Q3 2021 Halozyme Therapeutics Inc Earnings Call

Operator: Good afternoon. Thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Halozyme Third Quarter 2021 Financial Results Conference Call.

Good afternoon, and thank you for standing by.

My name is Brent and I will be your conference operator today.

This time I would like to welcome everyone to the <unk> third quarter 2021 financial results Conference call.

Operator: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Mr. Al-Khaldani, Vice President of Investor Relations and Corporate Communications, please begin your call

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question at that time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question press the pound key thank you Mr.

Mr Al Kelly, Danny Vice President of Investor Relations and corporate Communications. Please begin your call.

Mr. Al-Khaldani: Good afternoon, and welcome to our third quarter 2021 financial results.

Thank you.

Good afternoon, and welcome to our third quarter 2021 financial results Conference call.

Mr. Al-Khaldani: Results Conference call. In addition to our press release,

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.

Mr. Al-Khaldani: , , , , , , , , , , , , , ,

Mr. Al-Khaldani: The call can be found in the Investor Relations section of our website. Leading the call today will be...

Leading the call today will be Dr. Helen Torley, <unk>, 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.

Mr. Al-Khaldani: 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.

Mr. Al-Khaldani: Financial Officer, who will review our financial results for the third quarter.

Mr. Al-Khaldani: On today's call, both GAAP and non-GAAP financial measures will be discussed.

On today's call, both GAAP and non-GAAP financial measures will be discussed.

Mr. Al-Khaldani: The non-GAAP or adjusted financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and slide presentation.

Non-GAAP or adjusted financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and slide presentation.

Mr. Al-Khaldani: 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 our CEO, Dr. Helen Torley.

During the call, we will be making forward looking statements.

For you to our SEC filings for a full listing of the risks and uncertainties.

I'll now turn the call over to our CEO, Dr. Helen Torley.

Helen I. Torley: Thank you, Al. I'm pleased to report our strong third quarter financial results, which reflect the continued momentum and growth of our enhanced business. We reported third-quarter revenues of $115.8 million. This revenue was driven by record quarterly royalties of $58.6 million, which represents 145% year over year growth, and by collaboration revenue of $32.2 million, which included a $30 million commercial milestone from Janssen resulting from the continued strong growth and performance of Darzalek Subcutaneous. Third quarter GAAP diluted earnings per share was $1.48, including an income tax benefit related to the release of our tax valuation allowance, and non-GAAP diluted earnings per share was $0.55.

Thank you al I'm pleased to report on our strong third quarter financial results, which reflect the continued momentum and growth of our <unk> business. We reported third quarter revenues of $115 $8 million. This revenue was driven by record quarterly royalties of $58 $6 million, which represents a one.

<unk> hundred 45% year over year growth and by collaboration revenue of $32 2 million, which included a $30 million commercial milestone from Janssen, resulting from the continued strong growth and performance of doors at Lake subcutaneous.

Third quarter GAAP diluted earnings per share was $1 48, including an income tax benefit related to the release of our tax valuation allowance and non-GAAP diluted earnings per share was <unk> 55.

Helen I. Torley: As a result of the strong year-to-date performance, we are increasing the lower end of our revenue and operating income guidance for 2021. Revenue guidance is increased to $430-445 million, which represents growth of 61-66% over the prior year. Operating income guidance is now $265-280 million, representing 84-94% growth over prior years. In addition, we have one tax-related adjustment to our GAAP earnings per share guidance now that we have demonstrated a pattern of durable profitability.

As a result of the strong year to date performance, we are increasing the lower end of our revenue and operating income guidance for 2021.

Revenue guidance is increased to $430 million to $445 million, which represents growth of 61% to 66% over prior year.

Operating income guidance is now $265 million to $280 million, representing 84% to 94% growth over prior year.

In addition, we have one tax related adjustment to our GAAP earnings per share guidance now that we have demonstrated a pattern of durable profitability.

Helen I. Torley: This results in an increase to our gap earnings per share guidance to a range of $2.60 to $2.70. We're also raising the lower end of our non-GAAP earnings per share guidance to a range of $1.90 to $2.00.

This results in an increase to our GAAP earnings per share guidance to a range of $2 60 to $2 70.

We're also raising the lower end of our non-GAAP earnings per share guidance to a range of $1 90 to $2.

Helen I. Torley: Elaine will discuss our updated guidance in detail along with the rest of our financial results later in the call. Let me turn now to slide 3 and provide some details on key third-quarter progress and events, and I'll begin with royalty revenues. Royalties during the third quarter were $58.6 million.

Wayne will discuss our updated guidance in detail along with the rest of our financial results later in the call.

Let me turn now to slide three and provide some details on key third quarter progress in events and I'll begin with royalty revenues.

Royalties during the third quarter were $58 $6 million.

Helen I. Torley: This represents 145% growth year-over-year and 28% sequential growth, following what had previously been our record quarterly royalties. Strong royalty growth is being driven primarily by the successful ongoing global launches of Janssen's subcutaneous forms of Darzalex, which utilize our enhanced technology, and by increasing contributions from Roche's Fezgo. For the full year 2021, we continue to project a more than doubling in our royalty revenues over 2020 based on the anticipation of continued growth, primarily driven by Darzalek Subcutanean. We're delighted to see this continued robust growth in this high-margin, recurring revenue stream.

This represents 145% growth year over year, and 28% sequential growth following what had previously been a record quarterly royalties.

Royalty growth is being driven primarily by the successful ongoing global launches of Janssen subcutaneous forms of <unk>, which utilize our enhanced technology and by increasing contributions from Roche as Federico.

For the full year 2021, we continue to project a more than doubling in our royalty revenues over 2020 based on the anticipation of continued growth primarily driven by DARPA like subcutaneous.

We're delighted to see this continued robust growth in this high margin recurring revenue stream.

Helen I. Torley: I'll now provide some highlights on key commercialized products, which are listed on slide 4. There are five products now approved in most major global markets using our enhanced technology. The most recently launched products utilizing the enhanced technology, which we call our Wave 2 products, are Darzalex SE, which is also called Darzalex Fast Pro, and also Fezgo, which is a fixed-dose combination of Roche's Progetta and Herceptin. In each case, the subcutaneous version can be administered in just minutes compared to the multi-hour treatment times for the IV version.

I'll now provide some highlights on key commercialized products, which are listed on slide four.

There are five products now approved in most major global markets using our enhanced technology.

The most recently launched products utilizing the enhanced technology, which we call our wave two products, our <unk> SC which is also called dark like SaaS pro.

And also Fayetteville, which is a fixed dose combination approaches predictor and herceptin.

In each case, the subcutaneous version can be administered in just minutes compared to the multiyear treatment times for the IV versions.

Helen I. Torley: This can mean a reduced burden of treatment for patients and a reduced use of healthcare resources. Globally, more than 500,000 patients have received commercial products utilizing Enhance. Turning to slide five, I'll now provide some color on Darzalex and Darzalex subcutaneous. During the third quarter, Janssen's parents, Johnson & Johnson, reported worldwide sales of Darzalex, including both the IV and subcutaneous forms, of $1.58 billion, an increase of 42.9% year-over-year on an operational basis. On its third quarter conference call, J&J further stated this growth was driven by increased penetration of the subcutaneous formulation in the US and Europe, continued launches globally, and share gains, with a reported nearly five points of share growth in the United States across all lines of therapy in the third quarter. Turning now to subcutaneous Darzalex, according to data from Symphony Health in the United States, Darzalex Faspro achieved 72% of sales in the month of September.

This can mean reduced burden of treatment for patients and reduced use of healthcare resources.

Globally more than 500000 patients have received commercial products utilizing enhanced.

Turning to slide five I'll now provide some color on <unk> and dark like subcutaneous.

During the third quarter Janssen parent Johnson, and Johnson reported worldwide sales of <unk>, including both the IV and subcutaneous forms of $158 billion, an increase of 42, 9% year over year on operational basis.

On its third quarter conference call J&J. Further stated this growth was driven by increased penetration of the subcutaneous formulation in the U S and Europe.

<unk> launches globally and share gains with a reported nearly five points of share growth in the United States across all lines of therapy in the third quarter.

Turning now to subcutaneous <unk>. According to data from Symphony health in the United States <unk> achieved 72% share of sales in the month of September.

Helen I. Torley: This is an increase from 66% share at the end of June. The chart on the right illustrates the percentage of total Darzalex sales at Darzalex Faspro represented during the last month of each of the last four quarters in the United States. What you can clearly see is a strong growth trend which we project will continue. Driving potential additional opportunity, Janssen recently announced several regulatory achievements that can support continued growth for subcontinuous Darzalek.

This is an increase from 66% share at the end of June.

The chart on the right illustrates a percentage of total doors like sales at doors like fast grow represented during the last month of each of the last four quarters in the United States.

What you can clearly see a strong growth trend, which we project will continue.

Yes.

Driving potential additional opportunity.

<unk> recently announced several regulatory Terry achievements that can support continued growth for subcutaneous <unk>.

Helen I. Torley: Beginning with multiple myeloma, in July, Janssen received FDA approval for Darzalex Faspro in combination with pomalidomide and dexamethasone for patients with multiple myeloma after first or subsequent relapse. Moving now to light chain amyloidosis, in October, Janssen received approval from the China National Medical Products Administration for the use of Darzalex Faspro for the treatment of Cyclophosphamide and dexamethasone.

Beginning with multiple myeloma in July Janssen received FDA approval for <unk> in combination with <unk> and dexamethasone for patients with multiple myeloma after first or subsequent relapse.

Moving now to light chain amyloidosis in October Janssen received approval from the China National Medical products administration for the use of dark <unk> for the treatment of newly diagnosed primary light chain amyloidosis in combination with Bortezomib.

