Q3 2022 Halozyme Therapeutics Inc Earnings Call
Please wait the conference will begin shortly.
[music].
Yeah.
Good afternoon. My name is shantou and I will be your conference operator today at this time I would like to welcome everyone to the Halo Xylem third quarter 2022 financial and operating results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer.
Session.
If he would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If he would like to withdraw your question. Please press star one again please.
Please note. This event is being recorded I will now turn the call over to Chonburi Hillard Lyons, Vice President of Investor Relations and corporate Communications. Please go ahead. Thank you operator, good afternoon, and welcome to our third quarter 2022 financial and operating results Conference call. In addition to the press release issued today after the market.
Close you can find a supplementary slide presentation that will be referenced during today's call in the Investor Relations section of our website.
The call will be Dr. Helen Torley, President and Chief Executive Officer, who will provide an update on our business and Nicola Brock Our Chief Financial Officer, who will review our financial results for the third quarter ended September 32022.
On today's call, we will be making forward looking statements I refer you to our SEC filings for a full list of risks and uncertainties during the call both GAAP and non-GAAP financial measures will be discussed the non-GAAP or adjusted financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and slide presentation I will now.
Turn the call over to Helen Torley.
Thank you Tom and good afternoon, everyone I am pleased that our third quarter results continued to reflect both strong financial and operational performance across the business.
I'll begin on slide three and what is excellent news.
I'm delighted to announce that we achieved an all time high quarterly royalty revenue of almost $100 million in the third quarter.
This represents strong growth of 70% over prior year third quarter and continues to demonstrate the strength all of our enhanced business.
Total quarterly revenue was $209 million also a record with strong growth of 80% over same period prior year. Our total revenue growth results from our diversified portfolio, which includes bring enhanced revenues, resulting from royalty and milestone revenue incremental product sales and incremental royalties, resulting from the sale of the papers.
Which utilizes our small growing auto injector and also from sales of divested our specialty commercial testosterone replacement therapy.
We're pleased with the strong momentum in the growing diversification of our revenues.
Over the past several years and supported by the acquisition of <unk> in May we have built a leading subcutaneous drug delivery platform company with a specialty business that has a compelling growth opportunity diversified revenue stream and extended revenue durability, we look forward to leveraging our enhanced capabilities to support current and new partners utilizing in hand.
Our auto injectors and are often getrich, Boston ha with the goal of increasing their product's competitiveness and reducing the burden of treatment for patients.
With a dedicated focus on operational excellence for the combined business, our vision remains to deliver disruptive somebody should significantly improve patient experiences and positively influence outcomes.
Based on strong year to date results, our communication with partners and planned expenditures for the year. We're also reiterating our guidance for 2022 at previously disclosed we expect total revenues of 655 million to 685 billion for the full year 2022.
We expect revenue from royalties to increase greater than 70% year over year to approximately 350 million to $360 million.
I'll now move to slide four and provide more detail on our royalty revenue performance in the quarter.
We're very pleased with the continued robust growth of its high margin recurring revenue stream in the third quarter total royalty revenue was $99 6 million.
Representing 17% growth over the third quarter of 2021, and 17% sequential growth.
These results include our enhanced royalty and the auto injector device royalty stream.
Our wave two products dark like subcutaneous Amfesco continued to drive our overall strong royalty revenue growth.
The robust and rapid adoption of dark likes of cute in U S and Europe demonstrates that adoption shows no real barriers in both geographies.
Fayetteville growing rapidly in Europe demonstrates the acceptance of the fifth sub Q product within house.
Handset key products have clearly shown that they were adopted by payers physicians and patients worldwide.
This bodes well for our wave three four and five product launches.
Moving now to slide five which focuses on dark to light.
Starwood fast growth, which is a subcutaneous version of dark looks in the U S continued its remarkable growth story in Q3, achieving 85% share of total sales of Darling.
And at the same time total dark like sales also continued to demonstrate strong growth.
On their third quarter update call Janssens parent Johnson <unk> Johnson reported worldwide sales of <unk>, including both the IV.
Score of $2 billion.
An increase of more than 38% year over year on an operational basis.
The increase in <unk> sales was driven by share gains in all regions continued strong market growth and continued uptake of fast for the subcutaneous formulation with enhanced.
Also illustrated on this slide is an update on analysts' consensus for <unk> total revenue is now projected to achieve $12 billion in sales in 2025 with strong continued growth driven by increased penetration into the earlier lines of treatment.
