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 Halozyme 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 will be a question-and-answer session. Please note, this event is being recorded. I will now turn the call over to Tram Bui, Halozyme's Vice President, 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 our 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. Leading the call will be Dr. Helen Torley, Halozyme's President and Chief Executive Officer, who will provide an update on our business; and Nicole LaBrosse, our Chief Financial Officer, who will review our financial results for the third quarter ended September 30th, 2022. On today's call, we will be making forward-looking statements. I refer you to our SEC filings for a full list of risk 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'll now turn the call over to Helen Torley.

Thank you, Tram, and good afternoon, everyone. I am pleased that our third quarter results continue to reflect both strong financial and operational performance across the business. I'll begin on slide 3 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 the prior year third quarter and continues to demonstrate the strength of all of our ENHANZE business. Total quarterly revenue was $209 million, also a record, with strong growth of 80% over the same period last year. Our total revenue growth results from our diversified portfolio, which includes growing ENHANZE revenues resulting from royalty and milestone revenue, incremental product sales, and additional royalties from the sales of Teva’s EpiPen, which utilizes our small volume auto-injector, and also from sales of XYOSTED, our specialty commercial testosterone replacement therapy. We're pleased with the strong momentum and the growing diversification of our revenues. Over the past several years and supported by the acquisition of Antares in May, we have built a leading subcutaneous drug delivery platform company with a specialty business that is 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 ENHANZE, our auto-injectors, and our auto-injector ENHANCE, with the goals of increasing their product 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 solutions that significantly improve patients' experience 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. As previously disclosed, we expect total revenues of $655 million to $685 million 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 4 and provide more detail on our royalty revenue performance in the quarter. We are very pleased with the continued robust growth of this high-margin recurring revenue stream. In the third quarter, total royalty revenue was $99.6 million, representing 70% growth over the third quarter of 2021 and 17% sequential growth. These results include our ENHANZE royalty and the autoinjector device royalty stream. Our Wave 2 products, DARZALEX subcutaneous and Phesgo continue to drive our overall strong royalty revenue growth. The robust and rapid adoption of DARZALEX subcu in the US and Europe demonstrates that adoption shows no real barriers in both geographies. Phesgo is growing rapidly in Europe and demonstrates the acceptance of the fifth acute product with ENHANZE. ENHANZE subcu products have clearly shown that they have been adopted by peers, physicians, and patients worldwide. This bodes well for our Wave 3, 4, and 5 product launches. Moving now to Slide 5, which focuses on DARZALEX. DARZALEX FASPRO, which is the subcutaneous version of DARZALEX in the US, continued its remarkable growth story in Q3, achieving 85% share of total sales of DARZALEX. At the same time, total DARZALEX sales also continued to demonstrate strong growth. On the third quarter update call, Janssen’s parent Johnson & Johnson reported the worldwide sales of DARZALEX, including both the IT and subcutaneous forms of $2 billion, an increase of more than 38% year-over-year on an operational basis. The increase in DARZALEX sales was driven by share gains in all regions, continued strong market growth, and continued uptake of FASPRO, the subcutaneous formulation with ENHANZE. Also illustrated on the slide is an update on analyst consensus for DARZALEX total revenue. It is now predicted 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 Phesgo. On their third quarter call, Roche reported strong sales of Phesgo, a combination of Perjeta and Herceptin for subcutaneous injection for patients with early and metastatic HER2-positive breast cancer. Sales continued to show a strong uptake in Europe and the US. Phesgo revenue was CHF526 million for the first nine months of 2022, an increase of 150% year-over-year. Phesgo’s faster subcutaneous administration in just minutes compared to the standard intravenous administration has contributed to lower healthcare costs and resource use 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 Phesgo to be an important metric for years to come. Moving now to slide 6. Our next wave of potential launches are illustrated here. Focusing on Wave 3, these products represent the next set of royalty revenue opportunity with potential launches projected between 2023 and 2025. The Wave 3 products are subcutaneous efgartigimod, atezolizumab, nivolumab, and ocrelizumab. Our future growth trajectory is also supported by potential launches of our Wave 4 products in the 2025 to 2027 timeframe. Wave 4 is comprised of 11 partner products, featuring ongoing Phase I clinical testing or completed Phase I testing. I'm pleased to note that one of the Phase II products, Janssen's Amivantamab, recently advanced into Phase III clinical testing. Slide 7 highlights the recent advancements in our Wave 3 products during the third quarter. In September, Argenx announced the submission of a Biologics License Application or BLA through the FDA for the ENHANZE-enabled subcutaneous efgartigimod for the treatment generalized myasthenia gravis. Efgartigimod subcutaneous is on track to be the first of our Wave 3 potential partner launches with potential US approval anticipated in 2023. Efgartigimod as an intravenous drug, which has the brand name Vyvgart, is our flagship product, and it is being developed as an IV and subcu for multiple autoimmune disease indications. Analysts project multibillion-dollar revenue potential for Efgartigimod. As we enter this portion, Efgartigimod has been approved and launched in the US, Japan, and as of September also in Germany for the treatment of adult patients with generalized myasthenia gravis. On the recent third quarter call, organic noted strong position in patient demand for Vyvgart and reported total quarterly net product revenues of $131 million with 2,000 patients on treatment. In addition to the already submitted BLA application for Myasthenia Gravis, we