2016 Q3 Form 10-Q Financial Statement

#000115903616000133 Filed on November 07, 2016

View on sec.gov

Income Statement

Concept 2016 Q3 2015 Q3
Revenue $31.85M $31.85M
YoY Change 0.0% 118.08%
Cost Of Revenue $9.134M $6.180M
YoY Change 47.8% 20.21%
Gross Profit $4.197M $4.197M
YoY Change 0.0% -6.23%
Gross Profit Margin 13.18% 13.18%
Selling, General & Admin $11.60M $10.23M
YoY Change 13.43% 19.09%
% of Gross Profit 276.36% 243.65%
Research & Development $33.86M $27.61M
YoY Change 22.64% 38.72%
% of Gross Profit 806.84% 657.87%
Depreciation & Amortization $700.0K $400.0K
YoY Change 75.0% -20.0%
% of Gross Profit 16.68% 9.53%
Operating Expenses $54.60M $37.84M
YoY Change 44.29% 32.8%
Operating Profit -$22.74M -$23.24M
YoY Change -2.13% 22.13%
Interest Expense $5.253M $1.301M
YoY Change 303.77% -5.45%
% of Operating Profit
Other Income/Expense, Net $334.0K $78.00K
YoY Change 328.21% -36.07%
Pretax Income -$27.66M -$24.46M
YoY Change 13.09% 20.49%
Income Tax $1.284M $0.00
% Of Pretax Income
Net Earnings -$28.95M -$28.95M
YoY Change 0.0% 42.73%
Net Earnings / Revenue -90.87% -90.87%
Basic Earnings Per Share -$0.23 -$0.19
Diluted Earnings Per Share -$0.23 -$0.19
COMMON SHARES
Basic Shares Outstanding 128.2M shares 126.9M shares
Diluted Shares Outstanding 128.2M shares 126.9M shares

Balance Sheet

Concept 2016 Q3 2015 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $221.1M $123.7M
YoY Change 78.74% -8.03%
Cash & Equivalents $61.21M $71.51M
Short-Term Investments $159.8M $52.20M
Other Short-Term Assets $21.00M $9.900M
YoY Change 112.12% 11.24%
Inventory $12.85M $11.10M
Prepaid Expenses $14.96M
Receivables $17.68M $8.392M
Other Receivables $0.00 $0.00
Total Short-Term Assets $272.6M $153.1M
YoY Change 78.07% -3.47%
LONG-TERM ASSETS
Property, Plant & Equipment $4.407M $2.686M
YoY Change 64.07% -17.33%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $5.500M $3.000M
YoY Change 83.33% 7.14%
Total Long-Term Assets $9.893M $5.644M
YoY Change 75.28% -6.34%
TOTAL ASSETS
Total Short-Term Assets $272.6M $153.1M
Total Long-Term Assets $9.893M $5.644M
Total Assets $282.5M $158.7M
YoY Change 77.97% -3.58%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $4.641M $4.437M
YoY Change 4.6% 2.19%
Accrued Expenses $25.73M $18.93M
YoY Change 35.97% 25.98%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due $12.39M $15.70M
YoY Change -21.05% 55.82%
Total Short-Term Liabilities $52.66M $44.85M
YoY Change 17.41% 29.65%
LONG-TERM LIABILITIES
Long-Term Debt $199.8M $34.10M
YoY Change 485.92% -14.32%
Other Long-Term Liabilities $1.178M $3.746M
YoY Change -68.55% 35.77%
Total Long-Term Liabilities $1.178M $3.746M
YoY Change -68.55% 35.77%
TOTAL LIABILITIES
Total Short-Term Liabilities $52.66M $44.85M
Total Long-Term Liabilities $1.178M $3.746M
Total Liabilities $53.84M $48.60M
YoY Change 10.78% 30.11%
SHAREHOLDERS EQUITY
Retained Earnings -$558.0M -$487.0M
YoY Change 14.58% 9.4%
Common Stock $545.9M $518.8M
YoY Change 5.22% 6.93%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity -$11.99M $31.80M
YoY Change
Total Liabilities & Shareholders Equity $282.5M $158.7M
YoY Change 77.97% -3.58%

Cashflow Statement

Concept 2016 Q3 2015 Q3
OPERATING ACTIVITIES
Net Income -$28.95M -$28.95M
YoY Change 0.0% 42.73%
Depreciation, Depletion And Amortization $700.0K $400.0K
YoY Change 75.0% -20.0%
Cash From Operating Activities -$8.700M -$17.00M
YoY Change -48.82% 28.79%
INVESTING ACTIVITIES
Capital Expenditures -$400.0K -$300.0K
YoY Change 33.33% 0.0%
Acquisitions
YoY Change
Other Investing Activities $8.700M $20.70M
YoY Change -57.97% 590.0%
Cash From Investing Activities $8.300M $20.20M
YoY Change -58.91% 648.15%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 400.0K 500.0K
YoY Change -20.0% -37.5%
NET CHANGE
Cash From Operating Activities -8.700M -17.00M
Cash From Investing Activities 8.300M 20.20M
Cash From Financing Activities 400.0K 500.0K
Net Change In Cash -0.0000000008149 3.700M
YoY Change -100.0% -138.14%
FREE CASH FLOW
Cash From Operating Activities -$8.700M -$17.00M
Capital Expenditures -$400.0K -$300.0K
Free Cash Flow -$8.300M -$16.70M
YoY Change -50.3% 29.46%

