Halozyme Therapeutics Inc
NASDAQ:HALO
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Halozyme Therapeutics Inc
Earnings Call Analysis
Q3-2023 Analysis
Halozyme Therapeutics Inc
The company has reported a robust increase in royalty revenue for the third quarter of 2023, with a year-over-year growth of 15% reaching approximately $114 million. They have also reaffirmed their commitment to a revenue guidance amounting to $445 million to $455 million for the full year, highlighting an expected overall growth of over 23% compared to 2022.
DARZALEX FASPRO, the brand widely used for treating multiple myeloma, holds a dominant market share, with 91% in the United States and over 80% internationally. The medication has contributed to a significant 21% year-over-year sales increase for Johnson & Johnson, with third-quarter sales around $2.5 billion. Furthermore, analysts anticipate the annual sales of DARZALEX to surge to $17 billion by 2028.
Phesgo, a key product in Roche's breast cancer treatment arsenal, has seen a sales jump of 66%, totaling more than CHF800 million. Its adoption is rapidly growing, with a current conversion rate of 37% in the latest quarter and availability now in 44 countries. Roche also expects Phesgo to capture a 50% market share in the foreseeable future.
argenx's flagship product, VYVGART and its subcutaneous counterpart, VYVGART Hytrulo, have seen progression in terms of market adoption, achieving a quarter-over-quarter growth of 22% and totaling $329 million in sales for the third quarter. The product, backed by positive doctor feedback for its subcutaneous injection, is expected to receive European approval soon, with launches slated for 2024. argenx is also exploring VYVGART's potential in additional studies, which could further extend its reach in the market.
Tecentriq, another Roche product utilizing Halozyme's ENHANZE technology, has gained approval in Great Britain and is expected to receive opinions from other regions within the next quarter. The drug's intravenous version has already reported a sales increase, totaling CHF2.8 billion, marking an 11% boost compared to last year.
OCREVUS, designed for multiple sclerosis treatment, has made advancements in its subcutaneous formulation, showing positive phase III trial results. Sales of its intravenous form have climbed to CHF4.8 billion, a 14% year-over-year increase, showcasing its sustained commercial success. The subcutaneous version is anticipated to launch in the U.S. and Europe in 2024.
Bristol Myers Squibb's Nivolumab has shown positive phase III results for its subcutaneous form in treating renal cell carcinoma. The subcutaneous form is predicted to become a substantial part of the Opdivo business, with sales poised to endure well into the 2030s. BMS's third-quarter earnings report for Opdivo conveyed an 11% growth, with sales hitting $2.3 billion.
The company's Wave 3 products, typified by promising clinical outcomes, are foreseen to be a major source of near-term royalty revenues, with analysts estimating a combined sales potential of about $35 billion by 2028. This projection significantly outshines the $20 billion forecast for the current Wave 2 products, underlining the substantial growth potential for the company in the coming years.
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Hello, and welcome to the Halozyme Third Quarter 2023 Financial 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. [Operator Instructions] I will now turn the conference over to Tram Bui, Vice President of Investor Relations and Corporate Communications. Please go ahead.
Thank you, operator. Good afternoon, and welcome to our third 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. 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 2023. On today's call, we will be making forward-looking statements as outlined on Slide 2. I would 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'll now turn the call over to Dr. Helen Torley.
Thank you, Tram, and good afternoon, everyone. We're very pleased with our third quarter and year-to-date 2023 financial and operating results, which reflect the continued strength and durability of our business. We remain focused on supporting our growth trajectory and are well-positioned for another record year. We are on track with our recently updated revenue guidance and delivered greater than 25% revenue growth for the year, including greater than 23% royalty revenue growth. I'm also pleased to announce that as a result of our operational performance and close attention to expenses, we are raising EBITDA and non-GAAP EPS guidance. EBITDA guidance has increased from $420 million to $440 million to $430 million to $445 million and non-GAAP EPS guidance from $2.65 to $2.75, $5.70 to $5.80. I'm pleased to forecast such strong performance on both top and bottom-line growth this year. Moving to Slide 3. In addition, today, we announced an acceleration of the $250 million share repurchase remaining under the approved $750 million share repurchase plan that we announced in 2021. This $250 share repurchase will be executed through an accelerated share repurchase with a finance institution this week, subject to market conditions. We have a disciplined and balanced capital allocation strategy at Halozyme and Tecentriq to grow the business, return capital to shareholders through share repurchases and seek new growth opportunities through M&A. Our investments to grow the business in 2023 have resulted in substantial accomplishments, including our high-volume auto injector. We plan to invest at similar levels to grow the business in 2024. Our balance sheet is strong with continued projected EBITDA growth and cash generation throughout 2023. We have reduced our net leverage substantially and consistently each quarter from 3.2x at the end of 2022 to 2.4x at the end of the third quarter of this year. Given our strong balance sheet, decreasing leverage and continued EBITDA and cash generation, we decided to implement the announced $250 million ASR using cash on hand as we believe Halozyme is trading at a significant discount to our valuation, making sure refer to a high return on investment opportunity. We will