Cyclophosphamide and dexamethasone.

Helen I. Torley: This followed approval from regulatory authorities in Japan for subcutaneous Darzalex for systemic light chain amyloidosis in August. With the demonstrated sales and regulatory momentum, we continue to expect that Darzalex will be a driver of royalty growth for Halozyme for a long time. I'll now move to our second Wave 2 product, Fezgo, which was launched in the third quarter of 2020 in the United States and began launching in the first quarter of 2021 in Europe. In the third quarter, FASGO built on the momentum we saw in the first and second quarters of the year.

This followed approval from regulatory authorities in Japan for subcutaneous <unk> for systemic light chain amyloidosis in August.

With the demonstrated sales and regulatory momentum we continue to expect that <unk> will be a driver of royalty growth for heelys I'm for much time to come.

I'll now move to our second wave two product <unk>, which was launched in the third quarter of 2020 in the United States and began launching in the first quarter of 2021 in Europe.

In the third quarter physical built on the momentum we saw in the first and second quarters of the year.

Helen I. Torley: Roche reported third-quarter FESCO sales of 117 million Swiss francs, up from 67 million Swiss francs in the second quarter, representing more than 70% sequential growth. We're still early in the rollout of the ex-U.S. country launches, where reimbursement decisions can take a year or longer from the time of regulatory approval. And I'll just close with a brief comment on the Wave 1 launch product; sales in Q3 were overall stable compared to Q2.

Roche reported third quarter fiscal sales of 117 million Swiss francs up from 67.

Swiss franc in the second quarter, representing more than 70% sequential growth.

We're still early in the rollout of the ex U S country launches for reimbursement decisions can take a year or wrong longer from the time of regulatory approval.

And I'll just close with a brief comment on the wave one launch products.

<unk> in Q3 were overall stable compared to Q2.

Helen I. Torley: Let me now move to slide six and a discussion of the Enhanced Development Portfolio, including a few recent partner highlights. Excitingly, we predict we will exit 2021 with 16 products in development, including three products in phase three. I'll begin my review with the potential next wave of launches, which are these Wave 3 launch products. Based on historical development timelines, products that are in Phase 3 represent potential launches in the 2023 to 2025 timeframe. Today, we have three products that are in phase three, and these include Bristol's Nivolumab, Roche's Ticentric, and Argenix's F-Cartigema.

Let me now move to slide six and a discussion of the enhanced development portfolio.

A few recent partner highlights.

Excitingly, we project, we will exit 2021 with 16 products in development, including three products in phase III.

I'll begin my review with the potential next wave of launches, which are these are wave III launch product.

Based on historical development timelines products that are in phase III represent potential launches in the 2023 to 2025 timeframe.

Today, we have three products that are in phase III and these include Bristol's <unk> roche's to centric and organics is F cartage amount.

Helen I. Torley: These three products alone have projected sales of greater than $18 billion in 2024 based on analyst consensus. For Halozyme, where we receive, on average, a mid-single-digit royalty of net sales of the sub-Q product, this represents a very attractive new addressable market opportunity upon SC product approval, potentially beginning in 2023. Moving to the earlier pipeline, which includes products that are currently in or which have completed phase one.

These three products alone have projected sales of greater than $18 billion in 2024 based on analyst consensus.

For <unk>, where we receive on average a mid single digit royalty of net sales of the <unk> product. This represents a very attractive new addressable market opportunity upon FC product approval potentially beginning in 2023.

Moving to the earlier pipeline, which the products that are currently in or which have completed phase one.

Helen I. Torley: These products, if they continue in development, based on historical timelines, have the potential to launch in the 2025 to 2027 timeframe, forming the Wave 4 launch. Today, we have 10 products in Phase 1, and we continue to project we will exit 2021 with 13 Phase 1 studies completed or ongoing, with three new study starts expected during the remainder of the fourth quarter. This diversified and growing pipeline of products utilizing Enhance is setting up the potential for multiple waves of future product launches, potentially starting in 2023, that we believe will deliver long-term revenue growth.

These products if they continue in development based on historical timelines have the potential to launch in the 2025 to 2027 timeframe, forming the way for launches.

Today, we have 10 product in phase one and we continued to project. We will exit 2021 with 13 phase one studies completed or ongoing with three new studies.

As expected during the remainder of the fourth quarter.

This diversified and growing pipeline of products utilizing enhanced is setting up the potential for multiple waves of future product launches potentially starting in 2023 that we believe will deliver long term revenue growth.

Helen I. Torley: With our partners making such strong progress advancing studies across the entire portfolio, let me share just a few highlights and updates. I'll begin with Ergenix's F-Cartridge mod, which is currently leading the race to be our next potential launch within hands in 2023 and could be the first of the Wave 3 launches. In the United States, the PDUFA date for the IV form of F-cortigemoide in its first indication of myasthenia gravis is December 17th of this year; launches outside the United States are projected shortly thereafter, with Japan projected in Q1 2022 and Europe in the second half of 2022.

With a part is making.

Strong progress advancing studies across the entire portfolio, let me share just a few highlights and updates.

I'll begin with <unk>, which is currently leading the race to be our next potential launch with enhanced in 2023 and could be the first of the wave three launches.

In the United States. The <unk> date for the IV form of AST <unk> in its first indication of myasthenia Gravis is December 17th of this year.

Launches outside the United States are projected shortly thereafter with Japan projected in Q1, 2022 and Europe in the second half of 2022.

The data readout of the ongoing phase III trial for subcutaneous ask her to Jimmy <unk> with enhanced in myasthenia gravis is expected by our genetics in mid 2022 supporting the potential for a 2023 launch.

Helen I. Torley: The data readout of the ongoing Phase III trial for subcutaneous F-critogen mod within hands in myosinia gravis is expected by Argenix in mid-2022, supporting the potential for a 2023 launch. Myasthenia Gravis is the first of four potential indications currently being evaluated in ongoing Phase III clinical studies with Escher-Tegelmod subcutaneous within hands.

Myasthenia gravis as the first of four potential indications currently being evaluated in the ongoing phase III clinical studies with <unk> subcutaneous with N. Hence the additional.

Indications are chronic inflammatory demyelinating, polyneuropathy idiopathic thrombocytopenic purpura and pemphigus.

Helen I. Torley: Additional indications are chronic inflammatory demyelinating polyneuropathy, idiopathic thrombocytopenic purpura, and panthagitis. The projected size of the addressable populations and the large unmet need that exists in each of these indications are resulting in analysts projecting a multi-billion dollar opportunity for FCART2 demand. And we're also pleased to be working with Ergenics on a subcutaneous version of ARGX117, which is a C2 inhibitor. This is a product that's being explored as a treatment for multifocal motor neuropathy. And in other news this quarter, we're pleased to announce that in July, Janssen elected the target HIV reverse transcriptase, and plans are already underway to initiate a Phase 1 study.

The projected size of the addressable population and the large unmet need that exists in each of these indications are resulting in analysts projecting a multibillion dollar opportunity for F cartridge amount.

And we're also pleased to be working with <unk> on a subcutaneous version of <unk>, which is a <unk> inhibitor. This is a product that's being explored as a treatment for multifocal motor neuropathy.

And in other news in the quarter, we're pleased to announce that in July Janssen elected the target HIV reverse transcriptase.

Plans are already underway to initiate a phase one study.

We're very much looking forward to this program with Janssen, which will be the third program in our collaboration following doors, Alex and event Tomorrow.

Now with this strong progress by our partners. We project, we will have 16 products in clinical development by the end of 2021, including three products in phase III and this is what its form in this exciting set of potential wave three and wave four launches.

Helen I. Torley: And we're very much looking forward to this program with Jansen, which will be the third program in our collaboration, following Darzalex and Annie Van Tamanen. Now, with this strong progress by our partners, we project that we will have 16 products in clinical development by the end of 2021, including three products in phase three. And this is what is forming this exciting set of potential wave three and wave four launches. Now, let me just take a moment to talk about three additional drivers of continued royalty revenue growth and durability, beginning with the potential for co-formulation pathways. Co-formulation patents, as you may recall, can be granted by the Patent Office for novel or unexpected findings.

Now let me just take a moment to talk about three additional drivers of continued royalty revenue growth into your ability beginning with the potential for co formulation patents.

A co formulation patents as you may remember can be granted by the patent offer office for novel or unexpected findings.

In general co formulation patents have granted can have the effect of extending the duration of time that we receive royalties.

As a reminder, we typically receive royalties for a minimum of 10 years after the first commercial sale.

In addition, co formulae relation patents can also potentially delay the timing of the royalty step then to later than 2024 in Europe and later than 2027 in the United States.

Helen I. Torley: In general, co-formulation patents, if granted, can have the effect of extending the duration of time that we receive royalties. As a reminder, we typically receive royalties for a minimum of 10 years after the first commercial sale. In addition, co-formulation patents can potentially delay the timing of the royalty step-down to later than 2024 in Europe and later than 2027 in the United States. I'm pleased to report that several partners have recently filed new co-formulation patent applications related to products in the Enhanced Development Pipeline.

I am pleased to report that several partners have recently filed new co formulation patent applications related to product and the enhanced development pipeline.

We look forward to being able to provide further updates on these application to as information becomes public.

The next opportunity to increase the revenue durability includes new deals we see further revenue growth opportunity is your ability here too as we continue meeting with a number of companies and are discussing monoclonal antibodies by specifics small molecules and cell therapy opportunities for <unk>.

Helen I. Torley: We look forward to being able to provide further updates on these applications as information becomes public. The next opportunity to increase revenue durability includes new deals. We see further revenue growth opportunities and durability here too, as we continue meeting with a number of companies that are discussing monoclonal antibodies, bispecifics, small molecules, and cell therapy opportunities for ENHANCE that may result in new collaboration agreements. And the third opportunity to drive durability relates to new development programs.

