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If you read MS article carefully, you know that even if the EU decision “on obviousness” goes against Halozyme next week, halo’s royalty revenue is protected because the “composition of matter” coformulation patent is still in effect for darzalex Faspro until 2029:
Morgan Stanley wrote:
“Despite these potential challenges, we believe Halozyme’s royalties are durable, because the co-formulations are also protected by the composition-of-matter (COM) patents of the API, whose expiration dates are in the out years and are staggered. For example, the COM patents for daratumumab and efgartigimod expire in 2029 and 2036, respectively.”
People who don’t pay attention to details think that the decision next week would affect royalties in 2024. The decision next week determines loyalties for Faspro after 2029.
This is another reason why this price drop is a juicy bargain.
Halo is trading at forward PE of 11 and Peg of 1 (see finviz). It has a gross profit margin of 78%. It is an amazing bargain. Plus, we are getting a 25% discount from an all time high of $59.40. Love the bargain shopping. Helen has guided for 3 new deals this year and we are about to end the first quarter so you know we are getting closer and closer to an announcement. Even if the EU patent decision which is due next week doesn’t go our way, the recent slide in price has already factored that in. “Sell the rumor, buy the news”
This is what I care about:
“SVB Leerink Sets Halozyme Therapeutics
FY2027 Earnings Estimates at $7.51 EPS.”
It means that Halozyme’s earnings will grow 3 folds in the next 4 years. If you put a conservative PE ratio of 20 (very conservative for a fast growing company like Halo), you will have a $140 share price for 2027.
This is why all the dips are a blessing. Fundamentals dictate that over the next 4 years, we are headed to $140. I have and will load more every time the train has a stop. Been doing it since halo was in low teens (go back and see my posts)
You are correct
Consider yourself lucky to be able to pick up more shares at a significant dicount as I hope you did when we dipped into teens, 20’s and 30’s…. Nothing goes up in a straightline. Halozyme has some of the best derisked fundamentals in the industry. Highly profitable with continued earnings growth for many years to come offered at a low PEG and 2023 PE in the teens.
The convertible bonds is really old news. It was always known that they would have to be converted or paid back at some point. Halo’s SP was already punished for this once. It does not count against you twice. Once the market recognizes this, the stock will settle higher.
Regarding the 2023 guidance vs the market concensus, listen to the first Q&A at the end of Helen’s presention at JPM last night (it’s on Halo’s website). Helen said it’s not due to lower royalties but rather due to DELAYED milestone payments. She reitrated that the payments are only DELAYED and not lost. Total milestone payments over the next 2 years remains in line with market consensus.
Ripe for Halozyme and Enhanze: FDA Approves LEQEMBI™ (lecanemab-irmb from Biogen) Under the Accelerated Approval Pathway for the Treatment of Alzheimer's Disease
JANUARY 6, 2023
Route of administration for LEQEMBI:
“10 mg/kg administered intravenously once every two weeks”
Source: https://investors.biogen.com/news-releases/news-release-details/fda-approves-leqembitm-lecanemab-irmb-under-accelerated-approval
Halozyme has a partnership with Amgen now. Amgen is buying Horizon at a purchase price equivalent to a PE ratio of around 45.
Don’t get all too excited, shorts. Read the MS article Maumer cited in his post. It reads:
“…the potential to extend
the exclusivity period from the composition of matter patent from 2031 to
2036.”
The combination of matter patent is well and good at least until 2031. What’s at steak is between 2031 and 2036.
All dips are fantastic buying opportunities as they have been for years purely based on superb fundamentals and valuation.
I found it. Thank you
I get Morgan Stanley’s reports through Etrade and reviewed all their reports since they started covering Halozyme since your post. I did not see the exhibit you referred to or any mention of “Tracked European oppositions” or “Straw Man” in any of their publications.
Would you please provide the date of the MS report and the number of the page that contains this matter?
Thanks
Please provide a link/reference
There have been a ton of predictions on this board over the past few years that our rallies are not real and will be short-lived. In 30’s, our resident experts said it will go back to 20’s. In 40’s, they said back to 30’s, so on and so forth until very recently.
The point they are missing is that these rallies are based on fundamentals of earnings growth and high profit margin. It is in fact, the dips that are short-lived and not based on reality. So you would do quite well by adding to your holdings every time there is one.
