00:04 Good afternoon everyone. My name is Liza 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 2021 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] 00:32 At this time, I would like to hand things over to Mr. Al Kildani. Please go ahead, sir.

00:41 Good afternoon and welcome to our fourth quarter and full-year 2021 financial results conference call. In addition to our press release issued today after the close, you can find a supplementary slide presentation that will be referenced during today’s call in the Investor Relations section of our website. 00:58 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 new Chief Financial Officer, who will review our financial results for the fourth quarter. 01:11 On today’s call, both GAAP and non-GAAP financial measures will be discussed. The non-GAAP or adjusted financial measures are reconciled with comparable GAAP financial measures in our earnings press release and slide presentation. During the call, we will be making forward-looking statements. I refer you to our SEC filings for a full listing of the risks and uncertainties. 01:33 I’ll now turn the call over to our CEO, Helen Torley.

01:37 Thank you, Al. I'm pleased to welcome Nicole to the call and [indiscernible] her new role as our Chief Financial Officer after doing such a terrific job as our VP of Finance and as our Controller. I’m going to begin today with a brief review of our record 2021 financial performance, which has created strong momentum entering 2022. 01:58 Total revenues in 2021 grew 66% year-over-year to $443 million. Operating income grew 91% to $276 million and non-GAAP earnings per share for the year was $2. All of these measures are within the range of our final 2021 guidance. This strong 66% revenue growth was driven by royalty revenue growth of 130% year-over-year, a $40 million upfront milestone payment for the signing of our eleventh enhanced collaboration agreement with ViiV Healthcare and additional development and commercial milestones associated with launch progress and the strong momentum in our development portfolio where we achieved our goal of 10 new partner study starts in 2021. 02:47 This strong progress and results in revenue growth allowed us to continue to demonstrate our strong commitment to capital return through the completion of our $550 million share buyback plan, ahead of schedule in October of 2021 and announcement of a new three-year $760 million share repurchase program, inclusive of $160 million accelerated share repurchase program, which was initiated in December 2021. 03:15 These achievements and the results of momentum have positioned us well for continued revenue and operating income growth in 2022 and beyond. In January, we provided our 2022 guidance. 03:27 For full year 2022, we expect revenues of $530 million to $560 million, which represent growth of 20% to 26%, driven primarily by projected royalty revenue growth of approximately 50%. Also contributing to our revenue projection, this year, we have included a new…

20:40 Thank you, Helen. Before I begin, I would like to again note that we now report key measures on a non-GAAP basis in addition to the GAAP basis and also provide financial guidance on a non-GAAP basis. We consider these non-GAAP measures to be important because they provide useful measures of our operating performance. Exclusive the factors that do not directly affect what we consider to be our core operating performance, but just stock based compensation and amortization, as well as unusual events and their related tax effects. 21:13 Please refer to our press release and filings for a reconciliation of GAAP to non-GAAP net income and earnings per share. With that, let me turn to Slide 9, where I’ll focus on some highlights from our fourth quarter results. 21:29 Royalty revenue for the quarter was $62.6 million, a 96% increase over the prior year period of $32 million. This was driven primarily by the continued strong uptake of Janssen’s subcutaneous DARZALEX utilizing ENHANZE. 21:47 Collaboration revenue for the fourth quarter was $12.3 million, as compared to $57.3 million in the prior year period. In Q4 2021, there were no new upfront license payments as compared to a $30 million upfront license payment from horizon in Q4 2020. Lastly, GAAP EPS was $0.46 and non-GAAP Eps was $0.42 per diluted share. 22:17 And now, let me turn to Slide 10 for a review of the full-year 2021 results. I'll briefly touch on some highlights here with more details available in our press release and 10-K filed with the SEC today. 22:32 Total revenues grew 66%, a $443.3 million in 2021, off of an already substantial revenue base in 2020. The biggest contributor by far is this increase with higher revenues from Royalties of $203.9 million, up 130% from 2020.…

28:04 Thank you, Nicole. I'd like to thank that the Halozyme team, our partners, and all of our collaborators for the hard work that resulted in the strong 2021 performance. In 2022, we'll continue to deliver growing revenues, growing operating income, and expanding our pipeline resulting in both strong near-term and long-term growth. 28:25 I thank you for joining us today. And with that, we'd now be delighted to take your questions. Operator, would you please open the call for questions.