I'll move now to <unk>.
On the third quarter call Roche reported strong sales of Fayetteville, a combination of predictor and herceptin for subcutaneous injection for patients with early and metastatic <unk> positive breast cancer.
They will continue to show a strong uptick in Europe , and the U S. Batesville revenue was 526 million Swiss francs for the first nine months of 2022, an increase of 160% year over year.
As it goes faster subcutaneous administration in just minutes compared to Arris was standard intravenous administration has contributed to lower health care costs and use of resources and is rapidly becoming the lead in many markets.
On the third quarter call Roche reported 30% conversion in the early launch countries and stated that they expect <unk> to be an important medicine for years to come.
She's a member of the Roche Group also recently filed for regulatory approval in Japan, which could represent another opportunity for continued <unk> growth.
Moving now to slide six our next wave the potential launches are illustrated here.
Focusing on wave three these products represent the next set of royalty revenue opportunity with potential launch is projected between 2023 and 2025.
<unk> III products, our subcutaneous that particular piece of it.
And if all of them up and <unk>.
Our future growth trajectory is also supported by potential launches of our wave four products in the 2025 to 2027 time frame.
<unk> four is comprised of 11 partner products kind of what you're in ongoing phase one clinical testing or has completed phase one testing.
I'm pleased to note that one of the phase four products Johnson <unk> lab recently advanced into phase III clinical testing.
Slide seven highlights the recent advancements in our wave three products during the third quarter.
In September <unk> announced the submission of a biologics license application or BLA to the FDA for the enhanced enabled subcutaneous <unk> for the treatment of generalized myasthenia gravis.
Particularly <unk> subcutaneous is on track to the first of our wave three potential launches with potential U S approval anticipated in 2023.
British Mod as an intravenous drug which is the brand name <unk> is organic <unk> flagship product and it is being developed as an IV and a sub Q or multiple autoimmune disease indications.
Analysts project multibillion dollar revenue potential for that particular model.
As the intravenous version experts at Yamana has been approved and launched in the U S. Japan and as of September also in Germany for the treatment of adult patients with generalized myasthenia gravis.
On their recent third quarter call Organics noted strong physician and patient demand for both core and reported total quarterly net product revenues of $131 million with 2000 patients on treatment.
In addition to the already submitted BLA application for myasthenia gravis, we are excited to be partnering with organics to evaluate expertise amongst subcutaneous with enhanced in five additional autoimmune indications and expect multiple data readouts projected in 2023, including data and idiopathic thrombocytopenia.
Corporate chronic inflammatory demyelinating polyneuropathy and also efficacy.
I'll move now to Roche Roche is our most experienced partner with enhance and we're delighted that two of our four waves III opportunities are with Roche.
<unk> centric subcutaneous and off premise subcutaneous.
Recently Roche reported that their IV to centric revenues increased 10% to 7 billion Swiss francs for the first nine months of the year demonstrated continued strength for this important product.
We're looking forward to U S and European regulatory submissions for roche's centric with enhanced.
Supporting this in August Roche announced that its phase III study evaluating a subcutaneous formulation of <unk> centric Ortega Linden lab with <unk> in patients with advanced non small cell lung cancer met its co primary endpoint.
The study showed non inferior levels up to centric in the blood on injected subcutaneously compared to intravenous infusion and immunotherapy naive patients with advanced or metastatic non small cell lung cancer for whom prior platinum therapy field.
The safety profile of the subcutaneous formulation with enhanced was also consistent with IV to centric.
Subcutaneous to centric upon approval has the potential to reduce the treatment time for it to centric reached to eight minutes as a subcutaneous delivery down from 30 to 60 minutes for IV treatment.
Moving to <unk> Rossa is experiencing strong recruitment for the phase III trial of subcutaneous <unk> with enhanced unexpected top line data for this trial in 2023.
Octopus as an intravenous treatment. According to roche's remarks on the third quarter update call. She is currently the number one treatment in the U S and EU five for multiple sclerosis, both in terms of total share and new to brand share.
Total revenues for the first nine months were $4 4 billion Swiss francs.
With more than 250000 patients treated globally. Roche also commented that <unk> is experiencing higher persistence and up.
They're multiple sclerosis drugs.
