosed program to start in Fourq you is there a milestone.
Payable on on the start of that study I know.
Also why there are the other two undisclosed phase one studies.
That could start this quarter.
Yes, there are there are milestones associated with the phase three and the phase ones.
Great. Okay. Thanks for taking the questions.
Your next question comes from the line.
Joe Kelley from Piper Sandler. Please go ahead.
Hey, guys. Congrats on the nice quarter here. Thanks for taking my question, telling you may have touched on this a bit in your prepared remarks, but wondering if you could comment a little bit more qualitatively maybe on how the legacy products perform sequentially in the quarter just to maybe get a better sense of Dara seats full contribution.
Helen I. Torley: So I think that is the logic the SDE will apply, and I think it could happen in any of the divisions. And I'll just say again, we have a robust safety database with now over 400,000 patients treated commercially, which I do think really does help with the SDE in understanding the very well-established and clear strong safety profile of REPH20. Okay, great. And then, in terms of the additional trial phase three study from the undisclosed program to start in 4Q, is there a milestone payable on the start of that study and also either of the other two undisclosed phase one studies that could start this quarter? Yes, there are milestones associated with phase three and phase one. Great, okay, thanks for taking the questions. Your next question comes from the line of Joe Catanzaro from Piper Sandler.
In addition in the quarter and then I know you mentioned you did have visibility too.
Revenues with regards to US. The next you asked and Darzalex bass pro but wondering if you can speak to just the general conversion rate you are seeing in different territories and whether the U.S. is in fact seeing the highest early conversion rate or are there other.
Territories that are seeing that thanks.
Yes, I'll take the drugs like fundamental turn the legacy products over to Elaine.
With them at the uptake of Darzalex them, we're aware from Triangulating on the syndicated sales data and the overall sales that are pretty.
Present prop published by JNJ that there are sales in the U.S. and the ex us for Subcu.
Jason Nicholas Butler: Please go ahead. Helen, you may have touched on this a bit in your prepared remarks, but I was wondering if you could comment a little bit more qualitatively, maybe on how the legacy products performed sequentially in the quarter, just to maybe get a better sense of Dara SE's full contribution in the quarter. And then I know you mentioned you didn't have visibility into revenues with regard to U.S. and ex-U.S. and Darzalex FAS Pro, but I'm wondering if you can speak to just the general conversion rates you're seeing in different territories and whether the U.S. is, in fact, seeing the highest early conversion rate or are there other ex-U.S. territories that are seeing that? Thanks. I'll take the Darzalex one, and then I'll turn the legacy products over to Elaine.
With the U.S. being the larger one of the two we do not have any insights into the actual specific and conversion rate outside the us.
There is some directional information as you're probably aware in the syndicated data. However, this has not been confirmed our verified by JNJ and so were not in a position to talk about the uptake, but Sam it I think it's very clear to see that with this substantial increase that we sell quarter on quarter.
Which we've said is primarily driven by Darzalex. There has been very strong uptake predominantly in the U.S., but also in markets outside the U.S I'm coming from.
Joseph Michael Catanzaro: With the uptake of Darzalex, we're aware from triangulating on the syndicated sales data and the overall sales that are published by J&J that there are sales in the U.S. and ex-U.S. for SubQ, with the U.S. being the larger of the two. But I think it's very clear to see that with this substantial increase that we saw quarter on quarter, which we've said is primarily driven by Darzalex, there has been very strong uptake, predominantly in the U.S., but also in markets outside the U.S., coming from new and continuing patients. And with that, I'll turn it over to Elaine just to talk about the trends with the Legacy product. Sure. So, as you know, Joe, we don't break out our individual royalties, but, you know, for quarter on quarter, overall royalties were relatively flat for all the SubQ products, excluding Darzalex, so Herceptin SubQ and Medthera SubQ as a result of ongoing biosimilar competition based on the information that Roche has provided as well. Okay, got it. Thanks. That's helpful, and thanks for taking my questions here.
New and continuing patients.
And with that I'll turn it over to Elaine just to talk about the trends with the legacy products.