That may result in new collaboration agreements.

And the third opportunity to drive durability relates to new development programs. As a reminder, new development programs are rising from a new potential collaboration agreements are not currently included in <unk> long term royalty projections and these food form what we would call away five of launches.

And we can expect to wait five may be further expanded by current partners nominating and developing additional targets from the more than 20 currently available open slots that they have.

These three growth levers are what create the strong royalty revenue trajectory, we project to 2027 and beyond.

Helen I. Torley: As a reminder, new development programs arising from a new potential collaboration agreement are not currently included in Halozyme's long-term royalty projections, and these would form what we would call wave five of launches. We can expect that Wave 5 may be further expanded by current partners nominating and developing additional targets from the more than 20 currently available open slots that they have.

Moving now to slide seven I'll discuss our pipeline progress Ive just described drives revenues for <unk>.

We're again reiterating our three year outlook for projected revenues from milestones.

For 2021 through 2023, we continue to project $400 million to $450 million in milestone revenues.

This reflects our expectations for partner development and commercial milestones during that period and new deals.

Helen I. Torley: These three growth levers are what create the strong royalty revenue trajectory we project through 2027 and beyond. Moving now to slide 7, I'll discuss how this pipeline progress I've just described drives revenues for Halozyme. We're again reiterating our three-year outlook for projected revenues from Milestone. For 2021 through 2023, we continue to project $400 to $450 million in Milestone revenues. This reflects our expectations for partner development and commercial milestones during that period and new deals. The blue bars represent our three-year outlook since 2019, and the green bars represent actual annual milestone revenues, demonstrating that we are performing very well against these projections.

The blue bars represent our three year outlook since 2019, and the green bars represent actual annual milestone revenues demonstrating that we are performing very well against these projections.

This near term milestone revenue is an important and strong indicator for future royalty revenues.

Royalty revenue potential of approximately $1 billion in 2027 based on a non risk adjusted revenue projections for programs that we currently have line of sight to and assuming global sales and all indications.

We're excited by this ongoing momentum and growth potential of our enhanced technology franchise.

At the same time, we continue to evaluate the potential for new technology platform expansion through acquisition with the goal of accelerating and extending long term revenue growth.

We see the opportunity to create incremental value for other platform technologies, applying <unk> pro and partnering and commercialization capabilities.

Helen I. Torley: This near-term milestone revenue is an important and strong indicator for future royalty revenues. We project royalty revenue potential of approximately $1 billion in 2027, based on non-risk-adjusted revenue projections for programs that we currently have line-of-sight to and assuming global sales in all indications. We're excited by this ongoing momentum and growth potential of our enhanced technology franchise. At the same time, we continue to evaluate the potential for new technology platform expansion through acquisition with the goal of accelerating and extending long-term revenue growth.

As we've mentioned before and hands, it's still early in its growth cycle. So we have the opportunity to be highly selective.

With that I'm pleased to turn the call now over to Elaine for a discussion of the third quarter financial results.

Thank you Helen before I begin I'd like to again note that we now have towards key measures on a non-GAAP. Adjusted in addition to a GAAP basis and also provide financial guidance on a non-GAAP basis. We consider these non-GAAP financial measures to be important because they provide useful measures of our operating performance excluding <unk>.

Factors that do not directly affect what we consider to be our core operating performance such as stock based compensation and amortization as well as unusual events and their related tax effects and I'd ask you to refer to our press release and filings for a reconciliation of GAAP to non-GAAP net income and earnings per share.

Helen I. Torley: We see the opportunity to create incremental value for other platform technologies applying Halozyme's proven partnering and commercialization capabilities. Now, as we've mentioned before, Enhance is still early in its growth cycle, so we have the opportunity to be highly selective. With that, I'm pleased to turn the call now over to Elaine for a discussion of the third quarter financial results. Thank you, Helen.

With that let me turn to slide eight for a review of our third quarter revenues.

Total revenue for the third quarter was $115 8 million up 77% from revenue from the prior year period of $65 3 million.

The biggest driver of our overall revenue growth was from royalties recurring revenue, which accounted for over 50% of total revenue in the third quarter.

Na Sun: Before I begin, I'd like to again note that we now report key measures on a non-GAAP adjusted basis in addition to a GAAP basis and also provide financial guidance on a non-GAAP basis. We consider these non-GAAP financial measures to be important because they provide useful measures of our operating performance, excluding factors that do not directly affect what we consider to be our core operating performance, such as stock-based compensation and amortization as well as unusual events and their related tax effects.

Royalty revenue for the quarter was $58 6 million, a 145% increase over the prior year period royalty revenue of $23 9 million.

And this was driven primarily by the continued strong uptake of subcutaneous <unk> utilizing enhanced by our partner Jensen and to a lesser extent by Roche is the ongoing global lunches effect, though.

Yeah.

We also saw strong growth in product sales, which accounted for 22% of total revenues in the third quarter product sales, which can fluctuate period to period based on partner supply requirements and safety stock levels were $25 million in the quarter significantly higher than the prior year period product sales of $9 million.

Na Sun: And I'd ask you to refer to our press release and filings for a reconciliation of GAAP to non-GAAP net income and earnings per share. With that, let me turn to slide eight for a review of our third quarter revenue. Total revenue for the third quarter was $115.8 million, up 77% from revenue from the prior year period of $65.3 million. The biggest driver of our overall revenue growth was from royalties and recurring revenue, which accounted for over 50% of total revenue in the third quarter.

Growth in product sales was primarily driven by higher API sales to our partners Jensen and Roche in support of their ongoing sub Q product launches and commercial efforts globally.

And highlighting the tremendous commercial potential of enhanced we saw collaboration revenue in the quarter totaling $32 2 million.

Na Sun: Royalty revenue for the quarter was $58.6 million, a 145% increase over the prior year period royalty revenue of $23.9 million. This was driven primarily by the continued strong uptake of subcutaneous Garzalex, used in hands by our partner Janssen, and to a lesser extent by Roche's ongoing global launches of FECTO.

Of which $30 million was related to the achievement of a commercial milestone associated with subcutaneous <unk>.

This is the second commercial milestone achieved this year from our collaboration with Janssen. In addition to a $20 million milestone, which we earned in the second quarter, reflecting the continued momentum of subcutaneous <unk> co.

Collaboration revenue in the third quarter was consistent with the overall magnitude of collaboration revenue from the prior year period of $32 $3 million.

Na Sun: We also saw strong growth in product sales, which accounted for 22% of total revenues in the third quarter. Product sales, which can fluctuate period to period based on partner supply requirements and safety stock levels, were $25 million in the quarter, significantly higher than the prior year period. Growth in product sales was primarily driven by higher API sales to our partners Janssen and Roche in support of their ongoing sub-Q product launches and commercial efforts globally.

Let me now turn to slide nine for a more detailed breakdown of our third quarter P&L.

I'll begin with total operating expenses, which were $40 $2 million in third quarter up from $25 million in the prior year period.

The overall increase in total operating expenses resulted from higher cost of product sales, which were $18 6 million compared with $5 6 million in the prior year period.

The increase in cost of goods was attributable to the markedly higher level of API sales versus the prior year periods in support of our enhanced partners products and programs in the third quarter.

Na Sun: Highlighting the tremendous commercial potential of Enhance, we saw collaboration revenue in the quarter totaling $32.2 million, of which $30 million was related to the achievement of a commercial milestone associated with subcutaneous GARS-Elect. This is the second commercial milestone achieved this year from our collaboration with Janssen in addition to a $20 million milestone, which we earned in the second quarter, reflecting the continued momentum of subcutaneous scar delete.

Research and development expenses of $8 $5 million increase from $7 $7 million in the prior year period.

This increase was due to an increase in compensation expense, including stock based compensation for personnel to support additional enhanced targets entering clinical development.

And SG&A expenses were $13 2 million up from $11 7 million in the prior year period. Similarly, this increase was primarily due to an increase in compensation expense, including stock based compensation for personnel to support our enhanced franchise.

Na Sun: Collaboration revenue in the third quarter was consistent with the overall magnitude of collaboration revenue from the prior year period of $32.3 million. Let me now turn to slide nine for a more detailed breakdown of our third quarter P&L. I'll begin with total operating expenses, which were $40.2 million in the third quarter, up from $25 million in the prior year period. The overall increase in total operating expenses resulted from higher costs of product sales, which were $18.6 million, compared with $5.6 million in the prior year period.

Total operating expenses, excluding Cogs were $21 7 million for the third quarter compared with $19 $5 million in the prior year period and remain consistent with our expected spend for the year.

In terms of our operating profitability GAAP operating income for the quarter was $75 6 million, an increase of 88% compared to GAAP operating income of $40 3 million in the prior year period, reflecting our strong topline growth and Leverages our business model.

Na Sun: The increase in cost of goods was attributable to the markedly higher level of API sales versus the prior year period in support of our enhanced partners' products and programs in the third quarter. Research and development expenses of $8.5 million increased from $7.7 million in the prior year period.

So before we get to net income and earnings per share, let me spend a moment on the valuation allowance release recorded against our deferred income tax assets and the benefit to our financial results and annual guidance.

As you saw in our earnings release and as detailed in our 10-Q filing we reversed our tax valuation allowance this quarter and recognized an income tax benefit and deferred tax assets of $142 $5 million. We will begin recording income tax expense in our P&L in 2022 and going.