28:33 Thank you. [Operator Instructions] We’ll go first to Charles Duncan, Cantor Fitzgerald.

28:44 Hey, thanks for taking the question and congratulations on a great year Helen and team. Thanks. Quick question, in terms of royalty growth, you mentioned the roughly 50% royalty growth this year, and I guess I'm kind of wondering if you could provide a little color on what the, kind of puts and pulls to that royalty growth could be? Is that primarily driven by additional FASPRO growth or does Phesgo come into the picture? And then I guess as a follow-up to that, when you think about the 76% or so adoption rate for FASPRO versus DARZA IV, I guess, I’m wondering where do you think that can go?

29:39 Thanks, Charles. So, in terms of the royalty growth, the growth is driven by both FASPRO and by Phesgo. As we mentioned in the prepared remarks, we see growth for each of them. We call that FASPRO is a bigger brand. It is going to be a larger contribution, but we're excited about the contribution we're going to see from Phesgo as well, which is going to come from additional launches outside the U.S. and more adoption at the U.S., which is like the U.S. a bit, but also continued penetration into accounts in the U.S. as well. 30:14 So, those are our two key royalty growth drivers. Specific to DARZALEX, while the exit as we saw was 76%, our average share in the year Charles was just 58%. And so we did think about the key drivers of our royalty revenue growth. First of all we’ve got a very fast growing brand in DARZALEX, at $6 billion in 2021, but analysts are projecting it's going to $10 billion by 2025. 30:42 So, if you like the – the [whole pie] [ph] is going to get bigger. And then our share will grow from the average share of 58% considerably above that. And I think a good benchmark is, it's already at 76% of the end of last year. We're going to see more area under the curve sales as we continue to see growth even catch up to that average of 76%, and frankly, there are very few barriers I think that why a patient wouldn't use subcu over IV given the potential for reduced treatment time and also reduced infusion related reactions. 31:17 So, we see a lot of growth to come.

31:21 Okay. Very good. One quick pipeline question, and that is on Efgartigimod, you mentioned possible data here in the near-term as guided by your partner? And I guess I'm wondering if you could lay out provide a little bit of an outline on the, kind of work that you're doing to prepare for regulatory approval. I said that would be a new partner that you'd support in those efforts?

31:50 Yes, good question. So, if you're mentioning the data readout is sometime in the first quarter. There is study that's going to readout if their Phase 3 study, which is measuring reduction in IgG levels at day 29. And argenx has also stated that they are waging additional data that come from longer-term studies to complete their package. So, we're following our normal process Charles. 32:15 We will be ready with all of the sections that are needed, related specifically to our drug products. And all of that with our five approval to date would become very proficient and quick at doing that. So, everything is very nicely on track to support argenx when they are ready to submit their BLA.

32:42 Up next we’ll take a question from Michael DiFiore, Evercore ISI.

32:48 Hi guys. Thanks for taking my question and congrats on the great quarter and a phenomenal year. Just two for me, if I may. Number one, just regarding your next gen higher yield low cost API, I know you said, you just started investing behind that, when can we expect this to become available? And the second part to that is that, does this have any unique IP that may push out the 2024/2027 dates? And as a follow-up, on Slide 6, I’m not sure if I'm missing something, but I noticed that ALXN1720 and Bristol 73 are no longer on that chart, any color as to what happened would be great? Thank you.

