Halozyme Therapeutics, Inc 10-Q for FY2022 Q2

Halozyme Therapeutics, Inc. (HALO)

10-Q 2022-08-09 For: 2022-06-30

Added on April 11, 2026

About this 10-Q

Halozyme Therapeutics, Inc filed this 10-Q on August 9, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $152.37M; up 11.7% from $136.46M a year earlier
Net income: $22.69M; down 75.2% from net income of $91.46M a year earlier
Diluted EPS: $0.16; down 74.2% from $0.62 a year earlier

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Delaware						88-0488686
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

11388 Sorrento Valley Road						92121
San Diego						(Zip Code)
California
(Address of principal executive offices)


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


	June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	90,932	$	118,719
Marketable securities, available-for-sale	118,428		622,203
Accounts receivable, net and contract assets	189,368		90,975
Inventories, net	97,615		53,908
Prepaid expenses and other current assets	45,595		40,482
Total current assets	541,938		926,287
Property and equipment, net	37,091		8,794
Prepaid expenses and other assets	26,283		13,414
Goodwill	199,481		—
Intangible assets, net	976,097		—
Deferred tax assets, net	—		155,434
Restricted cash	500		500
Total assets	$	1,781,390	$	1,104,429

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	12,232	$	1,541
Accrued expenses	84,101		24,441
Deferred revenue, current portion	4,131		1,746
Current portion of long-term debt, net	99,048		89,419
Total current liabilities	199,512		117,147
Deferred revenue, net of current portion	2,739		2,530
Long-term debt, net	1,147,129		787,255
Other long-term liabilities	5,551		544
Deferred tax liabilities, net	3,288		—
Contingent liability	130,000		—
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock - $0.001 par value; 20,000 shares authorized; no shares issued and outstanding	—		—
Common stock - $0.001 par value; 300,000 shares authorized; 137,681 and 137,498 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	138		138
Additional paid-in capital	271,169		256,347
Accumulated other comprehensive loss	(2,017)		(620)
Retained earnings (accumulated deficit)	23,881		(58,912)
Total stockholders’ equity	293,171		196,953
Total liabilities and stockholders’ equity	$	1,781,390	$	1,104,429


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues:
Royalties	$	85,340	$	45,778	$	154,945	$	82,701
Product sales, net	46,300		30,360		68,440		52,126
Revenues under collaborative agreements	20,725		60,317		46,259		90,650
Total revenues	152,365		136,455		269,644		225,477
Operating expenses:
Cost of sales	33,943		23,018		49,865		41,237
Amortization of intangibles	11,403		—		11,403		—
Research and development	15,483		8,069		27,336		17,078
Selling, general and administrative	57,476		12,321		71,310		23,380
Total operating expenses	118,305		43,408		159,914		81,695
Operating income	34,060		93,047		109,730		143,782
Other income (expense):
Investment and other (expense) income, net	(945)		221		(447)		497
Inducement expense related to convertible notes	—		—		—		(20,960)
Interest expense	(3,104)		(1,752)		(4,863)		(3,717)
Net income before income taxes	30,011		91,516		104,420		119,602
Income tax expense	7,326		58		21,627		249
Net income	$	22,685	$	91,458	$	82,793	$	119,353

Net income per share:
Basic	$	0.16	$	0.64	$	0.60	$	0.85
Diluted	$	0.16	$	0.62	$	0.58	$	0.81

Shares used in computing net income per share:
Basic	137,937		142,487		137,798		140,201
Diluted	142,216		147,624		141,795		148,096


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	22,685	$	91,458	$	82,793	$	119,353
Other comprehensive income:
Unrealized gain (loss) on marketable securities	732		(1)		(1,439)		(84)
Foreign currency translation adjustment	2		(20)		2		15
Unrealized gain on foreign currency	40		6		40		23
Total comprehensive income	$	23,459	$	91,443	$	81,396	$	119,307


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended June 30, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income/(Loss)		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity
	Shares	Amount
BALANCE AS OF MARCH 31, 2022	137,888	$	138	$	261,713	$	(2,791)	$	1,196	$	260,256