Completing the wave three products BMS continues to progress, but their phase III study of subcutaneous <unk> or vivo utilizing enhanced in patients with renal cell cancer.
<unk> also recently initiated a second phase III study of nimble about subcutaneous with enhanced in patients with melanoma.
In addition, as you may be aware the fixed dose combination of IV and Ebola Marvin relapsed lineup at called <unk> is now approved in the United States and Europe for the treatment of certain patients with advanced melanoma.
We look forward to the results of the Phase one study of subcutaneous administration of <unk> and MF with enhanced and an update on future development plan by Bristol Myers Squibb.
The cumulative revenue opportunity for the wave three products is substantial with analysts' projections for IV and subcutaneous versions, increasing from 19 billion to <unk>.
On the $22 billion to $27 billion in 2025.
Amazon is royalties from this large commercial opportunity will depend upon the timing of approval of the subcutaneous portion within the projected 2023 to 2020 by time window and the speed at peak or conversion to subcutaneous.
Yeah.
I'll move now to our wave for product and slide eight.
Our goal is to continue to expand the number of products in development to advanced products to later stages of development towards regulatory approval and launch.
Our goal for 2022 is to support initiation of at least 10, new studies, including achieving more than six new phase II or phase III trial starts for existing enhanced partner programs and to advance two new products to enter the clinic this year.
I'm pleased to report that we are on track to meet this goal.
Supporting this progress in September Janssen initiated the phase III study of late afternoon.
Eventhough map with enhanced in patients with epidermal growth factor receptor mutated advanced or metastatic non small cell lung cancer.
Also in the third quarter, we recognized $48 million in collaboration revenue the majority related to Bristol Myers Squibb, and Roche progressing toward development events.
We are pleased with the continued progress by our partners with four products in wave three with the potential launch beginning next year in 2023, and a robust set of 11 wafer launch opportunities we have multiple potential growth drivers of robust future royalty revenue growth.
Moving to slide nine our acquisition of <unk> further strengthened our leadership in drug delivery in the third quarter, we had multiple productive discussions with current partners as well as potential partners on enhanced.
Our current small volume auto injectors and also the opportunity to collaborate on a high volume auto injector enable injections of up to 10 millimeters with enhanced.
By combining and innovative auto injector platform with enhanced we see a unique opportunity for patient friendly high volume subcutaneous treatment delivery that can be utilized across the spectrum of disease areas for both small molecule drugs and for biologics.
We currently are conducting feasibility study and expect to have a working prototype of our high volume auto injected by year end.
Then be incorporated into clinical testing.
Our goal remains to expand the number of companies licensing both our enhanced and our auto injector technology.
Let me now turn your attention to our specialty business, which includes <unk> lando, an upturn up well.
We remain focused on accelerating growth at <unk>, our weekly virtually painless subcutaneous testosterone replacement treatment, we just delivered by auto injector.
Every month, we are achieving new weekly high average prescription performance and believe there is still a significant opportunity to grow our share of the total testosterone replacement therapy market today.
To Dimensionalize this each market share point represents more than $20 million incremental sale.
But the growth rate that outpaces. The overall testosterone replacement therapy market. Our plan is to continue to switch patients from intramuscular injections, which can be associated with pain and can require physician or health care practitioner administration.
Intramuscular testosterone represents about 75% of the approximately $8 5 million annual testosterone replacement therapy prescription market volume today.
We also recently launched Orlando or twice a day oral testosterone replacement treatments. Our access team remains focused on gaining and expanding coverage by payers portal Ando.
We expect that our negotiations with the pharmacy benefit managers will be similar in duration to other commercial launches, which can take six months 12 months until access is established.
I'll move to slide 10 note before I hand, the call over to Nicole Let me reiterate our commitment to our strategic growth and capital allocation priorities.
In summary, we expect to enhance our growth by investing in the growth of our drug delivery business and our commercial business. We continued to return capital to shareholders with our share buyback and we will also continue to seek opportunities for external growth, noting that our current focus remains on driving operational excellence, albeit antares.
<unk>.
I'll now turn the call over to Nicole to discuss our third quarter financial results.
Nicole.
Thank you Helen I'll begin on slide 11.
We are excited to report our first quarter, reflecting a full quarter contribution from the <unk> acquisition, which was accretive to Q3 revenue and non-GAAP EPS.
We continue to project that the <unk> acquisition will be accretive to revenue and non-GAAP EPS for the full year of 2022.