33:29 Yeah, so let me begin with the next generation high-yield low cost API. We have just very recently begun investing in that Mike. And so, we're still in the process of development and the optimization. So, we don't have a specific timeline yet of when it will be introduced, but we are working as fast as we can to have that ready, but think in terms of several years in terms of having that fully scaled up tested, stability, and all the other things that we need to do. 34:04 So, several years for that come. It does not have [indiscernible] because it is ENHANZE. Now, you will recall that in January, we also announced the development of a new rHuPH20, which is not enhanced. That one does have unique IP associated with this out to 2032 in Europe in 2034 in the United States. 34:31 So, let me move then to the question of the pipeline. Yes, you’re absolutely correct. Let me start with PD-73, very recently BMS, based on the overall data that they have been seeing on the drugs that are addressing that target with IV indicated to us they wouldn't be proceeding with the [indiscernible] and all that product as a subcu. And so, we did remove it from our pipeline chart. 34:58 And again, very, very recently, [indiscernible] also indicated to us that they would not be proceeding with the C5 target and they actually returned that down target to us. So, always some puts and takes in the pipeline that we’re obviously excited to see the six new products starting in 2021, but we did see these programs for different reasons [indiscernible] proceeds in the case of CD-73 just doesn't seem to be that attractive a target in the immune-oncology.

35:32 Got it. Thank you very much.

35:37 Up next we’ll hear from Corinne Jenkins, Goldman Sachs.

35:43 Hey, good afternoon. Moving first just one, you announced obviously this new rHuPH20 back in January, and I'm curious if the news of that product has shaped if at all your conversations with potential partners or even existing partners thinking about new product targets and partnerships?

36:03 Yes. Thanks Corinne. Absolutely. We're still in the process of rolling out and getting into deeper conversations with all of our current partners, but I can say that we're seeing some interest in that and that concept, and there are two areas that we’ve talked what might be interesting is exactly where we're seeing some interest. 36:22 Partners who are considering developing small molecules, we more extended room temperature stability, maybe attractive to them. And also, current partners who are developing drugs where they are more interested in a longer IP perhaps because their own product does not have as extended an IP. So, we very much – the current partner is very interested in it and we're are beginning to introduce in our new partner discussions as well, because we have seen certainly since the announcement of the [indiscernible] more interest by company’s who are pursuing small molecules and so it's a great additional offering to discuss with them, talking about when that might be possible to integrate into their clinical program, but obviously ENHANZE available [managed] [ph] to do that.

37:12 [Indiscernible] Thank you. And then maybe, I'm not sure if you have the visibility, but in terms of what percentages total are like sales are FASPRO [indiscernible], I'm curious if you have any color on not trending?

37:29 Corinne is that – that was for the subcutaneous portion of the sales?

37:32 Yes, for FASPRO versus the IV.

37:34 Unfortunately, Janssen doesn't provide that level of details. So, we're not in a position to be able to share that. I can’t say though and we can go back to comments that Janssen’s themselves made in the – in about June or July of last year. At that point in time, they were saying, ex-U.S. The FASPRO conversion was 60%. So, we do expect the phase of growing FASPRO sales in the U.S. and by the U.S. they have seen conversion uprise considerably from that 60% reported to that time, but we can't – that gives specifics.

38:13 Okay. Helpful. Thank you.

38:17 Next up is Jessica Fye, JP Morgan.

38:22 Hey guys good afternoon, and thanks for taking my question. Just following up on some of the prior questions for the rHuPH20 with extended room temperature stability and potential for patient self-administration, when should we expect that to enter the clinic? And can you just talk about the type of product that would most benefit from those characteristics?

38:48 Yes. So, with the new rHuPH20, we are still in the process, obviously old developing it and optimizing it. So, we expect that that to be available to partners to integrate into their clinical program in a couple of years. Now, from there, Jess, they need to do Phase 1 and Phase 3 studies just like with ENHANZE. So, we're estimating this would be available and first potential launch will be post 2027 with the same expedited development pathway we see with ENHANZE with just a couple of years, so this is ready and we have the right stability and the information for partners to integrate into their clinical development program. 39:31 As you're thinking about the types of products that it might be useful, I don't want to name a specific product, but if you can think about these conditions where the patient may be more convenient for them to be carrying around a [cell injector] [ph] as an example or pre-fill syringe that has the drug on the person because it's for a chronic use, but where they might want to have it with them and not have their life impacted by having to be tied to home that's the type of situation where we're seeing partners be very interested in the extended from temperature stability.