Na Sun: This increase was due to an increase in compensation expense, including stock-based compensation, for personnel to support additional enhanced targets entering clinical development. SG&A expenses were $13.2 million, up from $11.7 million in the prior year period. Similarly, this increase was primarily due to an increase in compensation expense, including stock-based compensation for personnel to support our enhanced franchise. Total operating expenses excluding costs were $21.7 million for the third quarter, compared with $19.5 million in the prior year period, and remain consistent with our expected spend for the year.

Forward with an expected tax rate that will likely approximate statutory tax rates.

We anticipate tax expense to be substantially non cash expense until we fully utilize our deferred tax assets.

Moving to net income on a GAAP basis net income for the quarter was $216 6 million or $1 48 per diluted share, reflecting the benefit of the release of the tax valuation allowance that I discussed a moment ago.

Na Sun: In terms of our operating profitability, GAAP operating income for the quarter was $75.6 million, an increase of 88% compared to GAAP operating income of $40.3 million in the prior year period, reflecting our strong top-line growth and leverageable business model. So before we get to net income and earnings per share, let me spend a moment on the valuation allowance release recorded against our deferred income tax assets and the benefit to our financial results and annual guidance.

This compared with GAAP net income of $36 $2 million 25 per diluted share respectively in the prior year period.

And on a non-GAAP or adjusted basis net income was $80 5 million or <unk> 55 per diluted share compared to non-GAAP net income of $44 million or <unk> 31 per diluted share respectively in the prior year period.

Let me now turn to slide 10 for an update of our 2021 financial guidance I'm pleased to report that due to our strong performance year to date, we are raising the lower end of our guidance for 2021 revenue. We now expect total revenues of $430 million to $445 million up from our prior range.

Na Sun: As you saw in our earnings release and as detailed in our 10-Q filing, we reversed our tax valuation allowance this quarter and recognized an income tax benefit and deferred tax assets of $142.5 million. We will begin recording income tax expense in our P&L in 2022 and going forward with an expected tax rate that will likely approximate statutory tax rates. We anticipate tax expense to be a substantially non-cash expense until we fully utilize our Deferred Tax Act.

Of $425 million to $445 million. This new range would represent year over year growth of 61% to 66% over our already substantial revenues in 2020.

Moving to the components of revenue, we continue to expect revenue from royalties to more than double from 2020 level and product sales to increase 79% to 88% from 2020 level driven primarily by API sales in support of our enhanced partners.

Na Sun: Moving to net income on a gap basis, net income for the quarter was $216.6 million, or $1.48 per diluted share, reflecting the benefit of the release of the tax valuation allowance that I discussed a moment ago. This compared with gap net income of $36.2 million and 25 cents per diluted share, respectively, in the prior year period. And on a non-GAAP or adjusted basis, net income was $80.5 million or $0.55 per diluted share, compared to non-GAAP net income of $44 million or $0.31 per diluted share, respectively, in the prior year period.

We also continue to expect revenue under collaborations to be higher than the already meaningful collaborative revenue we achieved in 2020.

Also due to the strong topline growth and profitability enabled by our enhanced business model. We now expect GAAP operating income for 2021 to be in the range of $265 million to $280 million up from our prior range of $260 million to $280 million. This new range would.

84% to 94% growth over 2020, and a greater than 60% operating margin.

And as a result of the income tax benefit recorded in the third quarter. We now expect GAAP net income of $380 million to $395 million up from our prior guidance of $235 million to $255 million.

Na Sun: Let me now turn to slide 10 for an update on our 2021 financial guidance. I'm pleased to report that due to our strong performance year-to-date, we are raising the lower end of our guidance for 2021 revenues. We now expect total revenues of $430 million to $445 million, up from a prior range of $425 million to $445 million. This new range would represent year-over-year growth of 61 to 66 percent over our already substantial revenues in 2020.

Again, reflecting the strong year to date results, we are raising the low end of the range for non-GAAP net income, which we now expect to be $285 million to $300 million up from our prior guidance of $280 million to $300 million.

Moving to earnings per share, we now expect GAAP diluted earnings per share of between $2 60, and $2 70 up from our prior guidance of $1 55, and $1 70.

Due to the income tax benefit we recorded in the third quarter.

And lastly, we are raising the low end of the range for non-GAAP diluted earnings per share to $1 90 to $2 per share up from our prior guidance of $1 85 to $2 per share.

Na Sun: Moving to the components of revenue, we continue to expect revenue from royalties to more than double from 2020 levels and product sales to increase 79% to 88% from 2020 levels, driven primarily by API sales in support of our enhanced partners. We also continue to expect revenue under collaborations to be higher than the already meaningful collaborative revenue we achieved in 2020. Also, due to the strong top-line growth and profitability enabled by our enhanced business model, we now expect GAAP operating income for 2021 to be in the range of $265 million to $280 million, up from a prior range of $260 million to $280 million.

This new range would represent 70% to 79% growth over 2020.

I'll now turn to slide 11 for a summary of our approach to value creation and capital return and our strong progress to date.

We have been consistent regarding our balance capital allocation priorities. These include maintaining a strong balance sheet capital returned via share repurchases and commitment to driving both internal and external growth.

We have a strong balance sheet with cash and cash equivalents as of the end of the third quarter of $815 9 million.

We anticipate the strong projected free cash flow driven by our enhanced franchise will support both our commitment to capital return as well as funding both internal and external growth via M&A.

Na Sun: This new range would represent 84% to 94% growth over 2020 and a greater than 60% operating margin. And as a result of the income tax benefit recorded in the third quarter, we now expect a gap net income of $380 million to $395 million, up from our prior guidance of $235 million to $255 million. Again, reflecting the strong year-to-date results, we are raising the low end of the range for non-GAAP net income, which we now expect to be $285 million to $300 million, up from our prior guidance of $280 million to $300 million.

And in support of our continued commitment to capital return in the third quarter of 2021, we repurchased one 6 million shares of common stock in open market purchases or $64 7 million at an average price per share of $41 40.

Furthermore, in October of 2021, we repurchased an additional 0.3 million shares of common stock for $10 $3 million.

So with those purchases we have fully completed our three year board authorized share repurchase program that began in November of 2019 to repurchase up to $550 million of our outstanding common stock and under that program, we repurchased a total of $22 3 million shares within two years for 500.

Na Sun: Moving to earnings per share, we now expect diluted earnings per share of between $2.60 and $2.70 from our prior guidance of $1.55 and $1.70 due to the income tax benefit we recorded in the third quarter. And lastly, we are raising the low end of the range for non-GAAP diluted earnings per share to $1.90 to $2.00 per share, up from our prior guidance of $1.85 to $2.00 per share. This new range would represent 70% to 79% growth over 2020. I'll now turn to slide 11 for a summary of our approach to value creation and capital return and our strong progress to date. We have been consistent regarding our balanced capital allocation priorities.

$50 million at an average price per share of $24 72.

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

Thank you Elaine.

Like to begin by thanking the terrific halos I'm team our partners and collaborators for all of the hard work that resulted in this very strong performance with growing revenues growing operating income and an expanding pipeline that's going to fuel our near and long term growth.

As summer arrives on slide 12, we continue to expect multiple important value driving events in 2021, we.

We expect the launch momentum will continue for doors likes I've seen says go at with broadening adoption and Houston, the already launched markets and through additional global launches.

We predict three additional new phase one study starts resulting in 16 products in development by the end of this year, including three products in phase III.

Na Sun: These include maintaining a strong balance sheet, capital return via share repurchases, and commitment to driving both internal and external growth. We have a strong balance sheet with cash and cash equivalents as of the end of the third quarter of $815.9 million. We anticipate the strong projected free cash flow driven by our enhanced franchise will support both our commitment to capital return, as well as funding both internal and external growth via M&A.

In addition, we will continue to work to create new revenue growth opportunities seeking to sign new collaboration agreements advance new targets into development and seek new new co formulation patents submissions and finally, we will continue to seek to identify a platform technology that can add to our long term revenue growth.

With that I would like to thank you for joining us today, and we would now be delighted to take your questions. Operator would you. Please open the call for questions.

At this time I would like to remind everyone in order to ask a question simply press star followed by the number one on your telephone keypad pause for just a moment to compile our Q&A roster.

Na Sun: And in support of our continued commitment to capital return, in the third quarter of 2021, we repurchased 1.6 million shares of common stock in open market purchases for $64.7 million at an average price per share of $41.40. Furthermore, in October of 2021, we repurchased an additional 0.3 million shares of common stock for $10.3 million. So with those purchases, we have fully completed our three-year board-authorized share repurchase program that began in November of 2019 to repurchase up to $550 million of our outstanding common stock. And under that program, we repurchased a total of 22.3 million shares within two years for $550 million at an average price per share of $24.72.

Your first question comes from the line of Charles Duncan with Cantor Fitzgerald. Your line is open.

Yeah. Good afternoon, thanks for taking the question.

And Alain really great quarter congratulations.

Thank you Charles.

So quick question on <unk> I guess.

Can I ask you to wax.

I guess polenta here regarding <unk> conversion rate.

In your in your mind is there any credible reason.

That conversion rate could be 100% and then maybe a little bit more practical you mentioned commercial milestone the second one Matt.

Helen I. Torley: So with that, I'll now turn the call back to Helen. Thank you, Elaine. I'd like to begin by thanking the terrific Halozyme team, our partners, and collaborators for all of the hard work that resulted in this very strong performance, with growing revenues, growing operating income, and an expanding pipeline that's going to fuel our near and long-term growth. As summarized on slide 12, we continue to expect multiple important value-driving events in 2021.

This year about $50 million from revenue to you would you anticipate any additional commercial milestones beyond the royalties that you're earning in the next say 12 months from this from this program.

Yeah. Thanks, Jonathan Thanks for the question on doors, Alexia, we're obviously delighted to see the 72%.