continue to seek growth opportunities through M&A and have increased our technical searching evaluation due diligence capabilities with the addition of manual [centesis] who is a renowned leader in drug delivery technologies and a prior single fellow of novel drug delivery technologies as the Novartis invite for biomedical research. At this time, we do not predict any near-term M&A transaction that would add to our leverage. I'll move now to highlights in the third quarter, which are shown on Slide 4. We reported total revenue of $216 million, which gives us confidence to achieve our full year revenue guidance of $825 million to $845 million, representing greater than 25% year-over-year growth. With operating expense management, a strong focus in 2023 and with EBITDA and non-GAAP EPS trending above the low end of our recently updated guidance today, we increased guidance on these key measures of profitability. Moving now to Slide 5. As an industry-leading drug delivery platform company, Halozyme has built a diversified and robust portfolio. Our ENHANZE technology, combined with an innovative high-volume on-on sector provides new and we tend to improve therapeutic solutions for patients, our partners and health care providers. Throughout the year, our enhanced partners have made significant progress with their commercialization and development activities, which are expected to result in strong and durable long-term revenue growth for Halozyme. Before I provide additional details on each product, let me summarize the strong performance and momentum in the quarter, which is delivering strong results today while also advancing new ways of growth for Halozyme in the coming years. Our Wave 3 products, DARZALEX FASPRO and Phesgo remain strong revenue drivers. The approval of argenx is VYVGART Hytrulo in the United States and Tecentriq subcutaneous in [indiscernible] increased the total number of commercial products to 7 and importantly, signal to start in 2023 of to do royalty revenue streams. The positive Phase III base for VYVGART Hytrulo and CIDP will, upon approval, expand the commercial opportunity in a condition where there is significant high unmet need today. And the recent positive data announcements from 2 additional waste products, Nivolumab subcu and Atezolizumab subcu support near-term regulatory filings and commercial launches in the '24 to '25 time frame. A leading with 2 key takeaways. Firstly, the multiple positive Phase III data readout from our Wave 3 products in the last 19 months support a high success rate in the translation of Phase I/II enhanced subcutaneous pharmacokinetic data into positive Phase III results. The high success rate from early clinical data to positive Phase III data to approval is not always fully appreciated. The likelihood of success for our partners, utilizing enhanced technologies when bridging from an IP approval to subcute is very high when the early clinical data is generated. And secondly, as a result of the multiple positive Phase III data readout, we are confident to project 9 royalty revenue-generating products by 2025, a significant increase from 5 that we had as we entered 2023. And moving now to Slide 6. These approvals are the key drivers of our projection of the potential to achieve approximately $1 billion in royalty revenue in 2027. Let me now move to Slide 7. We set the goal for 2023 to deliver a new ENHANZE sale, a new high-volume auto-injector deal and a new volume auto-injector deal. We have made strong progress against these goals. We were very pleased to announce a new enhanced partnership with Acumen Pharmaceuticals, which reinforces the growing recognition of the value of subcutaneous drug delivery. Acumen is focused on the development of targeted therapies for Alzheimer's disease and is leveraging their deep understanding of the amyloid beta aligner to offer a medical breakthrough. The Alzheimer's disease market is a key inflection point with recent and expected approval paving a new path for treatment. We are delighted to work with Acumen with the goal of creating a best-in-class subcutaneous delivery option that may ease the treatment burden for patients, caregivers and the healthcare system. Under the terms of our nonexclusive agreements for their proprietary therapy, Halozyme receives an upfront payment and will be entitled some milestones in addition to a single-digit royalty on net sales, reflecting the nonexclusive nature of this agreement. For our high-volume auto-injector, we have also made strong progress. We presented the buildings from our clinical study, which demonstrated the delivery of 10 ml of a representative biologic in 30 seconds with our auto-injector was well tolerated by patients and one which are the patients we have again. The companies we presented the data you have been impressed and used our high-volume auto-injectors ENHANZE as a breakthrough in the area of rapid auto injection of large volume biologics. With that a break through comes excitement and source to something new. I am delighted that one of our current partners has agreed to test our current high-volume auto-injector device in a clinical test in 2024. This is a step prior to the potential development of a customized high-volume auto-injector for the patient population this partner is considering. At least one other current partner is also considering proceeding with the development of customized high-volume multi-injector for their patient population. We have not yet completed this agreement and remain focus to seek to get this completed in 2023, recognizing this may now occur in 2024. As an [fabless] leader in rapid subcutaneous drug delivery with ENHANZE in our differentiated auto-injector technology, we remain the partner of choice across the industry. We're also seeing strong interest from pharma and biotech companies who are interested in understanding the potential implications of the final CMS guidance on drug price negotiations for Part D drugs. In these guidelines, CMS affirmed its guidance that a fixed combination, which included 2 or more active ingredients will be distinct drugs for the purposes of applying the IRE price negotiation provision. Notably, Halozyme's