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美國
證券交易委員會
華盛頓特區20549
表格 10-Q
(標記一)
根據1934年證券交易法第13或15(d)節的季度報告
截至季度結束日期的財務報告2024年9月30日
或者
根據1934年證券交易法第13或15(d)節的轉型報告書
過渡期從           到           
委員會文件號 001-32335
Halo Logo updated.jpg
_______________________________________
HALOZYME THERAPEUTICS,INC。
(公司註冊名完全按照其章程規定)
_______________________________________
特拉華州 88-0488686
(設立或組織的其他管轄區域) (納稅人識別號碼)
El Camino Real 12390 92130
聖地亞哥(郵政編碼)
加利福尼亞州
,(主要行政辦公地址) 
(858) 794-8889
(註冊人電話號碼,包括區號)
不適用
(前名稱、地址及財政年度,如果自上次報告以來有更改)
在法案第12(b)條的規定下注冊的證券:
每一類的名稱交易標誌在其上註冊的交易所的名稱
普通股,每股0.001美元面值HALO納斯達克證券交易所 LLC
請勾選以下內容。申報人是否(1)在過去12個月內(或申報人需要報告這些報告的時間較短的期間內)已提交證券交易法規定的第13或15(d)條要求提交的所有報告;以及(2)過去90天內已被要求提交此類報告。     x    否  ¨
請勾選以下內容。申報人是否已在過去12個月內(或申報人需要提交此類文件的時間較短的期間內)逐個以電子方式提交了根據規則405提交的互動數據文件。這章的交易中規定。      x    否  ¨
請在對應的選項上打勾,表明該註冊公司是大型加速申報人,加速申報人,非加速申報人,較小的披露公司或新興增長公司。請參見交易所法規120億.2條對「大型加速申報人」、「加速申報人」、「較小的披露公司」和「新興增長公司」的定義。
大型加速報告人
加速文件提交人
非加速股票交易所申報人
較小的報告公司
新興成長公司
如果公司無法符合證券交易法第13(a)條規定,使用延長過渡期來遵守任何新的或修訂的財務會計準則,請在複選框中指示。 ¨
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註冊公司普通股的未償還股份數量(以千爲單位),每股面值爲0.001美元,爲 127,227 截至2024年10月24日.



HALOZYME THERAPEUTICS,INC。
目錄
 
  
項目1。
項目2。
項目3。
項目4。
項目1。
項目1A。
項目2。
項目3。
項目4。
項目5。
項目6。
2


第一部分 — 財務信息
項目1.  基本報表
HALOZYME THERAPEUTICS,INC。
簡明合併資產負債表
(未經審計)
2024年4月27日
九月三十日
2024
十二月三十一日
2023
資產
流動資產
現金和現金等價物$154,318 $118,370 
可供出售的有價證券511,988 217,630 
應收賬款、淨資產和合同資產285,743 234,210 
庫存
131,412 127,601 
預付費用和其他流動資產43,515 48,613 
流動資產總額1,126,976 746,424 
財產和設備,淨額74,490 74,944 
預付費用和其他資產80,151 17,816 
善意416,821 416,821 
無形資產,淨額419,592 472,879 
遞延所得稅資產,淨額 4,386 
總資產$2,118,030 $1,733,270 
負債和股東權益
流動負債
應付賬款$12,398 $11,816 
應計費用96,417 100,678 
流動負債總額108,815 112,494 
長期債務,淨額1,504,154 1,499,248 
其他長期負債40,406 37,720 
遞延所得稅負債,淨額11,952  
負債總額1,665,327 1,649,462 
承付款和或有開支(注11)
股東權益
優先股-$0.001 面值; 20,000 已獲授權的股份; 股份
已發行和尚未發行
  
普通股-$0.001 面值; 300,000 已獲授權的股份; 127,183126,770 分別截至2024年9月30日和2023年12月31日的已發行和流通股份
127 127 
額外的實收資本61,886 2,409 
累計其他綜合虧損
(6,939)(9,278)
留存收益397,629 90,550 
股東權益總額452,703 83,808 
負債和股東權益總額$2,118,030 $1,733,270 
請參閱附註事項的簡明合併財務報表。
3


HALOZYME THERAPEUTICS,INC。
簡明合併利潤表
(未經審計)
2024年4月27日

截至9月30日的三個月截至9月30日的九個月
 2024202320242023
收入
特許權使用費$155,061 $114,433 $400,572 $325,813 
產品銷售淨額86,659 86,569 224,128 221,252 
合作協議下的收入48,364 15,031 92,616 52,149 
總收入290,084 216,033 717,316 599,214 
營業費用
銷售成本49,426 54,823 117,362 140,063 
無形資產攤銷17,762 20,341 53,287 56,011 
研發18,458 17,321 58,607 55,027 
銷售、一般及行政費用41,241 35,269 112,086 111,574 
營業費用總計126,887 127,754 341,342 362,675 
營業利潤163,197 88,279 375,974 236,539 
其他費用收益
投資和其他收益,淨額
6,474 4,786 16,499 10,957 
Contingent liability fair value measurement gain
 13,200  13,200 
利息支出(4,524)(4,505)(13,555)(13,542)
稅前收入
165,147 101,760 378,918 247,154 
所得稅費用28,136 19,923 71,839 50,948 
淨收入$137,011 $81,837 $307,079 $196,206 
每股收益
基本$1.08 $0.62 $2.42 $1.48 
稀釋$1.05 $0.61 $2.37 $1.45 
加權平均流通股份
基本126,850 131,965 126,969 132,896 
稀釋130,134 134,083 129,526 135,233 
請參閱附註事項的簡明合併財務報表。
4


HALOZYME THERAPEUTICS, INC.
綜合損益簡明合併財務報表
(未經查核)
(以千為單位)
截至9月30日的三個月截至9月30日的九個月
2024202320242023
凈利潤$137,011 $81,837 $307,079 $196,206 
其他綜合收益
可供出售金融资产未实现收益(亏损),净额
1,735 (49)1,272 706 
外幣兌換調整2  (5)24 
外币未实现收益 2  1 
衍生工具未实现(亏损)收益,净额
(6,919)3,426 1,772 2,001 
金融工具的已實現虧損(收益),凈額
311 (537)(700)(583)
綜合收益$132,140 $84,679 $309,418 $198,355 
請參閱簡明合併基本報表附註。
5


HALOZYME THERAPEUTICS, INC.
簡明財務報表現金流量表
(未經查核)
(以千為單位)
截至9月30日的九個月
 20242023
經營活動
淨收入$307,079 $196,206 
調整使淨利潤與經營性現金淨額相符
股權酬金31,923 26,956 
折舊和攤銷7,610 8,152 
無形資產攤銷53,287 56,011 
債務折扣攤銷5,506 5,476 
可市場出售證券的折價累計計息,淨額
(8,520)(3,830)
可供出售證券實現收益
(7) 
設備處置損失1,678 517 
準備金義務公允價值計量調整
 (13,200)
遞延收入認定  (2,579)
租賃付款確認
863  
延遲所得稅15,824 25,083 
營運資產和負債的變化
應收賬款、淨其他合同資產(51,533)13,546 
存貨
(59,655)(28,353)
預付款項和其他資產(265)5,299 
應付賬款及應計費用(3,193)(3,067)
經營活動產生的現金流量淨額300,597 286,217 
投資活動
購買有市場流通的證券(596,157)(271,617)
出售和到期的有市場流通的證券收益311,598 195,697 
購買固定資產(7,644)(12,698)
投資活動產生的淨現金流出(292,203)(88,618)
籌資活動
償還2024年可轉換票據 (13,483)
回購普通股 (150,083)
淨股份結算相關稅費後發行普通股的收益
27,554 5,499 
籌集資金的淨現金流量
27,554 (158,067)
現金,現金等價物和受限制現金的淨增加額
35,948 39,532 
期初現金、現金等價物及受限制的現金餘額118,370 234,695 
期末現金、現金等價物及受限制的現金餘額$154,318 $274,227 
補充披露的非現金投融資活動
購置固定資產的預計支付款項$320 $533 
權利義務交換所獲得的租賃資產$2,622 $1,211 
爲2024可轉換票據的轉股發行的普通股$ $125 
請參閱附註事項的簡明合併財務報表。
6


HALOZYME THERAPEUTICS,INC。
股東權益的簡明合併報表
(未經審計)
(以千爲單位)
2024年9月30日止三個月
 普通股額外的
實繳
資本
累積的
其他
綜合虧損
未分配利潤總費用
股東的
股權
 股份數量
截至2024年6月30日的餘額126,535 $127 $30,747 $(2,068)$260,618 $289,424 
基於股份的報酬支出— — 12,578 — — 12,578 
根據行使期權和受限制股份單位解禁而發行普通股,淨利潤
648  18,561 — — 18,561 
其他綜合損失
— — — (4,871)— (4,871)
淨收入— — — — 137,011 137,011 
2024年9月30日的餘額127,183 $127 $61,886 $(6,939)$397,629 $452,703 
2024年9月30日止九個月
 普通股額外的
實繳
資本
累積的
其他
綜合(損失)收益
未分配利潤
總費用
股東的
股權
 股份數量
2023年12月31日的餘額126,770 $127 $2,409 $(9,278)$90,550 $83,808 
基於股份的報酬支出— — 31,923 — — 31,923 
發行普通股通過股票期權的行使和受限股票和績效股票單位的歸屬淨額及股份發行計劃
1,479 1 27,553 — — 27,554 
回購普通股(1,066)(1)1 —  
其他綜合收益
— — — 2,339 2,339 
淨收入— — — — 307,079 307,079 
截至2024年9月30日的餘額127,183 $127 $61,886 $(6,939)$397,629 $452,703 
2023年9月30日止三個月
 普通股額外的
實繳
資本
累積的
其他
綜合(損失)收益
未分配利潤
總費用
股東的
股權
 股份數量
截至2023年6月30日的餘額131,856 $132 $12,068 $(1,615)$140,448 $151,033 
基於股份的報酬支出— — 9,367 — — 9,367 
根據行權期權和解鎖受限制股單位發行普通股, 淨利潤
225 — 4,102 — — 4,102 
其他綜合收益
— — — 2,842 — 2,842 
淨收入— — — — 81,837 81,837 
截至2023年9月30日的資產負債表132,081 $132 $25,537 $1,227 $222,285 $249,181 
2023年9月30日止九個月
 普通股額外的
實繳
資本
累積的
其他
綜合(損失)收益
未分配收益(累計赤字)
總費用
股東的
股權
 股份數量
截至2022年12月31日的餘額135,154 $135 $27,368 $(922)$143,217 $169,798 
基於股份的報酬支出— — 26,956 — — 26,956 
發行普通股以轉換2024年可轉換票據289 — (126)— — (126)
發行普通股通過股票期權的行使和受限股票和績效股票單位的歸屬淨額及股份發行計劃803 1 5,498 — — 5,499 
回購普通股(4,165)(4)(34,159)(117,138)(151,301)
其他綜合收益
— — — 2,149 — 2,149 
淨收入— — — — 196,206 196,206 
2023年9月30日餘額132,081 $132 $25,537 $1,227 $222,285 $249,181 
請參閱附註事項的簡明合併財務報表。
7