Through this acquisition, we added a new platform technology and commercial products adds to revenue and can extend the durability of our revenues while being accretive in the first seven months.
Total revenue for the third quarter was $209 million.
Compared to a $115 8 million in the prior year period.
Year over year increase of 80% was primarily driven by an increase in royalty revenue and the addition of product sales as a result of the <unk> acquisition as.
As well as an increase in revenues under our collaborative agreement due to milestones recognized from BMS and Roche.
Royalty revenue for the third quarter was $99 6 million, an increase of 70% compared to $58 6 million in the prior year period.
Year over year increase was primarily driven by continued strength in uptake from Janssen subcutaneous stars less utilizing enhanced.
Cost of sales for the third quarter were $47 3 million <unk>.
Compared to $18 6 million in the prior year period.
The year over year increase was primarily driven by an increase in product sales as a result of the <unk> acquisition, including adjustments to reflect the amortization of the inventory step up at fair value.
Research and development expenses for the third quarter were $16 7 million.
Compared to $8 5 million in the prior year period.
Selling general and administrative expenses for the third quarter were $34 5 million.
Compared to $13 2 million in the prior year period.
The year over year increase in R&D and SG&A expenses was primarily due to the <unk> acquisition and an increase in compensation expense related to the combined larger workforce.
Operating income was $83 3 million.
<unk> to $75 6 million.
In the prior year period.
Q3, 2022 includes the impact of amortization of intangibles of $27 2 million.
Related to <unk> acquisition.
On a GAAP basis diluted earnings per share was <unk> 44, compared to $1 48 in the prior year period.
On a non-GAAP basis diluted earnings per share was <unk> 74.
Compared to <unk> 55 in the prior year period.
When comparing to the prior year, it's important to note that 2022 is our first year of recording income tax expense.
It's impacted current period, GAAP and non-GAAP diluted EPS by <unk> <unk> per share.
In August we completed the sale of $720 million convertible notes.
We used the proceeds to refinance our floating rate secured bank debt and replace it with unsecured 1% coupon notes.
We also repurchased a majority of the remaining 2024 notes that were significantly in the money.
Yes.
We continue to have access to pro rata bank debt to a revolving credit facility.
In August we increased the size of the revolving credit facility from $350 million to $575 million.
Our balance sheet remains strong with three three times net debt to EBITDA ratio as of September 32022.
Which we expect to reduce to less than three three times by the end of the year.
We continue to execute on our previously announced three year $750 million share repurchase program.
Inclusive of the $150 million accelerated share repurchase initiated in December of 2021, which concluded in June .
In the third quarter, we repurchased two 1 million shares for $90 million.
We also entered into an ASR to repurchase a $110 million and took initial delivery of 2 million shares.
For a total of $350 million repurchased under the plan to date.
With our 2022 repurchases our share buyback program have resulted in the repurchase of 33 million shares in 2019 positively impacting Q3, 2022, non-GAAP EPS by <unk> 14.
Okay.
Moving now to slide 12.
Just on the contributions of <unk> transaction and strong year to date results as well as the latest information from our collaboration partners and planned expenditures for the year.
We are reiterating our guidance for 2022.
As disclosed in our second quarter earnings call. We expect total revenues of $655 million $685 million for the full year 2022.
This includes the projected revenue contributions from the interiors business, which is expected to contribute $115 million to $125 million to.
To the full year guidance.
We expect revenue from royalties to increase by more than 70% over revenue from royalties in 2021 to approximately 315 million to $360 million.
Due to an acceleration in some ways <unk> III and wait for milestone revenue that we had expected in Q4 and have now recognized in Q3, we have achieved the vast majority of milestones expected in 2022.
Collaboration revenues for 2022 are expected to be lower than the level. We achieved in 2021 based on the latest update for expected timing of partner milestone bearing events.
Product sales from 2022 are expected to increase from 2021 due to the contribution of sales from the <unk> acquisition.
We expect operating income of $240 million to $265 million.
Which includes onetime transaction costs of approximately $45 million.
And amortization of approximately $80 million.
Related to <unk> acquisition.
Adjusting for these costs, we expect adjusted operating income of 365 million to $390 million.
We expect GAAP diluted earnings per share of $1 20 to $1 35.
Adjusting for acquisition related costs and other adjustments, we expect non-GAAP diluted earnings per share to be $2 10 to.
