Good afternoon. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Halozyme Fourth Quarter and Full Year 2022 Financial and Operating Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] Please note that this event is being recorded. I will now turn the call over to Tram Bui, Halozyme’s Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you, Operator. Good afternoon. And welcome to our fourth quarter and full year 2022 financial and operating results conference call. In addition to our press release issued today after the market close, you could 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 fourth quarter and full year 2022, as well as guidance for 2023. 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. 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 Torley.

Thank you, Tram, and good afternoon, everyone. I am very pleased with our fourth quarter and full year 2022 results, which continues to reflect strong financial and operational performance across the entire company, creating positive momentum and positioning Halozyme for an exciting 2023. In 2022, we extended our leadership as a subcutaneous drug delivery platform company through the continued expansion and progress of our ENHANZE portfolio and through the acquisition of Antares Pharma and the small volume auto-injector platforms. The acquisition also resulted in a diversification of our revenues with the addition of the auto-injector and specialty to software and products businesses. Moving to slide three, we achieved record revenue of $660 million in 2022, an increase of 49% year-over-year. This strong performance was primarily driven by the continued growth of our ENHANZE portfolio includes revenues from our acquired auto-injector and specialty product businesses. Fourth quarter 2022 revenue was $181 million, an increase of 78% over the same period in the prior year, resulting from continued growth of ENHANZE royalty revenues, incremental product sales and royalties from our small volume auto-injectors and sales of XYOSTED, our commercial testosterone replacement therapy product. As we look ahead, we entered the New Year with compelling growth opportunities. Our ENHANZE capabilities support our goal to expand the number of current and new partners utilizing ENHANZE, our high volume auto-injectors plus ENHANZE and our small volume auto-injectors. As a result, Halozyme is well positioned for continued growth. This growth is reflected in our guidance for 2023. We project record revenues of $815 million to $845 million, growth of 23% to 28% over 2022 and we project EBITDA of $415 million to $440 million, growth of 30% year-over-year growth. In 2023, we have multiple drivers of new opportunity contributing to near- and long-term growth. These include…

Thank you, Helen. 2022 was a year marked by strong financial performance. Halozyme recorded record revenue as a result of growing ENHANZE royalties and the addition of the Antares business. We completed the acquisition of Antares that met our expectations in being accretive to revenue and non-GAAP EPS. We also strengthened our balance sheet through a strategic refinancing walking into a lower interest rate that combined with our cash generation, puts us in a strong capital position with a net debt-to-EBITDA ratio of 3.2% at year-end. And as Helen mentioned, we remain committed to deploying capital through our share repurchase program to complement our EPS growth. With our 2022 repurchases, our share buyback programs have resulted in the repurchase of 30.6 million shares since 2019, which contributed $0.32 to non-GAAP earnings per share for the full year 2022. I will now turn to slide 13 for our fourth quarter 2022 financial highlights. Here, I will focus on total revenue for the fourth quarter, which was $181.5 million, a 78% increase compared to $102 million for the fourth quarter of 2021. The increase was driven by an increase in royalty revenue, primarily attributable to subcutaneous DARZALEX and the addition of product sales as a result of Antares acquisition. Revenue for the quarter included $106 million in royalties, an increase of 69%, compared to $62.6 million in the prior year period. Lastly, for the quarter, GAAP diluted earnings per share was $0.42 and non-GAAP diluted earnings per share was $0.48. I will now turn to slide 14 for a review of the full year 2022 results. I will briefly touch on some highlights here with more details available in our press release and 10-K filed with the SEC today. Total revenues grew 49% to $660.1 million in 2022, off of an already…

Thank you, Nicole. 2022 was a transformational year for Halozyme. We made great strides as a combined company with our one team culture that enhanced our leadership in drug delivery and supported our continued growth. 2023 will be another year with significant growth opportunities. Highlights include the potential start of our Wave 3 product launches with two potential approvals in 2023 for subcutaneous efgartigimod and subcutaneous atezolizumab, continued progress in the development of our high-volume auto-injector with ENHANZE, the goal of signing new collaboration agreements across our platform and continued revenue growth resulting from our commercial products. I will end by thanking our Halozyme team and our partners and collaborators for the strong progress made in 2022. I am excited regarding our 2023 plan that is resulting in our strong revenue and EBITDA growth guidance. And with that, we would be now delighted to take your questions. Thank you, everyone, for joining us today. Operator, would you please open the call for questions.

