Halozyme Therapeutics, Inc. (NASDAQ:HALO) Q1 2024 Earnings Call Transcript

Halozyme Therapeutics, Inc. (NASDAQ:HALO) Q1 2024 Earnings Call Transcript May 7, 2024

Halozyme Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Thank you for standing by. My name is [Perla] (ph), and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Halozyme First Quarter 2024 Financial and Operating 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] Please note this event is being recorded. Thank you. I would now like to turn the conference over to Tram Building, Halozyme’s Vice President of Investor Relations and Corporate Communications. Please go ahead.

Tram Building: Thank you, Operator. Good afternoon, and welcome to our first quarter 2024 financial and operating results conference call. In addition to the press release issued today after the market close, you could find a supplementary slide presentation that will be referenced during today’s call in the Investor Relations section of our website. Leading the call would 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 as well as our outlook. On today’s call, we will be making forward-looking statements as outlined on slide two. 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.

Helen Torley: Thank you, Tram, and good afternoon, everyone. Beginning on slide three, I’m very pleased to report that our first quarter 2024 operational performance was in line with our expectations, and reinforces our confidence in our full-year financial guidance. There are three drivers of this confidence in our guidance: our royalties, the expected milestone payments, and our EBITDA. Let me provide now some additional details on these three key drivers, which will help you appreciate the Halozyme business model even more. I’ll begin with royalties. The first quarter of 2024 marks the 15th consecutive quarter of greater than 15% year-over-year royalty growth. This provides robust support for continued royalty revenue growth in 2024, driven predominantly by our Wave 2 products, DARZALEX subcutaneous and Phesgo, with growing contributions projected from more recently launched and launching products VYVGART Hytrulo and Tecentriq subcutaneous.

The second driver is milestones. We have good visibility to our partner milestone revenues for the remainder of the year, where we project contributions from Wave 1, 2, 3 and 5 products. You may be surprised to see Wave 1 and 2 product milestones. This is a valuable feature of our agreement, where we can have milestone payments for attainment of pre-specified sales levels, potentially extending to occur many years after the original launch. Moving now to the Wave 5 product milestone, we predict a new product will enter the clinic in 2024, resulting in a milestone payment. In the first quarter, we recognized $14 million in milestone payments related to the approval and launch of VYVDURA, which is the brand name for a VYVGART Hytrulo in Japan.

I will move now to provide a little more color on the cadence, quality, and probability of the milestone revenues in the upcoming quarters. In the second quarter, we will recognize a $15 million milestone related to the recently announced U.S. regulatory file acceptance for nivolumab subcutaneous, a waste-free product. In the third quarter, we project two additional milestone payments related to the Wave 3 products, including a regulatory filing and a first commercial sale. Also in the third quarter, we project a milestone for the Wave 5 product Phase 1 study start I just mentioned. In the first quarter, it is notable that we project several commercial sales attainment milestones related to Wave 1, 2 and 3 products. For all of the above, we have strong visibility, including to the information and trends that give us confidence in these milestone achievements.

In addition, we project milestone revenues from new deals and new nominations in 2024. While these may occur at any time in the next three quarters, for planning purposes, we project these in the fourth quarter. We are currently in very active discussions with multiple pharma and biotech companies, and have progressed to terms discussions with several. Our strong operating performance and the achievements described above, together with our continued focus on operational expense management, result in confidence in delivering our full-year EBITDA, and we project that we will deliver 26% to 37% growth. The EBITDA quarterly growth cadence is projected to track well to the quarterly milestone payments I outlined earlier. All of these factors provide us with the confidence to reiterate our 2024 financial guidance, with total revenue expected to increase 10% to 19% year-over-year to $915 million to $985 million.

Royalty revenue continues to be the main driver, which is projected to increase 12% to 17% to $500 million to $525 million. We project adjusted EBITDA growth of 26% to 37% to $535 million to $585 million, and non-GAAP EPS growth of 28% to 41% to $3.55 to $3.90. With that overview, let me now move to the first quarter operational highlights, which are shown on slide four. The multiple advancements that our partners made in 2023 have paved a clear path for our strong outlook. We entered the year with seven approved ENHANZE partner products and there were multiple noteworthy partner product approvals in new regions and new indications already achieved in the first quarter of this year. Beginning with recent approvals, argenx’s efgartigimod subcutaneous with ENHANZE, which is the brand name in Japan of VYVDURA, was approved in Japan for generalized Myasthenia Gravis, including options for patient self-administration.