are excited to be partnered with Organic to evaluate efgartigimod subcutaneous with ENHANZE in five additional autoimmune indications and expect multiple data readouts projected in 2023 including data in idiopathic thrombocytopenic purpura, chronic inflammatory demyelinating polyneuropathy, and also other indications. I'll move now to Roche. Roche is our most experienced partner with ENHANZE, and we're delighted that two of our four Wave 3 opportunities are with Roche. These are Tecentriq subcutaneous and OCREVUS subcutaneous. Recently, Roche reported that their IV Tecentriq revenue increased 10% to CHF 2.7 billion for the first nine months of the year, demonstrating continued strength for this important product. We're looking forward to US and European regulatory submissions for Roche Tecentriq with ENHANZE. Supporting this, in August, Roche amended its Phase III study evaluating the subcutaneous formulation of Tecentriq or atezolizumab with ENHANZE in patients with advanced non-small cell lung cancer, which met its co-primary endpoint. The study showed non-inferior levels of Tecentriq in the blood when injected subcutaneously compared to intravenous infusion in immunotherapy-naive patients with advanced or metastatic non-small cell lung cancer for whom prior platinum therapy has failed. The safety profile of the subcutaneous formulation with ENHANZE was also consistent with IV Tecentriq. Subcutaneous Tecentriq upon approval has the potential to reduce the treatment time for Tecentriq to three to eight minutes as a subcutaneous delivery down from 30 to 60 minutes for IV treatment. Moving to OCREVUS. Roche is experiencing strong recruitment for the Phase III trial of subcutaneous ocrelizumab or OCREVUS with ENHANZE and expects top line data for this trial in 2023. OCREVUS, as an intravenous treatment according to Roche’s remarks on the third quarter update call, is currently the number one treatment in the US and EU5 for multiple sclerosis, both in terms of total share and new-to-brand share. Total revenues for the first nine months were CHF 4.4 billion with more than 250,000 patients treated globally. Roche also commented that OCREVUS is experiencing higher persistence than other multiple sclerosis drugs. Completing the Wave 3 product, BMS continues to progress with their Phase 3 study of subcutaneous nivolumab or NIVO utilizing ENHANZE in patients with renal cell cancer. BMS also recently initiated a second Phase 3 study of nivolumab subcutaneous with ENHANZE in patients with melanoma. In addition, as you may be aware, the fixed-dose combination of IV nivolumab and relatlimab called Opdualag 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 1 study of subcutaneous administration of nivolumab and relatlimab with ENHANZE and an update on future development plans by Bristol-Myers Squibb. The cumulative revenue opportunity for the Wave 3 products is substantial, with analyst projections for IV and subcutaneous portion increasing from $19 billion in 2022 to $27 billion in 2025. Halozyme’s royalties from this large commercial opportunity will depend upon the timing of approval of the subcutaneous portion within the projected 2023 to 2025 time window and the speed at which peak conversion to subcutaneous occurs. I'll move now to our Wave 4 product on Slide 8. Our goal is to continue to expand the number of products in development and to advance products to later stages of development towards regulatory approval and launch. Our goal for 2022 is to support the initiation of at least 10 new studies, including achieving more than new Phase 2 or Phase 3 trial starts for existing enhanced partner programs and to advance two new products into 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 a Phase 3 study of lazertinib plus amivantamab with ENHANZE 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 to support this development investment. We are pleased with the continued progress by our partners, with four products in Wave 3 with the potential to launch beginning next year in 2023 and a robustness of 11 Wave 4 launch opportunities, we have multiple potential growth drivers of robust future relative revenue growth. Moving to Slide 9. Our acquisition of Antares 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 our current small volume auto-injectors and also the opportunity to collaborate on a high-volume auto-injector enable injections of up to 10 milliliters with ENHANZE. By combining an innovative auto-injector platform with ENHANZE, we see a unique opportunity for patient-friendly, high-volume subcutaneous treatment delivery that can be utilized across a spectrum of disease areas for both small molecule drugs and for biologics. We currently are conducting a feasibility study and expect to have a working prototype for the high-volume auto-injector by year-end that can then be incorporated into clinical testing. Our goal remains to expand the number of companies licensing both our ENHANZE and our auto-injector technology. Let me now turn your attention to our specialty business, which includes XYOSTED, TLANDO, and NOCDURNA. We remain focused on accelerating growth of XYOSTED, our weekly painless subcutaneous testosterone replacement treatment, which is delivered by auto-injector. Every month, we are achieving new weekly high average prescription performance. I believe there is still a significant opportunity through our share of the total testosterone replacement therapy market. To dimensionalize this, each market share point represents more than $20 million in incremental sales. But the growth rate that we are facing in the overall testosterone replacement therapy market, our plan is to continue to switch patients from intramuscular injection, which can be associated with pain and can require physician or health care practitioner administration. Intramuscular testosterone represents about 75% of approximately 8.5 million annual testosterone replacement therapy prescription market volumes to date. We also recently launched TLANDO, our twice-a-day oral testosterone replacement treatment. Our access team remains focused on gaining and expanding coverage by payers for TLANDO. We expect that our negotiations with the pharmacy benefit managers will be similar in duration to other commercial launches, which can take 6 months to 12 months until access is established. I'll move to slide 10 now. 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 continue to return capital to shareholders with our share buyback – and we will also continue to see opportunities for external growth, noting that our current focus remains on driving operational excellence of the Antares acquisition. I'll now turn the call over to Nicole to discuss our third quarter financial results.