Sure.
As you know, Joe we don't breakout our individual royalties, but.
For first quarter on quarter overall royalties were relatively flat for all the subsea products, excluding darzalex, though herceptin met there and Hyqvia and for 2020, we projected decline in Herceptin Subcu and Mabthera Subcu as a result of of ongoing Biosimilar competition based on.
The information that the motion provided as well.
Yes.
Okay got it thanks Thats helpful and thanks for taking my question Sir.
Thanks, Sir.
Your next question comes from Anna <unk> from Goldman Sachs. Please go ahead.
Hi, This is Adam on for Graig Suvannavejh. Thank you for taking our questions and congratulations on the quarter just a few questions from us.
When can we expect to see some.
Contributions to meaningful contributions from Dfc Darzalex to hit the top line from you and also similar for banks go and just also any comments on for any additional updates on any potential PD in the future. Thanks.
Na Sun: Thank you. Your next question comes from Anna Vorobeva from Goldman Sachs. Please go ahead. Hi, this is Anna Long from Graig Suvannavejh.
All right. So we do.
Have commented on it that some or all of the royalties were seeing the third quarter. There are already contributions from outside the U.S.
Joseph Michael Catanzaro: Thank you for taking our questions and congratulations on the quarter. Just a few questions from us. When can we expect to see some contributions and meaningful contributions from the SC Darzalex to hit the top line from the EU and also similar for FESCO and just also any comments on any additional updates on any potential PBs in the future, I think. All right.
We don't have any details as to exactly where those are coming from is yet, but they're already there is uptake in markets outside the us for.
First says go we anticipate European approval, if at a follow standard standard timelines would occur in the first quarter.
Anna Vorobeva: So, we do have commented, Anna, that all of the royalties we're seeing in the third quarter are already contributions from outside the U.S. We don't have any details as to exactly where those are coming from as yet, but there is already uptake in markets outside the U.S. For FESGO, we anticipate European approval, if it follows standard timelines, would occur in the first quarter of 2021. And so, at the moment, as I mentioned earlier, really, the focus is on getting everything set up in the United States and continuing to get the formularies and the EMR and all of the other logistics with FESGO. For Additional BD, we are very engaged in a number of discussions with regard to Enhance, and I remain very confident we'll sign additional deals for Enhance.
All Twentytwenty one and.
And so at the moment as I as I mentioned earlier is really the focus is on getting everything setup in the United States and.
Continuing to get the formularies and the EMR and all of the other logistics with Fas go.
For additional BD, we are as very engaged in a number of discussions with regard to enhance.
I remain very confident we'll sign additional deals for an hands and then as we are looking at other technologies, yes, we continue to be evaluating a number of technologies looking for a match to what we've stated is going to be important an opportunity to increase our revenue growth.
In a manner that Tom has approval like in hands with it with the high margin high growth so nothing to update specifically there, but actively at work looking at opportunities.
Anna Vorobeva: And then, as we're looking at other technologies, yes, we continue to be evaluating a number of technologies, looking for a match to what we've stated is going to be important, an opportunity to increase our revenue growth in a manner that has a profile like Enhance, with high margin and high growth. So, nothing to update specifically there, but we are actively at work looking at opportunities. Great, thanks so much.
Great. Thanks, so much.
As a reminder to ask a question press star one on your telephone you.
Your next question comes from Joel Beatty from Citi. Please go ahead.
Hi, congratulations on the quarter my questions on sales fro are you able to provide any context on.
Trajectory of growth in royalty is that you are seeing and trajectory of the conversion from Ivy does the sub Q and any reason to think that the next few months could be any different than that trajectory you saw over the last few months.
Helen I. Torley: As a reminder, to ask a question, press star 1 on your telephone. Your next question comes from Joel Beattie from Citi. Please go ahead.
Yes. Thanks.