With the subsequent commercial launch of VYVDURA, these events resulted in a combined $14 million in milestone payments to Halozyme. It was also exciting that Takeda’s HYQVIA, which is a Wave 1 product, received approval for an expanded indication in the United States and Europe during the first quarter. The new indication is for maintenance treatment of patients with Chronic Inflammatory Demyelinating Polyradiculoneuropathy, or CIDP. In addition, Roche received European approval for Tecentriq subcutaneous. As a reminder, the potential U.S. approval is expected in September of this year. Also in the first quarter, and more recently, multiple partners advanced regulatory progress towards potential approvals and additional milestones in royalty revenues.

In February, argenx announced FDA acceptance of their sBLA, with priority review for VYVGART Hytrulo in CIDP, with a PDUFA target action date in June of 2024. And Roche announced the potential approval for Ocrelizumab subcutaneous in Europe, in mid-2024, and FDA PDUFA target action dates in September of 2024 for both Tecentriq subcutaneous and Ocrelizumab subcutaneous. Janssen announced U.S. and European regulatory submissions for a new indication for DARZALEX subcutaneous as part of a regimen for transplant-eligible newly diagnosed multiple myeloma patients. And BMS has announced the FDA acceptance of their BLA for nivolumab subcutaneous, with a PDUFA target action date of February, 2025. We’re also pleased to report two pipeline advancements.

Firstly, argenx initiated registrational studies of efgartigimod subcutaneous with ENHANZE for a new indication, thyroid eye disease. Excitingly, these studies will utilize efgartigimod with ENHANZE delivered by pre-filled syringe. And secondly, our partner, ViiV, initiated another Phase 1 study for VH4524184, which is an integrase inhibitor with ENHANZE. The performance of our Wave 2 product, along with the start of the launches of our Wave 3 pipeline, and the strong regulatory progress I just discussed give us high confidence in achieving our projections of $1 billion in royalty revenue in 2027. Let me now provide an update on each of our royalty revenue drivers, starting with DARZALEX FASPRO on slide five. I’ll begin each review by overviewing the potential opportunity sites for subcutaneous, and then cover recent progress and new opportunities.

In the first quarter of 2024, J&J’s DARZALEX sales were $2.7 billion, up 21% year-over-year on an operational basis. This strong growth was driven by share gains in all regions, resulting in share gain of six points across all lines of therapy, and of 10 points in the frontline setting. With subcutaneous penetration in excess of 90% in the United States and it’s estimated to exceed 80% outside the United States, subcutaneous DARZALEX is driving the strong demonstrated and projected total brand growth. Analysts continue to expect DARZALEX revenue to grow to exceed $17 billion in 2028. The potential approval, in 2024, for the new indication of transplant-eligible newly diagnosed patients based on recent U.S. and European regulatory submissions would provide an important new frontline opportunity for DARZALEX subcutaneous.

I’ll move now to Phesgo, which is shown on slide six. First quarter Phesgo sales increased 70% to CHF388 million, which represented the second best performer in Roche’s self-described Young portfolio. Roche recently highlighted that U.S. conversion is reaching 25%, and global conversion was 41% in the quarter. With the strong launch uptick and ongoing geographic expansion, Roche has commented that it projects overall conversion will increase to approximately 50% over time as patients continue to covert from IV Perjeta. There remains a substantial conversion opportunity from Perjeta to Phesgo, with Perjeta generating almost CHF1 billion in sales in the quarter. I’ll turn now to our Wave 3 product and product candidates, which is shown on the right-hand side of slide seven.