HALOZYME THERAPEUTICS,INC。
簡明合併財務報表附註
(未經審計)
1.    組織和業務
Halozyme Therapeutics,Inc.是一家生物製品公司,推進顛覆性解決方案,以改善新興和已建立療法的患者體驗和結果。
作爲ENHANZE的創新者® 使用我們專有的酶rHuPH20,我們的經過商業驗證的解決方案用於促進注射藥物和液體的皮下(SC)給藥,旨在通過快速皮下給藥和減少治療負擔來改善患者體驗。我們向生物製藥公司許可我們的技術,共同開發將ENHANZE與合作伙伴的專有化合物結合的產品。我們還使用我們的先進自動注射器技術開發、製造和商業化自身或與合作伙伴共同開發的藥品-器械組合產品,這些產品旨在提供商業或功能上的優勢,如提高便利性、可靠性和耐受性,增強患者舒適度和依從性。
我們的ENHANZE合作伙伴的獲批產品和產品候選基於rHuPH20,我們的專利重組人類透明質酸酶。 rHuPH20通過分解透明質酸(「HA」)(一種天然的多糖,是SC空間細胞外基質的主要組分)起作用。這一暫時降低了批量流體流動的障礙,從而實現了市場上高劑量,高容積注射生物製品(如單克隆抗體和其他大型治療分子以及小分子和液體)的改進和更快速的SC輸送,我們將應用rHuPH20來促進其他藥物或液體注射的輸送稱爲ENHANZE。在開發與我們的ENHANZE技術相結合的專有靜脈注射(「IV」)藥物方面,產生了數據,支持ENHANZE在減輕患者治療負擔方面的潛力,因爲與IV給藥相比,SC給藥的持續時間較短。 ENHANZE可以啓用固定劑量的SC劑量與IV給藥通常所需要的以體重爲基礎的劑量相比,延長用於已經通過皮下給藥的藥物的劑量間隔,還可以實現更低比例的輸注相關反應。 ENHANZE可能允許更靈活的治療選項,如由醫護人員或患者或照顧者在家中給藥。 最後,某些與ENHANZE共同製劑的專有藥物已獲得了額外的專利保護,將其產品的專利期延長到專有IV藥物的專利期之外。
我們目前與F. Hoffmann-La Roche,Ltd.和Hoffmann-La Roche,Inc.(「Roche」),Takeda Pharmaceuticals International AG和Baxalta US Inc.(「Takeda」),Pfizer Inc.(「Pfizer」),Janssen Biotech,Inc.(「Janssen」),AbbVie,Inc.(「AbbVie」),Eli Lilly and Company(「Lilly」),Bristol-Myers Squibb Company(「BMS」),argenx BVBA(「argenx」),ViiV Healthcare(全球專業治療HIV的公司,由葛蘭素史克控股)(「ViiV」)音像之家的藥物合作協議和許可協議)(「Chugai」)和Acumen Pharmaceuticals,Inc.(「Acumen」)。除了從ENHANZE合作中獲得前期授權費用外,我們還有權獲得基於事件和銷售的里程碑付款,來自銷售批量rHuPH20的收入以及與ENHANZE共同制定的已批准合作伙伴產品的商業銷售中的版稅。我們目前從銷售收入中獲得版稅,包括Takeda,Janssen和argenx合作的每種商業產品和Roche合作的多種商業產品。 商業化產品,包括銷售 之一 來自Takeda,Janssen和argenx合作的每種商業產品 五個營運部門:獵鷹創意集團、PDP、Sierra Parima、目的地運營和Falcon's Beyond Brands,所有這些板塊均爲可報告板塊。公司的首席營運決策者是執行主席和首席執行官,他們評估財務信息以做出營運決策、評估財務表現和分配資源。營運板塊基於產品線組織,對於我們的基於位置的娛樂板塊,根據地理位置組織。營運板塊的結果包括直接歸屬於板塊的成本,包括項目成本、工資和與工資有關的開支以及與業務板塊運營直接相關的間接費用。未分配的企業費用,包括高管、會計、財務、市場營銷、人力資源、法律和信息技術支持服務、審計、稅收企業法律開支的工資和相關福利,作爲未分配的企業開銷呈現,成爲報告板塊的總收入(虧損)和公司未經審計的彙總財務報表結果之間的調節項。 來自Roche合作的多種商業產品。
我們已經與梯瓦製藥股份有限公司(「梯瓦」)和Otter製藥有限責任公司(「Otter」)商業化自動注射器產品。我們還有包括Idorsia製藥有限公司(「Idorsia」)在內的開發項目,其中包括自動注射器。
我們專有產品的商業組合包括Hylenex®,利用rHuPH20,和XYOSTED®,利用我們的自動注射器技術。
除非另有特別說明或背景另有要求,在我們的簡明綜合財務報表附註中,對「Halozyme」,「本公司」,「我們」,「我方」和「我們」等的引用,指的是Halozyme Therapeutics, Inc.及根據附註2披露的其直接及間接完全擁有的子公司。 重要會計政策之摘要.
8