40:10 Okay. Got it. And maybe just one more from me, for the long-term royalty revenue potential where you're now providing an indication of what that could look like in 2031, going out beyond the 2027 figure that you've been giving for a while, how did you select 2031 as the kind of out year to provide there?

40:34 Just we’ve elected to show what would happen because there was so much focus I will say on 2027, we just selected something to show pretty close to that, but several years out what the dynamic would be Jess. Obviously, we could have picked one-year before, one-year after, but it just was picked to answer that question that there is strong growth potential for several years after 2027.

41:03 Great. Thank you.

41:10 Our next question comes from Jason Butler with JMP Securities.

41:15 Hi, thanks for taking the questions. Just a couple on the pipeline. I'm just – one on TAK-881, can you maybe just speak to how that product could fit into the overall IVIG franchise for Takeda and specifically how a 20% subcu formulation could potentially – how the market dynamics could play out there for a subcu conversion versus how they played out with HYQVIA? And then just real quick, could you remind us on the Phase 3 timelines to these [indiscernible] Nivolumab and your thoughts on how that product will impact the PD-1 market? Thanks.

41:55 All right. I'm going to say Jason, with regard to the IVSG market and exactly what Takeda is planning, they have not shared their specific plans and positioning for this new agent publicly. So, I'm not in a position to go into any details on that. I do see this though as an additional offering for them in what is a very strong franchise and the franchise that they have commented is one of their key growth drivers moving forward, but I can't comment on any specific positioning there. 42:30 For the nivolumab Phase 3 study, that continues at being executed by Bristol. They haven't provided any specific timeline. I can’t comment that on clinical trials.gov they have a primary completion date of December of 2023, which is sometimes a useful indicator through a rough time on as to when they expect, perhaps the first analysis to be done, but clearly it doesn't sound always had to do that. 42:57 And I think that Bristol is going with subcu therapy and this is really based on comments that they have made, is they do see the opportunity for patients not to be tied to infusion suites which are often in hospitals a bit further from the patient's home. And I think the vision for subcu is that it’s going to allow patients to be treated more in the community and with more ease and obviously in Bristol’s case a combination therapy of different check point inhibitors to reduce the burden for the patient and also for the caregiver. 43:28 So, we're very excited to see the progress they're making and recall they also have a Phase 1 study ongoing with appeal and relatlimab, which I think is going to be very interesting combination as well.

43:43 Great. Thanks for taking the questions.

43:48 Next up from Berenberg Capital Markets is Anita Dushyanth. Anita, your line is open.

44:04 Hi can you me?

44:03 Yes, ma'am please go ahead.

44:07 We can now Anita. Thank you.

44:11 All right. Thanks. I had a quick question on the Slide 6, a comment about the expected candidates to enter the pipeline, to say four new products, now would that mean that they have an IV version that’s already in the market or will those be brand new, like new molecules [indiscernible] that the partners has seen in a subcu formulation? And as a follow-up also, if the comment is five new Phase 2 [indiscernible], would you be able to give us some specifics on which of those Phase I might progress in the development? Thank you.