The opportunity for Wave 3 is meaningful, with five products that analysts project will generate total sales of $35 billion in 2028. This compares to $20 billion for our Wave 2 products, which are driving the robust royalty revenue growth we see today. Importantly, Wave 3 is largely de-risked, with positive Phase 3 data and regulatory submission plans already reported by our partners for all products, with the exception of Johnson & Johnson’s Amivantamab, where Phase 3 data and regulatory submissions are expected this year. Let me begin with VYVGART Hytrulo, the subcutaneous version. VYVGART Hytrulo is currently approved for generalized myasthenia gravis in the U.S. and Europe, and also in Japan, where it has the brand name VYVDURA. Notably, the European and Japanese approvals also allow for patient self-administration subcutaneously.

In 2023, VYVGART generated $1.2 billion in sales, and argenx continues to broaden ease of access and coverage for generalized myasthenia gravis, securing the J-code for the subcutaneous formulation in January of this year. With Symphony data showing positive quarter-over-quarter growth for the brand, we look forward to growing adoption and use of subcutaneous VYVGART Hytrulo as the number of physicians prescribing VYVGART Hytrulo expands and use increases in the earlier lines of treatment. The potential approval of a new indication of CIDP, in June in the United States, representing another exciting near-term growth opportunity for VYVGART Hytrulo, this is the indication that will be a subcutaneous delivery only launch. Based on argenx’s research and comments, approximately 42,000 patients are receiving treatment for CIDP today.

Only 20% of those patients are getting to remission on the current standard of care, and 50% of patients remain dissatisfied with the current burden of symptoms, signaling a real unmet need in this challenging condition. We appreciate the strong partnership with argenx, and share their patient-centric vision as they also grow and expand their pipeline. The recent initiation of two registrational studies evaluating efgartigimod with ENHANZE administered by pre-filled syringe for thyroid eye disease represents another future opportunity with efgartigimod. Moving now to Tecentriq subcutaneous, which is approved for subcutaneous delivery in the U.K. and Europe, with both approvals covering all of the approved indications for Tecentriq IV. Total revenue for Tecentriq was almost CHF900 million in the first quarter of 2024.

With potential U.S. approval, in September of 2024, Roche has commented that they believe subcutaneous Tecentriq will be largely protected of their IV formulation, with a very modest potential to add to brand growth. Meaning, the expectation is that the majority of subcutaneous use will be from patients currently on Tecentriq IV switching to Tecentriq subcutaneous with ENHANZE. I’ll move now to Ocrevus. In the first quarter of 2024, Ocrevus IV generated approximately CHF1.7 billion in revenue for Roche, increasing 8% year-over-year. Ocrevus remains the market leader in the U.S. and EU5, with approximately 24% global market share. The approval of subcutaneous ocrelizumab which will massively change the patient treatment experience. Today’s treatment and observation time can be from 3.5 to 6.5 hours with an IV given every six months.

The target for total time for subcutaneous treatment and observation is 10 minutes, also every six months. Importantly, Roche has commented that they see ocrelizumab subcutaneous being a stand-alone blockbuster opportunity, expanding use of ocrelizumab to treatment centers without IV infrastructure or with IV capacity limitations, supporting even stronger brand growth in the future. Roche recently announced that the European Medicines Agency’s Committee for Medicinal Products for Human Use has recommended the approval of ocrelizumab subcutaneous for its multiple sclerosis indication. The European Commission is expected to give a final decision on the approval in mid 2024. Roche also announced that the ocrelizumab subcutaneous has a PDUFA action date in the United States of September of 2024.

The key data supporting these approvals is from the OCARINA 2 study. Roche recently presented updated longer-term results from the OCARINA 2 study at the 76th American Academy of Neurology Annual Meeting. The results highlighted the significant potential benefits of subcutaneous ocrelizumab for patients with both relapsing and progressive forms of multiple sclerosis. The data showed that patients receiving ocrelizumab subcutaneous experienced near complete suppression of relapse activity, with 97.2% of patients experiencing no relapse during the treatment phase. In addition, it was reported that patients treated with subcutaneous Ocrevus experienced appropriate B-cell suppression, and impressive near-complete suppression of new inflammatory disease activity.