2.    重要會計政策之摘要
報告範圍
這些附帶的中期未經審計的簡明合併財務報表是根據美國通用會計準則(「U.S. GAAP」)和美國證券交易委員會(「SEC」)關於 10-Q 表的季度報告的規則和條例編制的。因此,它們不包括 U.S. GAAP 的所有要求的信息和披露,以形成完整的財務報表。這些簡明合併財務報表及其附註應與包含在我們於2024年2月20日向SEC提交的10-k年度報告中的審計合併財務報表及其附註一起閱讀。此處呈現的中期未經審計的財務信息反映了管理層認爲必要的用於公平陳述所呈現期間的財務狀況和業務結果的所有調整,這些調整僅包括正常循環調整。中期過渡業務結果不一定能反映整個財政年度的業務結果。
這些簡明合併財務報表包括Halozyme Therapeutics,Inc.和我們全資擁有的子公司Halozyme,Inc.和Antares Pharma,Inc.,以及Antares Pharma,Inc.的全資瑞士子公司Antares Pharma IPL AG和Antares Pharma AG的帳戶。所有公司間帳戶和交易均已消除。
使用估計
按照U.S. GAAP準則編制簡明合併財務報表需要我們進行估計和假設,這影響我們在簡明合併財務報表和附註中報告的金額。我們持續評估我們的估計和判斷,這些估計和判斷基於歷史和預期的業務結果和趨勢以及我們認爲在情況下合理的各種其他假設。由於它們的本質,估計受到內在的不確定性的影響,因此,實際結果可能與我們的估計有所不同。.
現金及現金等價物
現金及現金等價物包括高度流動的投資,可迅速轉換爲現金,其到期日距離購買日期不到90天。截至2024年9月30日,我們的現金及現金等價物包括貨幣市場基金、銀行存款證書及商業銀行的活期存款。
市場流通證券是指具有超過購買日起90天的原始期限,並專門用於資助當前運營的投資。這些投資被視爲可供出售。這些投資被歸類爲流動資產,即使所述到期日可能超出當前資產負債表日期一年或更長時間,這反映了管理層用於根據需要爲我們的業務運營提供融資的意圖。可供出售的投資以公允價值計量,其中未實現的收益和損失記錄在其他綜合收益中,作爲股東權益的一個單獨組成部分。市場流通證券的成本根據溢價或折扣的攤銷進行調整,這樣的攤銷或折現包括在我們的簡明合併利潤表中的投資和其他收益淨額中。我們使用特定鑑定法計算已售市場流通證券的實現收益和損失。我們的簡明合併利潤表中未計入已判斷爲由於市場流通證券信用損失而導致的已實現收益、損失和減值。
金融工具的公允價值
公允價值計量的授權指南建立了三級公允價值層次結構,它根據用於計量公允價值的輸入設置了優先級。這些層次包括:層次1,即觀察到的輸入,例如在活躍市場中的報價;層次2,即直接或間接可觀察到的除了在活躍市場中的報價以外的輸入;和層次3,即無市場數據或幾乎無市場數據的不可觀察輸入,因此需要實體開發自己的假設。
我們的金融工具包括現金等價物、可供出售市場流通證券、應收賬款、預付費用和其他資產、應付賬款、應計費用和長期債務。這些金融工具的公允價值估計是基於具體時間點上的相關市場信息。這些估計可能具有主觀性並涉及不確定性和顯著的判斷事項,因此不能以精確方式確定。現金等價物、應收賬款、預付費用和其他資產、應付賬款和應計費用的賬面價值通常被認爲代表其各自的公允價值,因爲這些工具的短期特徵。
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可供出售市場流通證券包括抵押資產支持證券、公司債務證券、美國國庫證券、機構債券和商業票據,根據層次1和層次2輸入進行公允價值計量。層次2金融工具使用的是 less active 市場的市場價格和具有可觀察輸入的專有定價估值模型,包括利率、收益曲線、到期日、發行日、結算日、報告交易、經紀人報價、報價價差、基準證券或其他市場相關數據。我們從我們的投資經理處獲得層次2投資的公允價值,該經理從第三方定價來源處獲取這些公允價值。我們通過將這些公允價值與第三方定價來源進行比較來驗證我們的投資經理提供的層次2金融工具的公允價值。
應收賬款淨額
應收賬款記錄在開具的金額並且不計息。應收賬款扣除預計的及時付款折扣、分銷費用和退貨扣減後記錄。我們認爲應收賬款的呈現爲無法收回的風險很小,因此,2024年6月30日和2023年12月31日設立較大的壞賬準備。 截至2024年9月30日和2023年12月31日已設立重要的呆賬準備。
存貨
我們已經簽訂了主要是用於房地產和汽車的運營租賃協議。這些租賃協議的合同期限從...到...不等。我們在合同開頭確定協議是否包含租賃權。我們的簡明合併資產負債表中包含了從運營租賃的未來最低租賃付款現值中解譯的使用權ROU資產和義務ROU資產。基於開始日的未來最低租賃付款現值計量來認定ROU使用權和義務。由於我們的大多數租賃協議不提供隱含利率,因此,我們使用增量借貸費率來確定折現率,該增量借貸費率基於開始日期時可用的信息得出。運營租賃ROU資產還包括已支付的租賃付款,並排除了獲得租賃激勵和發生的初始直接費用。我們的租賃協議通常包括延長或終止租賃的選擇權。當我們合理確定我們會行使該選擇權時,這些選擇權包括在租賃期內。租賃期在初始合同期限內不超過12個月的短期租賃在我們的簡明合併資產負債表中未計入。最少租賃支付的租賃支出按照直線法在租賃期內確認。
租約
我們已經簽訂了主要是用於房地產和汽車的運營租賃協議。這些租賃協議的合同期限從...到...不等。我們在合同開頭確定協議是否包含租賃權。我們的簡明合併資產負債表中包含了從運營租賃的未來最低租賃付款現值中解譯的使用權ROU資產和義務ROU資產。基於開始日的未來最低租賃付款現值計量來認定ROU使用權和義務。由於我們的大多數租賃協議不提供隱含利率,因此,我們使用增量借貸費率來確定折現率,該增量借貸費率基於開始日期時可用的信息得出。運營租賃ROU資產還包括已支付的租賃付款,並排除了獲得租賃激勵和發生的初始直接費用。我們的租賃協議通常包括延長或終止租賃的選擇權。當我們合理確定我們會行使該選擇權時,這些選擇權包括在租賃期內。租賃期在初始合同期限內不超過12個月的短期租賃在我們的簡明合併資產負債表中未計入。最少租賃支付的租賃支出按照直線法在租賃期內確認。 三年十二年我們已經簽訂了主要是用於房地產和汽車的運營租賃協議。這些租賃協議的合同期限從...到...不等。我們在合同開頭確定協議是否包含租賃權。我們的簡明合併資產負債表中包含了從運營租賃的未來最低租賃付款現值中解譯的使用權ROU資產和義務ROU資產。基於開始日的未來最低租賃付款現值計量來認定ROU使用權和義務。由於我們的大多數租賃協議不提供隱含利率,因此,我們使用增量借貸費率來確定折現率,該增量借貸費率基於開始日期時可用的信息得出。運營租賃ROU資產還包括已支付的租賃付款,並排除了獲得租賃激勵和發生的初始直接費用。我們的租賃協議通常包括延長或終止租賃的選擇權。當我們合理確定我們會行使該選擇權時,這些選擇權包括在租賃期內。租賃期在初始合同期限內不超過12個月的短期租賃在我們的簡明合併資產負債表中未計入。最少租賃支付的租賃支出按照直線法在租賃期內確認。
房地產和汽車等不動產的賬面金額,包括ROU資產,按成本減去累計折舊和攤銷計算。設備採用直線法計提折舊的有限使用期進行折舊,期限在...到...之間不等。改善租賃通常會在資產或租賃期限使用壽命估計較短的期間內使用直線法進行攤銷。
固定資產,淨值
我們根據處理或處置長期資產所需的權威指南對長期資產進行處理或處置的會計處理。長期資產會因爲事件或環境的變化而進行審查,以表明其賬面價值可能無法收回。 三年$244,200,將在歸屬期內按比例確認。 綜合收益被定義爲從非業主來源的交易和其他事件以及一些情況在期間的權益的變化。
長期資產的減值損失
2024年可轉換債券、2027年可轉換債券和2028年可轉換債券(統稱「可轉換債券」)根據債務和衍生品的權威準則進行會計處理。我們評估可轉換債券中包含的所有內含轉換選項,以確定是否存在需要根據內含衍生品權威準則將其作爲衍生品拆分的內含功能。根據我們的分析,我們將我們的每個可轉換債券作爲單獨的會計單位,即負債,因爲我們得出結論認爲內含的轉換功能不需要根據內含衍生品權威準則作爲衍生品拆分。
綜合收益
本質上綜合收益是從非所有者來源的交易及其他事件和情況中權益在一定期間內的變化。
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可轉換債券
我們按照債務和衍生品的權威準則處理2024年可轉換債券、2027年可轉換債券和2028年可轉換債券(統稱「可轉換債券」)。我們評估可轉換債券中包含的所有內含轉換選項,以確定是否存在需要根據內含衍生品權威準則將其作爲衍生品拆分的內含功能。根據我們的分析,我們將我們的每個可轉換債券作爲單獨的會計單位,即負債,因爲我們得出結論認爲內含的轉換功能不需要根據內含衍生品權威準則作爲衍生品拆分。
現金流量套期保值-貨幣風險
自2023年第二季度開始,我們參加了一個現金流量套期保值計劃,以減輕以瑞士法郎計價的預測版稅收入所涉及的外匯兌換風險。根據該計劃,我們可以對這些預測版稅進行套期保值,最高達 公司使用資產和負債的會計方法來計算所得稅。根據這種方法,根據資產和負債的金融報表及稅基之間的暫時區別,使用實施稅率來決定遞延稅資產和遞延稅負債,該稅率適用於預期差異將反轉的年份。稅法的任何修改對遞延稅資產和負債的影響將於生效日期在財務報告期內確認在彙總的綜合收益報表上。 ,以減少我們的收益和現金流量受匯率波動的不利影響。
根據對沖會計處理,所有對沖關係在對沖開始時正式記錄,並且在抵消對沖交易未來現金流變動方面高度有效。在對沖開始時以及持續進行中,我們評估外幣遠期合約在前瞻性和回顧性基礎上抵消對沖項目現金流變動的高效性。如果我們判斷(i)外幣遠期合約作爲現金流對沖不夠高效,(ii)外幣遠期合約已不再是高效對沖或(iii)預測交易不再有望發生,我們將前瞻性地終止對沖會計處理。我們根據遠期貨幣遠期合約的公允價值變動和與對沖的風險關鍵條款相匹配的假設外幣遠期合約的公允價值來衡量有效性。我們未將任何部分的外幣遠期合約排除在對沖效力評估之外。截至2024年9月30日,所有對沖都被判斷爲高度有效。
與我們的套期保值合同相關的資產或負債按公允市場價值記錄在預付費用和其他流動資產、應計費用,或相應地記錄在資產負債表中的其他長期負債。與這些套期保值合同公允市場價值的變化相關的損益,在財務報表中作爲累積其它綜合收益(損失)的組成部分記錄在股東權益的財務報表中,並在與被套期交易確認的同時,重新分類爲版稅收入在我們的捷報表中。如果預期交易未發生或很有可能不會在規定的套期期內發生,我們將這些套期現金流對沖的獲利或損失,從其它綜合收益重新分類到我們的捷算表中。來自現金流對沖的結算包括在經營活動中的捷現金流量表中。由於這些套期保值合同的公允市場價值來源於當前市場利率,這些套期保值合同被分類爲衍生金融工具。我們不會用衍生金融工具進行投機或交易目的。截至2024年9月30日,預計在接下來的12個月內從其他綜合收益中扣淨的淨收益金額對我們的捷算表並不重要。
商業組合
根據企業併購會計方法,我們根據被收購的有形和可識別無形資產和負債的估計公允價值,將支付的總代價分配給它們。這些估值要求我們進行估計和假設,特別是針對無形資產。我們將超過有形和無形資產的總體公允價值的溢價作爲商譽進行記錄。完成企業併購所產生的成本,例如法律及其他專業費用,將在發生時進行費用化處理。
如果企業併購的初始會計處理在處於測量期的報告期結束時尚未完成,在我們的財務報表中報告臨時金額。在測量期間,我們根據有關事實和情況的新信息調整發生在收購日時計量的臨時金額,如果已知,則會對商譽進行相應的抵消。測量期後識別的任何調整將在我們的簡明合併收入表中記錄。
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商譽、無形資產和其他長期資產
收購的資產,包括無形資產和在研究與開發 (「IPR&D」) 中獲得的資產,以及承擔的負債,在收購日按公允價值計量。 具有無限有效壽命的商譽,代表了收購的淨資產成本超過公允價值的部分。 企業合併中獲得用於 IPR&D 活動的無形資產被視爲具有無限生存期,直到相關研究與開發工作的完成或放棄。 在達到相關研究與開發項目的末尾(即在商業化時),IPR&D 資產將按其預計使用壽命攤銷。 如果相關研究與開發項目被放棄,則 IPD&D 資產將在放棄期間予以支付。
我們定期進行審查以確定是否發生任何事件表明具有有限有用壽命的無形資產和其他長期資產可能存在減值。如果存在減值的跡象,則進行減值測試以評估受影響資產的回收能力,方法是確定其賬面價值是否超過未折現的預期未來現金流量。如果無法收回受影響的資產,我們將估計資產的公允價值並在其賬面價值超過公允價值時記錄減值損失。可能表明存在潛在減值的因素包括股價和市值相對於賬面淨值的大幅下降,某項資產是否能夠爲我們的戰略業務目標創造正現金流量的顯著變化,以及某項資產的利用模式。
我們在報告單位級別上執行商譽減值分析,這與我們的報告和運營部門結構以及離散性財務信息的可用性相一致。在商譽減值審查期間,我們評估定性因素以確定我們的報告單位的公允價值是否低於賬面價值,包括商譽。定性因素包括但不限於宏觀經濟條件,行業和市場考慮以及我們的整體財務表現。如果在評估這些定性因素的全部情況之後,我們確定我們的報告單位的公允價值不低於賬面價值,包括商譽的金額不需要進一步評估。否則,我們將繼續比較報告單位的估計公允價值與賬面價值,包括商譽。如果報告單位的賬面價值超過公允價值,我們將根據差額記錄減值損失。我們可能選擇放棄定性評估並繼續執行定量的商譽減值測試。
我們的有限有用壽命可識別的無形資產通常包括收購的設備技術和產品權利。具有有限壽命的可識別無形資產的成本通常按直線分攤在各自估計的有用壽命上。
我們定期審核以確定任何事件是否發生,表明具有有限有用壽命的無形資產和其他長期資產可能出現減值。如果存在減值的跡象,則執行減值測試以通過確定賬面價值是否超過未折現的預期未來現金流量以評估受影響資產的可回收性。如果相關資產無法收回,則估計其公允價值並在其賬面價值超過公允價值時記錄減值損失。可能表明潛在減值的因素包括股價和市值下降幅度相比淨賬面價值的大幅下降,某一具體資產爲實現我們的戰略業務目標帶來的正現金流量的能力存在重大變化,以及某一特定資產的利用方式存在的模式。
收入確認
我們通過從(i)從授權我們的ENHANZE技術及其他版稅安排中收到的版稅,(ii)在協同協議下及(iii)從我們的專有和合作產品的銷售中收到的款項來產生收入。我們在把承諾的貨物或服務轉移給客戶的金額中確認收入,本金額反映了我們預期獲得的對換這些貨物或服務所產生的費用。爲確定與客戶簽訂的合同的收入確認,我們執行以下五個步驟:(i)確定合同中的承諾貨物或服務;(ii)識別合同中的履行義務,包括它們是否在合同上下文中明確;(iii)確定交易價格,包括對變量考慮的限制;(iv)將交易價格分配給合同中的履行義務;及(v)當(或者)我們滿足履行義務時確認收入。
ENHANZE和設備版稅
根據我們的ENHANZE合作和許可協議,如果合作產品被商業化,我們的合作伙伴將以銷售的平均中位數百分比率向我們支付專利費用。對我們所欠的所有金額,在觸發事件發生後是不可取消的,並且一旦支付就不可退款。除非根據其條款提前終止,通常合作關係將繼續生效,直至最後的特定產品和國家的版稅繳納期限到期,每個版稅期從該產品的首次商業銷售開始,以以下時間結束: (i)協議中規定的指定期限或期限,或(ii)最後到期的有效專利索權的過期,該有效索權覆蓋在合作開發下的產品。通常情況下,當特定專利在某個國家中不再具有有效權利時,我們的rHuPH20專利到期後,該國家的版稅率將降低。Janssen公司的DARZALEX SC專利不會影響這種版稅減免的時間。合作伙伴可以在寫了提前通知我們的天數之後,在其全部或特定目標的基礎上提前終止協議。在任何這樣的終止情況下,授予合作伙伴的許可證(總體上或相對於終止目標而言)將終止;不過,在協議到期的情況下(而非終止),已經授予的持續許可可能成爲永久,非獨佔和完全支付的。基於銷售的里程碑和版稅,將在發生相關銷售或里程碑時進行確認。我們從ENHANZE合作伙伴那裏直到完成上一個季度的財務報表後才收到最終專利費報告。因此,我們根據內部估計和合作夥伴提供的可用初步報告,估算所賺取的專利費用並識別收入。如果必要,當收到最終專利費報告後,我們將在下個季度記錄調整。迄今爲止,我們沒有記錄任何重大調整。 90 days prior written notice to us. 在任何此類終止情況下,授予的許可將全部撤銷。
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當合約到期而非終止時,已授予的持續執照可能變為永久、非獨家且完全付費。基於銷售里程碑和版稅的收入在產生相應的銷售或里程碑的期間予以確認。在我們完成前一季度的基本報表後,我們才會從ENHANZE合作夥伴那裡收到最終的版稅報告。因此,我們根據我們的版稅收入預估來確認收入,這些預估是基於內部估計和合作夥伴提供的初步報告。如果需要,我們會在接收到最終版稅報告時在下一季度記錄調整項。迄今為止,我們尚未記錄任何重大調整。
我們還通過與我們設備合作夥伴簽訂的許可和開發安排賺取版稅。這些版稅基於合作產品的商業銷售額的百分比,稅率從中單位數到低兩位數不等,並根據成交額水平進行分層。這些基於銷售的版稅,其中許可被視為版稅有關的主要元素,根據合作夥伴的商業銷售發生的時期進行估計並認列。這些版稅通常於商業銷售發生的時期結束後的45至60天內向我們報告並支付。我們根據來自合作夥伴的實際銷售信息(如有)或來自外部資料來源的預估處方銷售及預估淨銷售價的版稅收入進行估計。如果必要時,我們將在下一季進行調整,當最終的版稅報告收到時。迄今為止,我們尚未記錄任何重大調整。
根據ENHANZE和設備合作協議的營業收入
ENHANZE合作與授權協議
根據這些協議,我們向合作夥伴授予使用我們的ENHANZE技術開發和商業化產品的全球許可證,該技術將我們的專利rHuPH20酶與他們專有的生物製品結合,並針對指定數量的目標。這些目標通常是在全球範圍內獲得獨家授權的。在商業合作安排開始後選定的目標通常需要支付額外的許可費。合作夥伴對根據協議開發的任何產品的所有開發、製造、臨床、監管、銷售和市場營銷成本負責。我們對根據合作夥伴的採購訂單供應大量rHuPH20負責,還可以另行受雇進行研究和開發服務。儘管這些合作協議相似,因為它們源於同一框架,但每個合作協議都是一次長度談判的結果,因此可能有所不同。
我們通常從合作夥伴那裡收取預付授權費用,並且有資格收取基於合作夥伴實現指定的發展、監管和業務里程碑而付出的事件性付款。在幾項協議中,如果合作夥伴無法將產品開發推進到指定階段,他們會向我們支付年度費用以維持其專屬許可權。我們還因提供批量rHuPH20供應和研究開發服務而賺取分開的費用。
儘管這些協議在形式上被認定為合作協議,但基於會計目的,我們得出結論認為這些協議代表與客戶的合同,並不適用於合作安排的會計文獻。這是因為我們向合作夥伴授予知識產權許可證,提供大量的rHuPH20原料及研究和開發服務,這些都是我們持續活動的產出,作為相應的對價。根據這些合作協議,我們的合作夥伴主導資產的開發,我們並不承擔他們開發或商業活動中重大財務風險。因此,我們得出結論,我們的合作協議根據美國通用會計原則得到適當的會計處理。
在我們所有的ENHANZE合作協議中,我們已確認許可使用功能智慧財產作為唯一的履約義務。許可的智慧財產是我們獨有的ENHANZE技術,代表了應用rHuPH20以促進藥物遞送。每個許可都授予合作夥伴使用我們的智慧財產的權利,該智慧財產存在於許可生效日期上,因為ENHANZE技術並不需要持續開發。因此,我們在許可生效並合作夥伴獲得我們的智慧財產訪問權時(通常在協議開始時)才認可來自許可的營業收入。
當合作夥伴可以選擇將額外目標添加到已授予的許可證中時,我們將這些權利視為期權。我們評估這些期權是否包含實質權利,即其行使價是否比我們對新合作夥伴收費的相似許可證費用更低。這些期權的行使價格包括目標選擇費用、基於事件的里程碑支付和版稅的組合。當這些金額合計未提供超過其他客戶可獲得的折扣時,我們認為該期權不包含實質權利,並將視期權行使後提供額外許可權為獨立合同(目標選擇合同)。
一般來說,我們為客戶提供對許可的知識產權的賠償和保護。這些條款是確保許可符合協議陳述的一部分,並不是提供商品或服務的義務。
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我們還履行供應大量rHuPH20的購買訂單,並根據我們與合作夥伴的項目授權表格執行研究和開發服務,代表著獨立的合同。除了我們的許可證外,我們將大量rHuPH20的供應和研究和開發服務價格訂為我們的常規銷售價格,稱為獨立銷售價格(“SSP”)。因此,我們的合作夥伴沒有權利以非反映SSP的價格訂購這些物品。請參考下面有關這些獨立合同的營業收入認定的討論。
合同的交易價格代表我們因向客戶提供貨物和服務而應得的金額。交易價格不包括受不確定性影響的金額,除非有可能在不確定性解決時不會出現重大收入逆轉。除了事前授權金支付(或目標挑選合同中的目標選擇費),我們在協議中可能獲得的所有其他費用均受到產品開發重大不確定性的影響。許多基於事件的開發和監管里程碑的實現可能直到這些里程碑實際達成之前都不可能。這通常涉及里程碑,如獲得營銷授權批准。就其他開發里程碑而言,例如在臨床試驗中為第一位患者投藥劑量,根據走向試驗開始的進度,可能在其實際發生之前就被認為是可能的。為了評估朝向試驗開始的進展,我們評估導致合作夥伴啟動試驗的活動狀況,如從相關監管機構收到的意見回饋、完成新藥申請(“IND”)或相應申報的情況、藥物的準備和可用性、研究地點的準備狀況以及合作夥伴為該項目投入的資源。我們不會將交易價格中受不確定性影響的金額計入,直到有可能該金額不會導致未來收入出現重大逆轉。在每個報告期末,我們會重新評估此類里程碑達成的概率及任何相關的限制,如有必要,調整我們對總體交易價格的估計。
當合夥人持有目標交易權,且歸因於該等權利的金額不可退還時,該等金額會納入交易價格。然而,由於我們有可能需要提供新的目標,才會在交易權行使時,將其記錄為递延營業收入。這些金額會在交換權利到期或行使時,被認列在營業收入中。
因為我們的合約包含一種類型的履行義務(許可證),通常這些許可證會在協議簽訂時同時轉移,因此通常不需要進行交易價格的分配。然而,當某些特定目標的許可證適用交換權時,就需要進行分配,因為與這些目標相關的營業收入無法被確認。當需要進行分配時,我們會根據各個目標的許可證相對SSP進行先期金額的分配。我們使用基於收入的估值方法確定許可證的SSP,利用風險調整的購買現金流預測來估計授權方將獲得的回報,或者使用替代估值方法,如歷史交易中的指示性值。當包含不確定性金額,如里程碑和權利金,在交易價格中時,我們會將這些金額歸屬於產生這些里程碑或權利金金額的具體個別目標許可證。
我們還估算散裝rHuPH20和研發服務的SSP,以確定我們的合作夥伴不具備以折扣價格訂購這些服務的實質權利。對於散裝rHuPH20的供應,因為我們實際上是我們合作夥伴的合同製造商,我們估算並按照所有合作夥伴一致的典型合同製造商利潤收取SSP。我們基於完全負擔的勞動費率來確定研究和開發服務的SSP。我們的收費標準與我們在其他合作協議中觀察到的情況相當。我們還有一個歷史,對所有合作夥伴收取類似的收費。
當授權轉移給合作夥伴時,分配給單獨目標許可的頭期款將被確認為營業收入,如上述所討論的,如果該許可不受其他權利影響,或當交易所權利到期或被行使時。當開發里程碑和其他費用包含在交易價格中時,將被認列為營業收入,因為在那時,我們已經將相關許可證轉移給合作夥伴。
In contracts to provide research and development services, such services represent the only performance obligation. The fees are charged based on hours worked by our employees and the fixed contractual rate per hour, plus third-party pass-through costs, on a monthly basis. We recognize revenues as the related services are performed based on the amounts billed, as the partner consumes the benefit of research and development work simultaneously as we perform these services, and the amounts billed reflect the value of these services to the customer.
Device License, Development and Supply Arrangements
We have several license, development and supply arrangements with pharmaceutical partners, under which we grant a license to our device technology and provide research and development services that often involve multiple performance obligations and highly-customized deliverables. For such arrangements, we identify each of the promised goods and services within the contract and the distinct performance obligations at inception of the contract and allocate consideration to each performance obligation based on relative SSP, which is generally determined based on the expected cost plus mark-up.
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If the contract includes an enforceable right to payment for performance completed to date and performance obligations are satisfied over time, we recognize revenue over the development period using either the input or output method depending on which is most appropriate given the nature of the distinct deliverable. For other contracts that do not contain an enforceable right to payment for performance completed to date, revenue is recognized when control of the product is transferred to the customer. Factors that may indicate transfer of control has occurred include the transfer of legal title, transfer of physical possession, the customer has obtained the significant risks and rewards of ownership of the assets, and we have a present right to payment.
Our payment terms for development contracts may include an upfront payment equal to a percentage of the total contract value with the remaining portion to be billed upon completion and transfer of the individual deliverables or satisfaction of the individual performance obligations. We record a contract liability for cash received in advance of performance, which is presented as deferred revenue within accrued expense and other long-term liabilities in our condensed consolidated balance sheets and recognized as revenue in our condensed consolidated statements of income when the associated performance obligations have been satisfied.
License fees and milestones received in exchange for the grant of a license to our functional intellectual property, such as patented technology and know-how in connection with a partnered development arrangement, are generally recognized at inception of the arrangement, or over the development period depending on the facts and circumstances, as the license is generally not distinct from the non-licensed goods or services to be provided under the contract. Milestone payments that are contingent upon the occurrence of future events are evaluated and recorded at the most likely amount, and to the extent that it is probable that a significant reversal of revenue will not occur when the associated uncertainty is resolved.
Refer to Note 4, Revenue, for further discussion on our collaborative arrangements.
Product Sales, Net
Proprietary Product Sales
Our commercial portfolio of proprietary products includes XYOSTED and Hylenex recombinant which we sell primarily to wholesale pharmaceutical distributors and specialty pharmacies, who sell the products to hospitals, retail chain drug stores and other end-user customers. Sales to wholesalers are made pursuant to purchase orders subject to the terms of a master agreement, and delivery of individual packages of products represents performance obligations under each purchase order. We use contract manufacturers to produce our proprietary products and third-party logistics (“3PL”) vendors to process and fulfill orders. We concluded we are the principal in the sales to wholesalers because we control access to services rendered by both vendors and direct their activities. We have no obligations to wholesalers to generate pull-through sales.
Revenue is recognized when control has transferred to the customer, which is typically upon delivery, at the net selling price, which reflects the variable consideration for which reserves and sales allowances are established for estimated returns, wholesale distribution fees, prompt payment discounts, government rebates and chargebacks, plan rebate arrangements and patient discount and support programs. We recognize revenue from product sales and related cost of sales upon product delivery to the wholesaler location. At that time, the wholesalers take control of the product as they take title, bear the risk of loss of ownership, and have an enforceable obligation to pay us. They also have the ability to direct sales of product to their customers on terms and at prices they negotiate. Although wholesalers have product return rights, we do not believe they have a significant incentive to return the product to us.
The determination of certain reserves and sales allowances requires us to make a number of judgements and estimates to reflect our best estimate of the transaction price and the amount of consideration to which we believe we would be ultimately entitled to receive. The expected value is determined based on unit sales data, contractual terms with customers and third-party payers, historical and estimated future percentage of rebates incurred on sales, historical and future insurance plan billings, any new or anticipated changes in programs or regulations that would impact the amount of the actual rebates, customer purchasing patterns, product expiration dates and levels of inventory in the distribution channel. The estimated amounts of credit for product returns, chargebacks, distribution fees, prompt payment discounts, rebates and customer co-pay support programs are included in accrued expenses and accounts receivable, net in our condensed consolidated balance sheets upon recognition of revenue from product sales. We monitor actual product returns, chargebacks, discounts and fees subsequent to the sale. If these amounts differ from our estimates, we make adjustments to these allowances, which are applied to increase or reduce product sales revenue and earnings in the period of adjustment.
Selling prices initially billed to wholesalers are subject to discounts for prompt payment and subsequent chargebacks when wholesalers sell our products at negotiated discounted prices to members of certain group purchasing organizations (“GPOs”), Pharmacy Benefit Managers (“PBMs”) and government programs. We also pay quarterly distribution fees to certain wholesalers for inventory reporting and chargeback processing, and to PBMs and GPOs as administrative fees for services and for access to their members. We concluded the benefits received in exchange for these fees are not distinct from our sales of our products, and accordingly we apply these amounts to reduce revenues. Wholesalers also have rights to return unsold product
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nearing or past the expiration date. Because of the shelf life of our products and our lengthy return period, there may be a significant period of time between when the product is shipped and when we issue credits on returned product.
We estimate the transaction price when we receive each purchase order taking into account the expected reductions of the selling price initially billed to the wholesaler arising from all of the above factors. We have compiled historical experience and data to estimate future returns and chargebacks of our products and the impact of the other discounts and fees we pay. When estimating these adjustments to the transaction price, we reduce it sufficiently to be able to assert that it is probable that there will be no significant reversal of revenue when the ultimate adjustment amounts are known.
Each purchase order contains only one type of product, and is usually shipped to the wholesaler in a single shipment. Therefore, allocation of the transaction price to individual packages is not required.
In connection with the orders placed by wholesalers, we incur costs such as commissions to our sales representatives. However, as revenue from product sales is recognized upon delivery to the wholesaler, which occurs shortly after we receive a purchase order, we do not capitalize these commissions and other costs, based on application of the practical expedient allowed within the applicable guidance.
Partnered Product Sales
Bulk rHuPH20
We sell bulk rHuPH20 to partners for use in research and development and, subsequent to receiving marketing approval, we sell it for use in collaboration commercial products. Sales are made pursuant to purchase orders subject to the terms of the collaborative agreement or a supply agreement, and delivery of units of bulk rHuPH20 represent performance obligations under each purchase order. We provide a standard warranty that the product conforms to specifications. We use contract manufacturers to produce bulk rHuPH20 and have concluded we are the principal in the sales to partners. The transaction price for each purchase order of bulk rHuPH20 is fixed based on the cost of production plus a contractual markup, and is not subject to adjustments. Allocation of the transaction price to individual quantities of the product is usually not required because each order contains only one type of product.
We recognize revenue from the sale of bulk rHuPH20 as product sales and related cost of sales upon transfer of title to our partners. At that time, the partners take control of the product, bear the risk of loss of ownership, and have an enforceable obligation to pay us.
Devices
We are party to several license, development, supply and distribution arrangements with pharmaceutical partners, under which we produce and are the exclusive supplier of certain products, devices and/or components. Revenue is recognized when or as control of the goods transfers to the customer as discussed below.
We are the exclusive supplier of OTREXUP® to Otter. Because this product is custom manufactured with no alternative use and we have a contractual right to payment for performance completed to date, control is continuously transferred to the customer as the product is produced pursuant to firm purchase orders. Revenue is recognized over time using the output method based on the contractual selling price and number of units produced. The amount of revenue recognized in excess of the amount shipped/billed to the customer, if any, is recorded as contract assets in our condensed consolidated balance sheets due to the short-term nature in which the amount is ultimately expected to be billed and collected from the customer.
Other device partnered product sales are recognized at the point in time in which control is transferred to the customer, which is typically upon shipment. Sales terms and pricing are governed by the respective supply and distribution agreements, and there is generally no right of return. Revenue is recognized at the transaction price, which includes the contractual per unit selling price and estimated variable consideration, such as volume-based pricing arrangements, if any. We recognize revenue, including the estimated variable consideration we expect to receive for contract margin on future commercial sales, upon shipment of the goods to our partner. The estimated variable consideration is recognized at an amount we believe is not subject to significant reversal of revenue based on historical experience and is adjusted at each reporting period if the most likely amount of expected consideration changes or becomes fixed.
Cost of Sales
Cost of sales consists primarily of raw materials, third-party manufacturing costs, fill and finish costs, freight costs, internal costs and manufacturing overhead associated with the production of proprietary and partnered products. Cost of sales also consists of the write-down of excess, dated and obsolete inventories and the write-off of inventories that do not meet certain product specifications, if any.
16


