It has been about a month since the last earnings report for Halozyme Therapeutics (HALO). Shares have lost about 19.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Halozyme Therapeutics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Halozyme Q4 Earnings Miss, Revenues Beat Estimates
Halozyme reported fourth-quarter 2020 earnings of 50 cents per share, which missed the Zacks Consensus Estimate of 56 cents. The company had reported a loss of 17 cents in the year-ago quarter.
Total revenues increased 126.6% year over year to $121.7 million primarily driven by an upfront payment from Horizon Therapeutics and a milestone payment from J&J. The top line also beat the Zacks Consensus Estimate of $119.72 million.
Quarterly Highlights
Halozyme’s top line comprises product sales, royalties and revenues under collaborative agreements.
Royalty revenues were $32 million in the fourth quarter, up 85.7% from the year-ago quarter, mainly driven by strong sales uptake of J&J’s subcutaneous Darzalex (Darzalex SC) and Roche’s Phesgo. However, royalties were hurt by lower sales of its mature legacy partner products.
Product sales, including the sale of bulk rHuPH20 to collaborators using the ENHANZE platform for drug development, increased 43% to $32.5 million in the fourth quarter. The increase was driven by strong demand for rHuPH20 from partners to support their commercial as well as under developing products.
Revenues under collaborative agreements were $57.3 million compared with $13.7 million in the prior-year quarter. The significant increase was due to the company’s recognition of $30 million in upfront payment from Horizon Therapeutics and $15 million in sales milestone from Janssen, a subsidiary of J&J. Halozyme inked an agreement with Horizon Therapeutics granting access to its ENHANZE platform during the quarter. Janssen’s payment was triggered following first commercial sale of Darzalex Faspro.
Research and development (R&D) expenses declined 83.6% year over year to $7.4 million mainly due to discontinuation of oncology drug development efforts.
Selling, general and administrative (SG&A) expenses were $10.4 million, down 56.4% from the year-ago period. The decline was due to lower compensation and commercial-related expenses as a result of a restructuring initiatives announced last year.
The company repurchased its own common stock worth $150 million during the fourth quarter.
Full-Year Results
Halozyme reported revenues of $267.6 million in 2020, up 36.5% year over year. The company’s earnings in 2020 were 91 cents per share against a loss of 50 cents per share in the year-ago period.
2021 Guidance Issued
Halozyme issued its guidance for revenues and earnings for 2021. The company expects total revenues in 2021 to be between $375 million and $395 million, indicating year-over-year growth of 40. The company expects revenues from royalties to double year over year on the back of strong uptake of subcutaneous formulation of J&J’s Darzalex.
It expects earnings to be in the range of $1.40-$1.55 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -5.64% due to these changes.
VGM Scores
Currently, Halozyme Therapeutics has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Halozyme Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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