Replies to post #6526 on Halozyme Therapeutics Inc (HALO)

[Hope/Misery]

I have been long time holder of Halozyme. I go back to the butt dimple smoothing days! I can remember a quarterly report where Frost was beside himself when they discovered how peg just tore up the tumor cells of cancer giving rise to the thought it would allow more blood flow into the tumor to carry more cancer fighting drugs to the site.

Bottom line I have seen many gyrations of this company, and I am astonished how much luck plays a part in where a company ends up. I admire all that Helen has done for us and I hope she continues to lead us to the final conclusion. She is first and foremost a cancer researcher, so I hope she stays to the final outcome before she follows her next adventure in battling cancer. In fact, I was happy to see the post talking about the pre clinical work that was just presented with the Halo patented peg dealing with lissome in the cell. ( I know that description is wrong, so please forgive me.). Bottom line we have a patent on something that big Pharma might view as researchable, so let us chalk that up in the goodwill portion of our spreadsheet.

I think we are positioned very well right now, so let me put this out there for you to review and comment on. When you compare us to Horizon Theraputics we both have a multiplier of about 51 to 52 times revenue after taxes. This gives us our valuation. When you look at Helen's presentations on enhance revenue thru 2027 she always shows in a separate line the sale of the enzyme to our partners, and how it really could cover all the expenses we generate with the 20% we make off of enzyme sales.

In short I think we are about at that point with the Enzyme sales. Every penny now will go to bottom line.
We just cut our debt from 1.75% to .25% on our interest costs so essentially from 4 mil a year down to around 2 mil using round numbers that 2 can go to the bottom line. Even if we hold close to 1 billion in our coffers at 2% that is another 20 mil to the bottom line or we buy back stock and if we did it at 40 we our up 20% on that now with stock buy back.

If you look at last quarter data we run at about 54% of total revenue to bottom line revenue. I think they have us projected to do 397 mil this year if you times that by 52% it puts us at around 206 mil bottom line, and if you times that by 51 as multiplier you get a valuation of 10.5 billion divided by 143 mil give us a share price of around 74. I can see why people are willing to park 700 mil with us for .25%

Someone also posted a blogger who follows Halozyme and he had a chart comparing BMS Opdivo to Merk Keytruda and it showed Keytruda killing them with 2 billion a quarter in sales. I believe BMS was first to market on this and to lose share to Merk is unforgivable. I think BMS saw the market plan of J and J and that is why they gave us close to a billion in 2017 to lock up the sub q market. It is really working well for J and J who has a similar competitor in their arena. BMS needs us as much as J and j did. Possibly 15 bill a year x 4% royalty for these two drugs is 600 mil to us. I think we are looking at a very bright future.

[Fred Kadiddlehopper]

That's a great summary and calls into question the HALO guidance of $1 billion in royalties by 2027.
The one thing I'd be able to add is that you are on to something regarding how darzalex was a perfect alignment of interests. The fact is that many IV drugs are not necessarily going to switch to subcu. For example, the Lilly MAB for Covid-19 only takes an hour or less, so will there be a strong market incentive to adopt a subcu version? I doubt it. So the market for Enhanz might not be as great as once thought.
Add to that the alternative subcu formulations that appear to be quietly percolating and we have a worrisome stage set while we await the next shoe to drop in this long saga.