Share-based compensation expense	—	—		5,635		—		—		5,635

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net and shares issued under the ESPP plan	226	—		3,821		—		—		3,821

Repurchase of common stock	(433)	—		—						—
Other comprehensive income	—	—		—		774		—		774
Net income	—	—		—		—		22,685		22,685
BALANCE AS OF JUNE 30, 2022	137,681	$	138	$	271,169	$	(2,017)	$	23,881	$	293,171

	Six Months Ended June 30, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income/(Loss)		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity
	Shares	Amount
BALANCE AS OF DECEMBER 31, 2021	137,498	$	138	$	256,347	$	(620)	$	(58,912)	$	196,953

Share-based compensation expense	—	—		10,377		—				10,377

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net and shares issued under the ESPP plan	616	—		4,445		—				4,445

Repurchase of common stock	(433)	—		—						—

Other comprehensive loss	—	—		—		(1,397)				(1,397)
Net income	—	—		—		—		82,793		82,793
BALANCE AS OF JUNE 30, 2022	137,681	$	138	$	271,169	$	(2,017)	$	23,881	$	293,171

	Three Months Ended June 30, 2021
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income/(Loss)		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity
	Shares	Amount
BALANCE AS OF MARCH 31, 2021	143,380	$	143	$	501,186	$	(9)	$	(433,725)	$	67,595

Share-based compensation expense	—	—		5,372		—		—		5,372

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net	318	1		4,179		—		—		4,180

Repurchase of common stock	(1,517)	(2)		(48,840)						(48,842)

Other comprehensive loss	—	—		—		(15)		—		(15)
Net income	—	—		—		—		91,458		91,458
BALANCE AS OF JUNE 30, 2021	142,181	$	142	$	461,897	$	(24)	$	(342,267)	$	119,748

	Six Months Ended June 30, 2021
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity
	Shares	Amount
BALANCE AS OF DECEMBER 31, 2020	135,030	$	135	$	625,483	$	22	$	(474,593)	$	151,047
Adjustment to beginning accumulated deficit	—	—		(65,535)		—		12,973		(52,562)
Share-based compensation expense	—	—		10,295		—		—		10,295
Issuance of common stock for the induced conversion related to convertible notes	9,083	9		13,095						13,104
Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net	881	1		3,577		—		—		3,578

Repurchase of common stock	(2,813)	(3)		(125,018)						(125,021)

Other comprehensive loss	—	—		—		(46)		—		(46)
Net income	—	—		—		—		119,353		119,353
BALANCE AS OF JUNE 30, 2021	142,181	$	142	$	461,897	$	(24)	$	(342,267)	$	119,748


Cash consideration for Antares shares outstanding as of May 24, 2022	$	956,886
Consideration for Antares equity compensation awards (a)	45,828
Consideration for seller transaction costs paid by Halozyme	22,906
Consideration related to Antares closing indebtedness settled by Halozyme	19,683
Cash consideration related to cash bonus awards paid by Halozyme	365
Total purchase consideration	$	1,045,668


	Amount (in thousands)
Total purchase consideration, net of $46,548 cash acquired	$	999,120
Assets:
Short-term investments	498
Accounts receivable, net	82,160
Inventories, net	34,379
Prepaid expenses and other assets	5,241
Property and equipment, net	28,661
Intangibles, net	987,500
Liabilities:
Accounts Payable	7,197
Accrued expenses	33,705
Deferred revenue, current portion	2,509
Deferred revenue, net of current portion	1,207
Deferred tax liabilities, net	159,094
Other long-term liabilities	135,088
Net assets acquired, excluding goodwill	$	799,639
Goodwill	199,481


	Amount (in thousands)		Useful life (years)
Auto Injector technology platform	$	372,900	7
XYOSTED proprietary product	277,400		10
TLANDO product rights	277,600		10
ATRS-1902 (IPR&D)	59,600		Indefinite
Estimated fair value of intangible assets acquired	987,500