Notably, patients reported a very high 92% satisfaction level, and 90% of patients felt that it was very convenient to receive the ocrelizumab subcutaneous injection. These results demonstrate the potential of subcutaneous ocrelizumab as a treatment option that can be matched to the individual needs of patients with MS, and also healthcare professionals. Approval of ocrelizumab subcutaneous will represent our eighth approved subcutaneous product with ENHANZE. I’ll turn now to Bristol Myers Squibb nivolumab subcutaneous with ENHANZE. Bristol Myers Squibb recently announced the FDA acceptance of its biologic license application for nivolumab subcutaneous co-formulated with ENHANZE, and assigned a PDUFA action date of February, 2025. BMS reported that Opdivo, which is nivolumab, which is delivered intravenously, generated approximately $2.1 billion in sales in the first quarter of 2024.

With subcutaneous nivolumab projected to cover up to 75% of the IV indications over time, BMS has commented that nivolumab subcutaneous will help them extend their immuno-oncology franchise well into the next decade. Approval of nivolumab subcutaneous will represent our ninth ENHANZE approved partner product. I’ll move now to Johnson & Johnson’s amivantamab subcutaneous with ENHANZE. Amivantamab subcutaneous remains on track with the potential for launch in 2025. Amivantamab is already approved as an IV treatment under the brand name RYBREVANT with Johnson & Johnson projecting that RYBREVANT will become a multi-billion dollar brand. We look forward to Johnson & Johnson presenting the Phase 3 amivantamab with ENHANZE subcutaneous data at an upcoming medical meeting.

Approval will represent our 10th ENHANZE partnered product. I’ll now move to slide eight for an update on our Wave 4 pipeline, which is expected to support our future growth trajectory with potential launches in the 2025 to 2027 time frame. We have six products currently in development, reflecting a range of therapeutic areas, including oncology, neurology, immune disease, and HIV. Our two most advanced programs that are in Phase 3 development are Takeda’s Immune Globulin 20%, which is TAK-881 with ENHANZE, and Bristol-Myers Squibb’s Nivolumab+Relatlimab fixed-dose combinations subcutaneous with ENHANZE. The Phase 3 studies of TAK-881 and Nivolumab+Relatlimab continue to progress. Also advanced into later stage development is these broadly neutralizing antibody, N6LS, which is progressing in an ongoing Phase 2 study.

As I close out this section on our upcoming launches and pipeline, let me now highlight the actions and progress we are making as we seek to expand and add additional partners and development products that will further add to and extend our revenues in the post-2027 timeframe. This continues with its mission to transform the treatment experience for HIV patients and recently initiated a new Phase 1 study for an integrase inhibitor, VH4524184, given subcutaneously with ENHANZE. And we’re also excited to Acumen, and then they plan to initiate a Phase 1 study of a subcutaneous version of ACU193 for the treatment of Alzheimer’s disease in mid-2024. We’ve also continued to be in very active discussions with multiple pharma and biotech companies regarding ENHANZE and also our high-volume autoinjector.

We’ve progressed several companies to the stage of discussing terms for ENHANZE. This is the final stage prior to negotiation of the collaboration and licensing agreement. With regard to our high-volume auto-injector, in the first quarter, a current partner completed a human factor study of the high-volume auto-injector to evaluate device usability. Based on the results that were shared confidentially with Halozyme, the test was a success. We continue in discussions with that partner and several additional companies who are expressing interest in our high-volume auto-injector. With that overview, I’m pleased to now turn the call over to Nicole, who will discuss our financial results in more detail.

Nicole LaBrosse: Thank you, Helen. The first quarter of 2024 is on track with our plans and supports our strong financial performance expectations for the full-year from the continued momentum of our business. Let me now briefly touch on our capital allocation priorities on slide nine. We remain consistently focused on a balanced three-pillar strategy, which is to invest in our current business, deploy capital through share repurchases, and seek new growth opportunities through M&A. As we continue to execute on the $250 million ASR that was announced in the fourth quarter of 2023, the new $750 million share repurchase program that was recently approved by the board in February is a reflection of the confidence in our long-term projections in durability of our business.