recombinant human hyaluronidase technology in hand has been recognized as an active ingredient by the FDA.With those highlights, I'll now turn to Slide 8 for an overview of our royalty revenue and a more detailed review of the key products and drivers of growth. Royalty revenue for the third quarter of 2023 increased 15% year-over-year to approximately $114 million and continues to be the key driver of our revenue growth. For the full year, we are reiterating our royalty revenue guidance of $445 million to $455 million, representing greater than 23% growth over 2022. Our Wave 2 products, DARZALEX FASPRO and Phesgo are the current royalty revenue growth drivers and will be illustrated on the next 2 slides. DARZALEX FASPRO is a globally established choice of physician using DARZALEX for multiple myeloma patients with 91% share in the United States and an estimated greater than 80% share outside the United States. With the overall brand performance driven by the use of subcutaneous formulation, total DARZALEX brand growth is now the key metric we use to measure of DARZALEX subcutaneous growth and potential. In the third quarter of 2023, DARZALEX continued to drive strong sales growth for Johnson & Johnson with an increase of approximately 21% year-over-year on an operational basis to approximately $2.5 billion in the quarter. This increase was driven by share gains in all regions and continued growth in the first-line setting. Analysts predict annual DARZALEX sales will continue to grow and will be $17 billion by 2028. Turning now to Roche's Phesgo is shown on Slide 10. Phesgo is a combination of Perjeta and Herceptin delivered in a single 5 to 8-minute subcutaneous injection for patients with early and metastatic HER-2 positive breast cancer. I'll focus firstly on Perjeta to help them antialize the opportunity for Phesgo. For the 9 months of 2023, Roche reported projected revenue of CHF 3 billion. Moving now to Phesgo. Phesgo sales grew an impressive 66% to more than CHF 800 million, contributing positively to the continued growth of protein breast cancer treatment franchise. The global conversion rate from Project Phesgo continues to increase even as the number of large countries increases. Phesgo is now launched in 44 countries, up from 38 last quarter, and the conversion rate increased to 37% in the third quarter. Roche anticipates approximately 50% share over time, and we noticed that the key drivers of uptake include limited nurse and share capacity, even in the United States and patient preference for SubQ. Turning now to our Wave 3 products shown on Slide 11. I'll touch on recent event highlights and also upcoming value-driving events to watch for. All Wave 3 products are now highly derisked with one major market approval and positive Phase III data announced for the remaining 3 products. Beginning with Argenx VYVGART or Efgartigimod, this is Argenx's flagship pipe-laying product and is being developed with ENHANZE in a total of 6 autoimmune disease indications today with 4 of these indications being developed as subcutaneous-only delivery. Analysts project that Efgartigimod will be a multibillion-dollar annual revenue brand in 2028. The launch of Argenx VYVGART and VYVGART Hytrulo with ENHANZE for patients with generalized myasthenia gravis is progressing well, with growth of 22% quarter-over-quarter to $329 million in the third quarter of this year. With the approval of the subcutaneous VYVGART Hytrulo in June of 2023, organic goal is to expand the use of VYVGART by offering myasthenia gravis patients a new treatment delivery option and then within the earlier lines of treatment, driving brand loyalty with their current prescribers. It is exciting that VYVGART Hytrulo is helping organic achieve their goals. Argenx recently reported that initial feedback from doctors and VYVGART Hytrulo is broadly positive, and they recognize the benefit of this simple 30 to 90-second subcutaneous injection, which is enabled by our ENHANZE technology. Hytrulo is contributing to organic expansion of the market with new prescribers with the majority of patients by Hytrulo being VYVGART-naive. Our [genes] is also making progress reaching more myasthenia gravis patients globally. In September, VYVGART Hytrulo received a positive opinion from the CHMP, signaling a path for European approval for generalized myasthenia gravis with the self-administration Elektrofi later this quarter. Expanding the potential opportunity, Argenx demands positive top-line data from the ADHERE study, evaluating bipartite with ENHANZE for CIDP, with a 61% reduction in risk of relapse versus placebo, the safety and tolerability profile were reported to be consistent with the confirmed safety profile of VYVGART [indiscernible] in other indications. There is a significant unmet need in CIBP and we're excited that organic will be fine with their priority review foster and are busy preparing for 2024 launch. And further expanding the opportunity, Argenx recently confirmed 2 additional study readouts for VYVGART Hytrulo with ENHANZE, the first in idiopathic thrombocytopenic perforate, which is expected in the fourth quarter and the second was pemphigus, which is expected around the end of the year. I'll move now to our additional products with Roche. The Great Britain approval of Roches Tecentriq subcutaneous with ENHANZE in August marked our seventh enhanced commercial product approval. Based on the pivotal study conducted in non-small cell lung cancer, Tecentriq subcutaneous was approved in Great Britain for all current IV indications, including certain types of lung, bladder breast and liver cancer. Tecentriq [indiscernible] ENHANZE drug delivery technology allows for an approximate 7-minute subcutaneous delivery, which compares with 30 to 60 minutes for the IV infusion. Roche commented on their recent quarterly call that they project the potential purchase-centric subcu adoption in resource-constrained market to mirror the rapid conversion and high seretiment of Phesgo. With regard to upcoming regulatory actions, most project the CHMP opinion in the fourth quarter of 2023 and U.S. approval decision in 2024. We're also pleased to note that