The $2 25.
Representing an increase of 5% to 12% over 2021 non-GAAP diluted earnings per share.
With that I'll now turn the call back to Helen.
Thank you Nichole as you heard today, we are continuing to build on the momentum for enhanced and our auto injector and commercial business.
We achieved a new all time high for royalty revenue of nearly $100 million in the quarter.
We achieved a record $209 million in total revenue in the quarter.
And our acquisition is being validated by the progress being made in developing a differentiated large volume of auto injector plus in hand, which is projected to expand our subcutaneous offering current and new partners and to extend the durability of our royalty revenue Youll hear more of this in 2023.
The acquisition also accomplished our goal of diversifying our revenues with the product sales from our small volume auto injector agreement and is the highest it contributing to our third quarter revenues.
I'll close by thanking our halos empty and our partners and collaborators for the strong progress made during the quarter.
Thank you all for joining us today and with that we'd 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. Please press star one our first question comes from Michael Difiore with Evercore ISI. Your line is open.
Hi, guys. Thanks, so much for taking my question and congrats on the quarter just three for me.
Number one on the last call you mentioned that the Halo was going to reach out to potential partners to promote your new suite of auto injector offerings any any color on the progress made on outcomes achieved on this front.
Second question is just thinking through the subcutaneous <unk> commercial opportunity.
Granted that can simply from Novartis is administered sub Q1's, mostly student about half the sales and volume of that of IV <unk> and my question is should we expect a similar trajectory for subcutaneous <unk> or with sub Q or OCA versus potential less frequent dosing really matter here in <unk>.
Sales in that regard.
My last quick housekeeping question is that beginning a lot of questions from investors on the potential impact of Halo, assuming that makena will be pulled from the market. Thank you.
Thanks, Mike I'll begin with the update on the partners.
Partners and potential new partners that Felipe on the auto injector is on the auto injectors on hand, I can say that we are engaged in multiple calls and there is a lot of interest, particularly on the higher volume approach as there is no way to deliver volumes of fiber miles on a follow up today.
Could you using an auto injector so.
I can just say the conversations are going well. There's interest is good recognition. This is a differentiated approach.
And stay tuned as we continue to work on our prototype and hopefully next year are in a position to move forward into more in vivo testing of the effects are.
Our new auto injector.
Moving to subcutaneous Okra base I think if we think about the opportunity here, Mike mentioned on the call that IV <unk> globally with our four $4 billion Black brand page.
Patients are receiving that go in and get an infusion, which although it sped up over the years. If you actually look at on slides Roche put together the patients are required to be in the infusion suite for many hours.
The way Roche is position this is as an option for those patients perhaps because they don't want to spend time in the infusion suite or infusion suites are busy up for those patients instead to receive the subcutaneous portion of the drug.
Just going down to minutes instead of these hours I think is going to be very meaningful for patients with MF, which obviously is a lifelong condition. So we're very excited about that and if you listen to the Roche call. We certainly are.
Seeing some very positive things about it as well.
On Makena, obviously be.
We.
Are aware that there was a negative both has been no final decisions with regard to that what I can say about makena is a it's a very small contributor.
Two the halos him revenue.
And so it will not have any impact on our performance in 'twenty, two or 'twenty three whatever the decision is.
Got it very helpful. Thanks, so much.
Okay.
Our next question comes from Jessica Fye with Jpmorgan. Your line is open.
Hey, guys. Good evening, thanks for taking my questions.
On the large bottom volume auto injector can you help us understand the timelines for next steps that need to happen between achieving a working prototype and bringing the product to market.
And then.
With dorsal SaaS Pro U S conversion now at 85% how do you think about the realistic peak conversion from here in that timeframe. It could take to get there and then lastly operating expenses now that we've got a.
Full quarter with Antara is.
In the mix how should we think about the run rate for Opex as we look ahead to 2023. Thank you.
Yes, I'll start with the first and then I'll turn it over to Nicole for Opex. So the large following the auto injector working prototype of the end of this year.
As we talk with different companies each of them will have a slightly different need as it relates to the auto injector. So our goal is to start working with one or more companies to then move forward into getting into the clinic and testing. We also injector having further develops it so there'll be a period of further development Jess <unk>.
To get it right for what that partner needs and then move into clinical development.