Thank you, Helen. I'll begin on slide 11. We are excited to report our first quarter reflecting a full quarter contribution from the Antares acquisition, which was accretive to Q3 revenue and non-GAAP EPS. We continue to project that the Antares 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 in commercial products that adds to revenue and can extend the durability of our revenue while being accretive in the first seven months. Total revenue for the third quarter was $209 million, compared to $115.8 million in the prior year period. The 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 Antares acquisition, as well as an increase in revenue under collaborative agreements 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. The year-over-year increase was primarily driven by continued strength in uptake from Janssen's subcutaneous DARZALEX, utilizing ENHANZE. Cost of sales for the third quarter were $47.3 million 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 Antares 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 Antares acquisition and an increase in compensation expense related to the combined larger workforce. Operating income was $83.3 million, compared to $75.6 million in the prior year period. Q3 2022 includes the impact of amortization of intangibles of $27.2 million related to the Antares acquisition. On a GAAP basis, diluted earnings per share was $0.44, compared to $1.48 in the prior year period. On a non-GAAP basis, diluted earnings per share was $0.74, compared to $0.55 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, which impacted the current period GAAP and non-GAAP diluted EPS by $0.09 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 replaced it with unsecured 1% coupon notes. We also repurchased a majority of the remaining 2024 notes that were significantly in the money. We continue to have access to pro rata based debt through our 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 a 3.3 times net debt-to-EBITDA ratio as of September 30, 2022, which we expect to reduce to less than 3.3 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 2.1 million shares for $90 million. We also entered into an ASR to repurchase $110 million and took initial delivery of two million shares for a total of $350 million repurchased under the plan to date. With our 2022 repurchases, our share buyback programs have resulted in the repurchase of 30.3 million shares since 2019, positively impacting Q3 2022 non-GAAP EPS by $0.14. Moving now to slide 12. Based on the contributions of the Antares 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 to $685 million for the full year 2022. This includes the projected revenue contributions from the Antares business, which is expected to contribute $115 million to $125 million to the full year guidance. We expect revenue from royalties to increase by more than 70% over revenue from royalties in 2021 to approximately $350 million to $360 million. Due to an acceleration in some Wave 3 and Wave 4 milestone revenue that we had expected in Q4 and have now recognized in Q3, we have achieved a vast majority of milestones expected in 2022. Collaboration revenues for 2022 are expected to be lower than the levels 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 Antares 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 the Antares 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 $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, Nicole. As you heard today, we are continuing to build on the momentum for ENHANZE 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. Our acquisition is being validated by the progress being made in developing a differentiated large volume auto-injector plus ENHANZE, which is projected to expand our subcutaneous offerings to current and new partners and to extend the durability of our royalty revenue. You'll 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 contributing to our third quarter revenues. I'll close by thanking our Halozyme team 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?