We maintain a strong balance sheet with cash, cash equivalents, and marketable securities of $463.5 million as of March 31, 2024, compared to $336 million on December 31, 2023. Our net leverage ratio was two times at the end of the quarter and we expect to reduce our net leverage ratio as we continue to grow EBITDA throughout the year. Turning now to slide 10 for our detailed financial results for the first quarter, revenue grew 21% to $195.9 million compared to $162.1 million in the prior year period. Royalty revenue for the quarter was $120.6 million, an increase of 21% compared to $99.6 million in the prior year period, primarily attributable to continued momentum of our Wave 2 products, DARZALEX FASPRO, and Phesgo. Research and development expenses were $19.1 million compared to $18 million in the first quarter of 2023.

The increase was primarily due to planned investments in ENHANZE. Selling general and administrative expenses were $35.1 million in the quarter, down from $37.4 million in the prior year period, primarily due to reductions in commercial marketing expense, offset slightly by increased compensation expense. Growing revenues and relatively flat operating expenses resulted in EBITDA growth of 56% to $115.7 million from $74.3 million in the prior year period. GAAP diluted earnings per share was $0.60, and non-GAAP diluted earnings per share was $0.79. This is compared with GAAP diluted earnings per share of $0.29 and non-GAAP diluted earnings per share of $0.47 in the first quarter of 2023. Turning now to slide 11 in our 2024 guidance, we continue to see robust growth in our business, and as Helen mentioned, we are reiterating our full-year 2024 guidance of revenues of $915 million to $985 million, representing growth of 10% to 19%.

Adjusted EBITDA of $535 million to $585 million, representing growth of 26% to 37% and non-GAAP diluted EPS OF $3.55 to $3.90, which is growth of 28% to 41% year-over-year. As you refine your models, I’d also like to reiterate the following. We continue to expect milestones and API sales to be substantially weighted in the second-half of the year, with the second quarter flat to the first quarter. For royalties, we expect continued expansion of Wave 2 products and launched Wave 3 products, partially offset by a royalty rate step down for DARZALEX SC outside the U.S. Q2 royalties will be similar to Q1, with sequential growth in Q3 and Q4 to achieve the $500 million to $525 million guidance. Non-GAAP diluted EPS growth of 28% to 41% reflects adjusted EBITDA growth of 26% to 37%, as well as the impact of our 2023 share repurchases.

I will now turn the call back to Helen.

Helen Torley: Thank you, Nicole. 2024 is off to a strong start, as you’ve just heard, with excellent momentum in the current business and major progress made in advancing new approvals and growth opportunities. These opportunities include the FDA acceptance of Bristol’s submission for their BLA for nivolumab subcutaneous with a PDUFA action date of February 2025. The potential new indication approval and launch for argenx’s VYVGART Hytrulo in CIDP in the United States in June. Potential approval and launch of Ocrevus subcutaneous in Europe mid-year, potential U.S. approvals and launches for Roche’s Tecentriq subcutaneous and Ocrevus subcutaneous in September, and a Phase 3 data readout for J&J’s amivantamab subcutaneous. I want to close by thanking our terrific Halozyme team, our partners and collaborators for all of the hard work that resulted in such strong first quarter progress. Operator, we are now ready to open the call for questions.

See also 10 Fastest Growing Cities in New York State and 15 Best Places to Retire in Alabama.

Q&A Session

Operator: Thank you. [Operator Instructions] Your first question comes from the line of Vikram Purohit from Morgan Stanley. Your line is open.

Vikram Purohit: Hi, thank you for taking our questions. We had one on the pace of business development. Helen, you mentioned that there were some discussions ongoing with potential new partners for ENHANZE. Just wanted to see if you could provide some more color on kind of what the cadence of those discussions could be throughout the rest of the year, and kind of the different stages that they’re at, and how you might expect those to turn into to new agreements throughout the course of the year and 2025? And then, on the high-volume auto-injector, I just also wanted to see if you could provide some more detail on how those discussions are progressing and what it would take, given where some of those discussions are now to move towards closed agreements? Thank you.