	June 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Asset-backed securities	$	—	$	—	$	—	$	—
Corporate debt securities	—		—		—		—
U.S. Treasury securities	120,460		—		(2,032)		118,428
Non-US Government securities	—		—		—		—
Commercial paper	—		—		—		—
	$	120,460	$	—	$	(2,032)	$	118,428


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Asset-backed securities	$	32,745	$	—	$	(53)	$	32,692
Corporate debt securities	58,885		—		(86)		58,799
U.S. Treasury securities	231,230		—		(469)		230,761
Non- U.S Government securities	17,232		—		(12)		17,220
Commercial paper	282,731		—		—		282,731
	$	622,823	$	—	$	(620)	$	622,203


	June 30, 2022		December 31, 2021

Due within one year	$	118,428	$	500,965
After one but within five years	—		121,238
	$	118,428	$	622,203


	June 30, 2022						December 31, 2021
	Level 1		Level 2		Total estimated fair value		Level 1		Level 2		Total estimated fair value
Cash equivalents:
Money market funds	$	70,843	$	—	$	70,843	$	118,707	$	—	$	118,707
Commercial paper	—		—		—		—		—		—

Available-for-sale marketable securities:
Asset-backed securities	—		—		—		—		32,692		32,692
Corporate debt securities	—		—		—		—		58,799		58,799
U.S. Treasury securities	118,428		—		118,428		230,761		—		230,761
Non-US Government securities	—		—		—		—		17,220		17,220
Commercial paper	—		—		—		—		282,731		282,731
	$	189,271	$	—	$	189,271	$	349,468	$	391,442	$	740,910


	June 30, 2022		December 31, 2021
Raw materials	$	10,194	$	10,672
Work-in-process	44,165		17,451
Finished goods	43,256		25,785
Total inventories	$	97,615	$	53,908


	June 30, 2022		December 31, 2021
Research equipment	$	7,046	$	7,174
Manufacturing equipment	22,758		5,719
Computer and office equipment	6,497		5,370
Leasehold improvements	8,816		1,628
Subtotal	45,117		19,891
Accumulated depreciation and amortization	(13,749)		(13,100)
Subtotal	31,368		6,791
Right of use of assets	5,723		2,003
Property and equipment, net	$	37,091	$	8,794


Year:	Amortization (in thousands)
Remainder of 2022	$	54,387
2023	108,771
2024	108,771
2025	108,771
2026	108,771
Thereafter	427,026
Total	$	916,497


	June 30, 2022		December 31, 2021
Principal amount:
2024 Convertible Notes	$	90,936	$	90,936
2027 Convertible Notes	805,000		805,000
Total Principal Amount	$	895,936	$	895,936

Unamortized debt discount:
2024 Convertible Notes	$	(1,263)	$	(1,517)
2027 Convertible Notes	(16,055)		(17,745)
Total unamortized debt discount	$	(17,318)	$	(19,262)

Carrying amount:
2024 Convertible Notes	$	89,673	$	89,419
2027 Convertible Notes	788,945		787,255
Total carrying amount	$	878,618	$	876,674

Fair value based on trading levels (Level 2):
2024 Convertible Notes	$	172,743	$	159,678
2027 Convertible Notes	711,660		718,889
Total fair value of outstanding notes	$	884,403	$	878,567

Remaining amortization per period of debt discount (in years):
2024 Convertible Notes	2.4		2.9
2027 Convertible Notes	4.7		5.2


	June 30, 2022		December 31, 2021
Accounts receivable from product sales to partners	$	56,570	$	18,504
Accounts receivable from revenues under collaborative agreements	11,478		5,422
Accounts receivable from royalty payments	87,634		63,555
Accounts receivable from other product sales	6,259		4,634
Other receivable	9,985		—
Contract assets	19,842		—
Subtotal	191,768		92,115
Allowance for distribution fees and discounts	(2,400)		(1,140)
Total accounts receivable, net	$	189,368	$	90,975


	June 30, 2022		December 31, 2021
Prepaid manufacturing expenses	$	50,848	$	47,991

Other prepaid expenses	14,180		3,809
Other assets	6,850		2,096
Total prepaid expenses and other assets	71,878		53,896
Less long-term portion	(26,283)		(13,414)
Total prepaid expenses and other assets, current	$	45,595	$	40,482