Research and Development Expenses
Research and development expenses include salaries and benefits, allocation of facilities and other overhead expenses, research related manufacturing services, contract services, and other outside expenses related to manufacturing, preclinical and regulatory activities and our partner development platforms. Research and development expenses are charged to operating expenses as incurred when these expenditures relate to our research and development efforts and have no alternative future uses.
We are obligated to make upfront payments upon execution of certain research and development agreements. Advance payments, including nonrefundable amounts, for goods or services that will be used or rendered for future research and development activities are deferred. Such amounts are recognized as expense as the related goods are delivered or the related services are performed or such time when we do not expect the goods to be delivered or services to be performed.
Share-Based Compensation
We record compensation expense associated with stock options, restricted stock units (“RSUs”), performance stock units (“PSUs”) and shares issued under our employee stock purchase plan (“ESPP”) in accordance with the authoritative guidance for share-based compensation. The cost of employee services received in exchange for an award of an equity instrument is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense on a straight-line basis over the requisite service period of the award. Share-based compensation expense for an award with a performance condition is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized and any previously recognized compensation expense is reversed. Forfeitures are recognized as a reduction of share-based compensation expense as they occur.
Income Taxes
We provide for income taxes using the liability method. Under this method, deferred income tax assets and liabilities are determined based on the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases at each reporting period. We measure deferred tax assets and liabilities using enacted tax rates for the year in which the differences are expected to reverse. Significant judgment is required by management to determine our provision for income taxes, our deferred tax assets and liabilities, and any associated valuation allowances recorded against our net deferred tax assets. Deferred tax assets (“DTA”) and other tax benefits are recorded when they are more likely than not to be realized. On a quarterly basis, we assess the need for valuation allowance on our DTAs, weighing all positive and negative evidence, to assess if it is more-likely-than-not that some or all of our DTAs will be realized. We recorded a provision for income tax of $28.1 million and $71.8 million with an effective tax rate of 17.1% and 19.0% for the three and nine months ended September 30, 2024, respectively. The difference between our effective tax rates and the U.S. federal statutory rate of 21% is primarily due to a decrease from a share-based compensation windfall tax benefit, Foreign Derived Intangible Income (“FDII”) deduction, and research and development credit generation, partially offset by state income tax and Section 162(m) disallowance.
Segment Information
We operate our business in one operating segment, which includes all activities related to the research, development and commercialization of our proprietary enzymes and devices. This segment also includes revenues and expenses related to (i) research and development and manufacturing activities conducted under our collaborative agreements with third parties, and (ii) product sales of proprietary and partnered products. The chief operating decision-maker (“CODM”), our Chief Executive Officer (“CEO”), reviews the operating results on an aggregate basis and manages the operations as a single operating segment.

