Q1 2023 Halozyme Therapeutics Inc Earnings Call
Good afternoon, My name is Chris and I'll be your conference operator today.
At this time I'd like to welcome everyone to the handle xylem first quarter 2023 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 you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
To withdraw your question. Please press star one again please.
Please note this event is being recorded.
I'll now turn the call over to tram Bui pillows, and vice President of Investor Relations and corporate communications.
Please go ahead.
Thank you operator, good afternoon, and welcome to our first quarter 2023 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 <unk>.
President and Chief Executive Officer, who will provide an update on our business and Noverco Labrusca, Our Chief Financial Officer will review our financial results for the first quarter 2023 on today's call, we will be making forward looking statements as outlined on slide two.
We'd also 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 certain 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.
Really.
Thank you Tom and good afternoon, everyone. Let me begin on slide three.
Chile is a leading drug delivery platform company with a diversified on the bus business, which includes our enhanced royalty business, our auto injector technology business any specialty commercial portfolio.
I'm pleased to report that we executed to our plan for the first quarter of 2023, achieving total revenue of $162 million.
38% increase year over year.
This performance sets us up well for the year and we expect strong quarter over quarter risks growth throughout 2023 that will result in another record revenue year.
Turning now to slide four I'm delighted with the momentum of our drug delivery business.
With established our leadership in rapid subcutaneous drug delivery with <unk> and more recently with our differentiated auto injectors.
Our partners are making strong progress with their commercialization and development activities that are expected to result in strong and durable long term growth.
I have the best growth include the potential approval of a particular sub Q and pizza little bumps up to this year that would bring our approved products generating royalties from five products to seven products.
So we are just not blockbuster drugs OCA for sub Q, and Im Steve or sub acute continuing phase III development with the potential to launch by 2025.
And additional to brought it back in <unk> and <unk> fixed dose combination also continuing phase III clinical testing the final stage before potential launch and royalty generation with the potential to launch between 2025 and 2027.
And it is our goal to agile ready robust pipeline by adding three new agreements this year for enhanced enhanced plus or high volume auto injector and also a small volume of auto injector agreement.
Turning to slide five let me spend a moment on why so many partners are focused on and are still excited about subcutaneous drug delivery with enhanced.
And hence when co formulated with our partner Prana has demonstrated an ability to differentiate with subcutaneous product from IV to.
Key delivery decreases treatment time and treatment burden for patients. This.
This in turn results in an improved patient experience with patient, stating a strong preference for sub Q and surveys.
There may also be as we saw in the case of dark like subcutaneous a lower rate of infusion related reactions.
This will also translate into considerable advantages to the health care system.
These advantages include less use of more costly hospitals and infusion centers and less use of health care practitioner time equaling consideration in all regions of the world.
Moving now to slide six I'll provide an overview of our pipeline.
We described this in terms of weeks with waves, one and two the already launched chronic the wave three products those that have the potential to launch between 2023 and 2025 and the four products are those with the potential to launch between 2025 and 2027.
I will go into more detail on wave two three and four in a moment, but before I do so let me highlight an exciting event for one of our wave one products.
Takeda received FDA approval for an expanded indication for <unk> to treat primary immunodeficiency in children.
No available to a broader community impacted by primary immunodeficiency, who may prefer flexible treatment option in the management of these disorders.
Enhance is a key value driver for our partners and our extensive development pipeline supports our expectations for royalty revenues.
$1 billion in 2027 with potential for growth beyond that.
This projected growth is driven by new launches and the projected impact of co formulation patents.
Let me now move to slide seven for an overview of our royalty revenues.
Project $445 million to $455 million in royalty revenue in 2023, 23% to 26% growth over 2022.
Quarterly royalty revenue increased 43% year over year to $99 $6 million and we project strong quarter on quarter growth throughout 2023.
Five partner products, using the enhanced drug delivery technology and commercialized in approximately 100 global markets are contributing to royalty revenue growth to date with Darkle, except you guys built our wave two products the key growth drivers.
While we project the approval of a particular sub Q and simply accepted in the United States in 2023, we assumed virtually no royalty revenues in 2023 from these products due to launch timing and the standard time it takes for physicians to be confident regarding reimbursement.