44:54 Hi. Thanks for the question, Anita. If we go to that chart in the specific ore studies that started in the fourth quarter, I can’t say that [indiscernible], which is Janssen’s drug and HIV is available as an oral and an IM to date that leaves a successful commercial drug, including the [indiscernible] of the combination therapy [indiscernible] that they are in collaboration with ViiV 4, which recently got a new updated label to every two months injection. 45:25 So that one is a commercialized drug. We cannot comment on the Roche and disclose the drug because obviously they have not done – disclosed, don't just discuss that. The Takeda 1 this is the 20 %ICG. That is a developmental drug and then have a Cabotegravir at HIV drug as we've mentioned is approved. 45:52 And so, just then moving to your second question with regard to the pipeline, we're very pleased, you probably have noticed on the chart that we are indicating that Roche is close to initiating their Phase 3 study for [indiscernible], is trial design that’s actually published now on clinical trials.gov. This is one of expected Phase 2, 3 start. The remaining 4 will come from products that are on this chart, but unfortunately based on the confidentiality agreements we have until the product has announced it, we cannot comment on it, but the good news is, these will all be studies done in patients, and so shortly before the start, it will be posted on clinical drug [indiscernible] obviously provide updates as soon as we can at which these products are.

46:42 Thank you. That's very helpful. And just one more question for me. You did talk about looking into some of the potential acquisitions that could happen down the year. Maybe could you provide some color on what that implies when you say, you're looking at the de-risk assets, whether they would be late stage or maybe close to approval or already approved?

47:08 Yes, thanks. As we are looking at some M&A, we're specifically looking to find the business that is complementary to ENHANZE and we're looking for something where we have confidence that we're going to be able to deliver value because we can operationalize it over and above what we would pay for it. So, what is ideal is that we can find something that has got, perhaps already is being licensed to partners and demonstrated some clinical or commercial success. 47:39 Sorry, specifically commercial success, or it is a pipeline that's got positive Phase 3 data and a clear path to regulatory approval. What we don't want to do is get into some pipeline where there is a lot of technical risk still Anita, because that obviously doesn't fit our goal of acquiring something to continue to build and extended durability of our revenue. So, to fit our revenue and financial goals it needs to be more advance and that's what we mean by de-risk that see a clear path to revenue and revenue growth in the near-term.

48:19 Great. Thank you very much.

48:23 Our next question will come from Joe Catanzaro, Piper Sandler.

48:29 Hey, guys thanks so much for taking my questions and congrats on the progress. I just wanted to follow-up on an earlier question. Helen, I think you noted that for CD-73 maybe as a target, it just didn't meet Bristol’s expectations, but can you say for ALXN1720 what was the, sort of contributing factors that led to that target being returned back to you guys and maybe similarly, I think, amivantamab was in the enhanced pipeline earlier last year and then subsequently came out, what drove that decision? Those two questions, maybe you could just speak at a high level of what you're [indiscernible] within ENHANZE and by specific molecules? Thanks.

49:11 Yes. For ALXN1720, I’m afraid I don't have any color specifically why the return did, but we can see that obviously, Alexion has had amazing success with ULTOMIRIS and the more extended IV dozing interval and in the previous years, [indiscernible] did make comments to say that the IV was a little bit to their surprise. In that particular patient setting, we see many of the needs, but we don’t have any more color I can provide than that. And the great news is, we're now in a position to relicense that some target potentially to somebody else as there are a number of companies continue to develop exciting products in that space. 49:53 So, we will be obviously doing – seeking to do that as soon as possible. At amivantamab, we are continuing in development with amivantamab with Janssen. They have a specific preference as to how and where we articulate that we're proceeding with amivantamab. So, you'll find more details on that in our Q, which is an SEC filing, but based on Janssen’s preference, it is not reflected as clearly on our Halozyme chart that we use for investor meetings, but just to put a very fine point in it, absolutely Janssen continuing with amivantamab as the target subcu.

50:38 Okay, got it. That's really helpful. Thanks for taking my question.

50:54 Operator, is there any more questions?

51:00 There are no further questions at this time. Would you like to make any closing remarks?

51:05 Yes. Just like to thank everybody for your attention. Obviously, a great year in 2021 we're set up for continued strong progress, and growth in 2022 as well. And we look forward to updating you on our next quarterly call. Thank you so much and good night.

51:21 And once again, ladies and gentlemen, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.