as an IV treatment Tecentriq continues to demonstrate strong growth. Year-to-date 2023, Roche reported IV to Centric revenues of CHF 2.8 billion, an increase of 11% year-over-year. I'll move now to OCREVUS. Roche's Phase III OCREVUS trial evaluating OCREVUS subcutaneous with enhance met its primary and secondary endpoints. [Opening] has the potential for people living with multiple sclerosis to receive their treatment in just 10 minutes, twice a year and creating the possibility to administer OCREVUS in additional multiple sclerosis centers that do not have IV infrastructure or the capacity constraint, which has a new growth opportunity. In October, Roche ENHANZE additional data showing subcutaneous injection with non-inferior to intravenous infusion based on OCREVUS levels in the flat over 12 weeks. Of note, OCREVUS subcutaneous injection was comparable to IV infusion and providing rapid and sustained depletion of B cells and near complete suppression of MRI lesion activity in the brain over 24 weeks. The safety profile at OCREVUS subcutaneous was reported to be consistent with the well-established safety profile of the OCREVUS IV infusion. The Ocarina II data will be submitted to health authorities around the world with U.S. and European launches expected in 2024. The OCREVUS in the IV formulation continues its impressive growth trajectory. For the 9 months year-to-date, Roche reported OCREVUS revenue of CHF 4.8 billion, which represents an increase of 14% year-over-year. And moving to our fourth Wave 3 product with positive Phase III day, that Bristol-Myers Squibb subcutaneous Nivolumab. BMS recently reported positive top-line data from the Phase III CheckMate-67T study, which is evaluating OPDIVO subcutaneous in advanced or metastatic renal cell carcinoma. The study met its co-primary pharmacokinetic endpoint and a key secondary endpoint, demonstrating noninferiority of objective response rate versus IV nivolumab. The safety profile of subcutaneous placebo was described by BMS as consistent with that of the IV OPDIVO.On the recent quarterly call, BMS management indicated that Vivo subcutaneous has the potential to open up a regulatory approval, an indication that constitutes 65% to 75% of their feeble business today. Importantly, the further commented that subcutaneous has the potential to expand the franchise durability into the 2030. BMS reported IV sales of OPDIVO of $2.3 billion in the third quarter of 2023, an increase of 11% year-over-year. In total, these Wave 3 products represent substantial near-term new royalty revenue opportunity for Halozyme with animal projections for total product sales of approximately $35 billion by 2028. What is exciting and something that is, I think, very important to highlight is that this $35 billion project opportunity is significantly higher than the $20 billion opportunity, which is projected for our Wave 2 products, those that are driving the strong royalty revenue growth we see today. I'll move now to Slide 12, and we're some highlights from our Wave 4 partner product development pipeline with ENHANZE. Our long-term growth trajectory is supported by these Wave 4 products with potential launches in the 2025 to 2027 time frame, and the potential to add multiple sustainable new royalty revenue streams. Wave 4 comprised of 10 partner products, 2 Products progressing in Phase III study and 1 recent advancement into a Phase IIb study. The remaining products are in ongoing Phase I clinical testing or a completed Phase I study. The 2 most advanced Wave 4 products are approved at IV products and our ENHANZE-free subcutaneous studies. These are Johnson & Johnson subcutaneous formulation of Amivantamab and BMS combination of Nivolumab+Relatlimab with ENHANZE. Notably, Johnson & Johnson presented strong data at ESMO from the MARIPOSA study, demonstrating that the regimen of amivantamab and lazertinib, the same regimen that's being studied in the subcu versus IV study reduced the risk of progression and gas by 30% compared to Osimertinib or to Bristol. Overall survival data is now awaited. Continuing the program, we've recently initiated enrollment of a Phase IIb study, which is comparing the efficacy, safety, peak and tolerability of N6LS with ENHANZE, which was given in combination with cabotegravir and converting that to the standard of care in adults with HIV. Turning now to Slide 13. We recently presented the positive clinical data results of our high-volume auto-injector study at the 13th Annual PODD conference. There was strong interest in the data, which demonstrates the feasibility of administering a petitions injection of 10 ml that are representative of biologics in globulin 10% with a hand in approximately 30 seconds using our high-volume auto-injector. We're pleased by the acknowledgment by partners and potential for that this is a breakthrough in terms of rapid large-volume subcutaneous drug delivery via auto-injector. And we're also delighted with the progress we've been making in advancing with 2 current partners. I'll turn now to our commercial portfolio. Zia said, is a weekly virtually payment that subcutaneous needs to suffer on replacement treatment, which is delivered by our proprietary auto-injector. Our strategy is to convert patients who are not achieving the treatment goals with intramuscular injections of decost on replacement therapy. [indiscernible] demand in the third quarter continued to grow, contributing to a 32% increase in year-to-date demand growth this year compared to 2022. We're on a positive trajectory to achieve approximately $100 million in [indiscernible] sales in 2022, representing a 20% increase from the run rate following the acquisition. And in a further update, we recently made the decision to terminate the Zalando licensing agreement and return the license to Lipaglyn effective January 31, 2024. This decision was made due to the inability to obtain economically acceptable coverage with pharmacy benefit managers. We have now focused on all of our promotional sales and marketing activity on driving stat growth. With that, I'll turn the call over to Nicole, who will discuss our financial results for the third quarter of 2023. Nicole?