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 Halo was going to reach out to potential partners to promote your new suite of auto-injector offerings. Any color on the progress made or outcomes achieved on this front? My second question is just thinking through the subcutaneous Ocrevus commercial opportunity. Granted that Kesimpta from Novartis is administered subcu and is mostly doing about half the sales in volume of that of IV Ocrevus. My question is, should we expect a similar trajectory for subcutaneous Ocrevus, or would subcu Ocrevus have less frequent dosing really matter here and boost sales in that regard? And my last quick housekeeping question is that, I've been getting a lot of questions from investors on the potential impact to Halo assuming that Makena will be pulled from the market? Thank you.

Thanks, Mike. I'll begin with the update on the outreach to partners and potential new partners actually on the auto-injectors and the auto-injector plus ENHANZE. I can say that we are engaged in multiple calls, and there is a lot of interest, particularly in the higher volume approach. There is no way to deliver volumes of 5 mls and above today using an auto-injector. So I can just say the conversations are going well. There is interest and good recognition that this is a differentiated approach. Stay tuned, as we continue to work on our prototype and hopefully, next year we’ll be in a position to move forward into more in vivo testing of the effects of our new auto-injector. Moving to subcutaneous OCREVUS. I think if we think about the opportunity here, Mike, I mentioned on the call that IV OCREVUS globally is our $4.4 billion brand. Patients are going in and getting an infusion, which, although it has sped up over the years, if you look at the ways those patients are required to be in the infusion suite for many hours. I think Roche has positioned this as an option for those patients, perhaps because they don't want to spend time in the infusion suite or the infusion suites are busy. For those patients to instead receive the subcutaneous portion of the drug, and so just going down to minutes instead of these hours, I think it's going to be very meaningful for patients with MS, which is obviously a lifelong condition. So we're very excited about that. If you listen to those calls, we certainly are seeing some very positive things as well. On Makena, we are aware that there was a negative vote. There's been no final position with regard to that. What I can say about Makena is that it’s a very small contributor to Halozyme revenues, and so it will not have any impact on our performance in 2022 or 2023, whatever the decision is.

Got it. Very helpful. Thanks so much.

Our next question comes from Jessica Fye with JPMorgan. Your line is open.