If this is a product that our partners is already sub Q and they want to move it into an auto injector, perhaps today they have a pre filled syringe and they want an auto injector that we estimate will be a pretty straightforward and rapid path because we'll just be seeking to demonstrate non inferiority.
This was an intravenous drugs that the partner wants to move to sub Q auto injector think of that being more like the pathway for enhanced phase one study to find the dose and then a phase III study to demonstrate non inferiority and just based on conversations we're having we believe both of those pathways are possible.
Certainly with the interest being expressed by companies both the Q.
Q2, also inject or an IV to subcutaneous <unk> injector.
Conversion.
Second question with regard to the dark like 55%.
It is hard to estimate this how high it will go but when you think about the value proposition here, where our patients have the option to get three to five minute sub Q injection as opposed to a often four plus our IV infusion.
Certainly think there is a lot of continued growth possible.
In here with only a few patients we think electing to remain on the IV, perhaps because they like the community of the infusion suite.
And so we do think over time, we're just going to continue to see the conversion rate, increasing and cant put an estimate on it but the conversion will continue to grow beyond the 85% in the U S and the estimated 80% outside the U S and I'll. Just also say we're excited by the growth of the overall brand I mentioned on the call.
But in the third quarter revenue grew 38% on operational basis to $2 billion that really is remarkable and it.
In part because of this increased penetration into the frontline that the sub Q version based on Jonathan's comments is enabling.
It's a large population, but importantly, these patients stay on therapy. So the growth is going to come from share penetration, but also by the fact, the overall brand is growing so we see future growth absolutely.
And I'll turn it to Nicole for the operating expenses.
On the operating expense side, what I can say is you will have seen that Q3 is a bit more representative of our of our go forward run rate now being the first quarter. The first full quarter with the combined entities.
Looking at 2020 to thinking about next quarter. It is a good representation one thing that just comes to mind quarter over quarter looking into next quarter is.
Just a little bit a little bit of uptick as we built some head count vacancies. This quarter. So we will see the full impact of that in next quarter.
With regards to 2023 more to come there we have not provided our guidance yet for 2000 22000.
Give me for 2023, and we plan to do so early next year.
Our next question comes from David Risinger with SBB Securities. Your line is open.
Thanks very much.
So I have a couple of questions. Please I guess first I wanted to ask about slide eight if thats. Okay. I was hoping that you could just explain that slide and some details so that I understand.
What youre trying to convey there and where things currently stand in early November .
And David just to confirm slide eight just to make sure a number of years working to say this is the.
The wave four product status.
So the title of slide eight as expected in 2022 at least two new product candidates to enter clinic in over six new phase two slash three starts so I was just wondering.
In light of that heading.
Which of those have been disclosed to date and completed to date and what needs to happen over the next.
No less than 60 days.
Alright, perfect. So we can say that in terms of this new phase III starts.
We're very pleased on this call to have noted that <unk> has moved into phase III clinical testing.
As you see listed there.
We can also say that the beginning of the year from our phase one.
<unk>.
On this slide.
We saw <unk> as well as the chugai drugs, which are at the bottom of the slide move into phase one clinical testing.
And then if we take a look at and maybe I'll have a slide that we are not in this deck. So I do apologize for that aim at the the others.
Actually are in the wave three launches. So thank you for catching that David when we post as we actively airports light there. So I don't actually know why we're missing our wave three but that will just give you a sense of the products that have moved forward, we'll need to make sure that we expect will set in the deck that we will provide.
Okay. Thank you and then just a couple of other questions. So congrats on the map.
Advancing to phase III, just so that I understand your disclosure how was that Janssen program previously disclosed by the company.
What's the name or was it just.
On identify J&J program I, just don't know how you handle that disclosure previously.
So and we work with our partners on their preference for how things are disclosed in our SEC filings.
As an example.
R R K and Q it was disclosed as Ami bankrupt.
Our.
Presentations for earnings call. It was undisclosed because again, we worked with our partners and their preference, but it's being disclosed since the beginning in our SEC filing documents.
Okay. That's very helpful. And then finally, what should we expect the company's normalized non-GAAP tax rate to be in 'twenty three and beyond.
Yes.
So David we haven't provided that level of guidance.
After 2023.
I can say about 2022, and you will have seen in our results for this quarter, our effective tax tax rate is about 19%.
Did have the ability to reduce that a little bit this quarter looking at the combined entities and specifically our state tax obligation.