[Operator Instructions] Our first question will come from the line of Mohit Bansal with Wells Fargo. Please go ahead.

Great. Thank you for taking my question and congrats on all the progress. Maybe one question we get a lot is, do we have some clarity on how Inflation Reduction Act will treat ENHANZE products at this point, especially the products which have longer patent protection due to the co-formulation patterns? Thank you.

Thanks, Mohit. At this time, we are still awaiting CMS to provide regulations and the details as to exactly how it’s going to be implemented and so there still is not a clarity. We obviously are watching that closely and we will provide an update as it becomes clearer. And obviously, the question really is, whether it’s a subcutaneous, which have a different BLA filing and a difference that launch date would restart a different clock. And so, no answer we can give them that yet, Mohit, but that’s definitely of interest to us and our partners.

Got it. Super helpful. Thank you.

Your next question will come from the line of Mike DiFiore with Evercore ISI. Please go ahead.

Hi, guys. Thanks for taking my question and congrats on the quarter. Two for me. Number one, I noticed that Merck is conducting a Phase 3 non-small cell lung cancer trial of pembrolizumab+hyaluronidase. Any thoughts on how this may be different from ENHANZE? And the second question is concerning subcutaneous Vyvgart. Obviously, Vyvgart expected to be a big project in 2023 and you seem to be pretty bullish on the size of the subcu opportunity. So having said that, why didn’t the Vyvgart PDUFA delay not lead to a change in your guidance?

Yeah. Thanks for those questions. Let me begin with the question on Merck. We noted that the data on that study start. Mike, we don’t have any details as to exactly what Merck is using and how they are proceeding. So we really can’t comment on that. That would be a question, obviously, better address to them. What we can say is with regard to ENHANZE, we obviously have established versus the proven well-tested leader in supporting subcutaneous delivery of drugs and we do find that our proven track record of success with five approvals, more than 600,000 patients who have received treatment with ENHANZE drug really puts us in a great position and a great negotiation position for continue to expand the number of deals we have. So that’s all I will say on that one. On Vyvgart, as people may be aware, the FDA did feel that due to some additional data that was submitted during the review process that they needed more time to review. They extended the PDUFA date by three months and so now that PDUFA date is June of 2023. We do have milestones associated with approval of products, and so, obviously, just pushing out three months doesn’t make any change to our guidance that we still expect this to fall within 2023 based on all the information we have today.

Got it. Thanks so much.

Your next question comes from the line of Jason Butler with JMP Securities. Please go ahead.

Hi. Thanks for taking the question. Two for me. First of all, you pointed previously to the potential for an ENHANZE auto-injector partnership or collaboration this year. Is that still your expectation that, that could occur? And then, secondly, the clinical work that you are doing, the feasibility testing, can you maybe give us some parameters about how you are assessing success or progress with that work in 2023? Thanks.

Yeah. Thanks for that, Jason. Yes. We are indeed -- we are still planning and actively discussing with both current and potential new partners, the beginning development program of ENHANZE with a high-volume auto-injector. So very happy with the progress of those discussions. The clinical studies of which we -- in my prepared remarks mentioned, we expect to have data for that midyear is a feasibility study. We created a prototype. We tested it in some other models by the end of last year, which was our goal. But now we want to take it into patients, human volunteers and basically just show the feasibility and reliability of it. So, as an example, the primary endpoint will focus on the number of devices that fired appropriately and deliver the drug in the required amount of time. That’s pretty standard for these types of tests and it’s a nice way just to confirm the prototype is effective in doing what it was designed to do.

Great. Thanks for taking the questions.

Thank you.

Your next question will come from the line of Jessica Fye with JPMorgan.

Great. Good afternoon. Thanks for taking the questions. First, can you elaborate a little bit on the studies -- the profile enhancing studies mentioned on the last slide of the deck regarding patient preference and on-body device. Just curious to learn a little more there. And then, second, following up on an earlier question about Merck’s subcu pembro that sounds like it’s using hyaluronidase as well. Can you walk through why you would not be worried about partners trying to pursue a similar approach, creating their own ENHANZE-ish products with hyaluronidase and/or whether you expect Merck to infringe any IP? Thank you.