<unk> rate or a share of sales in the United States and we know the rest of world is seeing some very strong performance as well.

Helen I. Torley: We expect launch momentum to continue for Darzalex SC and Fezgo, with broadening adoption and use in the already launched markets and through additional global launches. We predict three additional new phase one study starts, resulting in 16 products in development by the end of this year, including three products in phase three. In addition, we'll continue to work to create new revenue growth opportunities, seeking to sign new collaboration agreements, advance new targets into development, and seek new co-formulation patent submissions.

I think it was a lot of growth there.

It's going to get a lot higher than 72%.

Maybe the occasional patient who does not want to receive subsidy you.

There may be some patients who like going to the infusion suites and spending time, there, but that is a tiny minority and so we do see the opportunity for continued growth at well beyond the current share and I would also just point out that the overall pie is also getting bigger.

<unk> seen them dark <unk> overall as a product is exceeding analysts' expectations due to increased penetration into some of the earlier lines of therapy with I think some pretty remarkable share growth reported by J&J. So not only is the conversion rate continuing the pie is getting bigger. So this is why we are still excited about.

Helen I. Torley: And finally, we'll continue to seek to identify a platform technology that can add to our long-term revenue growth. With that, I would like to thank you for joining us today, and we'd now be delighted to take your questions. Operator, would you please open the call to questions?

Operator: At this time, I would like to remind everyone, in order to ask a question, simply press star followed by the number one on your telephone keypad and pause for just a moment while we compile our Q&A roster. Your first question comes from the line.

That continued growth.

We're delighted with the $50 million in milestones that Chaz I think in the next period youre going to see more growth coming from predominantly from the royalty revenue growth.

Okay and one one last question.

As chip.

Unknown Attendee: Yeah, good afternoon. Thanks for taking the question. Helen and Elaine, really a great quarter. Congratulations. Thank you, Gerald. So, quick question on.

Your mod.

<unk> two.

<unk> three launches what would you like to see out of the upcoming data read and sub Q data mid next year that could.

Unknown Attendee: Darzalex, I guess I'm gonna ask you to wax, I guess, poetic here.

Good.

Provide your conviction that that could be another.

Unknown Attendee: Regarding Darcellex conversion rates.

<unk>.

Really really a value added value, creating a formula.

Unknown Attendee: In your mind, is there any credible reason?

Unknown Attendee: That conversion rate couldn't be 100%. And then maybe a little bit more practical, you mentioned the commercial milestone, the second one met this year, which brought about $50 million in revenue to you.

Relative to the IV form much like ours at sea is relative to <unk> IV.

Yeah, I think obviously, we are well the trial is designed to show non inferiority.

Unknown Attendee: Would you anticipate any additional commercial milestones beyond the royalties that you are already receiving?

With regard to lowering ITT level. So clearly that's the first thing, but I think what we want to see is a short simple subcutaneous injection test so that some patients or their caregivers our health care professionals are able to administer this out without interrupting the patient's life and giving the patient the opportunity to to go about it.

Helen I. Torley: Yeah, thanks, Chas. And thanks for the question and Doris Alex.

Helen I. Torley: Yeah, we're obviously delighted to see the 72% conversion rate or share of sales in the United States, and we know the rest of the world is seeing some very strong performance as well. I think there's a lot of growth there, Chas. It's going to get a lot higher than 72%. There may be the occasional patient who does not want to receive SubQ. There may be some patients who like going to the infusion suites and spending time there, but that is a tiny minority.

Our life without having to worry about them longer IV infusions. So those are the two things I'd be looking for from the data.

Okay, we will be looking for it to thanks for taking the question Hey, great quarter. Thank you.

Your next question comes from the line of Matthew Luchini with BMO. Your line is open.

Hi, good afternoon. Thank you so much for taking the questions and congrats on the quarter.

Helen I. Torley: And so we do see the opportunity for continued growth well beyond the current share. And I would also just point out that the overall pie is also getting bigger. If you've seen them, Doris Alex overall as a product is exceeding analyst expectations due to increased penetration into some of the earlier lines of therapy with, I think, some pretty remarkable share growth reported by J&J. So not only is the conversion rate continuing, but the pie is getting bigger.

I guess, maybe on guidance first so raise the bottom end, but maintaining the top end.

Just would like to get a little bit more perspective on a little bit more color on your perspective on the business and for year end.

Maybe where you see areas of potential conservatism within your outlook and then secondarily it sounds like.

I think this is the first time, you've mentioned cell therapy as a potential opportunity for <unk>. So would love to just get a little bit more.

Color on how you see that.

Helen I. Torley: So this is why we're so excited about that continued growth. We are delighted with the $50 million in milestones, Chas. I think in the next period, you're going to see more growth coming predominantly from royalty revenue growth. Okay, and one last question.

Particular type of product fitting into the broader portfolio and how much of a priority. It is relative to say antibodies or even small molecules.

Alright, well, let me take the second part first and then I'll ask Ilene to comment on.

On the guidance.

With regard to cell therapy. So yeah, I think it's fair to say, it's a minority of the conversations we're having definitely the conversations with them by specifics and monoclonal antibodies, probably the largest followed by small molecules and then cellular therapy, but I do think of cellular therapies are advancing more and more in the clinic.

Unknown Attendee: Jamad, related to, you know, the wave.

Unknown Attendee: [inaudible]

Unknown Attendee: What would you like to see out of the upcoming data read in sub-Q, data read mid-next year that could provide you conviction that FCART could be another, you know, really a value added, value creating formula relative to the IV form, much like DARSA-SC is relative to DARSA-IV?

Matt we're going to have companies come in and want to discuss with US what are the potential benefits could be with enhance.

Helen I. Torley: Yeah, I think obviously we are. The trial is designed to show non-inferiority with regard to lowering IgG levels, so clearly that's the first thing. But I think what we want to see is a short, simple, subcutaneous injection test so that patients or their caregivers or healthcare professionals are able to administer this without it interrupting the patient's life and giving the patient the opportunity to go about their lives without having to worry about longer IV infusions. So those are the two things I'd be looking for from the data. Okay, we'll be looking forward to that. Thanks for taking the time to answer the question. Great quarter!

And so we're delighted with the versatility of the platform I think that was you know what I think we're demonstrating more and more is the bridge of types of molecules that enhance can work with them and I would say the <unk> deal certainly spurred people's imagination on with people thinking about small molecules in particular thinking about longer.

<unk> of therapy, and how that could.

The patient experienced potentially even improve compliance and so we're in a very exciting phase for in hands with a broader type of opportunities being discussed with us and look forward to hopefully translating some of those into new deals as we go forward with.

Operator: Your next question comes from the line of Matthew Lucchini with BMO. Your line is open.

With that I'll turn it over to Elaine to comment on the guidance.

Unknown Attendee: Hi, good afternoon. Thank you so much for taking the questions and congratulations on the quarter. I guess maybe on guidance first. So raise the bottom end, but maintain the top end.

Thanks Helen.

So with respect to our guidance I think we try to be very thoughtful as we formulate that guidance and we it also reflects our confidence in the growth prospects of of our of our business model as well as the strong year to date results what I would.

Unknown Attendee: Just would like to get a little bit more perspective on, a little bit more color on your perspective on the business and on your end, and maybe where you see areas of potential conservatism within your outlook. And then secondarily, you know, it sounds like this is the first time you've mentioned cell therapy as a potential opportunity for enhancement, and we'd love to just get a little bit more color on how you see that. Particular type of product fitting into the broader portfolio and how much of a priority it is relative to, say, antibodies or even small molecules. All right.

Remind folks is that we did raise guidance by $50 million in the second quarter and we're pleased that given the strong results in the third quarter, we were able to again raise guidance by increasing that lower end of the range in terms of total revenues a recall thats an amalgamation of a number of components.

Some of which can fluctuate period to period product sales that you may have noted in my comments I'm can fluctuate based on.

Sort of orders from from partners as well as safety stocking of our partners.

Helen I. Torley: Well, let me take the second part first, and then I'll ask Elaine to comment on the guidance. With regard to cell therapy, yes, I think it's fair to say it's a minority of the conversations we're having. Definitely the conversations with bispecifics and monoclonal antibodies, probably the largest, followed by small molecules and then cellular therapy. But I do think cellular therapies are advancing more and more in the clinic. Matt, we're going to have companies come and want to discuss with us what potential benefits Enhance could have.

And we certainly saw very strong performance in the last couple of quarters in terms of increase in product sales milestones also can fluctuate period to period as.

As Helen noted, we're very pleased to see the continued strong growth and momentum of George likes bass Pro which.

<unk> allowed us to achieve our two additional commercial milestones in the second and third quarter.

But those can be obviously.

You know that those fluctuate.

So given everything in that full picture.

We feel very confident in the in.

Helen I. Torley: And so we're delighted with the versatility of the platform. I think that was, you know, what I think we're demonstrating more and more is the breadth of types of molecules that Enhance can work with. And I would say the VEVE deal certainly spurred people's imaginations on, with people thinking about small molecules and, in particular, thinking about longer duration of therapy and how that could improve the patient experience, potentially even improve compliance.

In the in the revenue guidance and I know in particular.

Royalties, which are the recurring component of our of our of our revenues are have strong growth potential and is reflected in our guidance.

Okay.

Alright, thanks for taking.

Taking the questions.

Your next question comes from the line of Roy Buchanan with JMP Securities. Your line is open.

Hey, guys I'm, sorry, it's actually Jason.

So just a couple of questions.

Helen I. Torley: And so we're in a very exciting phase for Enhance with a broader type of opportunities being discussed with us, and we look forward to hopefully translating some of those into new deals as we go forward. With that, I'll turn it over to Elaine to comment on the guidance. Thanks, Helen.