Wells Fargo initiated coverage of Halozyme Therapeutics with a rating of Overweight and set a new price target of $65.00
https://quantisnow.com/insight/3733681
SVB Securities analyst David Risinger maintained a Buy rating on Halozyme today and set a price target of $62.00. The company’s shares closed last Friday at $53.97, close to its 52-week high of $54.67.
Here is why it’s not good idea to bet against Halozyme. From fool.com: “With just the drugs on the market, Halozyme's revenue should grow from about $260 million in 2020 to over $1 billion by 2024. Royalty revenue generates about 90% incremental margins. Earnings and cash flow should grow at a very attractive rate.” (See source link below)
This earnings growth and halo’s phat profit margin are secular and agnostic to interest rates and recessions. As such, anytime IBB, XBI or overall market conditions drag Halozyme’s price, consider it a gift from “Mr. Market” and load up more. Hold on to your shares and add more with every dip.
This strategy has worked well in 10’s, 20’s, 30’s and 40’s and will work all the way to 100’s. Bottomline is that if earnings are multiplying several fold over the next few years, the share price should at least double. The PE and PEG ratio are still low when considering the profit margin and proven earnings growth.
From Nasdaq:
PE ratios:
2023 Estimates 18.42
2024 Estimates 14.39
From Finviz:
PEG 0.64
https://www.fool.com/investing/2022/11/11/interview-with-quoc-tran-of-tran-capital/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article&yptr=yahoo
Do you agree with their prediction, maumar? How about you, Fred? Are you thinking about selling more calls?
Halozyme announced Johnson & Johnson (JNJ) would test a treatment combination in lung cancer patients. The combo will use Halozyme's drug delivery system, Enhanze.
This is the first product from Halozyme's so-called "Wave 4" to begin final-phase testing. The first wave of products launched in 2021 with the second following in 2023. Fourth-wave products will launch in 2025 and beyond.
Johnson & Johnson expects this combination of drugs — dubbed amivantamab and lazertinib — to bring in a peak of more than $5 billion in sales, SVB Securities analyst David Risinger said in a note to clients.
"If the combination succeeds Halozyme could be eligible to receive royalties on another blockbuster potential product," Risinger said. "Amivantamab royalties are not reflected in our Halozyme estimates and represent upside."
https://www.investors.com/research/ibd-stock-of-the-day/halo-stock-surges-into-breakout-with-another-potential-blockbuster-in-view/
In a report released today, Jason Butler from JMP Securities reiterated a Buy rating on Halozyme (HALO – Research Report), with a price target of $62.00. The company’s shares closed yesterday at $45.83.
Excellent conference call and earnings results. Halozyme is significantly undervalued. Mid to high 50’s are in the bag
No insider selling since February, not even for paying taxes on awarded options. I’ve been an investor in Halo since 2011 and don’t recall this long a period without insider selling (again paying taxes). Insiders believe Halo is worth a lot more.
It’s trading at a PE of 24 for 2022 and PE of 16 for 2023 (see link below). Considering the recent market conditions, and to a novice, this may seem fairly or even richly valued. However, such a conclusion is shortsighted because:
1) Halo has a terrific PEG ratio of 0.81 (i.e. significant and proven earnings growth at a bargain price)
2) Halozyme is in a secular and interest rate agnostic pharma sector which has and will continue to see major in-flows especially after elections. Split government is good for biopharma.
3) Phat profit margin of 75% (see link below)
4) Share buy backs
We are overdue for some fresh partnerships which will not only add momentum but also immediately make the PE even more favorable due to the upfront payments and further improved E.
I would consider dollar-profit-averaging out between $65 and $100 (if no are no new positive catalysts)
At these bargain prices, I continue to purchase OWNERSHIP in this company. If it drops in price due to overall market conditions, I will continue to add as I have on monthly (and often weekly) basis for over 10 years.
https://www.nasdaq.com/market-activity/stocks/halo/price-earnings-peg-ratios
https://finviz.com/quote.ashx?t=HALO&p=d
Halo might beat by more than 1% since its SC share may have grown also (bigger slice of a bigger pie) if they are disciplined with expenses.
