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Agreed. We need better IR.
Halozyme (HALO) has received a new Buy rating, initiated by TD Cowen analyst, Brendan Smith.
Brendan Smith has given his Buy rating due to a combination of factors surrounding Halozyme’s impressive ENHANZE technology and its extensive partnership portfolio. The technology is considered a gold standard in the subcutaneous drug development space. Its success is evident in the firm growth of commercial drugs, with expectations of doubling revenues by the fiscal year 2028. Smith highlights the underappreciated pipeline that should compensate for any potential decline in the legacy franchise, supporting an Outperform rating with a $54 price target.
Furthermore, Smith’s outlook is buoyed by Halozyme’s substantial royalty growth, driven by the current ENHANZE drugs, and he anticipates continued double-digit growth in revenue and profits for the next few years. The company’s strategic partnerships with industry giants and the potential for over thirty drugs through these collaborations reinforce the positive trajectory. Key upcoming catalysts for Halozyme seem largely derisked, with the expectation of three new launches by the end of 2025, further solidifying the company’s growth and justifying the Buy recommendation.
https://www.tipranks.com/news/blurbs/buy-rating-affirmed-for-halozyme-on-strong-enhanze-technology-prospects-and-robust-partnership-pipeline#google_vignette
… here is the correct link for TD Cowen
https://www.themarketsdaily.com/2024/02/29/halozyme-therapeutics-nasdaqhalo-coverage-initiated-by-analysts-at-td-cowen.html
TD Cowen initiated coverage of halozyme today with “outperform” and price target of $54. They say halozyme’s pipeline is under-appreciated.
https://theenterpriseleader.com/2024/02/29/michael-j-labarre-sells-10000-shares-of-halozyme-therapeutics-inc-nasdaqhalo-stock.html
the most recently awarded stocks are not vested yet. 1/4 of the recent awarded options are.
Positive change! Take a look at all the SEC form 4’s that were filed today (link below).
It appears that the officers were granted options and stock but unlike previous times, they did not sell any. Historically they would sell about half of the awarded stocks.
https://www.nasdaq.com/market-activity/stocks/halo/sec-filings
So Helen is now scheduled to present at 3 biotech/pharma conferences in March. This is certainly positive in my view. However, when I talked to IR in early January and shared my concern about not presenting at the most important conference of the year (JP Morgan), IR said Helen had other priorities. IR also said that presenting at these conferences have not produced the results they were looking for in the past years.
So what changed? Did they accomplish the priorities they wanted to accomplish and are now back to normal operations (i.e. attending conferences again)? What did they accomplish? Do they have a new deal that is close to announcement? Or was the priory to get ready for the financial update they gave in Jan regarding the “no patent cliff.”
If it’s the former, great. If it’s the latter, it is highly disappointing. They should be able to walk and chew gum at the same time. The latter would not justify missing the most important conference of the year.
And finally, the “not attending because the conferences don’t produce the results they are looking for” was a bunch of nonsense. Clearly they are now attending 3 conferences of far lower importance than JP Morgan.
We need new leadership and new IR. Halozyme is great value (EBITA growth, profit margin, PE and PEG ratios) not because of this leadership but despite it.
Xbi, the biotech benchmark is at a 52 week high today. $halo is nowhere near its 52 wk high. Why are insiders rewarded with options which they turn around and sell more than half every time? 2 months in 2024 and we still don’t have the deals promised for 2023.
We need new leadership at Halozyme.
The technology, profiting margin and EBITA growth CAGR’s are superb, however, the management is weak.
Agreed. We need a new PR VP. She is way out of her league. Halozyme is a $5 billion market cap company. We deserve better.
She does not even respond to emails from known significant shareholders with legitimate questions.
From 8-k, the bonds are only convertible if share price is at 130% of conversion price
(See excerpt below)
This means if you are worried about the conversion by the bond holders now, you think the share price will reach 130% of $56 and stay there for 20 days. Again, you must be a bull.
This is likely why the bond holders did not convert in 2023 when we went above $56.
“1.00% Convertible Notes due 2028
In August 2022, we completed the sale of $720.0 million in aggregate principal amount of 1.00% Convertible Senior Notes due 2028 (the “2028
Convertible Notes” and collectively with the 2024 Convertible Notes and the 2027 Convertible Notes the “Convertible Notes”). The net proceeds in
connection with the issuance of the 2028 Convertible Notes, after deducting the initial purchasers’ fee of $18.0 million, was approximately $702.0 million.