Also included in that royalty revenue as revenue from our small volume auto injector business base remains stable and largely driven by Teva generic epipen.
Moving now to slide eight I'll provide more detail on <unk>.
Janssen as <unk> continues its amazing growth story growing approximately 26% year over year on an operational basis in the first quarter of 2023 to approximately $2 $3 billion.
This increase was driven by share gains in all regions continued growth of the market and strong adoption of dark lit faster.
This formulation with enhanced.
J&J expect XIAFLEX to continue to grow in the first line setting.
Analysts are now projecting annual growth like sales will reach 16 $5 billion in 2028.
<unk> <unk> is the global established choice of physicians using <unk> for myeloma patients.
With the share of 88% in the United States and as last reported by Janssen now exceeding 80% outside the United States.
The key metric we now track is the overall brand performance as this is driven by the sub Q.
Darice subcutaneous is a key growth driver of our royalty revenues in 2023, and we will continue to contribute meaningfully until at least 2030.
Turning now to rescue sales go on slide nine.
<unk> is a combination of projected unacceptable for subcutaneous injection for patients with early and metastatic Hershey positive breast cancer.
This allows for a single five to eight minutes subcutaneous treatment compared with a lend their IV treatment schedule.
Most recently reported that 85% of patients preferred fiscal subcutaneous administration over the intravenous formulation of project and trajectory over the first quarter of 2023 Roche reported sales of approximately 240 million Swiss francs and increase of 72% year over year.
In the initial 30 months countries <unk> share is now 35% exceeding 40% outside the United States with the U S and Germany approaching 20%.
Roche with their focus on patients is a pioneer clearly recognizes the benefits of subcutaneous drug delivery for patients and for the health care system overall.
We project continued growth from Fayetteville in 2023 and beyond.
Yes.
Well. She is also developing a path for patient self administration of <unk> with an on body injector and expect pivotal phase one data from this program in the second half of the year.
Mixed up our wave three products, which are shown on slide 10.
These products represent the next set of royalty revenue opportunities for heelys them with potential launches projected between 2023 and 2025.
The wave three products, our subcutaneous, particularly mod pizza listen that the volume up and <unk> all of which are prisoner at least one indication as an IV formulation.
This gives us confidence and the likelihood of approval for enhance enables subcutaneous versions of these products.
I will summarize the Q banquets and events occurring this year with this exciting portfolio, where analysts project total sales, including IBM sub Q to reach approximately $35 billion in 2028.
Our Genesis subcutaneous execute demand for generalized myasthenia gravis is an FTE producer date of June 28 2023.
<unk> also submitted a marketing authorization application to the European Medical agency.
Analysts predict potential total aggregate annual revenue of approximately 7 billion in 2028.
The launch of the IV formulation is certainly progressing well with a reported $401 million in 2022 and growth of 25% quarter over quarter to $218 million.
In the first quarter of this year.
We are excited the subcutaneous expertise what has the potential to be the first of our wave III partner launches with U S approval and commercial launch projected mid year 2023.
On their recent quarterly call organic management commentary on the importance of gaining traction in early line patients for the continued trajectory.
The subcutaneous approval may help achieve this.
<unk> flagship pipeline product <unk> is being developed for the treatment of multiple autoimmune disease indications with subcutaneous development currently in six indications.
Four of these indications to date, our subcutaneous only indication.
Again, it has announced plans to expand and add additional indications, including a new study clients for thyroid eye disease from nature of this year.
And organic project multiple data Readouts in 2023.
Includes data in chronic inflammatory demyelinating polyneuropathy now in July of 2023.
Two additional phase III data readouts are projected for the fourth quarter of 2023, and two additional serious autoimmune conditions idiopathic thrombocytopenic purpura on pemphigus.
I'll move now to Roche at the beginning of the year Roche announced their BLA to the FDA for subcutaneous <unk> with enhanced was accepted with a <unk> date of September 15th 2023.
Subcutaneous piece Elisa map has the potential to offer greater convenience for patients and physicians within approximately seven minutes subcutaneous administration time compared to 30 to 60 minutes for IV treatment.
We believe this represents a significant advancement for patients the health care system, where our resources are constrained as well as for payers.
In the first quarter of 2023 Roche reported IV to centric revenues of 920 million Swiss francs, and increase of 15% year over year, driven by higher demand in the U S and in Europe .