17


Adoption and Pending Adoption of Recent Accounting Pronouncements
The following table provides a brief description of recently issued accounting standards, those adopted in the current period and those not yet adopted:
StandardDescriptionEffective DateAdoption MethodEffect on the Financial
Statements or Other Significant Matters
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.
The new guidance is intended to improve annual and interim reportable segment disclosure requirements regardless of number of reporting units, primarily through enhanced disclosures of significant expenses. The amendment requires public entities to disclose significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit and loss.
Annual periods beginning after December 15, 2023 (our 2024 Form 10-K), and interim periods within fiscal years beginning after December 15, 2024 (our Q1 2025 Form 10-Q) - Early adoption is permitted, including adoption in an interim period
Retrospective
We do not expect the standard to have a material effect on our consolidated financial statements, but will result in expanded segment disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.The new guidance includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.Annual periods beginning after December 15, 2024 (our 2025 Form 10-K) - Early adoption is permittedProspective or RetrospectiveWe are currently evaluating the impact of the standard on our consolidated financial statements and related disclosures.
18


3.    Fair Value Measurement
Available-for-sale marketable securities consisted of the following (in thousands):
September 30, 2024
Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Asset-backed securities$426 $ $ $426 
Corporate debt securities98,060 421 (10)98,471 
U.S. treasury securities399,027 1,055 (50)400,032 
Agency bonds13,049 10  13,059 
Total marketable securities, available-for-sale$510,562 $1,486 $(60)$511,988 
December 31, 2023
Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Asset-backed securities$3,512 $ $(8)$3,504 
Corporate debt securities6,022 1 (10)6,013 
U.S. treasury securities175,996 200 (12)176,184 
Agency bonds16,119  (16)16,103 
Commercial paper15,826   15,826 
Total marketable securities, available-for-sale$217,475 $201 $(46)$217,630 
As of September 30, 2024, eight available-for-sale marketable securities with a fair market value of $74.0 million were in a gross unrealized loss position of $0.1 million. Based on our review of these marketable securities, we believe none of the unrealized loss is as a result of a credit loss as of September 30, 2024 because we do not intend to sell these securities and it is not more-likely-than-not that we will be required to sell these securities before the recovery of their amortized cost basis.
The estimated fair value of our contractual maturities of available-for-sale debt securities were as follows (in thousands):
September 30, 2024December 31, 2023
Due within one year$301,345 $197,633 
Due after one year but within five years210,643 19,997 
Total estimated fair value of contractual maturities, available-for-sale$511,988 $217,630 
19


The following table summarizes, by major security type, our cash equivalents and available-for-sale marketable securities measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):
September 30, 2024December 31, 2023
Level 1Level 2
Total Estimated Fair Value
Level 1Level 2
Total Estimated Fair Value
Assets
Cash equivalents
Money market funds$34,713 $ $34,713 $22,142 $ $22,142 
U.S. treasury securities   2,000  2,000 
Available-for-sale marketable
   securities
Asset-backed securities 426 426  3,504 3,504 
Corporate debt securities 98,471 98,471  6,013 6,013 
U.S. treasury securities400,032  400,032 176,184  176,184 
Agency bonds13,059  13,059 16,103  16,103 
Commercial paper    15,826 15,826 
Total assets$447,804 $98,897 $546,701 $216,429 $25,343 $241,772 
Liabilities
Derivative instruments
Currency hedging contracts (1)
$ $7,894 $7,894 $ $9,480 $9,480 
(1) Based on observable market transactions of spot currency rates, forward currency rates or equivalently-termed instruments. Carrying amounts of the financial assets and liabilities are equal to the fair value. As of September 30, 2024, the derivative liabilities recorded within accrued expenses and other long-term liabilities in our condensed consolidated balance sheets were $1.9 million and $6.0 million, respectively.
We had no available-for-sale securities that were classified within Level 3 as of September 30, 2024 and December 31, 2023.

20


4.    Revenue
Our disaggregated revenues were as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Royalties$155,061 $114,433 $400,572 $325,813 
Product sales, net
Proprietary product sales
39,925 31,511 119,319 91,765 
Bulk rHuPH20 sales
31,493 37,001 66,637 86,203 
Device partnered product sales
15,241 18,057 38,172 43,284 
Total product sales, net86,659 86,569 224,128 221,252 
Revenues under collaborative agreements
  Upfront license and target nomination fees27,000  27,000  
Event-based development and regulatory milestones and other fees
18,000 13,000 57,500 46,000 
Device licensing and development revenue
3,364 2,031 8,116 6,149 
Total revenues under collaborative agreements48,364 15,031 92,616 52,149 
Total revenues$290,084 $216,033 $717,316 $599,214 
During the three months ended September 30, 2024, we recognized revenue related to licenses granted to partners in prior periods in the amount of $173.1 million. This amount represents royalties earned in the current period in addition to $18.0 million of variable consideration in the contracts where uncertainties were resolved and the development milestones are expected to be achieved or were achieved. Revenue recognized during the three months ended September 30, 2024 that had been included in accrued expense and other long-term liabilities in our condensed consolidated balance sheets as of December 31, 2023 was not material.
During the nine months ended September 30, 2024, we recognized revenue related to licenses granted to partners in prior periods in the amount of $458.1 million. This amount represents royalties earned in the current period in addition to $57.5 million of variable consideration in the contracts where uncertainties were resolved and the development milestones are expected to be achieved or were achieved. We also recognized revenue of $0.6 million during the nine months ended September 30, 2024 that had been included in accrued expense and other long-term liabilities in our condensed consolidated balance sheets as of December 31, 2023.
Accounts receivable, net, other contract assets and deferred revenues (contract liabilities) from contracts with customers, including partners, consisted of the following (in thousands):
September 30, 2024December 31, 2023
Accounts receivable, net$273,062 $233,254 
Other contract assets12,681 956 
Deferred revenues9,126 4,048 
As of September 30, 2024, the amounts included in the transaction price of our contracts with customers, including collaboration partners, and allocated to goods and services not yet provided were $88.3 million, of which $79.2 million relates to unfulfilled product purchase orders and $9.1 million has been collected and is reported as accrued expense and other long-term liabilities in our condensed consolidated balance sheets. The unfulfilled product purchase orders are estimated to be delivered by the end of 2025. Of the total deferred revenues of $9.1 million, $0.8 million is expected to be used by our customers within the next 12 months.
We recognized contract assets of $12.7 million as of September 30, 2024, which related to development milestones deemed probable of receipt for intellectual property licenses granted to partners in prior periods and for goods or services when control has transferred to the customer, and corresponding revenue is recognized on an over time basis but is not yet billable to the customer in accordance with the terms of the contract.
21