We also incurred additional debt issuance costs totaling $1.0 million. Debt issuance costs and the initial purchasers’ fee are presented as a debt discount.
The 2028 Convertible Notes pay interest semi-annually in arrears on February 15th and August 15th of each year at an annual rate of 1.00%. The
2028 Convertible Notes are general unsecured obligations and rank senior in right of payment to all indebtedness that is expressly subordinated in right of
payment to the 2028 Convertible Notes, rank equally in right of payment with all existing and future liabilities that are not so subordinated, are effectively
junior to any secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness
and other liabilities (including trade payables) of our current or future subsidiaries. The 2028 Convertible Notes have a maturity date of August 15, 2028.
Holders may convert their 2028 Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter
commencing after the calendar quarter ending on December 31, 2022, if the last reported sale price per share of common stock exceeds 130% of the
conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the
immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five
consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the
measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion
rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on our common stock, as described in the offering
memorandum for the 2028 Convertible Notes; (4) if we call such notes for redemption; and (5) at any time from, and including, February 15, 2028 until the
close of business on the second scheduled trading day immediately before the maturity date. As of December 31, 2023, the 2028 Convertible Notes were
not convertible.
Upon conversion, we will pay cash for the settlement of principal, and for the premium, if applicable, we will pay cash, deliver shares of common
stock or a combination of cash and shares of common stock, at our election. The initial conversion rate for the 2028 Convertible Notes is 17.8517 shares of
common stock per $1,000 in principal amount of 2028 Convertible Notes, equivalent to a conversion price of approximately $56.02 per share of our
common stock. The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued or unpaid interest.”
… having said this, the convertibles were issued in August 2022 and the share price did go higher than $56 in 2023. Yet, the convertible bond holders did not elect to convert.
What this tells you is that they were hoping for even a bigger gain and likely are holding off on converting until share price reaches their capped maximum gain which is capped at $75.41 (see the link below)
Either way, the convertibles are not an issue unless you believe the stock price is going to at least $56 or more likely $75.41. If you are worried about it, you must be a bull.
https://www.prnewswire.com/news-releases/halozyme-therapeutics-inc-announces-upsize-and-pricing-of-private-offering-of-625-million-of-convertible-senior-notes-due-2028-301606130.html
I stand corrected.
“In connection with the pricing of the Convertible Notes, the Company entered into capped call transactions with certain of the initial purchasers of the Convertible Notes and/or their respective affiliates and/or other financial institutions (collectively, the "Capped Call Counterparties"). The capped call transactions are expected generally to reduce potential dilution to holders of the Company's common stock on any conversion of the Convertible Notes or at the Company's election (subject to certain conditions) offset any cash payments the Company is required to make in excess of the principal amount of any such converted Convertible Notes, as the case may be, with such reduction or offset subject to a cap based on the cap price. The cap price of the capped call transactions is initially $75.41 per share of the Company's common stock, representing a premium of 75% above the last reported sale price of $43.09 per share of the Company's common stock on August 15, 2022, and is subject to certain adjustments under the terms of the capped call transactions.”
The convertible bonds are not convertible at any price. They cannot be converted until the stock is in the $70’s.
If you are worried about the convertible bonds now, that means deep down you believe we will be trading in the $70’s soon.
Thanks for your optimism. I see $50’s and $60’s in 2024. $70 is a bit too optimistic in my view.
Again, I think (maybe I’m wrong) you already knew this but hoping no one remembers or bothers to fact check.
… and that (34% gain) would be without new partnerships or positive news. When we get another meaningful partnership (i.e something that is already approved for IV delivery), you have to add at least another 10-20% (20% if it is HVAI) since it would put to rest the bears argument that Halo can’t get new deals.
I agree that the additional 10-20% is based on speculation. However, the 34% is entirely based on existing successful therapeutics and current investor sentiments (ie 2023 PE of 16)
… 34% higher in 2024 (to maintain the same PE ratio of 16 for 2024 as for we have for 2023) would put us around $53 per share.
Not a concern for at least 4 years
None of the competitors have anything (in the context of SC delivery of otherwise IV meds) approved by FDA yet. They are years behind. This is why they are speculative micro-cap stocks with no profits. They can sign all the deals in the world, but until the science is proven, it’s pure speculation.
Halozyme on the hand has successfully treated over 800,000 patient post multiple approvals. There is no comparison.
Halo can easily buyout the tiny South Korean company and/or XERS but why should it. They are micorcap and speculative for a reason.