Helen Torley: Yes. Thank you, Vikram. Yes, delighted to give an update on both of those areas. That obviously is a strong focus for us. As we mentioned in the prepared remarks, in the quarter, we were delighted to see several companies progressing from technical discussions to terms discussions, and importantly, this is a stage that happens Part 2 negotiating and signing the CLA. So, that is a very strong sign of progress. And this is really a result of conversations in the first quarter with more than 10 pharma and biotech companies where at least one conversation has happened. In several occasions, we’ve had multiple conversations. In terms of the feedback, let me give you the very consistent feedback, which is I think a very strong sign for the value proposition that ENHANZE provides and how companies are thinking more and more about subcutaneous.

The first bit is companies definitely are thinking more and more about subcutaneous delivery right from the start particularly in diseases like autoimmune disease, CNS disease and oncology. Moving to ENHANZE, it’s very clear they see ENHANZE as a goal standard for rapid subcutaneous delivery for patients, particularly in the autoimmune CNS and oncology areas, but in all areas as well. And why we think that is because of what they see in hand as a highly derisked product with a strong safety track record and great history of global regulatory approval and commercial success. And we’ve always talked about that, that the companies are very focused on the safety profile. They don’t want something experimental that could delay their progress with development or do something to their commercial product.

So, that’s a very important fact. And it’s great to see that our messaging on that and our data on that is well received. While IV to subcu conversion is the main focus of discussions, we are seeing more and more companies wanting to get to extended dosing for subcu delivery, two weeks to a month, one month to three months, that type of thing, and again, particularly in autoimmune and chronic diseases. And we are seeing focus expand from the traditional monoclonal antibody space to companies inquiring about use of ENHANZE with bispecifics, nucleic acid therapies and also antibody drug conjugates, and so great, very consistent feedback in all of those areas. In terms of the evaluation and decision making process, as we’ve described before, each company is unique.

They have their own process for technology approval and then for budget approval, each of which moves at a different pace. And so, it’s an end of one with each company, which makes it always hard to project the exact timeline for signing each deal. But what we can say in the quarter was we had multiple technical discussions advancing to the decision makers and separately, several of those then advancing to terms discussion, the last decision point prior to negotiation of the CLA. So, excellent progress, Vikram, where based on the breadth and depth of discussion and the progress, I’m confident in signing ENHANZE deals based on all of this strong progress. I’ll move to the high volume auto-injector where we are delighted with the interest we’re seeing since we communicated our Phase 1 clinical study data and we are in discussions with the current partners but also potential new partners as it relates to HVI.

We talked in the past this, the HVI really is truly groundbreaking. We hear that often in conversations. It’s not something that’s been done before and many believed it could not actually be done. Within this space, there’s been a bit of a history of some of the prior types of on body injectors and other technologies not meeting biotech and pharma expectations. And so, what we experienced are two things. One, as we’ve talked about, companies want to try it, they want to test it. And that was obviously an example of our, one of our current partners who completed a human factor study to evaluate device usability in the first quarter. We were delighted that that was a success and we continue in discussions with that partner and also with other potential partners.

And the second area is as companies start thinking about getting into development agreement and commercialization, they want to understand and have confidence in the device development plan and specifically, key aspects like availability of the primary container they want to use, the manufacturing plan, including the sites, the capacity, the equipment, the slots to meet their demand projections. And so, I think all of these are very good signs of progress in terms of the depth of questions people are getting into, really wanting to understand when this can be commercialized for them and how it will fit. And so, the great news is the Halozyme team has deep experience in developing and commercializing devices, having done it many times with the small volume auto-injectors, and so, all of this work on the manufacturing plan is also well underway at this time.

So, we continue in discussions and we expect those to also advance to development agreements. Again, hard to pin the exact time, but the progress has been very strong.

Vikram Purohit: Appreciate it. Thank you.

Operator: And your next question comes from the line of Jessica Fye with J.P. Morgan. Please go ahead.

Jessica Fye: Great. Thanks for taking my question. Sort of sticking with a similar theme here on kind of potential new deals, first, when you say that you’re in terms of discussions with several companies, should we think of those potential deals as being both pure ENHANZE deals and auto-injector deals as well? Second, should we think of the terms of these new potential deals at similar economics to HALO as the existing kind of portfolio deals? And lastly, I think in the past you had talked about a partner who is interested in a customized high volume auto-injector for their patient population. Is that one among the several companies with whom you’re in these terms discussions?