<unk> also reported first quarter 2023 revenues of $1 6 billion Swiss francs per <unk>, which represents an increase of 14% year over year and annualize. This at over $7 billion U S dollars.
Okay.
Third wave three opportunity.
With more than 300000 patients treated globally okra vis remains the number one treatment in the U S and EU five both in terms of total share of new to brand share with higher retention rates than other therapies for multiple sclerosis.
Nicole with subcutaneous okra is to significantly shorten the treatment and observation time compared to the IV for.
For the IV is currently three 5% to six hours.
With the data readout for the phase III trial of subcutaneous localism up with enhanced expected later this year subcutaneous delivery could Lord target total administration on observation time for the first and second dose to one hour and to just 10 minutes for administration and observation for each subsequent dose.
Well she is excited that the subcutaneous data will provide an opportunity to expand the market appropriate access to patients for intravenous dosing is not viable.
Moving now to our fourth wave three products Napoleon Matt.
<unk> reported Opdivo IV sales of $2 2 billion in the first quarter of 2023, an increase of 15% year over year or 17% excluding FX.
<unk> believes that subcutaneous delivery of <unk>.
<unk> forward and they are progressing with their phase III registration study of subcutaneous <unk> utilizing <unk> in patients with renal cell carcinoma.
Our waste through products represent substantial de risks near term new royalty revenue opportunity for Amazon driven by two potential approvals this year and the phase III readout of subcutaneous operating somatic.
The opportunity represented here in terms of analysts' projections for total product sales is approximately $35 billion in 2028.
Which is significantly higher than the opportunity for our wave two products, which are driving our strong royalty revenue growth today.
Moving to slide 11, I'll review, our way for a partner product development pipeline with enhanced.
Our longer term growth trajectory is further supported by these four product with potential launches in the 2025 to 2027 time frame.
We force comprised obtain partner products two of which are in phase III and the remaining eight are in an ongoing phase one clinical testing has completed phase one.
In 2023 and beyond our goal is to continue to expand the number of products in development and to advance products through development to regulatory approval and launch, adding multiple new royalty revenue streams.
The two most advanced Robert Johnson, subcutaneous, Amit antenna and BMS is fixed dose combination of <unk> plus overlap them up with enhanced.
Both are already approved and showing strong glucose IV treatment.
Entering phase III clinical testing at sub Q version.
Janssen initiated their phase three study of Niraparib, plus Amazon snap with enhanced in 2022 in patients with Egfr mutated advanced or metastatic non small cell lung cancer.
And recently BMS also initiated the phase III study relativity <unk> with the goal of demonstrating that drug exposure level of knoll about plus <unk> fixed dose combination with enhanced is not in theater to IV administration of the same combination.
With this study being done in patients with previously untreated metastatic or Unresectable melanoma.
Other notable program and our wave four pipeline include focus on innovation for HIV.
These <unk> and Genesis will pilgreen folks already approved as I am an oral delivery are in phase one development as subcutaneous strengths with enhanced.
Beef has stated their goal with subcutaneous delivery is to further extend the dosing interval, thereby further screen patients at the burden of treatment and the disease.
Steve is also in phase one development with and six hours a day.
Beltman state broadly neutralizing antibody for HIV.
I'll move now to our new growth opportunities.
We remain highly engaged and your partnership discussions for <unk> and our auto injectors I'm excited that the funnel of discussions is an all time high driven by high interest in subcutaneous drug delivery.
While the timing is always difficult to predict we are confident that we will achieve our goals for 2023 for one you enhance deal when you enhance plus high volume auto injector deal.
<unk> small volume auto injector deal.
We're experiencing strong interest in learning more about our high volume auto injector for rapid delivery of up to 10 ml, which is enabled by enhanced.
This approach will offer a truly differentiated opportunity for patient friendly high volume subcutaneous drug delivery that can be utilized across the spectrum of disease areas for both small molecule drugs and biologics.
We have a working prototype ready for clinical testing and expect to initiate and complete human feasibility study by midyear.
We look forward to signing an agreement with a current or a new partner to collaborate on the custom development and are tracking nicely towards this goal.
I'll turn now to our commercial portfolio, which includes <unk> and Telemundo and are shown on slide 12.