Thank you, Helen. Our financial performance in the third quarter set us up well for another record year. We achieved top and bottom-line growth in line with our plans and supporting our financial performance expectations for the full year. Our balance sheet remains strong with continued projective EBITDA growth and cash generation in 2023 and beyond. Our cash, cash equivalents and marketable securities were $483.3 million as of September 30, 2023, compared to $348.3 million as of June 30, 2023. Our net leverage ratio was 2.4x as of September 30, 2023, compared to 2.9x as of June 30, 2023. We expect to continue to decrease net leverage with EBITDA growth. Turning to Slide 14. And as Helen mentioned, today, we announced an acceleration of the $250 million of share repurchases remaining under the approved $750 million share repurchase plan announced in 2021. The $250 million share repurchase will be conducted under an ASR. This brings our total share buyback since the inception of the first program in 2019 to $1.3 billion, which has benefited the current quarter non-GAAP EPS by $0.15. Given our strong balance sheet, decreasing leverage and continued EBITDA and cash generation, we decided to implement the $250 million ASR now, take advantage of this buying opportunity. We will continue to have a disciplined and balanced focus on our capital allocation efforts with a focus on driving value for shareholders through investing to grow the business, shareholder return, we are seeking new growth opportunities through M&A with no near-term plans to add to our leverage. Turning now to Slide 15 for our detailed financial results for the third quarter of 2023. Revenue for the third quarter was $216 million compared to $209 million in the prior year period. The revenue increase was primarily driven by higher enhanced product sales, royalty growth and biased sales growth, offset by the timing of milestones recognized in the prior year period. Recall that the timing of the milestone for Tecentriq SC in the U.S. was clean figure third quarter and is now expected in 2024. Royalty revenue for the quarter was $114.4 million, an increase of 15% compared to $99.6 million in the prior year period, driven by continued strong uptake of J&J's subcutaneous DARZALEX as both Roche and Phesgo. Research and development expenses for the third quarter was $17.3 million compared to $16.7 million in the prior year period, and SG&A expenses were $35.3 million compared to $34.5 million in the prior year period. The increases are primarily engagement increase in compensation expense. EBITDA in the quarter was $124.6 million compared to $109.9 million in the prior year period, reflecting the write-off of a contingent liability related to Zalando. GAAP diluted earnings per share in the quarter was $0.61, and non-GAAP diluted earnings per share was $0.75. Turning now to Slide 16. We are reiterating our top line guidance and raising our EBITDA and non-GAAP EPS guidance for the full year 2023. We expect total revenue of $825 million to $845 million, representing growth between 25% and 28% over prior year total revenue. We expect royalty revenue of $445 million to $455 million, an increase of 23% to 26% year-over-year, driven by continued strength in our enhanced BI products, including DARZALEX SC and Phesgo as well as a full year auto-injector royalty contribution. We now expect EBITDA of $430 million to $445 million, an increase from $420 million to $440 million, representing growth of 37% to 41% over 2022 EBITDA due to strong expense management in the release of the can do-related contingent liability. We now expect non-GAAP diluted earnings per share of $2.70 to $2.80, an increase from $2.65 to $2.75 representing annual growth of 22% to 27%, which reflects our strong year-to-date results and expense management. With that, I'll now turn the call back over to Helen.
Thank you, Nicole. It has been another strong quarter of execution, significantly advancing our royalty revenue generating portfolio and growth opportunity. We're excited to further expand current and new partner opportunities for ENHANZE and the high-volume auto-injector, and we continue to see additional opportunity for growth. I want to thank everyone on the Halozyme team and our partners and collaborators for the strong progress year-to-date. With that, we'd now be delighted to take your questions. Operator, please open the call for question and answer.
[Operator Instructions] Your first question comes from the line of Mohit Bansal with Wells Fargo. Your line is open.
Great. Thank you very much taking my question and congrats on all the progress. I have a 2-part question regarding the auto-injector. So the passage you mentioned who is looking at auto-injectors. Could you help us understand, is it related to like someone who -- so is it for a product which already is using a current technology and that now could be converted into an auto-injector, something like that? And then the other part of the question is, could you help us understand how much time does it take for an auto-injector technology like when someone conceptualizes that to actually converting it into a real product? What is the process there? How much time that take? Thank you.