Helen Torley: Yes. Thanks, Jess. With regard to the types of discussions, I can say we’re having discussions on ENHANZE alone and I would say that is the most frequent discussion we’re having. But we are also having discussions on ENHANZE with a high volume auto-injector, as well as small volume auto-injector as well. So, across the portfolio, but definitely the ENHANZE is the highest volume of the conversations and particularly the ones that we’re seeing advancing at this point in time. With regard to terms, in the past, we have mostly done terms for products and companies are looking for exclusive agreements and exclusive rights. I will say that as ever we are talking to companies also about non-exclusive rights. And so, there is a difference in our terms between exclusive rights and non-exclusive rights.

So, I would say you could see some differences in that. But in some of the areas we’re talking about, these certainly are areas of strong interest for multiple companies. And so, it would be our goal if we did non-exclusive deals to seek to get multiple agreements. And obviously, we’ll find ourselves in potentially even a stronger position if we were to be successful with that. And then the customized HVI, all of the discussions on HVI, frankly are an element of some customization. Depending on the volume the partner wants to inject, they have to identify what the primary container is going to be and they may have a preference and a thought for that. They may also depending on the patient population, have a preference for needle depth and the viscosity of the drug may dictate a certain difference in the needle dose.

And so, there is always an element of customization in the discussions of the HVI, Jess, nothing major, but all kind of appropriate for really having an offering that is the right thing for that partner’s patient population and drug.

Jessica Fye: Thank you.

Operator: And your next question comes from the line of Michael DiFiore from Evercore ISI. Your line is open.

Michael DiFiore: Hi, guys. Thanks for taking my question. Congrats on all the progress. Two for me, thoughts on obviously, Phesgo is becoming a huge product for you guys, thoughts on how a Perjeta biosimilar may uptake — may affect the uptake of Phesgo and I ask because there’s one that seems to be completing Phase 3 trials late this year. And separate question is, I think you mentioned for subcu nivo, you said that if it’s approved, it would cover 75% of the IV indications. My question is, why not 100% and could we expect the same 75% of the indications for subcu atezo? Thank you.

Helen Torley: All right. Thanks so much, Mike. With regard to Phesgo, obviously you’re right, it’s showing very strong progress with 70% growth year-over-year in the first quarter. And that has resulted in 41% global conversion with U.S. approaching 25%. And I do think what’s going to be important for Roche is that they continue to support the conversion. They’ve talked about it reaching and exceeding 50%. And I certainly think the progress we’re seeing, it might even do better. That’s going to be important for the conversation we have about biosimilars because what we have seen and I like to use Herceptin as I think a very relevant example for that, that Herceptin got to 60% share of sales where subcu after about three years.

We meet with Roche twice a year and hear that the share of the Herceptin subcu has remained sticky. And by that, we mean clinics that move to giving their patients and themselves as staff experience the convenience of subcu did not move to IV biosimilars. And it’s because the value proposition is so strong in terms of convenience for patients, much shorter treatment time, obviously for Phesgo, the differences between five to eight minutes versus what can often be two to two and half hours for the sequential administration. And for a clinic, that means a lot less need for nursing time, oversight, et cetera, not to mention the pharmacy having to be involved in making up the IV. So, I think what’s going to be important is we continue to see this very strong progress to subcutaneous.

And then, I think that the IV Perjeta will not, if we can look at that example with Herceptin be an issue.

Michael DiFiore: Got it. Very helpful. And my other question regarding the subcu Nivo and if approved?

Helen Torley: Yes, sorry, subcu nivo, yes, this is a comment that Bristol has made with regard to the 75% of the IV indications. And I’m not recalling off the top of my head, Mike, exactly what it is and the reason for it. But we do know that for Tecentriq outside the U.S., U.K. and Europe, it got 100% of the indications and that certainly would be the goal in United States. So, there is, I think a couple of the patient indications, which I believe actually as I’m recalling this, I think it’s where it is combined with the indications for CTLA4-Ig. So, one is a Yervoy combined indication, those are the ones that are being excluded when they give the 75% because that combination was not studied.