As I said those are weekly virtually painless subcutaneous testosterone replacement treatment, which is patients delivered by auto injector.
Our growth strategy remains focused on converting patients from intramuscular injections. The most common treatment approach to date.
In the quarter, we saw strong growth of size that physician demand achieving new weekly high average prescription performance every month.
Sales to wholesalers slightly light demand in the quarter as a result of a change in our three PL distribution channel.
Our goal remains to achieve approximately $100 million in <unk> revenue in 2023, representing a 22% increase from the run rate following the acquisition.
And we're also still focused on gaining access for <unk>, our oral testosterone treatment to.
To date, we have not yet reached agreement with pharmacy benefit managers on an appropriate rebate rate on adult access is established we are projecting low revenues for <unk> in 2023.
Before I hand, the call over to Nicole let me reiterate our commitment to our strategic growth and capital allocation priorities, which are shown on slide 13.
We are committed to maximizing our revenue growth and durability to create long term value for all of our stakeholders.
We're investing strategically and enhance and our auto injector technologies, while continuing to return capital to shareholders with our share buyback plan.
We've completed $500 million.
All of the $750 million three year share buyback program, which was approved by the board of directors in December of 2021 and.
And this includes a $150 million share buyback completed in the first quarter of 2023.
We're also actively evaluating M&A opportunities seeking additional platforms are companies with de risk assets.
Platform technologies, where we see the opportunity for significant revenue growth and durability.
Ill now turn the call over to Nicole to discuss our financial results for the first quarter of 2023 Nicole.
Thank you Helen.
The first quarter of 2023 is on track with our plans and supports our strong financial performance expectations for the full year.
As Howard mentioned, we remain committed to our capital allocation strategy.
In regards to our share buyback program, we were pleased that within the first quarter, we maximized our repurchase opportunity and completed the full $150 million plan for the year, resulting in the repurchase of $4 2 million shares at an average price per share of $36.01.
Our share buyback programs have resulted in the repurchase of $34 8 million shares since 2019, which contributed nine to non-GAAP earnings per share in the first quarter.
Our cash cash equivalents and marketable securities were $275 6 million.
As of March 31, 2023.
Impaired to $362 8 million.
On December 31, 2022, due to our Q1 share repurchases.
Our balance sheet remains strong with projected cash generation and EBITDA growth in 2023.
Our net debt to EBITDA ratio is three two as of March 31, 2023, which is expected to be less than three by the end of the year.
While we have completed our share repurchases allocated for the year, we will continuously evaluate our future use of capital and monitor market conditions and other factors, while also preserving capital to fund revenue growth and durability via M&A.
I'll now move to slide 14 for our detailed financial results for the first quarter of 2023.
Revenue for the first quarter was $162 million compared to $117 3 million for the first quarter of 2022.
The 38% year over year increase was driven by an increase in royalty revenue.
Merely attributable to subcutaneous stars Lax and the addition of product sales as a result of <unk> pharma acquisition.
Royalty revenue for the quarter was $99 6 million.
An increase of 43% compared to $69 6 million in the prior year period.
Al mentioned that royalty revenue for the quarter to a small sequential decline of 6% from $106 million in the fourth quarter of 2022.
This is due to the expected impact of changes in FX rates.
Annual royalty rate tiers, and epipen seasonality.
Some of our contracts include peered royalties to escalate and U.
As volumes build over the course of the year.
The thresholds for increased rates was exceeded in Q1, and therefore, the increased rates will apply for the remainder of the year.
Amortization of intangibles was $17 8 million in the first quarter due to the acquisition in which <unk> acquired intangible assets that are amortized over a useful life related to the auto injector technology platform <unk>.
Instead and to window.
We project amortization of intangibles to be similar for each quarter in 2023.
Research and development expenses for the first quarter was $18 million.
Compared to $11 9 million in the first quarter of 2022.
Primarily due to an increase in compensation expense related to the ongoing combined larger workforce to support the device platform and regulatory quality and manufacturing.
As well as planned investments and enhance.
SG&A expenses were $37 4 million compared.
Compared to $13 8 million for the first quarter of 2022.
Primarily due to an increase in compensation expenses related to ongoing combine larger workforce, including the addition of commercial resources and sales and marketing for our testosterone replacement therapy products.