Thanks, Mohit, and thanks for those 2 questions. With regard to the 2 updates we gave on high-volume alternative to progress, one partner moving into a clinical study as a first step before moving forward to the development of a custom auto-injector for one of their patient populations. And the second one, which is also a current partner is evaluating moving forward into a development agreement. As those have not advanced sufficiently for us to sign the deal, I'm not able to provide any additional information, but they are both partners who are very experienced with our ENHANZE technology. With regard to the auto-injector time line, the high-volume one, it is often to depend actually on what the product is that's being used. Is it already a subcu, as an example, is a very important driver of the timeline? And the second one is what primary container the partner wants to you. And is that immediately available?If it's already a subcutaneous product using ENHANZE and it's a primary container that's available, we estimate the timeline in around the 2-year time frame needs to be a comparative study done, stability work needs to be done. Human factor studies need to be done, but we estimate that can be done in about 2 years. And that, as you see, starts to generate revenues for Halozyme. If it's the case of a product that's currently in IV, and this is going to be something that is adding in hand and going into an auto-injector, think of that more like the timeline we see for an ENHANZE product because that which is approximately 5 years, 4.5 to 5 years from first in human to approval. That really would have to go through the comparability to show that the subcu dose is the same as IV. And while that's happening, all of the device development and the device stability and the human factor study is going to happen in parallel. So 2 years to 5 years, I think, is a reasonable time frame depending on the type of product made.
Thank you very much. Appreciate it.
Your next question comes from the line of Michael DiFiore with Evercore ISI. Your line is open.
Hi, guys, thanks for taking my questions, and congrats on all the progress. Especially congrats on today's newly announced deal with Acumen. My first question is why is this deal not exclusive? Is the -- a beta target still for grabs from any other manufacturer? And if so, would this potential future manufacture have the option of securing an exclusive deal outside of Acumen, of course? And my second question is regarding subcu OCREVUS. How should we think about the maximum IV to subcu conversion rate in the U.S., assuming that launches next year? I mean if we think back to RITUXAN HYCELA's launch in the EU, Roche adopted a much more proactive biosimilar defense strategy compared to the U.S. and launched HYCELA roughly 4 years prior to biosimilar entry. And as a result, the MAX IV, the subcu conversion rate in Europe was 60%. And I guess my open question is, could we expect a similar 60% conversion here in the U.S? Thank you.
Great. Thank you for that question, Michael. We actually do have another partner that is confidential who has the nonexclusive access to the amyloid beta. And in light of that, the opportunity with Acumen was nonexclusive given that we already had somebody who has the target non-exclusively. And I think that's a nice example of how -- when we're able to do nonexclusive deals, we can license to multiple different partners. So I think that answered that question and we're excited to be working with Acumen on their novel approach to this very dreaded disease where we're seeing significant advances and support all of the amyloid beta hypothesis as a key mechanism where we may be able to see real benefits for patients. With regard to subcutaneous OCREVUS, what we're hearing from Roche, if you've been listening to the prepared remarks, is Roche thought that their growth of the -- OCREVUS has been a little limited by the lack of infusion seat capacity, both outside the U.S. and in the U.S. and also sites who are able to have IV infrastructure. In light of that, there's a lot of commentary from Roche to think about this a little bit like Sabre became after the conversion was done, which is they're going to be trying to grow the overall market as a primary goal and also have some switch, but it's going to be a little bit of a different dynamic than one you mentioned for RITUXAN HYCELA where it was switched before biosimilars. I think we're going to see both dynamics happening -- and we're very excited by that because it means that patients are living far away and a core access such as patients in rural communities or countries where there isn't good access to IV therapies are going to be able to start on OCREVUS, which is the leading therapy for multiple sclerosis in the U.S. and EU5. So we'll see a market growth strategy and the conversion strategy because we haven't seen exactly this dynamic happened before, it's hard to pay exactly how much conversion will happen. But we certainly are seeing for FASPRO, I can turn your attention to that, that the availability of FASPRO what's been fuelling the dramatic growth we're seeing of DARZALEX in the last couple of years, and it's what's projected to be taking DARZALEX from an $8 billion brand last year to a $16 billion brand next year. So new ways to think about it, but I think equally exciting in terms of the opportunity we're going to see here for OCREVUS, where it will be 10 minutes subcu 2 times a year instead of 3.5 to 6 hours, IV twice a year and very likely closer to the patient's home.
Super helpful. Thank you so much.
Our next question comes from the line of Corinne Jenkins with Goldman Sachs.
Hi, great. Maybe a couple from us. First, could you just talk to us about some of the drivers of the XYOSTED growth this quarter is, I think, pretty meaningful. Are you seeing an inflection? And what pockets are driving that?
Thanks for inform. With I said we had a focus on 2 drivers. First one is driving that conversion. In the physician's office to get the patient some identified who are not doing well on their [indiscernible] and getting them on to -- sorry, their IM testosterone therapy and getting them on to XYOSTED. And the second one is very careful at Hansen in the office to make sure the office is filling in any part of authorizations that might be required, but also making sure when the patient gets a prescription filled, they're being more successfully connected with the copy assistance and other programs we put in place. So it's that pull-through of all of the programs and a higher rate of identification of patients that really is driving the growth that we're seeing and we do per day. We're still under 5% share all of this overall market, which is dominated by the IM subcutaneous, which is our conversion target. That's what we're trying to switch patients from. So a lot of growth still to come with the strategy that is beginning to really pay dividends.