Kind of an interconnected here.

As you wrapped up the share repurchase program.

Can you just talk about your priorities priorities for shareholder capital return is it another repurchase obviously M&A comes into play here. So.

One priority stack above another and then as you think about M&A.

To what extent are you willing to do R&D work and thinking about this both from the spend and the tax efficiencies, but also your operating efficiencies. This is there any scenario, where you grow the organization or the on the flip side are there any opportunities for further opera.

Na Sun: So, with respect to our guidance, I think we try to be very thoughtful as we formulate that guidance, and it also reflects our confidence in the growth prospects of our business model, as well as our strong year-to-date results. What I would remind people is that we did raise guidance by $50 million in the second quarter, and we're pleased that, given the strong results in the third quarter, we were able to, again, raise guidance by increasing that lower end of the range.

<unk> efficiencies.

Yeah, I'll start with the second part of the question and then I'll ask Elaine to talk about the capital return.

When we made the transition of the company in 2019, Jason We said, we were moving away from being a high risk R&D organization, where we're waiting for a card turnover further results of a clinical study for example, and so that is not the type of M&A opportunity. We're looking at we're looking at platforms that are.

Na Sun: In terms of total revenues, recall that it's an amalgamation of a number of components, some of which can fluctuate period-to-period. Product sales, as you may have noted in my comments, can fluctuate based on the sort of orders from partners, as well as safety stocking of our partners. So, given everything in that full picture, you know, we feel very confident in the revenue guidance, and I know, in particular, royalties, which are the recurring component of our revenues, have strong growth potential and are reflected in our guidance.

Somewhat are largely derisked.

Where we can take our skills and license it to other types of companies and so it might there be a small amount of additional.

Research you do with regards to that platform just like within hands. There is a small amount, but we definitely do not want to go back into the clinical development high R&D risk business that that is not what we plan to do.

We are always very focused on assuring we are running the business as profitably as possible, but again in hands is such a an attractive large business. There are certain investments, we make because we see a long and durable revenue stream and if those investments support that then that's going to make sense. So it's always a balance of being prudent in.

Operator: All right, thank you for taking the question. Your next question comes from the line of Roy Buchanan with JMP Securities. Your line is open.

Unknown Attendee: Hey guys, it's actually Jason. So just a couple questions that are kind of interconnected. As you wrap up the share repurchase program, can you talk about your priorities for shareholder capital return? Is it another repurchase? Obviously, M&A comes into play here, so does one priority stack above another? And then, as you think about M&A, to what extent are you willing to do R&D work, and thinking about this both from the spend and the tax efficiencies, but also your operating efficiencies? Is there any scenario where you grow the organization, or, on the flip side, are there any opportunities for further operating efficiencies?

Making sure we are investing for future growth, but making sure. Every dollar is spent wisely I'm sure you expect Matt from a Scott. So there you are.

I will turn it over to Ilene, though just to talk about the priorities for capital returns.

Yes.

Thanks, Sean So as you noted we completed our $550 million three year buyback program, we did that one year early.

And really that's been part of our commitment to capital return and our confidence in the long term value potential of <unk>.

We do what I would emphasize is that we think our enhanced business model because it is capital efficient in our and an early in its growth cycle really is able to be supportive of a balanced capital allocation strategy that can fund both capital return as well as funding internal and external.

Helen I. Torley: Yeah, I'll start with the second part of the question. Then I'll ask Elaine to talk about the capital return. You know, when we made the transition of the company in 2019, Jason, we said we were moving away from being a high-risk R&D organization where we're waiting for a card turnover for the results of a clinical study, for example. And so that is not the type of M&A opportunity we're looking at

With respect to our future plans, it's a little premature to comment, but we would anticipate providing additional perspective, when we provide guidance early next year.

Helen I. Torley: We're looking at platforms that are somewhat or largely de-risked, where we can take our skills and license them to other types of companies. And so might there be a small amount of additional research you do with regard to that platform? Just like with Enhance, there is a small amount, but we definitely do not want to go back into the clinical development, high R&D risk business. That is not what we plan to do.

Got it alright, thanks for taking my questions.

Thanks, Susan Thanks, Jason.

Your next question comes from the line of Michael <unk> with the Jordan Your line is open.

Hi, guys congrats on the great quarter and thanks, everyone for taking my question just two for me.

Number one just on slide number six I was hoping you could elaborate more on the pre phase one starts.

That are to be expected in Q4. So obviously Alzheimer's is top of mind. These days is there any update there hasnt been any updated conversations on the possibility of a subcutaneous Alzheimer's partnering opportunity.

Helen I. Torley: We are always very focused on ensuring we're running the business as profitably as possible. But again, Enhance is such an attractive large business; there are certain investments we make because we see a long and durable revenue stream. And if those investments support that, then that's going to make sense. So it's always a balance of being prudent and making sure we are investing for future growth while making sure every dollar is spent wisely. I'm sure you expect that from a Scot, so here you are. I'll turn it over to Elaine now to talk about the priorities for capital return. Thanks, Helen.

And similarly.

I'm not sure I'm going on our <unk> phase III call. They mentioned that the bolus pemphigoid indication.

That phase one trial was going to start before the end of the year I was wondering if that also could be part of the.

Three phase ones.

Regarding <unk> I realize it's still early days.

Any thoughts on the uptake of FESCO.

And any incremental insight into its launch compared to <unk>.

At the same point in time, thank you.

Right. So Michael I'll start with the three phase III zone until several of them are <unk>, we're not in a position to talk about them, but we can say that as <unk> had mentioned at the start of the year. It was our goal to start one of their clinical studies with Cabo take or for this year <unk> is one of those studies, but the other two.

Na Sun: So, as you noted, we completed our $550 million, three-year buyback program. We did that one year early. And really, that's part of our commitment to capital return and our confidence in the long-term value potential of Halozyme. With respect to our future plans, it's a little premature to comment, but we would anticipate providing additional perspective when we provide guidance early next year.

The partners have not made those public so we cannot announce them and it's likely we will be able to talk about those.

Sometime early in the first quarter of next year. So you'll learn what they are at that point in time.

Unknown Attendee: Got it. Great. Thanks for taking the questions.

[noise] bolus Pemphigoid is not one of the current indications that we're studying with organics I can answer answer that question.

Helen I. Torley: Thanks, Jason.

Operator: Your next question comes from the line of Michael DiFiore with Desjardins. Your line is open.

And with regard to Alzheimer's.

Unknown Attendee: Hi guys, congrats on a great quarter and thanks so much for taking my questions. Just two for me.

I've mentioned on the last call I believe that the amyloid beta target is still available.

Unknown Attendee: Number one, just on slide number six, I was hoping you could elaborate more on the three phase one starts that are to be expected in Q4. So obviously, Alzheimer's is top of mind these days. Is there any update or have there been any updated conversations on the possibility of a subcutaneous Alzheimer's partnering opportunity? And similarly, not too long ago on Argenix's phase recall, they mentioned that the Bulleth-Pemphigo identification, that phase one trial is going to start before the end of the year.

And so we are we will be excited to talk with people with regard to that target, but at this point in time.

<unk> is available.

Did I address all your questions on the studies.

Yes, thanks, so much.

Alright that says go.

It's clear and the doors Alack side got off to a stronger he got off to an explosive start frankly, we did not expect even that Starz lakes would get sucked in explosive start, particularly in the U S and in advance of the permanent J code and what we've seen with fans go with a lot more of a traditional new.

Unknown Attendee: I was wondering if that also could be part of the three phase ones. Separately, regarding PheSGO, I realize it's still early days, and any thoughts on the uptake of PheSGO and any incremental insight into its launch compared to Darzalex at the same point in time. Thank you.

Yeah.

Clonal antibody drug where there is just a period of time, where all of the logistics needed to get in place in the United States and it's continuing with that trend outside the U S where we're delighted with the progress we're seeing it's still early in the launch rollout with only a few countries haven't got reimbursement and launch, but we're already seeing some very nice contribution.

Helen I. Torley: Right. So, Michael, I'll start with the three Phase 3s now.

Helen I. Torley: Until several of them are announced, we're not in a position to talk about them. But we can say that, as Vive had mentioned at the start of the year, it was their goal to start one of their clinical studies with cabotegraphy this year. Cabotegraphy is one of those studies.

Outside the United States, and we do predict that overtime, we're going to see continued growth by more countries in Europe and rest of world in particular, but did continued adoption and broadened adoption in the other launch markets as well so.

Helen I. Torley: But the other two, the partners have not made those public, so we cannot announce them. And it's likely we'll be able to talk about those sometime early in the first quarter of next year, so you'll learn what they are at that point in time. Bullis pentaglide is not one of the current indications that we are studying with organics.

I'd say doors all ex explosive.

So more of a slower growth story, but we will see continued growth over the long term as it expands in terms of countries and accounts.

Great. Thanks, so much.

Thank you.

Your next question comes from the line of I need to just chat with Aaron Berg. Your line is open.

Helen I. Torley: I can answer that question. And with regard to Alzheimer's, as I mentioned on the last call, I believe that the amyloid beta target is still available. And so we will be excited to talk with people about that target. But at this point in time, it remains available. Did I address all your questions about the studies? Yes, thanks so much. All right.

Hi, good afternoon, congrats on the quarter and thanks for taking my questions.

I just have a couple here.

Tun you spoke about the 10 candidates in phase one potentially 13 by end of the year.

Off these are how many do you think will kind of move into the phase III by 'twenty two I'm, sorry, 23, and then also we know that dogs helix has been a franchise so quite a wide profile.