	June 30, 2022		December 31, 2021

Accrued compensation and payroll taxes	$	15,858	$	9,858
Accrued outsourced manufacturing expenses	6,242		6,514
Income taxes payable	23,036		1,439
Product returns and sales allowance	21,222		706
Other accrued expenses	15,506		3,648
Lease liability	7,788		2,820
Total accrued expenses	89,652		24,985
Less long-term portion	(5,551)		(544)
Total accrued expenses, current	$	84,101	$	24,441


Balance at December 31, 2021	$	—
Goodwill acquired	199,481
Balance at June 30, 2022	$	199,481


	Weighted average remaining life (in years)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Auto Injector technology platform	7	$	372,900	$	5,585	$	367,315
XYOSTED proprietary product	10	277,400		2,908		274,492
TLANDO product rights	10	277,600		2,910		274,690
Total definite-lived intangibles, net		$	927,900	$	11,403	$	916,497
ATRS-1902 (IPR&D)						59,600
Total Intangibles, net						$	976,097


	June 30, 2022
	Unrecognized Expense		Remaining Weighted-Average Recognition Period (years)
Stock options	$	28,109	2.81

RSUs	$	33,922	2.82
PSUs	$	5,073	2.41
ESPP	$	172	0.46


	Three Months Ended
	June 30,
	2022		2021		Change
Sales of bulk rHuPH20	$	25,057	$	24,087	$	970
Sales of proprietary products	14,687		6,273		8,414
Sales of device partnered product	6,556		—		6,556
Total product sales, net	$	46,300	$	30,360	$	15,940


	Six Months Ended
	June 30,
	2022		2021		Change
Sales of bulk rHuPH20	$	41,505	$	40,857	$	648
Sales of proprietary products	20,379		11,269		9,110
Sales of device partnered products	6,556		—		6,556
Total product sales, net	$	68,440	$	52,126	$	16,314


Period	Total Number of Shares Purchased	Weighted-Average Price paid per share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Approximate Dollar Value of Shares That May Yet Be Purchased under the Programs (thousands)
April 1, 2022 through April 30, 2022	—	$	—	—	$	600,000
May 1, 2022 through May 31, 2022	—	$	—	—	$	600,000
June 1, 2022 through June 30, 2022	—	$	—	—	$	600,000
Total	—			—


2.1						Agreement and Plan Merger among Halozyme Therapeutics, Inc., Atlas Merger Sub, Inc. and Antares Pharma, Inc. dated as of April 12, 2022 (1)

3.1						Amended and Restated Certificate of Incorporation (2)

3.2						Bylaws, as amended (3)
4.1						Indenture, dated November 18, 2019, between Halozyme Therapeutics, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, and the Registrant (4)

4.2						Form of Note, dated November 18, 2019, between Halozyme Therapeutics, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, and the Registrant (4)

4.3						Indenture, dated March 1, 2021, between Halozyme Therapeutics, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, and the Registrant (5)

4.4						Form of Note, dated March 1, 2021, between Halozyme Therapeutics, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, and the Registrant (5)

4.5						Credit Agreement, dated as of May 24, 2022, by and among Halozyme Therapeutics, Inc., the Guarantors, Bank of America N.A. and each of those additional Lenders that are a party to such agreement. (6)

4.6						Security Agreement, dated as of May 24, 2022, by and among Halozyme Therapeutics, Inc., the Guarantors and Bank of America N.A (6).

10.1						Lease Agreement, dated July 1, 2019, by and between Antares Pharma, Inc. and Whitewater Properties I, LLC. (7)

31.1						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended

32						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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		Halozyme Therapeutics, Inc., a Delaware corporation


Dated:	August 9, 2022	/s/ Helen I. Torley, M.B. Ch.B., M.R.C.P.
		Helen I. Torley, M.B. Ch.B., M.R.C.P. President and Chief Executive Officer (Principal Executive Officer)



Dated:	August 9, 2022	/s/ Nicole LaBrosse
		Nicole LaBrosse Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)