Joel Beattie: Hi, congratulations on the quarter. My question's on FASBRO. Are you able to provide any context on the trajectory of growth in royalties that you're seeing, and you know, the trajectory of the conversion from IV to sub-Q, and any reason to think that the next few months could be any different than the trajectory you saw over the last few months? sales for FastPro. And so we are going to be evaluating the continued trend and the additional data points over the next month. When we think about where additional growth will come from, in the already launched markets, which are the US and some of the markets outside the US, obviously, there's an opportunity, given we're only one quarter in. The growth is going to come from more physicians adopting and getting deeper penetration and uptake in individual clinics.
Thanks Joel.
We look at it we mentioned that this was the first full quarter of sales for fast pro and so we are going to be evaluating the continued trend and the additional data points over the next month, when we think about where additional growth could will come from in the already launched launch markets, which is.
Yes, and some of the markets outside the U.S.. Obviously, there is an opportunity given we're only one quarter in the growth is going to come from more physicians, adopting and getting deeper penetration and uptake in the individual clinics and so.
That I think will continue to drive strong growth and then as we think about markets that have not yet launched them. We know that as that reimbursement is got in place we're going to see a cascade of additional launches occurring over the next step months and.
Joel Beattie: And so that, I think, will continue to drive strong growth. And then, as we think about markets that have not yet launched them, we know that as that reimbursement is got in place, we're going to see a cascade of additional launches occurring over the next months and quarters. And so, based on everything we know, there are so many growth drivers with only one quarter of sales under our belt. I do expect to see a very good trend, but we're trending off three data points at the moment. And so we certainly are going to be watching very carefully in the next month to see exactly what that rate of growth is going to be. But there are, as I mentioned, many drivers for strong continued growth.
At quarters end so.
So based on everything we know there are so many growth drivers with only one quarter of sales under our belt I do expect to see a very good trend, but we're trending off three data points at the moment and so we certainly are going to be watching very carefully in the next month to see exactly what that rate of growth is going to be but there are as I mentioned many drivers for.
<unk> strong continued growth.
Okay, and then maybe.
Another question.
Just at a higher level on partnering more new of new targets that are not selected by any partners today.
How does the discussion go in terms of who gets first preference.
Kind of kind of new company come in and grab it or do existing partners get any type of look at the new target before a new company could drive it.
Helen I. Torley: That makes sense. And then maybe another question, and it's on, you know, just at a higher level on partnership. When you have, you know, new targets that have not been selected by any partners to date, you know, how does that discussion go in terms of who gets first preference? You know, can a new company come in and grab them? Or do existing partners get any type of, you know, look at that new target before a new company could grab it? I think it's fair to say it's simplified.
I think it's fair to say the simplification out his first come first serve as someone is end bonafide negotiations with us for a target and they are a new partner then they will get the target.
It is an existing partner and they nominate the target they will get the target. So it really is a first come first serve them situation.
Thank you.
Joel Beattie: It's first come, first serve. If someone is in bona fide negotiations with us for a target and they are a new partner, then they will get the target. If it is an existing partner and they nominate the target, they will get the target.
Okay.
That was our last question at this time I will turn the call back over to the presenters.
Thank you very much and thank you everyone for joining this call as you can hear we are absolutely delighted with the very strong progress.
Helen I. Torley: So it really is a first come, first served situation. Thank you. That was our last question at this time. I will turn the call back over to the presenters. Thank you very much and thank you everyone for joining this call. As you can hear, we are absolutely delighted with the very strong progress in the third quarter and what it means and signals for the importance of the enhanced portfolio. Obviously, we're seeing a very robust uptake in the United States of a sub-Q product, and I think that's a milestone we certainly should be marking and recognizing. I'll say again, the team has navigated through a lot of challenges in 2020, and we are very excited about all of the progress to date and importantly what that means for the company in 2021. Thank you so much for your attention. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
In the third quarter and what it means and signals for the importance of the ENHANZE portfolio. Obviously, we're seeing a very robust uptake in the United States over Subcu product and I think that.
Milestone, we certainly should be marking and Anne and recognizing.
I'll say again.
The team has navigated through a lot of challenges.
In 2020, and Dan we're very excited about all of the progress to date and importantly, what that means for the company for Twentytwenty. One. Thank you so much for your attention.
Okay.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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