You know that we have strong EBITA growth through 2028 with existing assets (see slide 27 on the link below). Again, you are worried about many years from now. We will have more in the pipeline by then with or without Helen.
https://s28.q4cdn.com/284259014/files/doc_events/2024/01/HalozymeFinancialUpdateJanuary2024-FINAL.pdf
Even assuming no positive news and no improvement in investor sentiment around Halo, we are looking at least a 30% price gain between now and the end of 2024. Why? We are at 2023 PE ratio of 16 and 2024 PE of 12. Since the E (earnings) is growing by 30% (see below from Nasdaq) this year, for the PE ratio to stay the same (i.e. same investor sentiment), the P (price) has to go up 30%. (34% if you go by Halo’s own EBITA growth projection for 2024)
The following are the latest valuations for Halozyme (from Nasdaq):
PE Ratios:
2023 Actual
16.22
2024 Estimates
12.44
2025 Estimates
10.59
2026 Estimates
7.88
Forecast Earnings Growth Rates
Growth 2024
30.56
PEG Ratio
0.5
Excellent and thoughtful analysis.
There is no patent cliff. The way their contracts are set up, they continue to make royalties (at the same rate as before patent expiration) for minimum of 10 years if there is a coformulation patent (which there is for all existing programs.)
The only exception is Faspro, but even with that, the royalties will continue to flow to Halozyme but at a discounted rate.
You don’t have to take my word for it. Read/listen to the January financial update.
Then again, I am sure you already knew this and you “patent cliff” remark is to spread misinformation and scare the uninformed.
I assume you are worried about growth after 2028.
There are no growth concerns between now and 2028 EVEN IF HALO HAS ZERO NEW PARTNERS OR ZERO NEW INNOVATIONS. The existing programs with no new deals are giving us 20-30% growth in EPS through 2027. (See Halo’s Jan financial update, slide 27 regarding 5 year EBITA and EPS growth based purely on existing programs)
Yes we need new partners and innovation after that to keep the existing rapid growth going past 2028. Yes, Helen dropped the ball on this for the past 14 months. But there have been plenty of successes with new deals prior to 2023 and there is good chance we will see more with or without the current CEO.
The stock got punished more than it deserved for lack of execution in just a single year. There was plenty of success in other years and that’s why we have amazing fundamentals now and for the next five years.
A similar negative sentiment was shared by a couple of posters on this board (including you) when PEGPH2 failed. Folks were so focused on that one failure that they missed all the other successes. This is why a few here didn’t like halozyme when it was trading in single digits and teens just a few years ago. I loaded up and posted numerous time here on this board back then. I think it is undervalued now as it was then despite the recent management failure.
$HALO Halozyme’s institutional ownership has gone up to 97.87%
https://www.nasdaq.com/market-activity/stocks/halo/institutional-holdings
Halozyme vs S&P500
Source: Refinitiv 2/16/24
P/E forecast EPS
10.2 vs 30.7
P/Free Cash Flow last 4Q
13.5 vs. 27.2
1 year sales growth
34.5 vs. 4.3
3 year sales growth
49.9 vs. 16.5
1 year EPS growth
25.6 vs. -28.0
1-year forecast EPS growth
25.4 vs. 20.5
Long term growth rate 3-5 years
21.0 vs. 12.7
Gross margin
76.7 vs. 41.0
Net margin
32.5 vs. 11.1
Return on assets
13.5 vs. 5.2
Return on equity
146.7 vs. 19.9
Share price will go up to high 40’s and low 50’s not because of management’s performance over the past 14 months but despite of it.
Fundamentals cannot be ignored. No matter how badly they fumbled new deals over the past 14 months, they have so many existing/growing royalties that we are looking at an impressive EBITA growth at a CAGR of 20-30% per year through 2027 (see slide 27 on the link below). This deserves a PE of 18-25.
Yes, we could be at a PE of 30 and higher with stronger management.
https://s28.q4cdn.com/284259014/files/doc_events/2024/01/HalozymeFinancialUpdateJanuary2024-FINAL.pdf
You clearly don’t understand buy backs. Apple and many other fortune 500 companies do it too. Here is why; it’s the complete opposite of dilution. Fewer shares outstanding means that I as a shareholder own a bigger percentage of the company and more of its earnings. The earnings per every single one of my shares go up.
I don’t mean to say I told you so. The point I have been trying to make here is that the market can fight fundamentals only for so long.
You cannot have a forward PE of 10 for a company that has a fabulous profit margin and growing EBITA with a CAGR of 20-30% through 2027.