Thanks for those questions, Jess. I will begin with the profile enhancing studies and for everybody that’s on slide 18 of the deck that we showed. And I think, Jess, you particularly wanted to hear about the patient preference study on the on-body device. These are studies that partners are doing for already commercialized or late-stage development drugs. And it’s all -- these types of studies are done to enhance the profile or provide additional information to inform patients and/or physicians with regard to how the drug can be used. These are trials that are actually listed on clinicaltrials.gov, but we didn’t have permission from our partners to actually list them here, but you can find more about them and pretty routine and I think exciting that partners are continuing to explore and expand the profile on all drugs that are in development. With regard to Merck, I think, the reason we are not worried about our current partners wanting to move and develop their own hyaluronidase and start incorporating that really focuses on a number of factors. The first one is that we bring a very strong safety track record. The issue when you combine two biologics together is a worry about immunogenicity and with 600,000 patients treated, they know that, that has been a very well-characterized safety profile. First question that comes up in all of our new deal negotiations is that worry. I think that’s the first one, Jess. We also have established a very strong relationship with all of our partners, demonstrating our expertise in development and regulatory and reliability of supply. And if you like the phrase of the aims broken, why fix it, I think, that is another reason that would not consider doing that. We obviously are very conscious about being reliable and a low-cost supplier to our partners. So then thinking about that would make no sense. And then the third one, I think, is a little bit more strategic for the partners, and they are, as we look at our partners, many of them are more focused on developing new molecular entities to deliver new large revenue speeds rather than take the time and resources to focus on in modest reduction to what it’s costing, for example, in a royalty rate. And so for all of those factors, we think it’s highly unlikely that our partners would want to develop their own rUpH20 and with no indication there.

Thank you.

Our next question will come from the line of Corinne Jenkins with Goldman Sachs. Please go ahead.

Yeah. Good afternoon, everyone. So I think maybe just for clarification for me. I think we have previously talked a lot about the 5 ml, but now you are talking about a 10 mL as well. Can you just talk about where you stand in the development of that 10 ml version and what are some of the gating steps before that can enter the clinic?

Yeah. Thanks for that, Corinne. And our prototype has actually been designed with flexibility that depending on what a partner actually wants, it can deliver anything from 5 ml to 10 ml. And so it’s the same basic prototype that we have in development. It’s just the fill cartridge will be able to be varied depending on what volume the partner actually wants. So this clinical testing that we plan to do this year will evaluate some several options of volume up to 10 ml.

That’s helpful. Thanks. And then as you think about kind of your current portfolio of partnered products, what portion of them fall under 10 ml versus 5 mL versus less than that? Is that something you can provide clarity on?

Yeah. We have mentioned when we did the acquisition, that we have a small number of our partner programs today that are in those volume ranges. We tended to work on larger volumes, 15 mls being quite common for our Boeing, but there are certainly a handful of current partners who are in that 5 ml to 10 ml range. They haven’t provided that information publicly, so we are not in a position to do that. But as we said when we did the acquisition, this is also a part of the strategy and moving to ENHANZE what the high-volume auto-injector is to get new deals and new collaboration partners. And I can say from us evaluating the landscape, we see a number of opportunities out there that may be used for us in the future that allow us to be delivering that 5 ml to 10 ml alone as well. So think of it as some opportunity for the current partners, but really this was to open up a whole new market of opportunity for ENHANZE here with that.

Thanks. Maybe just one last one for me. We have got a couple of product launches coming this year. How should we think about the path to co-formulation patents for those products? Is that something we can get some visibility on in the near-term?

Yeah. I can say that all of our currently marketed products have received or pending patents for co-formulation patents. I can also say, Corinne, that all of our development partners are very actively engaged in a number of the ones who have got advanced- to late-stage development have already filed applications for co-formulation patents. Specific by partner is not something we can talk about because that’s partner confidential information and I think the visibility will come as patents are issued, those become public domain, and at that point in time, you will be able to find them and we will be able to talk about them. But our partners have been unanimous in their support or protecting their inventions and filing co-form patents, which obviously, we are very pleased about and support, because, in general, those have benefits to us in terms of the duration of time we get royalties and they can also push out the time for the spec down. So we are very -- we are aligned and our very active focus on new co-form submissions.