EBITDA in the quarter $74 $3 million.
Compared to $76 4 million in the first quarter of 2022.
The year over year comparison reflects a $25 million milestone payment in the first quarter of 2022, which did not repeat in the first quarter of 2023.
As well as the impact of year over year increases in operating expenses.
GAAP diluted earnings per share was 29 in the first quarter and non-GAAP diluted earnings per share was <unk> 47.
Turning now to our 2023 guidance on slide 15.
We are reaffirming our full year 2023 guidance.
We expect total revenues of $815 million to $845 million.
Representing growth between 23% to 28% over 2022 total revenue.
We expect total revenue to be primarily driven by continued strength in enhanced wave two products.
FC Invesco.
As well as the full year of Antares product sales and auto injector royalty contribution.
We expect revenue from royalties to increase between 23% to 26% over revenue from royalties in 2022 to a range of $445 million to $455 million.
Please note again that our 2023 guidance includes milestone payments for the approval of FCS Cartage and Mod and <unk>.
<unk> royalty revenue contributions from these two products within this year.
We expect EBITDA of $415 million to $440 million representing growth of more than 30% over 2022 EBITDA.
Excludes the impact of amortization costs related to the Antares acquisition.
Finally, we expect non-GAAP diluted earnings per share of $2 50 to $2 65.
With that I'll now turn the call back over to Helen.
Thank you Nicole I'd like to thank the hail event team our partners and collaborators for the strong progress made in the first quarter of this year setting us up for such strong growth in 2023.
We're continuing to look forward to our commercial product and royalty revenue growth project and we will increase the number of enhanced commercial partner products from five to seven products with the approvals of subcutaneous at particular and achieve the lithium as.
We also expect pipeline progress and expansion with phase III data for a subcutaneous <unk> and for subcutaneous <unk> as well as two new targets entering the clinic from our current partners.
Continued progress in the development over high volume auto injected what's been happened as expected.
As well as adding new collaboration partners with the goal of signing multiple new collaborations agreements across our platform.
And we continue to expect revenue growth, resulting from our commercial products.
These events all support our strong full year revenue and EBITDA growth guidance.
With that we would now be delighted to take your questions. Operator would you. Please open the call.
If you'd like to ask a question. Please press Star then one on your telephone keypad.
Our first question is from Jessica Fye with Jpmorgan. Your line is open.
Hey, guys. This is not an on for Jessica Fye.
I think.
Can you talk about like what have you seen with B R E.
Impact.
Like how does how has it impacted discussions with current partners and or potential new partners.
And then another one is thinking about how we are anticipating a step down in <unk>.
<unk>.
Past pro.
About the growth of our products and on the royalties as we look forward to the potential for a billion dollars in 2027 and protect the potential to be higher than that in 2031.
With regard to the steps on a royalty rates yeah. The specific details and all of our contract because you know our our confidential. So I, we we always leave it in light of the European patent finding did gave us some commentary on the at Dorothy legs, specifically, we're really not in a position.
Listen to provide any additional details beyond that at this time.
The next question is from <unk>.
Goldman Sachs is open.
Yeah. Good afternoon, everyone. Maybe two one follow on from the last question. It sounds like your current partners aren't bringing it up to you, but how is like the I R. Eight Ida and factoring into any conversations that you're having with potential partners and then the second one for me you reference business development I'm curious how the integration.
<unk> and your target leverage goals factor in to potential timing for any additional BD.
Yeah, I'm I'm happy to take the first part in our lives Nicole to discuss the target leverage you know I'd say since they guidance came out in March crew and we have been in multiple conversations with potential new partners for ENHANZE and enhance plus H B I and I do not believe I can never remember, Iowa coming up.
Even in those conversations I I really think it is because the majority of the people who have got drugs that are the large volume injectables are in part b.
And the everybody recognizes that the guidance of come out so far isn't related to that so we're really not having conversations.
Any frequency with regard to that nickel you take the question on the target leveraging the thinking about future emanate, yes happy to thinks Korean when looking at our leverage for ending the quarter. We were at 3.2 times at a net debt to EBITDA ratio and we're tracking to be delivered to lessons.
Three times by the end of the year. So we are tracking nicely with our expectations and also provides ample opportunity for future growth via M&A, you know looking at our leverage profile as well as our expected cash flow generation and expected EBITDA growth.