That's the expectation for this year and we're looking forward to sharing more on next year at a later date.
Okay. Thank you very much congrats on the progress David.
Thank you.
Our next question comes from Jason Butler with JMP. Your line is open.
Hi, Thanks for taking the questions I just had two.
You spoke about the fact that there is interest in both the auto injector as well as combining the auto inject with enhanced is there.
On balances there to what extent is the interesting one bucket versus the other and then secondly, just on the specialty business can you talk about commercial integration.
Think about getting the specialty business to breakeven do you think you can do it with the current product portfolio alone are there strategic things youre thinking about including bringing in additional products into that.
That business. Thanks.
Alright.
I would say that the.
On balance there is more interest and I think excitement with regard to enhance with the large fully multi injector frankly, because thats not something that is available in any format for our partners on the marketplace today smaller.
Smaller volume auto injectors. There are other versions, we do not think there is differentiated or a customizable as ours, but where the the novelty and innovation is coming is the ability to deliver up to <unk> rapidly.
So injector, which is what we are seeking to develop with high volume, Jason So definitely the high volume with enhanced getting debit is the greatest interest.
And with regard to specialty I commented on the call that the testosterone market is a growing market and a large market in every 1% share we can gain with our products is about $20 million in so theyre, absolutely as a path and it's our goal to be able to breakeven on this just simply.
With the products that we have in the portfolio today definitely a lot of opportunity in liking. The recent growth we're seeing in our <unk>.
Great. Thanks for taking my questions.
Our next question comes from Corn Jenkins with Goldman Sachs. Your line is open.
Good afternoon, everyone.
One for me as you think about indications that maybe most appropriate for an auto injector delivery method versus maybe indications that aren't necessarily as appropriate for an auto injector delivery method for whatever reason, how does that compare to kind of existing partner portfolio that you have.
Yes.
Okay.
Sure and as I think about that.
I think it's a.
Some indications where the patient is more likely to be administering it at home.
That is a more obvious place for an auto injector just off the top of my head so that can be both small molecules and biologics where the.
Its product label does not suggest there's any need for physicians to provision so perhaps areas more like while keeping disease neurology psychiatry those types of areas. However, I would also say there is nothing to preclude auto injectors being delivered by health care professionals.
And then also setting as well because that it really is a nice quick convenient way to deliver drug as well and so I think hopefully that is helpful.
So like the anything can be delivered via auto injector, we believe.
I would say that.
Think about it both as an at home delivery, which was probably areas outside of oncology, but even in an office setting perhaps the areas like oncology it might be more suitable there.
Okay.
And then can you just frame for us some of the potential drivers for subcutaneous adoption in the context of what's a pretty competitive PD, one PD L. One landscape.
Just any contracts that you can provide there would be helpful.
Yes, we certainly are.
We're excited about the progress we're seeing with both bank centric, making progress on the EBIT, we can progress to have sub Q versions.
The way I look at it we start first with what the company's strategy is.
<unk> from Roche and Bristol have talked about the importance for patients and reducing the treatment burden, which the shorter sub Q would do.
Opportunity to combine drugs on BMS is doing that obviously with opdivo in the mab further reducing the burden and importantly competitive differentiation. It is very clear that everybody is moving towards more convenient delivery of immune checkpoint inhibitors, and obviously, our Q is enabling that.
The next comes into the patient benefit is there any benefit that that even goes beyond convenience like we've seen with some of our other products.
And so we believe that the positioning of the subsea products within hands is going to play both Bristol and Roche and a very nice position against them.
Competition in PD, one PDL, one and importantly, really do a lot to support patients by reducing the burden theyre going through their receivable to cancer therapy.
Hey, Thanks, and just a quick point of clarification. When you have the combinations like <unk> and rollout of the mab or there isn't a single co formulation with and hands or are they two separate auto injectors.
That one is they just like Bansko, it's the two drugs within hands in a single index great.
Alright, thank you.
Again, if you would like to ask a question. Please press star one.
We have reached the end of our question and answer session I will now turn the call back over to Helen for closing remarks.
Thank you very much for Rudy as you've heard we're very excited with the continued momentum all of it and also our auto injector progress as well as our commercial business.
Look forward to providing updates next quarter and all of their continued success and growth of hail event. Thank you.
This concludes today's conference call you may now disconnect.
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Okay.
Okay.
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Yes.
Yes.
Okay.