Yeah. Thank you.

Your next question will come from the line of Vikram Purohit with Morgan Stanley. Please go ahead. Vikram, your line maybe on mute.

Hi. Can you hear me now?

We can.

We can, Vikram.

Okay. Great. Thanks for taking my question and sorry about that. So we had one question on subcutaneous ocrelizumab. So assuming the Phase 3 data here is positive, how do you foresee uptake for a subcu oc should ramping in this market, particularly given some recent competitive developments here in the multiple sclerosis space? Thanks.

Yeah. And so we are expecting, based on latest comments from Roche, the data midyear, which with the goal of taking therapy from the treatment and observation time for a minimum of 3.5 hours to 6 hours down to the initial doses with subcu being an hour for injection and observation, and ultimately, the goal is 10 minutes if the data supports that. So you can see what a transformation that will be for patients who are receiving MS therapy, lifelong and having to go to an infusion suite. And so I do think that based on that profile and be able to get to a simple 10-minute injection, this will be very competitive with the other products that are available on the market. Roche has not commented on specific uptake, but they have commented that they see an exciting market for the subcu option and delivery.

[Operator Instructions] Your next question will come from the line of David Risinger with SVB Securities. Please go ahead.

This is Dan Tarjan on for Dave. Two questions for us, please. So, one, can you provide some more color on your portfolio of Phase 1 candidates and including the historical on Phase 1 candidate in actually advancing to Phase 3 and also the typical time line for a Phase 3 go/no-go decision after candidate enters Phase 1. Second question, any modeling color you can provide on the first quarter of 2023 and the following quarters? Thank you.

All right. So our -- with regard to the Phase 1 candidates, that those really today would be what we are calling our Wave 4 products simply, just turn to that page, right? So that will be listed on page nine. And as you can imagine, Dan, it really does all depend on the individual partners plans and programs as to exactly what that time line is. The two products that are at the top of the list in that case atezolizumab and nivolumab moved pretty rapidly from their end of Phase 1 into the Phase 3 decision. In other cases, we have studies that are ongoing, such as ARGX-117 and repilvary [ph]. So those are still active studies and so you wouldn’t move forward. There is one study there, teplizumab. I think we have talked about that before, where we heard comments from Horizon to say they were evaluating going forward in options with and without Page 20 and so we are still waiting for a final decision on the plan there. But I would say just based on those examples, the majority of the studies here listed are still ongoing in the Phase 1 with teplizumab being one that’s completed. And so once those studies are finished and a decision is made and often there’s a conversation with the FDA about the design of the Phase 3 study. It usually is measured in months of time, I think, six months plus or minus, is a reasonable time frame for a transition, we might see between a Phase 1 and a Phase 3 for a partner who is wanting to move quickly to move forward into Phase 3 development. If I am sorry, can you just repeat the second question, you cut out a little bit for us.

Yeah. No problem. So the second question was, any modeling perspective for the first quarter of 2023 and the following quarters?

Yeah. I will ask Nicole to address that.

Yeah. Happy to share. So while we don’t provide guidance on a quarterly basis. What I can say is we look forward to Q1, from a revenue perspective, we are able to share that total collaboration revenue. We are forecasting to be relatively flat in 2023 versus 2022 and we do have line of sight to milestones beginning in the second quarter of the year and really being more weighted into the second half of the year. So that can give you a little bit of line of sight to expectations. And then when I talk about maybe looking at royalty. So just to reiterate, our royalty guidance for the full year is $445 million to $455 million. While what we do see in Q1 is sequential growth to be flattening in the first quarter and then grow sequentially there after throughout the year and that’s really a driver of seasonality with our EpiPen. We have FX reset at the start of the year and also looking into Q1, we are expecting minimal true-up in the first quarter.

And so I will just add that we wanted to provide that bit of color. We are very excited about the continued growth that we are going to see in the subsequent quarters both in terms of our royalties but also milestones that are a little -- that will begin in Q2, as Nicole said.

That’s very helpful. Thank you.

We have no further questions at this time. Ladies and gentlemen, that will conclude today’s meeting. Thank you all for joining. You may now disconnect.