Yes, helpful. Thank you. And maybe one last one for us. It sounds like there's a number of partners that are kind of circling around the auto-injector. What's your sense of some of the gating factors or things they'd like to better understand before actually signing on the deal? And what will they be exploring with the studies next year?
Yes. As I mentioned in the prepared remarks, really when we've been presenting it, we've had comments like fantastic work through, never thought this was possible. And I think it is the degree of innovation that's represented here [indiscernible] with any new innovation, there is always a period of inertia. And I will see it's exactly what we saw with ENHANZE, if I go back to right when I was in the company, where we've just done a couple of the deals, it took a couple of companies to come in and do it and then the waves happened after that. So I think we're just seeing that traditional innovation adoption curve and people moving into the clinic now get tested is going to help generate additional data. And just because it was so remarkable, we show them a video of patients receiving the therapy and it's invisible to see that the patient had to see 10 ml into the abdomen, I think in just 30 seconds. So I think it's a wonderful reflection of the innovation and people are doing their work now to evaluate that, think about it for their patient populations. And in the case of one partner in ENHANZE moving into a clinical study next year. So we're going to see more of that over the next months, I believe.
Helpful. Thanks.
Your next question comes from the line of Jason Butler with JMP Securities.
Hi, thanks for taking the question. Just one on the accelerated buyback. I mean now that you're wrapping up this buyback, can you just talk to us about how you're thinking about future return of shareholder capital and I guess, put that in the context of your appetite for bringing on new technologies?
Yes, I'll ask Nicole to address that.
Yes. Thanks, Jason. So as we think about our capital allocation strategy, it really remains unchanged. We're focused on the 3 pillars that we've been focused on, which is really continuing to invest in our current platform, continuing to return capital to shareholders, and we're very excited to take advantage of this buying opportunity now and accelerate the remaining portion on the current plan to do that starting this quarter. And then also, again, very much continuing to look for growing that revenue growth, that durability long term via M&A. We implemented the ASR this quarter because there are no near-term plans to grow via M&A, and we wanted to deploy our capital in the best way to return value to shareholders, but that will very much continue to be a focus in the longer term as we grow the business.
Great. And then just one more for me on Phesgo. Can you just speak to how you think about peak adoption here and how the self-administration product could drive -- whether it could drive further adoption for the subcu?
Yes. Thanks, Jason. On sense to, on Roche's comments, obviously, what we're seeing every quarter is an increase in the overall conversion. But I'll just mention that every quarter, there's always 4 to 6 countries being added, which is diluting the overall conversion. So that 37%, 38% reflects the range from very recent start of conversion all the way up to, I think, the mention to 92% conversion in Europe. With U.S. based on latest comments maybe 2 quarters ago at 20%at that time. Roche has commented that we expect up to -- to get to 50% conversion with that obviously continuing to be a range of recently launched markets and also high conversion in those markets where we're seeing resource constraints, nursing shortages, IV capacity constraints. And so we're obviously delighted with the very strong progress we're seeing and the continuous growth to come as we get to that 50% overall conversion of the market. And I wouldn't be surprised myself if it was able to go even further than that based on the value proposition that we're seeing here. And just to reiterate that, for breast cancer patients, many of them moms, many of them working instead of having to be an infusion sensor for the treatment, which can take up to 1.5 hours, but then let's say observation, the injection of Phesgo is given in just 5 minutes or so with a shorter observation time. That means a month can go in before work at lunchtime after work and not be able to have to take so much time. So it's a strong value proposition, and I am expecting more growth to come. The focus of the on-body which does include Phesgo. So sometimes people ask is that Phesgo or ENHANZE in it, yes, and ENHANZE an intrinsic car of Phesgo, which also included Herceptin and Perjeta. The goal with that is to allow for more at-home therapy. And so I haven't heard Roche comment if that can much they think that will impact the growth and grow the market. But based on the patient population, we just described, I think this is going to be a very nice option for a certain segment of that population that will fit better into their lifestyle.
Okay, great. Thank you.
Your next question comes from the line of Vikram Purohit with Morgan Stanley. Your line is open.
Hi, good evening, thanks for taking my questions. So we had 2, one on capital allocation, one on the auto-injector. So going back to some of your prepared remarks, it sounded like there's a renewed focus on business development and M&A. And so while we understand that you're not anticipating any near-term M&A, do you speak generally about the profile of businesses and the profile of assets that you'd find additive to fold in Halozyme? And then on the auto-injector, just a clarification, are the economic terms associated with these potential initial contracts? Would they be in line with economics in terms associated with your current ENHANZE contracts? Thanks.