This was a good earnings call but nothing spectacular. The reason we are back in $40 and not in the 20’s as you predicted on your post earlier this month is purely that Halozyme is way undervalued for it’s proven earnings growth. Despite Helen dropping the ball last year, at some point Mr. market was going to wake up to this fact.
Having said this, if we had a stronger CEO, we’s be looking at a PE of 20-30 at par with biotech historical valuations.
Yes, any/every technology can one day become commoditized and even obsolete.
Nova Nordisk spending over $11 billion on Catalent indicates that we are far far away from it when it comes to drug delivery.
Both Ozempic and Wegovy are available as auto-injectors.
This is precisely why Catalent was purchased: “The three sites being purchased by Novo Nordisk specialize in what’s known as fill-finish, or the processes of sterilizing and standardizing pharmaceutical products and containers before filling and sealing the containers with drug product.”
That is nothing but sterile auto-injector syringes.
Your observation regarding Halozyme as a take over target is spot on.
Just a few days ago Novo Nordisc (Ozempic) bought the syring manufacturer, Catelent for $11 billion.
The same syringe manufacturer makes syringes for Eli Lilly’s GLP-1 (obesity injectable drug)
Now Eli is at the mercy of Novo Nordisc (I’m sure the regulators will make sure they play nice)
This buy out is very similar to Roche, JNJ or BMS buying Halo.
https://www.biopharmadive.com/news/novo-catalent-acquire-deal-wegovy-manufacturing-obesity/706530/
It’s the volume (ml) not the dose (mg) that is a determinant of the back pressure.
Rhuph20 (enhanze) reduces this back pressure by opening up (temporarily dissolving) the extracellular matrix.
“Francis”?!!!
And you pretend to be against personal attacks?
You are clearly not against personal attacks on the ones who have a different view than you do. Otherwise you would have done something about the poster who wrote:
““You are a true savant and a Sherlock, to boot. Do you play the violin by any chance? I say, you must, by Jove. Elementary.”
And this was not the first time he wrote garbage like this.
You should step down from moderating here just as much as Helen should step down from halozyme.
So you were ok with following from the other poster:
“You are a true savant and a Sherlock, to boot. Do you play the violin by any chance? I say, you must, by Jove. Elementary.”
Where is his reminder?!
I’m not sure why you are the moderator here. Your views are not balanced. You have been biased for a long time. The record is there for all to see.
You are right. No one knows with 100 percent certainty that you are a short.
All we have are your posts over the months and years. They make a compelling case that you are short and the harder you try the more obvious it gets.
As I said, there is nothing wrong with shorting Halozyme. Have at it.
Howeeme, no worries. The same folks who refer to your correct observation regarding strong cashflow and fundamentals as “happy talk,” where full of doom and gloom talk on this very board when halozyme was trading in single digits and low teens. They will have the same sentiment when we get to all time new highs.
I think one can be objective and acknowledge that the current management has dropped the ball in 2023 and 2024 thus far without being in denial (like the shorts on this board are) of the strong fundamentals and valuations (available on nasdaq.com and finviz).
The other poster touting XERS, does not have a single post on XERS board ever. Go take a look. You know he is not long XERS. He is just short halo. Nothing wrong with it as long as one knows the motives behind the misinformation.
Yes she has.
Despite her failure in 2023 and thus far in 2024, Halozyme is a highly profitable company with a proven history of EPS growth and future EPS growth (through 2030) with existing approved products and the ones in the pipeline (no new deals needed)
2024 PE of 10 is the an overreaction especially when looking at EPS growth and profit margin. The pendulum will swing to the other extreme at some point with positive news (a deal or a CEO replacement). Even without good news, somewhere in the middle of the pendulum path is probably the reasonable valuation for halo. I would say a 2024 PE of 15 or a PEG of 0.6-0.7 is a conservative bet. This would put us around $50.
Very true. Even without ANY new deals, Halo is a proven cashflow machine with a phat profit margin and with EPS growth through 2030 (purely based on existing wave 1 to 4 products).
Yes, Helen and management dropped the ball in 2023 and failed to deliver on their own goal of 3 deals. Having said this, the stock has been overtly punished with a 2024 PE of 10. At some point this year and even without a deal, we will have a realistic PE of 15 which will put us around $50.
With a meaningful deal or a CEO replacement, we will easily be over a PE of 20 or $65.
I welcome both.
Because there is zero evidence for it on clinicaltrials.gov