Good evening. Thank you for taking my questions. Regarding the large bottom volume auto-injector, could you clarify the timelines or the steps needed between having a working prototype and launching the product? Also, with DARZALEX FASPRO US conversion currently at 85%, what do you see as the realistic peak conversion and the timeframe to achieve it? Finally, now that we've completed a full quarter with Antares, how should we estimate the operating expenses run rate 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 volume auto-injector working prototypes for 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. Our goal is to start working with one or more companies to then move forward into getting into the clinic and testing the auto-injector after further development. If this is a product that a partner is already using subcu and they want to move it into an auto-injector, perhaps today, they have a prefilled syringe and they want an auto-injector. We estimate that will be a pretty straightforward and rapid path because we will just be seeking to demonstrate non-inferiority. If this was an intravenous drug that the partner wants to move to subcu with the auto-injector, think of that being more like the pathway for ENHANZE Phase I study to find the dose and then a Phase III study to demonstrate non-inferiority. Based on conversations we're having, we believe that both of those pathways are possible, certainly with the interest expressed by companies, both subcu to auto-injector and IV to subcu with auto-injector conversion. As for DARZALEX FASPRO conversion, it is hard to estimate just how high it will go. When you think about the value proposition here, we have patients who have the option to get a three to five-minute subcu injection as opposed to an often four-plus-hour IV infusion; we certainly think there is continued growth possible here. We do think, over time, we're just going to continue to see the conversion rate increasing and can’t put an estimate on it right now. But conversion will continue to grow beyond the 85% in the US and the estimated 80% outside the US. I would also say we are excited by the overall brand growth. That said, in the third quarter, revenue grew 38% on an operational basis to $2 billion. That really is remarkable. It is in part due to this increased penetration into the frontline enabled by the subcu version, which is a large population, but importantly, these patients stay on therapy. The growth is coming from share penetration but also from the fact the overall brand is growing.

Yes, Jessica, on the operating expense side, what I can say is you will have seen that Q3 is a bit more representative of our go-forward run rate now being the first full quarter with the combined entities. Looking at 2022, thinking about next quarter, it is a good representation. One thing to consider is that there may be just a slight uptick as we built some headcount vacancies this quarter, so we'll see the full impact of that in the next quarter. As for 2023, we have not provided our guidance yet for next year, and we plan to do so early next year.

Our next question comes from David Risinger with SVB 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 8, if that's okay. I was hoping that you could just explain that slide in detail so that I understand what you're trying to convey there and where things currently stand in early November.

And David, just to confirm, slide 8, just to make sure our numbers are working the same. This is the Wave 4 product status.

So the title of slide 8 is expected in 2022, at least two new product candidates to enter the clinic and over six new Phase 2/3 starts. I was 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, I don't know, less than 60 days?

All right. Perfect. So we can say that, in terms of this new Phase 2/3 start, we're very pleased on this call to have noted that amivantamab has moved into Phase 3 clinical testing as you see listed there. We can also say that at the beginning of the year from a Phase 1 perspective on this slide, we saw N6LS as well as the Chugai drug, which are at the bottom of the slide moving to Phase 1 clinical testing. The other studies are in the Wave 3 launches. Thank you for noticing that, David. Based on our conversations and information, we need to make sure that we have the pool set in the deck that we will provide.

Okay. Thank you. And then just a couple of other questions. So congrats on the amivantamab advance into Phase 3. Just so that I understand your disclosure, how was that Janssen program previously disclosed by the company? What was it named or was it just an unidentified J&J program? I just don't know how you handle that disclosure previously.

So we work with our partners on their preference for how things are disclosed in our SEC filings, for example, our P&Q, it was disclosed as amivantamab. In our presentation for earnings calls, it was undisclosed because, again, we work with our partners and their preference, but it's been 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 2023 and beyond?

So David, we haven't provided that level of guidance out to 2023. What I can say about 2022, you'll have seen in our results for this quarter, our effective tax rate is about 19%. We did have the ability to reduce that a little bit this quarter looking at the combined entities and specifically our state tax obligations. That's the expectation for this year, and we're looking forward to sharing more on next year at a later time.