Helen I. Torley: Now, Fezgo, you know, it's clear that Darzalex got off to a stronger, got off to an explosive start. Frankly, we did not even expect that Darzalex would get such an explosive start, particularly in the U.S. and in advance of the permanent J code. What we've seen with Fezgo is a lot more of a traditional new monoclonal antibody drug where there is just a period of time when all of the logistics needed to get in place in the United States, and it's continuing with that trend.

The candidates that are in phase G. Now.

Do you have any I guess any of those have the potential to have a broad labeling.

Deutsche Bank.

Okay.

Let me begin by saying with regard to the current phase one study was actually a very active discussion at the moment with our partners to look first of all to see how many are going to be moving into phase III in 2022, and then to estimate for 2023. So I can't give you an exact number for that Anita, but but I would say that by 2023.

Helen I. Torley: Outside the U.S., we're delighted with the progress we're seeing. It is still early in the launch rollout with only a few countries having got reimbursement and launched, but we're already seeing some very nice contributions outside the United States, and we do predict that over time we're going to see continued growth by more countries in Europe and the rest of the world, in particular, but continued adoption and broadened adoption in the other launch markets as well. So I'd say Darzalex is explosive, and Fezgo is more of a slower growth story, but we will see continued growth over the long term as it expands in terms of countries and accounts.

My projection would be the majority of these products. If the company does decide to move forward with them will be in phase III development that would be the traditional timeline.

And the ones that would be more likely to start in 2023 are the ones that have more recently started a phase one so that would be the pattern. We generally see so I expect the majority by 2023.

With regard to phase III candid I'm, sorry, the current phase III candidates and.

Which ones we're excited about.

Operator: Your next question comes from the line of Anita Deschant with Barenburg. Your line is open.

With getting a broad label.

I thank them.

For both Opdivo and <unk> centric, what the FDA said at the Rituxan Hi, Fellow <unk> was you don't necessarily need to do a separate study for each and every indication that each of our partners goes to have a separate conversation with the FDA and their clinical development program is designed based on the agreement they reached with the FDA that remains part.

Unknown Attendee: Hi, good afternoon. Congratulations on the quarter, and thanks for taking my questions. I just have a couple here.

Unknown Attendee: Helen, you spoke about the 10 candidates in Phase 1, potentially 13 by the end of the year. Of these, how many do you think will kind of move into Phase 3 by 22? Sorry, 23.

And our confidential, but I would say that definitely.

Helen I. Torley: Also, we know that Darzalex has become a franchise, quite a wide profile. Of the candidates that are in Phase 3 now, do you have any idea if any of those have the potential to have a broad labeling like Darzalex? Let me begin by saying, with regard to the current Phase 1 studies, there is actually a very active discussion at the moment with our partners to look, first of all, to see how many are going to be moving into Phase 3 in 2022 and then to estimate for 2023.

Good possibility that that while our current partners are each studying one indication for the solid tumors. They will get a broader set of solid tumor indications should there be no FDA questions related to safety because that is always the question that's going to be there. So we'll have to wait and see the data and it will depend on the.

<unk> partners are having but certainly that is the path and the direction. The FTE were given at giving at the Rituxan high sell out Oh deck. So look forward to that particular mode. As it is a different circumstance because it's still a development product. They are doing sub two studies in four separate indications in part.

Helen I. Torley: So, I can't give you an exact number for that, Anita, but I would say that by 2023, my projection would be that the majority of these products, if the company does decide to move forward with them, will be in Phase 3 development. That would be the traditional timeline, and the ones that would be more likely to start in 2023 are the ones that have more recently started Phase 1. So, that would be the pattern that we generally see. And I expect the majority by 2023.

Because they don't have already approved IV to bridge, two but what's very exciting about F cartage and mod.

Is the strong potential obviously here in terms of the market opportunity and that <unk> is integrated sub two really right from the start with some indications like see IDP only being developed as a sub Q not as an IV and.

Helen I. Torley: With regard to the current Phase 3 candidates and which ones we're excited about getting a broad label, I think for both Updevo and for Ticentric, what the FDA said at the Rituxan HiSela ODAC was that you don't necessarily need to do a separate study for each and every indication. Now, each of our partners goes to have a separate conversation with the FDA, and their clinical development program is designed based on the agreement they reach with the FDA.

And so this is really the model that we're excited about where we're talking to more partners about as potentially moving sub Q earlier, even in their pipeline and applying it more broadly and <unk> is a Super example of a company that has really embraced us.

And hands into their portfolio.

Great that is very helpful. I just had one more clarification I know you mentioned the eschar.

So she I D. P is the only being Delaware SC.

It is the most possibility of other candidates to like a.

Helen I. Torley: That remains partner confidential, but I would say there's definitely a good possibility that while our current partners are each studying one indication for solid tumors, they will get a broader set of solid tumor indications should there be no FDA questions related to safety. Because that is always the question that's going to be there.

Actually the ones that are being newly developed to just be sort of be delap at this eight pills and not not the IV route at all.

Yes, the other partners are certainly contemplating that.

In the past, there's just a little bit different when you do sub Q right from the start where you were.

Helen I. Torley: So, we'll have to wait and see the data, and it will depend on the conversations the partners are having. But certainly, that is the path and the direction the FDA gave at the Rituxan HiSela ODAC meeting. So, I look forward to that.

We're seeing our partners do a phase one study to pick the dose and then they do a seamless phase II into phase III as opposed to going straight into phase III, because they need to generate generally a broader set of data for safety.

Unknown Attendee: F-Cartrigimod is a different circumstance because it's still a development product. They are doing sub-Q studies in four separate indications, in part because they don't have already approved IVs to bridge to. But what's very exciting about F-Cartrigimod is the strong potential, obviously, here in terms of the market opportunity, and that their GenX has integrated sub-Q really right from the start, with some indications like CIDP only being developed as a sub-Q, not as an IV.

But it's a.

Similar just a slightly larger clinical development program, if youre doing SC right from the start.

But definitely a conversation that's very active with a number of partners today and potential partners.

That's very helpful. Thanks, a lot.

Thanks Anita.

Your next question comes from the line of Geoffrey Porges with SBB. Your line is open.

Hello. This is Dan <unk> on for Jeff two questions for US. Please first can you provide an update on whether any new options were exercised during the quarter. Besides what you mentioned for Janssen and where any additional new contract signed and then second were there any targets for which options expired and.

Unknown Attendee: And so, this is really the model that we're excited about, and we're talking to more partners about potentially moving sub-Q earlier, even in their pipeline, and applying it more broadly. And our GenX is a super example of a company that has really embraced and integrated hands into their portfolio. Great, that is very helpful. I just have one more clarification. I know you mentioned that FGAR for CIDP is the only one being developed as a SC.

The associated rights were returned to you. Thank you.

Yes.

In terms of new options exercised and by that I.

I think Dan you mean, new nominations are being announced by our partners or and I would say no. We generally do announce for you win new nomination. So to my recollection. There was just the the Janssen one. This this quarter there were no new collaboration agreements in the in the third.

Unknown Attendee: Is there more possibility of other candidates, especially the ones that are being newly developed, to just be sort of developed as SC itself and not the IV route at all? Yes, other partners are certainly contemplating that. The development path is just a little bit different when you do Sub-Q right from the start, where we're seeing our partners do a Phase 1 study to pick the dose, and then they do a seamless Phase 2 into Phase 3, as opposed to going straight into Phase 3, because they need to generate, generally, a broader set of data for safety.

Quarter again, we generally announce those and we did have the return of one option I'm trying to remember if it was exactly in the quarter, but there has been one option.

Unknown Attendee: But it's a... Similar, just a slightly larger clinical development program if you're doing SC right from the start, but definitely a conversation that's very active with a number of partners today and potential partners. That's very helpful, thanks.

Returned by a partner and that's great news because if the partner isn't moving forward with it per our contracts. We are often able to license that to another partner who may have interest in that so.

Hopefully that gives you a sense of the flow we've seen in the last quarter.

That's helpful. Thank you very much.

Operator: Your next question comes from the line of Jeffrey Porges with SBB. Your line is open.

Your next question comes from the line of Daniel Wong with Jpmorgan. Your line is open.

Unknown Attendee: Hello, this is Dan Tarjan on behalf of Jeff. We have two questions for you, please. First, can you provide an update on whether any

Hi, This is Daniel for Jessica Fye, Thanks for taking my question at.

At a high level, how should we think about the push and pulls affecting the royalty revenue as we look ahead into 2022, and then as you move to small molecules into the phase III programs do you expect the endpoints to revolve around PK or do you expect and need to demonstrate benefit on clinical endpoints.

Unknown Attendee: And second, were there any targets for which options expired and the associated rights were returned to you? Thank you.

Helen I. Torley: Yes, in terms of new options exercised, and by that I think, Dan, you mean new nominations being announced by partners, or, and I'd say no, we generally do announce for you when new nominations, so to my recollection, there was just the Janssen one this quarter, there were no new collaboration agreements in the third quarter, again, we generally announce those, and we did have the return of one option, I'm trying to remember if it was exactly in the quarter, but there has been one option returned by a partner, and that's great news, because if the partner isn't moving forward with it, per our contracts, we are often able to license that to another partner who may have interest in that, so hopefully that gives you a sense of the flow we've seen in the last quarter. That's helpful. Thank you very much.

Yeah, well, let me ask Elaine just to talk about.

2022, I'm afraid I'll just say in advance she is not going to be able to say terribly much because we werent doing our guidance, but I mean, any any comments on the push and pulls in royalty revenues.

I would just say, we'll be providing more guidance.

When we provide.

Provide our guidance at the beginning of next year, what I can say is that as I noted in my earlier comments. There are some components of revenue that can fluctuate period to period product sales and milestones.

And then and then royalties obviously the recurring component of our revenues and there there's.