J&J results beat estimates on cancer drug strength
Reuters3:14 AM PDT
Johnson & Johnson (JNJ.N) on Tuesday beat Wall Street estimates for quarterly revenue and profit on strong demand for its cancer drug Darzalex
Sales of cancer drug Darzalex jumped 29.8% to $2.05 billion
“Morgan Stanley suggests that investors who are looking for safety in a volatile market might consider investing in this biotechnology stock. Andrew Galler, analyst at Morgan Stanley, began coverage of Halozyme Therapeutics. The company was given an overweight rating and a price target of $50. Galler described the company as a “safe port” in a storm. He wrote that Halozyme was the most defensive name we covered due to its established royalty business, long term potential for growth and diversified base business through its acquisition of Antares. Galler specifically sees value and diversification in Halozyme’s revenue streams. He emphasized Enhanze’s drug delivery technology platform. This platform is being used by major biopharmaceutical companies such as Pfizer and Bristol-Myers Squibb. Morgan Stanley’s $50 price target indicates that shares could rise 26% after Thursday’s close. He wrote that “While we don’t see any significant upside drivers other than continued expansion of Enhanze portfolio, and commercial executions by partners in near-term”, he said. — CNBC’s Michael Bloom contributed to this report.”
On CNBC now:
Morgan Stanley calls for a 26% gain in this under-the-radar ‘safe port in the storm’
PUBLISHED FRI, SEP 9 20228:51 AM EDT
https://www.cnbc.com/2022/09/09/morgan-stanley-calls-for-a-26percent-gain-in-this-under-the-radar-safe-port-in-the-storm.html
Morgan Stanley initiated coverage of Halozyme Therapeutics with a rating of Overweight and set a new price target of $50.00
Halozyme has the potential to disrupt the retail/commercial OTC IV hydration/vitamin/nutrient/supplement industry. More and more of these centers are popping up in various cities. Just google “IV hydration nutrient or supplement” and you will see all the commercial practices that are offering this service (or see sample links below). Now with the auto-injector+Enhanze combo, Halozyme can offer the small volume supplements/nutrients as OTC at home. For hydration and larger volume nutrients, the customer can visit one of these centers or the practitioner can visit the customer at their home. However, instead of a cumbersome IV start (which takes time and skill), the practicer can do the SC in 5 minutes. Any time there is an IV start, the vein is damaged some and overtime the patient runs out of veins (eg. IV drug users have no veins after a while, or chemo patients get a central line port instead of repeated IV starts). I have also contacted a few of these centers. They run their IV’s over 20-30 minutes. So there is also a significant time saving advantage with Enhanze.
https://www.nutridrip.com
https://livewellclinic.org/services/iv-nutrient-therapy%E2%80%8B/
https://www.ivlounge-edh.com
https://www.bouncehydration.com/blog/iv-therapy-benefits/
I hope so. Would love to load up more.
That was the second round of convertibles. Including the most recent one, there have been 3 rounds.
If I remember correctly, the very first convertibles had a trigger of high teens or low $20’s and the Halo surpassed that threshold quickly (within a few months).
You were correct :)
Ok, so now we know the “why.” No matter how you look at the convertible bonds, it certainly does not reduce the future earnings potential of halozyme anywhere near the 20% haircut the share price has seen lately. Halozyme should rally from here.
New phase 2 trial posted today. Janssen and Enhanze, RYBREVANT for non-small cell lung cancer
A Study of Amivantamab in Participants With Advanced or Metastatic Solid Tumors Including Epidermal Growth Factor Receptor (EGFR)-Mutated Non-Small Cell Lung Cancer (PALOMA-2)
https://clinicaltrials.gov/ct2/show/NCT05498428?term=Rhuph20&draw=2&rank=94
Thank you. I was waiting for a signal like that. Reminds us of when the technical pessimism set in at the low 30’s and low 20’s before that. Comments like this signaled the bottom then and do the same now.
The part about Melanoma is new. I don’t recall a previous mention of Opdivo/Enhanze for Melanoma before.
Brand new phase 2 trial post today:
Sponsor:
Bristol-Myers Squibb
Opdivo/rHuPH20
“The purpose of this study is to evaluate the switch from Nivolumab Intravenous (IV) infusions to Nivolumab Subcutaneous (SC) administration in participants with resected Stage IIIA/B/C/D or Stage IV melanoma or resected invasive Urothelial Carcinoma (UC) originating in the bladder who have high risk of recurrence.”
https://clinicaltrials.gov/ct2/show/NCT05496192?term=Rhuph20&draw=3&rank=84
There will be analyst upgrades and raised targets