5.    Certain Balance Sheet Items
Accounts receivable, net and contract assets consisted of the following (in thousands):
September 30,
2024
December 31,
2023
Accounts receivable from product sales to partners$36,912 $58,588 
Accounts receivable from revenues under collaborative agreements39,603 16,183 
Accounts receivable from royalty payments150,155 118,170 
Accounts receivable from other product sales52,981 47,060 
Contract assets12,681 956 
Total accounts receivable and contract assets
292,332 240,957 
Allowance for distribution fees and discounts(6,589)(6,747)
Total accounts receivable, net and contract assets
$285,743 $234,210 
Inventories consisted of the following (in thousands):
September 30,
2024
December 31,
2023
Raw materials$30,579 $23,646 
Work-in-process14,886 34,025 
Finished goods143,518 69,930 
Total inventories
188,983 127,601 
Less long-term portion (1)
(57,571) 
Total inventories, current
$131,412 $127,601 
(1) Long-term portion of inventories represents inventory expected to remain on hand beyond one year and therefore is included in prepaid expenses and other assets in the condensed consolidated balance sheets.
Prepaid expenses and other assets consisted of the following (in thousands):
September 30,
2024
December 31,
2023
Prepaid manufacturing expenses$31,055 $36,850 
Other prepaid expenses18,476 12,902 
Long-term inventories
57,571  
Other assets
16,564 16,677 
Total prepaid expenses and other assets
123,666 66,429 
Less long-term portion
(80,151)(17,816)
Total prepaid expenses and other assets, current
$43,515 $48,613 
Prepaid manufacturing expenses include raw materials, slot reservation fees and other amounts paid to contract manufacturing organizations. Such amounts are reclassified to work-in-process inventory as materials are used or the contract manufacturing organization services are complete.
22


Property and equipment, net consisted of the following (in thousands):
September 30,
2024
December 31,
2023
Research equipment$8,621 $8,588 
Manufacturing equipment38,762 32,472 
Computer and office equipment9,410 9,722 
Leasehold improvements6,995 6,987 
Subtotal
63,788 57,769 
Accumulated depreciation and amortization(23,812)(19,661)
Subtotal
39,976 38,108 
Right of use of assets34,514 36,836 
Total property and equipment, net
$74,490 $74,944 
Depreciation and amortization expense was approximately $2.6 million and $2.7 million, inclusive of ROU asset amortization of $1.4 million and $1.4 million for the three months ended September 30, 2024 and 2023, respectively.
Depreciation and amortization expense was approximately $7.6 million and $8.2 million, inclusive of ROU asset amortization of $4.3 million and $4.2 million for the nine months ended September 30, 2024 and 2023, respectively.
Accrued expenses consisted of the following (in thousands):
September 30,
2024
December 31,
2023
Accrued compensation and payroll taxes$17,441 $17,361 
Accrued outsourced manufacturing expenses11,179 12,361 
Taxes payable
3,517 963 
Product returns and sales allowance44,718 41,932 
Other accrued expenses29,213 33,584 
Lease liability30,755 32,197 
Total accrued expenses
136,823 138,398 
Less long-term portion(40,406)(37,720)
Total accrued expenses, current
$96,417 $100,678 
Expense associated with the accretion of the lease liabilities was approximately $0.5 million and $0.6 million for the three months ended September 30, 2024 and 2023, respectively and $1.7 million and $1.9 million for the nine months ended September 30, 2024 and 2023, respectively. Total lease expense for the three months ended September 30, 2024 and 2023 was $2.0 million and $2.0 million, respectively, and $6.0 million and $6.1 million for the nine months ended September 30, 2024 and 2023, respectively.
Cash paid for amounts related to leases for the three months ended September 30, 2024 and 2023 was $1.6 million and $1.6 million, respectively, and $5.1 million and $5.0 million for the nine months ended September 30, 2024 and 2023, respectively.


23


6.    Goodwill and Intangible Assets
Goodwill
A summary of the activity impacting goodwill is presented below (in thousands):
Balance as of December 31, 2023
$416,821 
Adjustment
 
Balance as of September 30, 2024
$416,821 
Intangible Assets
Our acquired intangible assets are amortized using the straight-line method over their estimated useful lives of seven to ten years. The following table shows the cost, accumulated amortization and weighted average useful life in years for our acquired intangible assets as of September 30, 2024 (in thousands).
Weighted Average Useful Life (in years)
Gross Carrying ValueAccumulated AmortizationNet Carrying Value
Auto Injector technology platform7$402,000 $135,235 $266,765 
XYOSTED proprietary product10136,200 32,073 104,127 
Total finite-lived intangibles, net
$538,200 $167,308 $370,892 
ATRS-1902 (IPR&D)Indefinite48,700 
Total intangibles, net$419,592 
Estimated future annual amortization of finite-lived intangible assets is shown in the following table (in thousands). Actual amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures, and asset impairments, among other factors.

YearAmortization Expense
Remainder of 2024$17,762 
202571,049 
202671,049 
202771,049 
202871,049 
Thereafter68,934 
Total$370,892 
24


7.    Long-Term Debt, Net
1.00% Convertible Notes due 2028
In August 2022, we completed the sale of $720.0 million in aggregate principal amount of 1.00% Convertible Senior Notes due 2028 (the “2028 Convertible Notes”). The net proceeds in connection with the issuance of the 2028 Convertible Notes, after deducting the initial purchasers’ fee of $18.0 million, was approximately $702.0 million. We also incurred additional debt issuance costs totaling $1.0 million. Debt issuance costs and the initial purchasers’ fee are presented as a debt discount.
The 2028 Convertible Notes pay interest semi-annually in arrears on February 15th and August 15th of each year at an annual rate of 1.00%. The 2028 Convertible Notes are general unsecured obligations and rank senior in right of payment to all indebtedness that is expressly subordinated in right of payment to the 2028 Convertible Notes, rank equally in right of payment with all existing and future liabilities that are not so subordinated, are effectively junior to any secured indebtedness to the extent of the value of the assets securing such indebtedness, and are structurally subordinated to all indebtedness and other liabilities (including trade payables) of our current or future subsidiaries. The 2028 Convertible Notes have a maturity date of August 15, 2028.
Holders may convert their 2028 Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2022, if the last reported sale price per share of common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on our common stock, as described in the offering memorandum for the 2028 Convertible Notes; (4) if we call such notes for redemption; and (5) at any time from, and including, February 15, 2028 until the close of business on the second scheduled trading day immediately before the maturity date. As of September 30, 2024, the 2028 Convertible Notes were not convertible.
Upon conversion, we will pay cash for the settlement of principal, and for the premium, if applicable, we will pay cash, deliver shares of common stock or a combination of cash and shares of common stock, at our election. The initial conversion rate for the 2028 Convertible Notes is 17.8517 shares of common stock per $1,000 in principal amount of 2028 Convertible Notes, equivalent to a conversion price of approximately $56.02 per share of our common stock. The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued or unpaid interest.
As of September 30, 2024, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.
Capped Call Transactions
In connection with the offering of the 2028 Convertible Notes, we entered into capped call transactions with certain counterparties (the “Capped Call Transactions”). The Capped Call Transactions are expected generally to reduce potential dilution to holders of our common stock upon conversion of the 2028 Convertible Notes or at our election (subject to certain conditions) offset any cash payments we are required to make in excess of the principal amount of such converted 2028 Convertible Notes. The cap price of the Capped Call Transactions is initially $75.4075 per share of common stock, representing a premium of 75% above the last reported sale price of $43.09 per share of common stock on August 15, 2022, and is subject to certain adjustments under the terms of the Capped Call Transactions. As of September 30, 2024, no capped calls had been exercised.
Pursuant to their terms, the capped calls qualify for classification within stockholders’ equity in our condensed consolidated balance sheets, and their fair value is not remeasured and adjusted as long as they continue to qualify for stockholders’ equity classification. We paid approximately $69.1 million for the Capped Calls, including applicable transaction costs, which was recorded as a reduction to additional paid-in capital in our condensed consolidated balance sheets. The Capped Call Transactions are separate transactions entered into by us with the capped call Counterparties, are not part of the terms of the Convertible Notes, and do not affect any holder’s rights under the Convertible Notes. Holders of the Convertible Notes do not have any rights with respect to the Capped Call Transactions.
25


0.25% Convertible Notes due 2027
In March 2021, we completed the sale of $805.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2027 (the “2027 Convertible Notes”). The net proceeds in connection with the issuance of the 2027 Convertible Notes, after deducting the initial purchasers’ fee of $20.1 million, was approximately $784.9 million. We also incurred additional debt issuance costs totaling $0.4 million. Debt issuance costs and the initial purchasers’ fee are presented as a debt discount.
The 2027 Convertible Notes pay interest semi-annually in arrears on March 1st and September 1st of each year at an annual rate of 0.25%. The 2027 Convertible Notes are general unsecured obligations and rank senior in right of payment to all indebtedness that is expressly subordinated in right of payment to the 2027 Convertible Notes, rank equally in right of payment with all existing and future liabilities that are not so subordinated, are effectively junior to any secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities (including trade payables) of our current or future subsidiaries. The 2027 Convertible Notes have a maturity date of March 1, 2027.
Holders may convert their 2027 Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021, if the last reported sale price per share of common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on our common stock, as described in the offering memorandum for the 2027 Convertible Notes; (4) if we call such notes for redemption; and (5) at any time from, and including, September 1, 2026 until the close of business on the scheduled trading day immediately before the maturity date. As of September 30, 2024, the 2027 Convertible Notes were not convertible.
Upon conversion, we will pay cash for the settlement of principal and for the premium, if applicable, we will pay cash, deliver shares of common stock or a combination of cash and shares of common stock, at our election. The initial conversion rate for the 2027 Convertible Notes is 12.9576 shares of common stock per $1,000 in principal amount of 2027 Convertible Notes, equivalent to a conversion price of approximately $77.17 per share of our common stock. The conversion rate is subject to adjustment.
As of September 30, 2024, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.
1.25% Convertible Notes due 2024
In November 2019, we completed the sale of $460.0 million in aggregate principal amount of 1.25% Convertible Senior Notes due 2024 (the “2024 Convertible Notes”). The net proceeds in connection with the issuance of the 2024 Convertible Notes, after deducting the initial purchasers’ fee of $12.7 million, was approximately $447.3 million. We also incurred debt issuance cost totaling $0.3 million. Debt issuance costs and the initial purchasers’ fee were presented as a debt discount.
在2021年1月,我們通知票據持有人我們不可撤銷地選擇以現金結算2024年可轉換票據的本金,並在溢價時發放普通股股票。2024年可轉換票據的轉換率爲 41.9208 每1000美元本金的2024可轉換票據,對應價值爲約41.9208股我們的普通股份,相當於每股約23.85 美元的轉換價格。轉換率可能進行調整。
2023年1月,我們通知贖回2024可轉換票據。票據持有人在贖回日之前的營業日任何時間可以轉換票據。2023年3月,票據持有人選擇全部轉換2024可轉換票據。在轉換過程中,我們支付了約13.5 1百萬美元現金,其中包括本金和應計利息,併發行了 288,886


26



我們的可轉換票據淨賬面金額
我們的可轉換票據賬面價值和公允價值如下(以千美元爲單位):
2020年9月30日
2024
12月31日
2023
名義金額
2027可轉換債券$805,000 $805,000 
2028年可轉換債券720,000 720,000 
總本金金額
$1,525,000 $1,525,000 
未攤銷債務折扣
2027可轉換債券$(8,378)$(10,950)
2028年可轉換債券(12,468)(14,802)
未分攤債務折扣總額$(20,846)$(25,752)
賬面餘額
2027可轉換債券$796,622 $794,050 
2028年可轉換債券707,532 705,198 
總賬面金額$1,504,154 $1,499,248 
根據交易水平的公平價值(二級)
2027可轉換債券$807,721 $695,826 
2028年可轉換債券853,754 670,522 
未償債券的全部公允價值$1,661,475 $1,366,348 
債務折扣每期剩餘攤銷期限(年)
2027可轉換債券2.43.2
2028年可轉換債券3.94.6