Operator: Your next question comes from the line of Daniel Wohl with J.P. Morgan. Your line is open.

The the the.

Gross.

Drivers really from our wave two launch products, notably <unk> legs and increasingly from FESCO as well as you noted in the third quarter of this year and those growth in our wave two launch products are offsetting some of the downward pressure from the legacy <unk>.

Unknown Attendee: Hi, this is Daniel from Jessica Fye. Thanks for taking our question. At a high level, Helen, how should we think about the push and pulls affecting royalty revenue as we look ahead into 2022? And then, as you move small molecules into phase three programs, do you expect the endpoints to revolve around PK, or do you expect a need to demonstrate benefit on clinical endpoints? Yeah, well, I'll let you.

Products.

Our wave one launches are notably subdue herceptin and sub Q, rituxan, which faced Biosimilar competition, but clearly are the big drivers of royalties are our wave two launches and we continued to have.

Unknown Attendee: Yeah, well, let's ask Elaine just to talk about 2022. I'm afraid, I'll just say in advance, she's not going to be able to say terribly much because we aren't doing our guidance.

Evidence of strong growth.

Notably <unk> and increasingly invesco.

But more to come in early 'twenty two.

Na Sun: But Elaine, any comments on the push and pulls and royalty revenues? I would just say we'll be providing more guidance when we provide our guidance at the beginning of next year. What I can say is, as I noted in my earlier comments, there are some components of revenue that can fluctuate from period to period, product sales, and milestones. And then royalties are obviously the recurring component of our revenues.

Thankfully and Daniel we still are pretty early we've only developed in the past a few small molecules, but I would say from our expectations.

We do expect the FDA will focus on PK, absolutely Oh to show non inferiority. If the goal is a bridging study to an already approved drug with regard to efficacy in the majority over approvals to date there has been.

Some form of efficacy endpoints, such as response rate for multiple myeloma, but we did see as an example for <unk>. There was no efficacy primary endpoint efficacy with secondary and so I think this is a case by case discussion with the FDA. It will depend on the overall profile of the drug its a risk benefit and so I I think it's <unk>.

Na Sun: And there are growth drivers really from our Wave 2 launch products, notably Darzalex and increasingly from Fesco, as you noted in the third quarter of this year. And that growth in our Wave 2 launch products is offsetting some of the downward pressure from the legacy products of our Wave 1 launches, notably Sub-Q Herceptin and Sub-Q Rituxan, which are faced with similar competition. But clearly, the big drivers of royalties are our Wave 2 launches, and we continue to have evidence of strong growth, notably in Darzalex and increasingly in Fesco, with more to come in early 2022. Thanks, Elaine. And Daniel, we are still pretty early.

More likely than not there'll be some form of demonstration of efficacy, but it's not necessarily a given it'll depend on the profile of the drug.

Great. Thank you very much.

Again, if you would like to ask a question press Star one on your telephone Keypad. Your next question comes from Charles Duncan with Cantor Fitzgerald. Your line is open.

Yeah, Hi, thanks.

Helen and lane for taking the follow up.

Quick question regarding.

The continuation of royalty growth as a function of co formulation patents you mentioned that some had been filed.

Helen I. Torley: We've only developed in the past a few small molecules, but from our expectations, we do expect the FDA will focus on PK, absolutely, to show non-inferiority if the goal is a bridging study to an already approved drug. With regard to efficacy, in the majority of our approvals to date, there have been some form of efficacy endpoints, such as response rate for multiple myeloma But we did see, as an example for Fezgo, that there was no efficacy primary endpoint.

You anticipate being able to say that any any of those are public.

Or granted say that publicly over the course of the next say two years.

Yeah, the timing Chez is not in our control obviously, we're thrilled at the partners did file them it'll be down to the patent office and in part due to the partner strategy. So we can't give you a time for it but as you know we're thrilled to see this progress because of the benefit that has both in terms of.

Helen I. Torley: Efficacy is secondary. And so I think this is a case-by-case discussion with the FDA. It will depend on the overall profile of the drug. It's a risk-benefit analysis. And so I think it's more likely than not there will be some form of demonstration of efficacy, but it's not necessarily a given. It will depend on the profile of the drug.

And next go to extend the duration of time, we get royalties, but also appreciate the time to the step down but I can't give you a time window it'll be on a product by product basis.

I know you probably can't disclose identities, but can you say whether or not any of them are on wave two products.

Operator: Again, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from Charles Duncan with Cantor Fitzgerald. Your line is open.

Yeah, I I can't say that some of it we have a relatively small pool of opportunities in it in terms of the.

Unknown Attendee: Yeah, hi, thanks Helen and Elaine for taking the follow-up. Quick question regarding the continuation of royalty growth as a function of co-formulation patents. You mentioned that some have been filed. Do you anticipate being able to say that any of those are public?

But just thought I would just say that we are excited that our partners are working very hard with us to find that moment of innovation and novelty that we all feel very strongly about has got a very good chance of getting these co formulation patents and we're not done yet I think that's another core thing to hear while these.

Helen I. Torley: or, granted, say that publicly over the course of the next, say, two years. Yeah, the timing, Chas, is not in our control. Obviously, we're thrilled that the partners did file them.

Several partners have moved forward, we continued to be very active with several others and so youre going to see more and more of these co formulation patents being submitted.

Overtime based on the novelty that can be found when there.

Helen I. Torley: It'll be down to the patent office and, in part, due to the partner strategy. So we can't give you a time for it. But as you know, we're thrilled to see this progress because of the benefit this has both in terms of the potential to extend the duration of time we get royalties and also push out the time to step down. But I can't give you a time window. It'll be on a product by product basis.

Co formulated within hands.

Okay last quick question on.

Follow up to previous question someone asked about the beta target in Alzheimer's.

First of all I'm wondering if opus to nuclear is available for Parkinson's disease, and then secondarily when you think about administering antibodies subcutaneously.

Unknown Attendee: I know you probably can't disclose identities, but can you say whether or not any of them are on Wave 2 products?

For that has to be absorbed have to be CNS penetrant do you think that you are able to.

Helen I. Torley: Yeah, I can't say that, Taz, as we have a relatively small pool of opportunities, you know, in terms of that. But I'll just say that we are excited that our partners are working very hard with us to find that moment of innovation and novelty that we all feel very strongly about, has a very good chance of getting these co-formulation patents. And we're not done yet. I think that's another core thing to hear.

I guess use enough in our hands to be able to enable that formulation was one of those two antibody targets.

Yeah Chaz.

I don't think we've tested enough of these molecules to answer your question, but I will say if the goal is to take a product that's already.

IV subcutaneously, we are very confident that and enhance will be able to do that I don't know if you were kind of wondering more about higher concentrations getting into the CNS fluid, we haven't really done that because more of our programs are focused on non inferiority and the ability to deliver them sub Q. So I have strong confidence very strong confidence we can take our.

Helen I. Torley: While these several partners have moved forward, we continue to be very active with several others. And so you're going to see more and more of these co-formulation patents being submitted over time, based on the novelty that can be found when they're co-formulated within the body.

Our product and deliver the.

Therapeutic dose subcutaneously with regard to alpha cynically black.

Unknown Attendee: Okay, last quick question, a follow-up to a previous question someone asked about the A-beta target and Alzheimer's. First of all, I'm wondering if alpha-synuclein is available for Parkinson's disease, and then secondarily, when you think about administering antibodies subcutaneously for, you know, that have to be absorbed, you know, have to be CNS penetrant, do you think that you're able to, I guess, use enough in the hands to be able to enable that formulation with one of those two antibodies

Blanking on if that is the one who is available I have to say jazz obviously, there are a lot of targets out there.

And we are in dialogue with a number of companies on CNS and neurology slash psychiatry type targets I cannot recall exactly how has that been taken by our partner.

Okay very good thanks for taking the follow up.

Thank you.

There are no further questions at this time, Dr. Helen Torley, I will turn the call back over to you.

Helen I. Torley: Yeah, Chaz, I don't think we've tested enough of these molecules to answer your question, but I will say if the goal is to take a product that's already IV subcutaneously, we are very confident that Enhance will be able to do that. I don't know if you were kind of wondering more about higher concentrations getting into the CNS fluid. We haven't really done that because more of our programs are focused on non-inferiority and the ability to deliver them sub-Q, so I have strong confidence, very strong confidence, that we can take a product and deliver the therapeutic dose subcutaneously.

Thank you everybody, we really do appreciate your attention and your continued them support clearly another strong quarter of execution by the terrific team at Haile as I am and our partners and we look forward to this continuing with a very exciting fourth quarter ahead of us as well. Thank you very much look forward to speaking to you next quarter.

Ladies and gentlemen. This concludes today's conference call you may now disconnect.

Please wait the conference will begin shortly.

[music].

Helen I. Torley: With regard to alpha-synuclein, I am blanking on if that one is available, I have to say, Chaz. Obviously, there are a lot of targets out there and we are in dialogue with a number of companies on CNS and neurology slash psychiatry type targets. I cannot recall exactly whether that one has been taken by a partner. Okay.

Okay.

Yes.

[music].

Yeah.

Yeah.

Operator: Okay, very good. Thanks for taking the follow-up. There are no further questions at this time. Dr. Helen Torley, I will turn the call back over to you.

Yeah.

Okay.

[music].

Helen I. Torley: Thank you, everybody. We really do appreciate your attention and your continued support. Clearly, another strong quarter of execution by the terrific team at Halozyme and our partners, and we look forward to this continuing with a very exciting fourth quarter ahead of us as well. Thank you very much. We look forward to speaking to you next quarter.

[music].

Yeah.

Yeah.

Hum.

[music].

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Please wait; the conference will begin shortly.

unknown: [inaudible]