All right. With regard to BD and M&A, as Nicole maintain, we didn't find any near-term opportunities, but we are continuing to look at that remains one of our 3 core pillars, which is to seek growth through deploying their capital for M&A. As a leader in drug delivery, we are looking for derisked broadly licensable assets where we can see a path to near-term accretion. So some form of drug delivery that is something major pharma, major biotech cannot do themselves, in which they would be needing to license from a company that has that specific asset. There are assets out there to anticipate that question. It just has to fit a grid of criteria for us, including that past a near-term accretion. So we will keep looking here. We spent a number of years looking for the [indiscernible] acquisition, and so we will just keep focusing on that. But also, as Nicole mentioned, the -- what we consider to be the undervaluation of the Halozyme stock made the share repurchase, the right thing we believe, to return capital to shareholders, given the strong opportunities that, that represented. With regard to the high-volume auto-injector, what we're going to see is because the high volume auto-injector has to be used with ENHANZE. Strategically, this is positioned to help us expand the number of current partner assets in the clinic and moving into the clinic, but also to allow us to find more enhanced partnerships. So the HPI is always going to be associated with a royalty payment for the drug, but that is primarily going to be driven by ENHANZE. And the model that's most likely for the high-volume auto-injector will be development and payment as it's being accretive but anthem product sales, where we would make the money on the number of devices that were purchased in the sale of the creative product.
Got it. Thank you.
[Operator Instructions] Your next question comes from the line of Na Sun with JPM Chase.
Hey guys, this is Na Sun [indiscernible]. Just question on the nonexclusive deal. I guess, is there more -- are you seeing more interest in nonexclusive deals from potential partners? And then another one on the auto-injector. What is the pathway for developing the auto-injector into a self-administered auto-injector? The first auto-injector Phase I is still administered by acquisition. Thanks.
All right. I will take the one on the auto-injector or maybe I'll ask Nicole to comment afterwards on the nonexclusive deals. Because this was a prototype now in the first time this has ever been done to attempt to deliver 10 mls in 30 seconds, we thought it was prudent and appropriate for pace that we had a health care administered approach to it. What we will find now is that partners are going to be moving the partners that we mentioned is likely going to move into the clinic to do a patient self-administered. And frankly, there's nothing additional that has to be done other than to write the protocol that way. It's very simple. It's an injector or place the device and the auto-injector on the atom and click a button and hold it there. So it's going to be very straightforward for patients to do. But the only reason we didn't do in the first study was because it's never been done before. Having seen how well tolerated it was and how well it worked. We have no hesitation in supporting patient studies at this stage then. So it will simply be the patient does that themselves. And while this is a larger volume than some other auto-injectors, the actual mechanism of doing it is tried and tested, I'll say, drive and tested by -- it seems like hundreds of thousand patients around the world with GLP-1. It's very similar to that. It's just a larger volume and a longer hold time. Nicole, do you want to comment on the interest in nonexclusive deals at the moment?
Yes, it's happy to ma'am. So I will say, historically, we always have tried to market exclusive and nonexclusive deals. I think historically, the interest has been on the exclusive side, but obviously, that comes with a higher price tag as well. We're very interested in nonexclusive deals. We see the benefit of reaching more partners and more patients that way. So I think both you'll see coming through, and we'll continue to pursue both types of models.
Thank you.
Your next question comes from the line of Mitchell Kapoor with H.C. Wainright. Your line is open.
Hi, everyone, thanks for taking the question. I wanted to ask about the evolution of the royalty revenue business. And right now, we have a lot of it coming from DARZALEX and Phesgo. But obviously, we'll have Phesgo HYTRULO and Tecentriq subcutaneous and others that will be making up a little bit more of the revenue -- royalty revenue business share. Could you just kind of comment on how soon you expect meaningful uptake to occur for some of these other agents? And then also on the Tecentriq subcutaneous approval in 2024, can you just comment on when you'll have a new PDUFA date? Or what is kind of the gating items to getting to that timeline?
Okay. All right. With regard to the evolution, and thanks for asking that question because we're very excited that the Wave 3 products. I know all 4 of them largely derisked with one approval and 3 positive Phase III studies. So looking very encouraging for launches of these products in the 2023 to 2025 time frame. And importantly, as I mentioned, if you look at where these products are projected to be in terms of size by 2020, it's $35 billion in sales of the product. which is substantially higher than the $20 million we're seeing with DARZALEX and Phesgo today. So we're very excited about how attractive that opportunity is. Depending on how you define meaningful, all 4 products are going to be commercialized by 2025 with several of them launching 1 to 2 years before that. So I think '24 mid-24, '25, '26, '27 is where we're really going to see these products growing very nicely following what we've seen in the past, which has been maybe a 2.5 to 3 years to peak cat conversion. So definitely going to be a very nice addition to the continued contributions from the Wave 1 and Wave 2 products, but adding 4 new very attractive royalty revenue streams in '23, '24, '25 and then on to '27 and beyond.
Great. Thank you. And on the Tecentriq new date for potential approval, is that something more narrow that you'll have a time on as we get closer to that? Or do we have an aside data at this point?
Yes. As far as we are aware, Roche has not communicated any assigned date, what they did state was the filing go in by year-end this year. And assuming a standard 10-month review time, mean that we take it into, let's say, the September, October time frame, but Roche has not communicated anything about that as yet.
Okay. Great. Thank you all very much.
Thank you.
That is all the time we have for the question-and-answer session. This will conclude today's conference call. We thank you for joining. You may now disconnect your lines.