Okay. Thanks.
The next question is from O'hare Bunzl with Wells Fargo as long as open.
Alright. Thank you for taking my question I have a couple of questions. So one on I R. A just stay with the team here do you expect some more clarity will repeat over the next six to 12 months from from from pumps, you Miss more about the <unk> the side of it.
Should we expect something like that in your conversations with with.
<unk> with your partners and the other question is actually.
Technical in terms of you know.
You have mentioned that sequential royalties because bigotry said.
So do the royalty revenues or not.
Despite the revenues of higher <unk>.
These are not higher so that that experience. It is there anything else in terms of the indirect revenues or other.
Broad revenues in terms of.
Maybe we should be available in the first quarter as we go forward here.
Thank you.
Yeah, I'll I'll take the question on I R. A and Nicole we'll we'll talk about the sequential royalties uhm Mohit probably in as as you're probably seeing with many of her large form of partners. There simply isn't the information available at the moment as to Wednesday M. S is going to talk with regard to the at part B guidance and so no.
But he is really talking or speculating with regard to to that as you know uhm ENHANZE is an active ingredient them. The subcu injection would not be possible without ENHANZE. We also are seeing benefits that light as an example of darzalex reduced infusion related reactions and so we look forward to.
You know learning more but recognize that we are good to be communicating very strongly that ENHANZE brings a lot of them are active benefits to patients with regard to being part of the new combinations with Subcu darzalex.
And in regards to sequential royalty quarter over quarter. Yeah. We did mention a few factors driving that one of them being the add backs rates changing you over here. The other one would be a royalty tears escalate during the year that is something that we see uncle C and he.
Hands and the interiors royalty side to answer your question there, but importantly, those thresholds, it's really only impactful to the first few months of the year and those thresholds are exceeded within the first quarter. So does not and pats the remainder of the ear and then you also item we see in Q1 is.
B royalties do you have a seasonal pattern, where Q1 is the lowest of the year. So that's a just a little bit more flavor on seasonality, but overall, our quarterly results for royalties are tracking very nicely to our plans and our expectations to meet the guidance, we'd sit out for the year, which is four.
Hundred and $45 million to $455 million for the year, representing greater than 20% year over year growth for royalties.
Helpful. Thank you.
[noise]. The next question is from Michael <unk>, Evercore, sorry <unk>.
Hi, guys. Thanks for taking my question.
Two two more ones on my auto right about different versions. So just regarding C. M. S. As part of the guidance document I think for now everyone's operating under the assumption that part B, we will look like very much like part D.
So assuming that's true now that handles lawyers and powerful team has had some time to fully digest the gods documents.
Are there any nuances contained therein, perhaps make you incrementally more or less confident on how ENHANZE formulated products may qualified.
Single source drug that was my first question my.
My other question is just to remind us how the E. U E. P O doors like stance pro patent replication is specific to just doors looks fraud pro and why there wouldn't be any read across to your other you co formulation pens. Thank you.
Alright, thank Mike for those questions yet.
Interest obviously in the I R. A so it when we we talked about this a lot when the guidance came out and if we if there is an interpretation or the the part B guidance comes like similar to the part D. Our interpretation based on experts in Washington D. C is if you focus on the part of the guidance that described.
They are big stove combination and yet so we use an example of two corticosteroid drugs and talks about the both active ingredients not being considered the same as a single agent used alone I think that is what we see is a perfect description of ENHANZE because the R. U P. H 20.
Designated in multiple documents from the a C. As an active ingredient now why is that it it's because as I mentioned earlier eight does make the whole subcutaneous delivery possible that allows for a short term Jackson. It allows for reduced infusion related reactions on occasion and.
Frankly patients would not be able to receive the therapy and such a simple short way nor with the health care system be able to accrue the benefits or if the shorter time. So certainly are reading at this point in time. If it's identical is that this up he will be treated as a separate single source agent then.
The I V drugs, but with all the appropriate cat it with them and see them as half the issue the specific guidance for part M. B.
Moving to the E U passing yes, I think for people.
Few weeks ago, and Jensen had one all fair to uproot European co formulation patents for Darzalex them revoked and they still have I'll note. Another one that's under review this was a single relocation of the first patent so they have a second patent it remains as well as another patent pending.