Okay. Thank you very much. Congrats on the progress.

Thank you, David. Thank you.

Thank you.

Our next question comes from Jason Butler with JMP. Please go ahead.

Hi. Thanks for taking the question. I just had two. Helen, you spoke about the fact that there is interest in both the auto-injector as well as combining the auto-injector with ENHANZE. Is there a balance there, to what extent is the interest in one bucket versus the other? And then secondly, just on the specialty business, can you talk about commercial integration and how you think about getting the specialty business to breakeven? Do you think you can do it with the current product portfolio alone, or are there strategic things you're thinking about, including bringing in additional products into that business? Thanks.

All right. Yes. I would say that on balance, there is more interest and excitement related to ENHANZE with a large-volume auto-injector, frankly because that’s not something available in any format for partners in the marketplace today. Small-volume auto-injectors have other versions. We do not think they are as differentiated or as customizable as ours, but the novelty and innovation are coming from the ability to deliver up to 10 mL rapidly via auto-injector, which is what we are seeking to develop with high-volume. So definitely, the high volume with ENHANZE is generating the greatest interest. Regarding specialty, I commented on the call that the testosterone market is growing and large. Each 1% share we can gain with our products represents about $20 million. So there's absolutely a path and it's our goal to be able to break even on this simply with the products that we have in the portfolio today. There’s definitely a lot of opportunity in light of the recent growth we're seeing in our XYOSTED product.

Our next question comes from Corinne Jenkins with Goldman Sachs. Your line is open.

Good afternoon, everyone. Maybe one for me. As you think about indications that may be most appropriate for an auto-injector delivery method versus indications that may not be suitable for an auto-injector delivery method for whatever reason, how does that compare to the existing partner portfolio that you have?

Yeah. Corinne, as I think about that, I think it's an indication where the patient is more likely to be administering it at home. That is the more obvious place for an auto-injector just off the top of my head. This can be both small molecules and biologics where the product label does not suggest there's any need for physician supervision. Perhaps areas like autoimmune disease, neurology, and psychiatry are suitable for this. However, nothing precludes auto-injectors from being delivered by healthcare professionals in an office setting as it is convenient for drug delivery there as well. I think any therapy can potentially be delivered via auto-injector. But I would say think about it as an at home delivery, which may likely involve areas outside oncology but could also apply within oncology in specific cases.

Okay. Helpful. And can you just frame for us some of the potential drivers for subcutaneous adoption in the context of what's a competitive PD-1, PD-L1 landscape? Any context you can provide that would be helpful?

Yes, we are certainly excited about the progress we're seeing with both Tecentriq making progress and HALO making progress towards subcu versions. The way I look at it is, we start first with what the company's strategy is. Both Roche and Bristol have discussed how important it is for patients to reduce treatment burden, which shorter subcu dosing would achieve. The opportunity to combine drugs is there, and BMS is doing that with their recent approval of the combination with Relatlimab, further minimizing patient burden. Competitive differentiation is crucial as well. It is very clear that everyone is moving towards more convenient delivery in checkpoint inhibitors, and our subcu is enabling that. The mix is coming into the patient benefit. Is there any benefit that goes beyond convenience? We've seen that with some of our other products. The positioning of the subcu products with ENHANZE places both Bristol and Roche in a very favorable position against the competition in PD-1 and PD-L1, significantly reducing burden on patients receiving cancer therapy.

Okay. Thanks. And just a quick point of clarification. When you have the combinations like nivolumab and relatlimab, are those in a single co-formulation with ENHANZE, or are they two separate auto-injectors?

That one is similar to Phase 2, where it's the two drugs with ENHANZE in a single index.

We have reached the end of our question-and-answer session. I'll now turn the call back over to Helen for closing remarks.

Thank you very much, everybody. As you've heard, we're very excited with the continued momentum of ENHANZE, also our auto-injector progress, as well as our commercial business. We look forward to providing updates next quarter on the continued success and growth at Halozyme. Thank you.

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