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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Organization and Business </font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Halozyme Therapeutics, Inc. is a biotechnology company focused on developing and commercializing novel oncology therapies. We are seeking to translate our unique knowledge of the tumor microenvironment to create therapies that have the potential to improve cancer patient survival. Our research primarily focuses on human enzymes that alter the extracellular matrix and tumor microenvironment. The extracellular matrix is a complex matrix of proteins and carbohydrates surrounding the cell that provides structural support in tissues and orchestrates many important biological activities, including cell migration, signaling and survival. Over many years, we have developed unique technology and scientific expertise enabling us to pursue this target-rich environment for the development of therapies.</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our proprietary enzymes are used to facilitate the delivery of injected drugs and fluids, potentially enhancing the efficacy and the convenience of other drugs or can be used to alter tissue structures for potential clinical benefit. We exploit our technology and expertise using a two pillar strategy that we believe enables us to manage risk and cost by: (1) developing our own proprietary products in therapeutic areas with significant unmet medical needs, with a focus on oncology, and (2) licensing our technology to biopharmaceutical companies to collaboratively develop products that combine our technology with the collaborators&#8217; proprietary compounds.</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The majority of our approved product and product candidates are based on rHuPH20, our patented recombinant human hyaluronidase enzyme. rHuPH20 is the active ingredient in our first commercially approved product, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Hylenex</font><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">&#174;</sup></font><font style="font-family:inherit;font-size:10pt;"> recombinant, and it works by temporarily breaking down hyaluronan (or &#8220;HA&#8221;), a naturally occurring complex carbohydrate that is a major component of the extracellular matrix in tissues throughout the body such as skin and cartilage. We believe this temporary degradation creates an opportunistic window for the improved subcutaneous delivery of injectable biologics, such as monoclonal antibodies and other large therapeutic molecules, as well as small molecules and fluids. We refer to the application of rHuPH20 to facilitate the delivery of other drugs or fluids as our ENHANZE</font><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">&#8482;</sup></font><font style="font-family:inherit;font-size:10pt;"> Technology. We license the ENHANZE Technology to form collaborations with biopharmaceutical companies that develop or market drugs requiring or benefiting from injection via the subcutaneous route of administration.</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We currently have ENHANZE collaborations with F. Hoffmann-La Roche, Ltd. and Hoffmann-La Roche, Inc. (&#8220;Roche&#8221;), Baxalta US Inc. and Baxalta GmbH (Baxalta Incorporated was acquired by Shire plc in June 2016) (&#8220;Baxalta&#8221;), Pfizer Inc. (&#8220;Pfizer&#8221;), Janssen Biotech, Inc. (&#8220;Janssen&#8221;), AbbVie, Inc. (&#8220;AbbVie&#8221;), and Eli Lilly and Company (&#8220;Lilly&#8221;). We receive royalties from two of these collaborations, including royalties from sales of one product approved in both the United States and outside the United States from the Baxalta collaboration and from sales of two products approved for marketing outside the United States from the Roche collaboration. Future potential revenues from the sales and/or royalties of our approved products, product candidates, and ENHANZE collaborations will depend on the ability of Halozyme and our collaborators to develop, manufacture, secure and maintain regulatory approvals for approved products and product candidates and commercialize product candidates.</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:30px;font-size:11pt;"><font style="font-family:inherit;font-size:10pt;">Our proprietary development pipeline consists primarily of pre-clinical and clinical stage product candidates in oncology. Our lead oncology program is PEGPH20 (PEGylated recombinant human hyaluronidase), a molecular entity we are developing in combination with currently approved cancer therapies as a candidate for the systemic treatment of tumors that accumulate HA. We have demonstrated that when HA accumulates in a tumor, it can cause higher pressure in the tumor, reducing blood flow into the tumor and with that, reduced access of cancer therapies to the tumor. PEGPH20 has been demonstrated in animal models to work by temporarily degrading HA surrounding cancer cells resulting in reduced pressure and increased blood flow to the tumor thereby enabling increased amounts of anticancer treatments administered concomitantly gaining access to the tumor. We are currently in Phase 2 and Phase 3 clinical testing for PEGPH20 with ABRAXANE</font><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">&#174; </sup></font><font style="font-family:inherit;font-size:10pt;">(nab-paclitaxel) and gemcitabine in stage IV pancreatic ductal adenocarcinoma (&#8220;PDA&#8221;) (Studies 109-202 and 109-301), in Phase 1b clinical testing for</font><font style="font-family:inherit;font-size:11pt;"> </font><font style="font-family:inherit;font-size:10pt;">PEGPH20 with KEYTRUDA</font><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">&#174; </sup></font><font style="font-family:inherit;font-size:10pt;">(pembrolizumab) in non-small cell lung cancer and gastric cancer (Study 107-101) and in Phase 1b/2 clinical testing for PEGPH20 with HALAVEN</font><font style="font-family:inherit;font-size:10pt;"><sup style="vertical-align:top;line-height:120%;font-size:7pt">&#174;</sup></font><font style="font-family:inherit;font-size:10pt;"> (eribulin) in first line and second line HER2-negative metastatic breast cancer.</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Except where specifically noted or the context otherwise requires, references to &#8220;Halozyme,&#8221; &#8220;the Company,&#8221; &#8220;we,&#8221; &#8220;our,&#8221; and &#8220;us&#8221; in these notes to condensed consolidated financial statements refer to Halozyme Therapeutics, Inc. and its wholly owned subsidiary, Halozyme, Inc., and Halozyme, Inc.&#8217;s wholly owned subsidiaries, Halozyme Holdings Ltd. and Halozyme Royalty LLC.</font></div></div>

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