This was a specific instance, where with the judgment of the court that because Johnson had public state clinical trial protocol that mentioned the invention, but they relied on in the patent before they filed a patent that meant that they were not able to use that.
Invention, which was reduced infusion related reactions to support that particular patent note. The reason this is only applying for this single pats them from Darzalex is that other of our partners relied on other inventions to support their patents. So one of the core things about cool formulation.
<unk> is it has to be novel not described before invention and so by definition all of our partners are looking at their data to look for something different and so that that's why there's no read through to any of the other pass instead of filed or any of our other European partners, and mmm mmm companies or or kerf.
Awful to make sure that they do get the filings first to the patent office before they make the data public I'll also just comment that just in case anyone has the question any U S. The U S does not have the same exact approaches Europe with regard to this Ah prepublication in a political <unk>.
Protocol Ah and so there's no read through to the United States I'm, either I'll just spell to come at the next step in Europe could be for dancing to file an appeal. It Johnson did file an appeal the passenger would be unresolved and usually the appeal process can take three to four years, but again I'll also mention this step down.
And continues to have other patents and for heroism, we're very confident in our revenues and twenty-three and to continue to receive royalties from Ah Johnson until at least 2030. So Ah there was attention to this but we certainly are feeling very well about our at Johnson royalties and the very strong growth that were.
Seeing there.
Well thank you.
[noise]. The next question is from Jason Butler was JMP. Your line is open.
[noise] I surround for Jason Thanks for taking our questions. Just a couple of how long you mentioned the the funnel a partner discussions or that I don't know all time high just assuming that those are are mostly candidates seeking their first approval as ENHANZE formulations.
Sorry, you cut up a little bit. So your thing are those companies are looking for approvals of their first indications so yeah development stage products or commercial products.
But all of them stage correct I would think the mixture. It it's a mixture of both of those you know we've traditionally worked with companies where they're getting their phase three approval or they're already approval approved and and that's because ENHANZE can really help enhance the competitiveness. All then Ah Ah Ah a product.
We are talking more and more and and have some very interesting conversations ongoing with companies who are looking at the Ah optimizing their PK profile and so that that's a different approach where you're not trying to bridge to the already approved but you could do something have you ever see Max for example associated toxicity.
Mm ENHANZE can help with that or you want to get to a very extended dosing interval. So very nice mix up discussions Roy.
Okay cause I'm one of them that you mentioned that 10 ml auto injector a collaboration partner for further development cause what are they going to bring to the table that you didn't get from Antarctica. Thanks.
Oh, so he actually is one of the I think very intriguing things about being Terry's and portfolio auto injector someday engineer that we have is that they've traditionally offered partners. They auction to customize a device for a specific patient population or disease.
And so what we what we have is a working prototype each partner will have to determine what their primary container. They want it to be there'll be a little bit of customization some might be five M. L. 70 miles you know tanner mouth, so that will take a little bit of work, but specifically the form factors and other factors like needle debts and other.
Are things each partner generally will like to customize to be right for their particular drug in their populations and their target population. So it simply is that customization work for it to move from protostar to Ah development stage Autoinjector to a commercial auto injector.
Okay, Great I'm gonna throw in one more of the [noise] the Darzalex injection site reaction.
Results are you mentioned is that achievable with a lower dose of ENHANZE. When you use to achieve the subcu injection itself.
That makes sense.
I I understand your question I don't think we ever tested that because in our clinical studies with them separately Darzalex of is.
One does all the the are you page 20 used in each injection to my knowledge right. So I think it's a very very small does and so I don't think there was a dose ranging for are you page 20, we know that might take them. So it probably never tested but I will say, it's a very small those that's used.
In the all of our products.
Got it thank you.
The next question is from David <unk> was SBB Securitas is open.
Yes, sorry, thanks, very much so I have a couple of questions. Please first the press release mentions planned investments and and and.
I was hoping that you could provide some more color on that Helen, particularly Simpson hands and so to lose U S. Exclusivity in 2027, and then just a couple of financial questions. What was the impact and Perez a non-GAAP earnings are EPS from a quarter and.
[noise] regarding share repurchases did you mentioned that you have.
Finished setup for the year, thanks very much.
