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Why Halozyme Therapeutics, Inc. Deserves Its 52-Week High

What happened

In response to the company posting pleasing third-quarter results and boosting guidance, shares of Halozyme Therapeutics (NASDAQ: HALO), a biotech that focuses on making other drugs more effective, jumped 13% as of 1:45 p.m. EST.

So what

Here's an overview of the headline numbers from the quarter.

  • Revenue just about doubled to $63.7 million. That easily surpassed the $59 million that Wall Street had projected. 
  • Royalty revenue grew 31% to $17.1 million thanks to growing sales of Herceptin SC and MabThera SC.
  • Net income for the quarter -- yes, income -- was $2.7 million, or $0.02 per share. That's a big reversal from the $29 million loss that was recorded last year. It was also much better than the $0.10 loss that market watchers had predicted.
  • Cash balance at quarter-end was $317 million. 

The upbeat quarterly results enabled management to make a number of positive changes to its full-year guidance:

  • Revenue is now projected to land between $265 million to $280 million (up from $245 million to $260).
  • Operating expenses are expected to land between $230 million and $240 million (down from $240 million to $250 million).
  • Operating cash flow is expected to be in the range of $70 million to $85 million (up from $50 million to $60 million).
  • Cash balance at year-end is expected to be between $400 million to $415 million (up from $380 million to $395 million).

Looking beyond the financials, Halozyme also had a number of key developments occur during the quarter, including:

  • Signed the largest collaboration and licensing agreement in the company's history with Bristol-Myers Squibb (NYSE: BMY). The deal brought in an up-front payment of $105 million and covers 11 immuno-oncology targets. What's more, each of those 11 targets could bring in up to $160 million in potential milestone payments.
  • Signed a new target with longtime partner Roche (NASDAQOTH: RHHBY) that included a $30 million up-front payment and up to $160 million in potential milestone payments.
  • Roche's Genentech division launched Rituxan Hycela, which combines rituximab and Halozyme's technology as a treatment for lymphoma and leukemia.
  • Initiation of a phase 3 study that incorporates Halozyme's technology with Johnson & Johnson's Darzalex.

Between the better-than-expected quarterly results, guidance boost, and clinical progress, it isn't hard to figure out why shares are soaring today.

Image source: Getty Images.

Now what

Investors were also given a brief update on HALO-301. This is the company's phase 3 study that is examining its lead compound PEGPH20 in combination with Celgene's Abraxane and gemcitabine as a treatment for pancreatic cancer. Management stated that enrollment remains ongoing and the company expects interim analysis to take place before the end of 2018.

In total, things are going well for Halozyme. Sales are growing, cash burn is decreasing, management continues to sign lucrative partnership deals, and its bank account is loaded with cash. That's why I continue to believe that shares can head higher from here, even though today's jump puts them at a fresh 52-week high.

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Brian Feroldi owns shares of Celgene. The Motley Fool owns shares of and recommends Celgene and Johnson & Johnson. The Motley Fool has a disclosure policy.