27



以下表格總結了我們可轉換票據的利息支出元件和每種票據的有效利率期貨(以千爲單位)。
截至9月30日的三個月截至9月30日的九個月
2024202320242023
票面利率息費
2024可轉換債券$$$$36
2027可轉換債券5035031,5091,509
2028年可轉換債券1,8001,8005,4005,400
總票券利息$2,303$2,303$6,909$6,945
債務折扣攤銷
2024可轉換債券$$$$24
2027可轉換債券8598532,5722,555
2028年可轉換債券7817702,3342,301
債務貼現總攤銷$1,640$1,623$4,906$4,880
利息支出
2024可轉換債券$$$$60
2027可轉換債券1,3621,3564,0814,064
2028年可轉換債券2,5812,5707,7347,701
總利息支出$3,943$3,926$11,815$11,825
有效利率期貨
2027可轉換債券0.7 %0.7 %0.7 %0.7 %
2028年可轉換債券1.5 %1.5 %1.5 %1.5 %
Revolving Credit and Term Loan Facilities
In May 2022, we entered into a credit agreement, which was subsequently amended in August 2022 (the “Amendment”), with Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, and the other lenders and L/C Issuers party thereto (the “2022 Credit Agreement”), evidencing a credit facility (the “2022 Facility”) that provides for (i) a $575 million revolving credit facility (the “Revolving Credit Facility”) and (ii) a $250 million term loan facility (the “Term Facility”). Concurrently, with the entry into the Amendment, we repaid the entire outstanding Term Loan Facility and repaid all outstanding loans under the Revolving Credit Facility under the 2022 Credit Agreement. The 2022 Facility will mature on November 30, 2026 unless either the Revolving Credit Facility or the Term Facility is extended prior to such date in accordance with the 2022 Credit Agreement.
The Term Facility requires quarterly scheduled repayments of the term loans in each of the first, second, third and fourth years following the closing in annual amounts equal to 2.50%, 5.00%, 7.50% and 10.00% of the initial principal amount of the term loans, respectively. The term loans are also subject to mandatory prepayments from the proceeds of certain asset sales, subject to our right to reinvest the proceeds thereof.
Borrowings under the 2022 Facility bear interest, at our option, at a rate equal to an applicable margin plus: (a) the applicable Term Secured Overnight Financing Rate (“SOFR”) (which includes a SOFR adjustment of 0.10%), or (b) a base rate determined by reference to the highest of (1) the federal funds effective rate plus 0.50%, (2) the Bank of America prime rate, (3) the Term SOFR rate for an interest period of one month plus 1.10%, and (4) 1.00%. The margin for the 2022 Facility ranges, based on our consolidated total net leverage ratio, from 0.25% to 1.25% in the case of base rate loans and from 1.25% to 2.25% in the case of Term SOFR rate loans. In addition to paying interest on the outstanding principal under the Facility, we will pay (i) a commitment fee in respect of the unutilized commitments thereunder and (ii) customary letter of credit fees and agency fees. The commitment fees range from 0.15% to 0.35% per annum based on our consolidated net leverage ratio.
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As of September 30, 2024, the Revolving Credit Facility was undrawn. We incurred a total of $3.6 million in third-party costs related to the 2022 Credit Agreement which are recorded as debt issuance cost within prepaid expenses and other assets in our condensed consolidated balance sheets. As of September 30, 2024, the unamortized debt issuance cost related to the revolving credit facility was $1.7 million.

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8.    Share-based Compensation
The following table summarized share-based compensation expense included in our condensed consolidated statements of income related to share-based awards (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Research and development$3,598 $3,159 $9,511 $9,931 
Selling, general and administrative8,980 6,208 22,412 17,025 
Total share-based compensation expense$12,578 $9,367 $31,923 $26,956 
Share-based compensation expense by type of share-based award was as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Stock options$3,922 $4,290 $12,115 $11,935 
RSUs, PSUs and ESPP8,656 5,077 19,808 15,021 
Total share-based compensation expense$12,578 $9,367 $31,923 $26,956 
We granted stock options to purchase approximately 0.6 million and 1.8 million shares of common stock during the nine months ended September 30, 2024 and 2023, respectively. The exercise price of stock options granted is equal to the closing price of the common stock on the date of grant. The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model (“Black-Scholes Model”). Expected volatility is based on historical volatility of our common stock. The expected term of options granted is based on analyses of historical employee termination rates and option exercises. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The dividend yield assumption is based on the expectation of no future dividend payments. The assumptions used in the Black-Scholes Model were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Expected volatility
40.35 - 40.46%
40.70 - 40.82%
40.01 - 40.46%
39.68 - 40.82%
Average expected term (in years)4.84.95.04.8
Risk-free interest rate
3.65 - 4.44%
4.19 - 4.29%
3.65 - 4.70%
3.37 - 4.29%
Expected dividend yield    
In February 2021, our Board of Directors approved our 2021 ESPP and our stockholders approved the plan in May 2021. The ESPP enables eligible employees to purchase shares of our common stock at the end of each offering period at a price equal to 85% of the fair market value of the shares on the first business day or the last business day of the offering period, whichever is lower. Share purchases are funded through payroll deduction of at least 1% and up to 15% of an employee’s compensation for each payroll period, and no employee may purchase shares under the ESPP that exceeds $25,000 worth of our common stock for a calendar year. As of September 30, 2024, 2,579,790 shares were available for future purchase. The offering period is generally for a six-month period and the first offering period commenced on June 16, 2021. Offering periods shall commence on or about the sixteenth day of June and December of each year and end on or about the fifteenth day of the next December and June, respectively, occurring thereafter. During the nine months ended September 30, 2024, 24,432 shares were issued pursuant to the ESPP.
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Total unrecognized estimated compensation cost by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized was as follows (in thousands, unless otherwise noted):
September 30, 2024
 Unrecognized
Expense
Remaining
Weighted-Average
Recognition Period
(in years)
Stock options$31,097 2.38
RSUs45,008 2.71
PSUs17,608 1.80
ESPP112 0.18

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9.    Stockholders’ Equity
During the nine months ended September 30, 2024 and 2023, we issued an aggregate of 1,107,442 and 455,702 shares of common stock, respectively, in connection with the exercises of stock options at a weighted average exercise price of $27.03 and $18.10 per share, respectively, for net proceeds of approximately $29.9 million and $8.2 million, respectively. For the nine months ended September 30, 2024 and 2023, we issued 347,502 and 328,115 shares of common stock, respectively, upon vesting of certain RSUs and PSUs for which the RSU and PSU holders surrendered 88,825 and 70,733 RSUs and PSUs, respectively. Stock options and unvested restricted units totaling approximately 7.4 million and 7.8 million shares of our common stock were outstanding as of September 30, 2024 and December 31, 2023, respectively.
Share Repurchases
In December 2021, the Board of Directors authorized a second capital return program to repurchase up to $750.0 million of outstanding stock over a three-year period which we completed in June 2024. A total of 19.1 million shares were repurchased over the three-year period at an average price per share of $39.31. All shares repurchased under our capital return programs have been retired and have resumed their status of authorized and unissued shares.
In February 2024, our Board of Directors authorized a new capital return program to repurchase up to $750.0 million of our outstanding common stock.





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10.    Earnings per share
Basic earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period, without consideration for common stock equivalents. Outstanding stock options, unvested RSUs, unvested PSUs, common shares expected to be issued under our ESPP and the Convertible Notes are considered common stock equivalents and are only included in the calculation of diluted earnings per common share when net income is reported and their effect is dilutive.
Potentially dilutive common shares issuable upon vesting of stock options, RSUs and PSUs are determined using the average share price for each period under the treasury stock method. Potentially dilutive common shares issuable upon conversion of the Convertible Notes are determined using the if-converted method. Since we have committed to settle the principal amount of the Convertible Notes in cash upon conversion only, the number of shares for the conversion spread will be included as a dilutive common stock equivalent.
A reconciliation of the numerators and the denominators of the basic and diluted earnings per share computations is as follows (in thousands, except per share amounts):
Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Numerator
Net income$137,011 $81,837 $307,079 $196,206 
Denominator
Weighted average common shares outstanding for basic earnings per share126,850 131,965 126,969 132,896 
Dilutive potential common stock outstanding
Stock options2,174 1,830 1,844 1,882 
RSUs, PSUs and ESPP817 288 615 378 
Convertible Notes293  98 77 
Weighted average common shares outstanding for diluted earnings per share130,134 134,083 129,526 135,233 
Earnings per share
Basic$1.08 $0.62 $2.42 $1.48 
Diluted$1.05 $0.61 $2.37 $1.45 
Shares which have been excluded from the calculation of diluted earnings per common share because their effect was anti-dilutive include the following (shares in millions):
Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Anti-dilutive securities (1)
24.0 27.4 26.1 27.6 
(1) The anti-dilutive securities include outstanding stock options, unvested RSUs, unvested PSUs, common shares expected to be issued under our ESPP and Convertible Notes.
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11.    Commitments and Contingencies
From time to time, we may be involved in disputes, including litigation, relating to claims arising out of operations in the normal course of our business. Any of these claims could subject us to costly legal expenses and, while we generally believe that we have adequate insurance to cover many different types of liabilities, our insurance carriers may deny coverage or our policy limits may be inadequate to fully satisfy any damage awards or settlements. If this were to happen, the payment of any such awards could have a material adverse effect on our condensed consolidated statements of income and balance sheets. Additionally, any such claims, whether or not successful, could damage our reputation and business. We currently are not a party to any legal proceedings, the adverse outcome of which, in our opinion, individually or in the aggregate, would have a material adverse effect on our condensed consolidated statements of income or balance sheets.

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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