Yeah I'll take the first question and then I'll ethnical to take the the next to him with regard to the planned investments. This really relate back to announcement, we made maybe 18 months ago with regard to starting the development of a high yield are you pitch 20, as well as a room temperature stable.
Are you page 20, David we we we you know for our royalty terminal system highlights it we always receive them in and but the vast majority of cases, a minimum of 10 years and after the first commercial sale and so 2020 said it might be patent expiry, but we are going to be selling a P. I.
To our partners in generating royalties to well past 2030 based on our development portfolio and so we thought it was important for us to continue to invest to get to a higher yields API because that would be the expectation of our partners that we would continue to improve the process is we also.
R. R started development of a more room temperature stable, one that might be more suitable for small molecules circumstances, we're partners might want the patient to be able to carry for example, an auto injector around with them. So that one continues in early development for making good progress with the the.
High yield one and partners of express love interest in that obviously as that it just helps us that strengthen our ability to continue to supply a very high quality a P. I for our partners.
What's that Oh, yeah, yes thinks David with regards to spin Terry's contribution it was accretive obviously to our revenue line and two are non-GAAP E. P. S. In the corner and continues to our expectations is that it continues to be accretive for the full your results for 2023.
And then in regards to share repurchases. We did complete the full amount that we had allocated for the year, which was $150 million. We took the opportunity in the first quarter to maximize our buying during low prices and so we were able to accelerate that and buy at the low prices.
And fully complete the amount that we had allocated for the year.
Thank you.
The next question is from and Yang with Jeffries. Your line is open.
Or did you Peach 20th have you identified any partners more specifically interested in these miss John Itchy eyes, and it's so one will be improved.
<unk> E ready for clinical investigation.
Yeah, so different pathways for each of them. They they hire <unk> is the same cell line as our current one and so it is much more likely that will be a simple compatibility study that will be done and it will be then moved into their supply chain and we've done that before this will pick sir.
Four years, but it should be a pretty a seamless transition and and we've got several of our partners who have expressed interest in moving to that obviously once it is approved and available with regard to the more room temperature stable and we continue in discussions on that that was seen as being.
<unk> a bit more specific to small molecules and specifics I think we're room temperature stability is needed Ah. So Ah nobody has signed up at this at this point in time never expect it to be a a large driver of revenue because it's it's.
Our separate your products are much more focused on the large volume biologics where room temperature stability is not needed because the products have to be refrigerated Ah. So very pleased with the progress in the interests. We've seen on the higher yields continuing to have this offering for those Ah partners who might be.
Want something that's more suitable for a small molecule and patient self administration.
Again, that's star one if you'd like to ask a question and the next question is from Caroline Telemark with <unk> capital markets and your line is open.
Hi, Thanks for taking the question do you discuss the current Ivy to <unk> conversion rate trajectory for other products aside from the ones in your slide such as <unk> and <unk>. Thanks.
[noise]. So Carolina five is understanding your question what what what are we saw with the wave one products and those were predominantly launched in Europe . Herceptin is a good example that said go out to about 50 per cent share of sales after two years and it got to a 60 per.
[noise] Center sales after three years Biosimilars entered the market at that period of time and I can say that we do hear from rose. This year has remained sticky in those markets, where they'd convert but it didn't continue to grow after that we don't have specific data on Q V. A for me to be able to share Ah her.
My theory got to about 40 per cent share of sales and so you know we were seeing a range, where obviously, we're very pleased to see darzalex up there at eight eight per cent in the U S greater than 80% outside the U S and really it's very clear now that the Serb cute driving that amazing revenue growth of overall.
[noise] darzalex that you're seeing up by aiding the penetration into the front line and second line populations, which are the larger populations in patient stay on therapy longer and so you know, we usually think about a target of around 60% conversion at three years and then we look at the products and we say do we think it's going to be a bit higher than that is it going to be able.
Lower than that but overall very pleased with the progress we're seeing and I'll just point out says go after a slow start some very nice courtroom over quarter growth and no 35 per cent share with double with Roche and I was expecting continued at conversion as of physicians and patients really.
[noise] do see the benefits of this particularly in the adjuvant setting.
That's helpful. Thanks.
We have no further questions at this time and this will conclude today's conference call. Thank you everyone for participating.
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