$HALO: Subcutaneous drug delivery, obsoleting IV delivery


Halozyme Therapeutics has two main lines of business

  • ENHANZE is an engineered enzyme that makes possible subcutaneous delivery of drugs that previously required delivery via IV because of the drugs’ characteristics (large molecule size etc.)
  • They acquired a line of auto-injectors when they purchased Antares Pharma

ENHANZE benefits include:

  • Patients prefer a shot that takes a few minutes vs. an IV injection that can take hours
  • Hospitals get faster patient throughput
  • Insurance gets reduced cost

$HALO does not develop its own drugs; rather, it partners with other drug companies who benefit when their drugs can be delivered subcutaneously.

Auto Injectors

  • $HALO partners with drug companies who benefit when their drugs can be self-administered using Halozyme’s auto-injectors.
  • I’ll describe the strategic importance of the auto-injectors below.

The core thesis is that subcutaneous delivery of drugs is a new/emerging industry, displacing existing IV delivery of drugs.

The main threat to the core thesis is an upcoming patent cliff. $HALO has a two-pronged strategy for dealing with the patent cliff; I’ll discuss that too. Another threat to the core business is their balance sheet; they recently make a large acquisition: Antares Pharma, the maker of the auto injectors.

Revenue, in millions, going back to 2019
2019: 60, 56, 39, 46. (total 201)
2020: 53, 25, 55, 65. (total 198)
2021: 121, 89, 136, 115. (total 461)
2022: 102, 117, 152, 208. (total 579)
2023: 181, 162. ( so far: 343. Projected: 815 to 845 )

Gross Margin: 67%

Other: Cash from Operations is $279M. P/E of 13, but it goes up somewhat if you factor in the $1.5B price tag of Antares

Recurring Revenue is from (EDIT: royalties) they get from their Drug-Company Partners. They also get licensing fees and milestone payments, which are non-recurring and can make their revenue lumpy.

Their Sales Pitch for ENHAZE:

  • Faster drug delivery vs. IV
  • Patients prefer subcutaneous
  • Hospitals get faster patient throughput
  • Less cost to Insurance companies
  • Evidence that ENHANZE delivery actually delivers superior results vs. IV in terms of less waste, better disbursement and potentially better safety profile e.g. fewer complications

Their Sales Pitch for their auto-injectors

  • Enables patients to self-administer
  • Multiple configurations enable multiple delivery profiles: more/less volume, multiple doses from the same injector, delivery at different depths etc.
  • Benefits Drug Company partners by expanding the use cases (delivery mechanisms) for their drugs


  • Their main most is the IP protection of ENHANZE, but this patent protection runs out in 2027

They have a plan for long-term durable growth. I’m posting here to get feedback from the board: is their plan feasible?

Their plan for durable growth past 2027 has three prongs:

  1. Negotiate deals between now and 2027 such that the deals extend past 2027, regardless of the patent expiration
  2. Make delivery via ENHANZE integral to the FDA approval of their partners’ drugs, so that their patent protection effectively gets a free ride on the coattails of the drugs’ IP protection
  3. For some drugs, wrap both ENHANZE and their auto-injectors up into the FDA approval. They think this may be possible because ENHAZE will make possible the world’s first High Volume auto injector

Recent price action
Price has pulled back recently, making for a potentially good entry point.
According to Piper Sandler, the pullback is driven mainly by external factors such as drug pricing reform in the U.S. and a setback to a European patent for JNJ cancer therapy Darzalex which uses [HALO’s enzyme technology. ( Halozyme sees no impact on royalties after EU body revokes J&J's Darzalex patent | Seeking Alpha )

Will their efforts to extend the benefits of their IP protection of ENHANZE, past its 2027 expiration, pay off? Please chime in if you have any insight, observations etc.


Looking further, I’ve identified two sources of competition:

  1. ALTEOGEN(196170 KQ) of South Korea; they have a similar product and are doing similar deals
  2. Some drug companies are working on their own to make subcutaneous versions of their own drugs.

Such competition, I’m sure, will affect the take rate they can negotiate with their drug-company partners.

I still think there are strengths to its model; it features high-margin recurring revenue and has the potential for durable growth, even past its patent expiration. Subcutaneous drug delivery looks to me like an important/emerging/expanding market with room for multiple players.


You’re betting on their ability to circumvent the problems presented by patent expiration. I think I’ve there are better investment opportunities with other companies.
In addition, if the patent is close to expiring it means that this technology has been available for about 20 years. Why hasn’t been in common use? Did it have to wait for ENHANZE to be usable?