As used in this Quarterly Report on Form 10-Q, unless the context suggests otherwise, references to “Halozyme,” “the Company,” “we,” “our,” “ours,” and “us” refer to Halozyme Therapeutics, Inc., its wholly owned subsidiaries, Halozyme, Inc., Antares Pharma Inc., and Antares Pharma Inc.’s wholly owned subsidiaries, Antares Pharma IPL AG and Antares Pharma AG. References to “Notes” refer to the notes to the condensed consolidated financial statements included herein (refer to Item 1 of Part I).
The following information should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q, as well as the audited financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2023, included in our Annual Report on Form 10-K for the year ended December 31, 2023. Past financial or operating performance is not necessarily a reliable indicator of future performance, and our historical performance should not be used to anticipate results or future period trends.
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, provisions of Section 21E of the securities and Exchange Act, as amended, and Section 27A of the Securities Act of 1933, as amended. All statements in this report other than statements of historical fact, included herein, including without limitation those regarding our future product development and regulatory events and goals, product collaborations, our business intentions and financial statements and anticipated results, are, or may be deemed to be, forward-looking statements. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “think,” “may,” “could,” “will,” “would,” “should,” “continue,” “potential,” “likely,” “opportunity,” “project” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Quarterly Report on Form 10-Q. Additionally, statements concerning future matters such as the development or regulatory approval of new partner products, enhancements of existing products or technologies, timing and success of the launch of new products by us and our partners, third-party performance under key collaboration agreements, the ability of our bulk drug and device part manufacturers to provide adequate supply for our partners, revenue, expense, cash burn levels and our ability to make timely repayments of debt, anticipated amounts and timing of share repurchases, anticipated profitability and expected trends and other statements regarding our plans and matters that are not historical are forward-looking statements. Such statements reflect management’s current forecast of certain aspects of our future business, are based on currently available operating, financial and competitive information and are subject to various risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated or implied in our forward-looking statements due to a number of factors including, but not limited to, the Risk Factors set forth in our most recent Annual Report on Form 10-K referred to below under the section entitled “Risks Factors” and elsewhere in this Quarterly Report on Form 10-Q and our most recent Annual Report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report on Form 10-Q.
Overview
Halozyme Therapeutics, Inc. is a biopharmaceutical company advancing disruptive solutions to improve patient experiences and outcomes for emerging and established therapies.
As the innovators of ENHANZE® drug delivery technology (“ENHANZE”) with our proprietary enzyme rHuPH20, our commercially validated solution is used to facilitate the subcutaneous (“SC”) delivery of injected drugs and fluids, with the goal of improving the patient experience with rapid SC delivery and reduced treatment burden. We license our technology to biopharmaceutical companies to collaboratively develop products that combine ENHANZE with our partners’ proprietary compounds. We also develop, manufacture and commercialize, for ourselves or with our partners, drug-device combination products using our advanced auto-injector technologies that are designed to provide commercial or functional advantages such as improved convenience, reliability and tolerability, and enhanced patient comfort and adherence.
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Our ENHANZE partners’ approved products and product candidates are based on rHuPH20, our patented recombinant human hyaluronidase enzyme. rHuPH20 works by breaking down hyaluronan (“HA”), a naturally occurring carbohydrate that is a major component of the extracellular matrix of the SC space. This temporarily reduces the barrier to bulk fluid flow allowing for improved and more rapid SC delivery of high dose, high volume 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 ENHANZE. We license our ENHANZE technology to form collaborations with biopharmaceutical companies that develop and/or market drugs requiring or benefiting from injection via the SC route of administration. In the development of proprietary intravenous (“IV”) drugs combined with our ENHANZE technology, data have been generated supporting the potential for ENHANZE to reduce patient treatment burden, as a result of shorter duration of SC administration with ENHANZE compared to IV administration. ENHANZE may enable fixed-dose SC dosing compared to weight-based dosing typically required for IV administration, extend the dosing interval for drugs that are already administered subcutaneously and potentially allow for lower rates of infusion-related reactions. ENHANZE may enable more flexible treatment options such as home administration by a healthcare professional or potentially the patient or caregiver. Lastly, certain proprietary drugs co-formulated with ENHANZE have been granted additional exclusivity, extending the patent life of the product beyond the patent expiry of the proprietary IV drug.
We currently have ENHANZE collaborations and licensing agreements with F. Hoffmann-La Roche, Ltd. and Hoffmann-La Roche, Inc. (“Roche”), Takeda Pharmaceuticals International AG and Baxalta US Inc. (“Takeda”), Pfizer Inc. (“Pfizer”), Janssen Biotech, Inc. (“Janssen”), AbbVie, Inc. (“AbbVie”), Eli Lilly and Company (“Lilly”), Bristol Myers Squibb Company (“BMS”), argenx BVBA (“argenx”), ViiV Healthcare (the global specialist HIV Company majority owned by GlaxoSmithKline) (“ViiV”), Chugai Pharmaceutical Co., Ltd. (“Chugai”) and Acumen Pharmaceuticals, Inc. (“Acumen”). In addition to receiving upfront licensing fees from our ENHANZE collaborations, we are entitled to receive event and sales-based milestone payments, revenues from the sale of bulk rHuPH20 and royalties from commercial sales of approved partner products co-formulated with ENHANZE. We currently earn royalties from the sales of eight commercial products including sales of one commercial product from each of the Takeda, Janssen and argenx collaborations and five commercial products from the Roche collaboration.
We have commercialized auto-injector products with Teva Pharmaceutical Industries, Ltd. (“Teva”) and Otter Pharmaceuticals, LLC (“Otter”). We have development programs including auto-injectors with Idorsia Pharmaceuticals Ltd. (“Idorsia”).
Our commercial portfolio of proprietary products includes Hylenex®, utilizing rHuPH20, and our specialty product XYOSTED®, utilizing our auto-injector technology.
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Our third quarter of 2024 and recent key events are as follows:
Partners
In October 2024, argenx initiated two studies evaluating VYVGART Hytrulo with ENHANZE, a Phase 3 study for adult patients with ocular myasthenia gravis (“oMG”) and a Phase 2 study for kidney transplant recipients with antibody mediated rejection (“AMR”).
In October 2024, Janssen announced the European Commission (“EC”) approved DARZALEX SC for the treatment of patients newly diagnosed with multiple myeloma (“NDMM”) who are eligible for autologous stem cell transplant (“ASCT”) in combination with bortezomib, lenalidomide, and dexamethasone (“D-VRd”).
In September 2024, argenx expanded its global collaboration and license agreement nominating four additional targets that provides them exclusive access to our ENHANZE drug delivery technology for a total of six targets. Under the terms of the expanded exclusive agreement, we received upfront payments of $7.5 million per target nomination for a total of $30.0 million. argenx is obligated to make future milestone payments of up to $85.0 million per new nominated target, subject to achievements of specified development, regulatory and sales-based milestones. We are also entitled to receive royalties on net sales of commercialized products with our ENHANZE technology.
In September 2024, ViiV expanded its global collaboration and license agreement providing ViiV the ability to exclusively access our ENHANZE drug delivery technology for one additional undisclosed target.
In September 2024, Roche announced the U.S. Food and Drug Administration (“FDA”) approved OCREVUS ZUNOVO with ENHANZE as a twice a year ten-minute SC injection for the treatment of relapsing multiple sclerosis (“RMS”) and primary progressive multiple sclerosis (“PPMS”).
In September 2024, Roche announced the FDA approved TECENTRIQ HYBREZA with ENHANZE for all approved adult indications of IV TECENTRIQ and was made available to patients, resulting in a $12.0 million milestone payment.
In September 2024, Janssen announced the submission of a supplemental Biologic License Application (“sBLA”) to the FDA for approval of a new indication of DARZALEX FASPRO in combination with D-VRd for the treatment of adult patients with NDMM for whom ASCT is deferred or who are ineligible for ASCT.
In August 2024, the FDA designated Janssen’s Biologics License Application (“BLA”) priority review status for amivantamab SC in combination with LAZCLUZE for currently approved or submitted indication of IV in certain patients with NSCLC.
In August 2024, Takeda submitted a New Drug Application (“NDA”) in Japan seeking approval for TAK-771 with ENHANZE for treatment of chronic inflammatory demyelinating polyneuropathy (“CIDP”)/Multifocal Motor Neuropathy (“MMN”).
In July 2024, Janssen announced the FDA approved DARZALEX FASPRO for an additional indication in NDMM patients who are eligible for ASCT in combination with D-VRd.
In July 2024, argenx announced the National Medical Products Administration (“NMPA”) approved the BLA of efgartigimod SC for generalized myasthenia gravis (“gMG”) in China.
In July 2024, Acumen initiated a Phase 1 study of sabirnetug (“ACU193”) co-formulated with ENHANZE for the treatment of early Alzheimer’s disease.

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Product and Product Candidates
The following table summarizes our marketed proprietary products and product candidates under development and our marketed partnered products and product candidates under development with our partners:
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Proprietary Products and Product Candidates
Hylenex Recombinant (hyaluronidase human injection)
We market and sell Hylenex recombinant which is a formulation of rHuPH20 that facilitates SC administration for achieving hydration, increases the dispersion and absorption of other injected drugs and, in SC urography, to improve resorption of radiopaque agents. Hylenex recombinant is currently the number one prescribed branded hyaluronidase.
XYOSTED (testosterone enanthate) Injection
We market and sell our proprietary product XYOSTED for SC administration of testosterone replacement therapy (“TRT”) in adult males for conditions associated with a deficiency or absence of endogenous testosterone (primary or hypogonadism). XYOSTED is the only FDA-approved SC testosterone enanthate product for once-weekly, at-home self-administration and is approved and marketed in the United States (“U.S.”) in three dosage strengths, 50 mg, 75 mg and 100 mg.
ATRS - 1902
We have an ongoing program to develop a proprietary drug device combination product for the endocrinology market, for patients who require additional supplemental hydrocortisone, identified as ATRS-1902. The development program uses a novel proprietary auto-injector platform to deliver a liquid stable formulation of hydrocortisone.
In June 2021, we submitted an investigational new drug (“IND”) application with the FDA for the initiation of a Phase 1 clinical study of ATRS-1902 for adrenal crisis rescue. The IND application included the protocol for an initial clinical study to compare the pharmacokinetics (“PK”) profile of our novel formulation of hydrocortisone versus Solu-Cortef®, which is an anti-inflammatory glucocorticoid and is the current standard of care for the management of acute adrenal crises.
In July 2021, the FDA accepted our IND for ATRS-1902 enabling us to initiate our Phase 1 clinical study. The Phase 1 clinical study, designed to evaluate the safety, tolerability and PK of a liquid stable formulation of hydrocortisone, was initiated in September 2021. The study was a cross-over design to establish the PK profile of ATRS-1902 (100 mg) compared to Solu-Cortef (100 mg), the reference-listed drug, in 32 healthy adults.
In January 2022, we announced the positive results from the Phase 1 clinical study and were granted Fast Track designation by the FDA. The positive results supported the advancement of our ATRS-1902 development program to a pivotal study for the treatment of acute adrenal insufficiency, using our Vai novel proprietary rescue pen platform to deliver a liquid stable formulation of hydrocortisone.
Partnered Products
ENHANZE Collaborations
Roche Collaboration
In December 2006, we and Roche entered into a collaboration and license agreement under which Roche obtained a worldwide license to develop and commercialize product combinations of rHuPH20 and up to twelve Roche target compounds (the “Roche Collaboration”). Under this agreement, Roche elected a total of eight targets, two of which are exclusive.
In September 2013, Roche launched a SC formulation of Herceptin (trastuzumab) (Herceptin® SC) in Europe for the treatment of patients with HER2-positive breast cancer followed by launches in additional countries. This formulation utilizes our ENHANZE technology and is administered in two to five minutes, compared to 30 to 90 minutes with the standard IV form. Herceptin SC has since received approval in Canada, the U.S. (under the brand name Herceptin Hylecta™) and China.
In June 2020, the FDA approved the fixed-dose combination of Perjeta® (pertuzumab) and Herceptin for SC injection (Phesgo®) utilizing ENHANZE technology for the treatment of patients with HER2-positive breast cancer. Phesgo has since received approval in Europe and China. In September 2023, Chugai (a Member of the Roche Group) announced that it had obtained regulatory approval for Phesgo from the Ministry of Health, Labour and Welfare (“MHLW”) in Japan. We receive royalties for Phesgo sales in Japan as part of our licensing agreement with Roche.
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In June 2014, Roche launched MabThera® SC in Europe for the treatment of patients with common forms of non-Hodgkin lymphoma (“NHL”), followed by launches in additional countries. This formulation utilizes our ENHANZE technology and is administered in approximately five minutes compared to the approximate one and a half to four hour IV infusion. In May 2016, Roche announced that the EMA approved MabThera SC to treat patients with chronic lymphocytic leukemia (“CLL”). In June 2017, the FDA-approved Genentech’s RITUXAN HYCELA®, a combination of rituximab using ENHANZE technology (approved and marketed under the MabThera SC brand in countries outside the U.S. and Canada), for CLL and two types of NHL, follicular lymphoma and diffuse large B-cell lymphoma (“DLBCL”). In March 2018, Health Canada approved a combination of rituximab and ENHANZE (approved and marketed under the brand name RITUXAN® SC) for patients with CLL. In April 2024, Roche’s MabThera SC was approved by the China NMPA to treat DLBCL.
In September 2017 and October 2018, we entered into agreements with Roche to develop and commercialize additional exclusive targets using ENHANZE technology. The upfront license payment may be followed by event-based payments subject to Roche’s achievement of specified development, regulatory and sales-based milestones. In addition, Roche will pay royalties to us if products under the collaboration are commercialized.
In August 2023, Roche announced the approval of TECENTRIQ SC with ENHANZE by the Medicines and Healthcare products Regulatory Agency (“MHRA”) in the United Kingdom. In January 2024, Roche received EC marketing authorization for TECENTRIQ SC. In September 2024, Roche announced the FDA approved TECENTRIQ HYBREZA with ENHANZE. TECENTRIQ SC enables SC delivery in approximately seven minutes, compared with 30-60 minutes for IV infusion, and is approved for all adult indications of TECENTRIQ IV.
In June 2024, Roche announced the EC granted marketing authorization in the European Union (“EU”) for OCREVUS SC as a twice a year ten-minute SC injection for patients with relapsing forms of multiple sclerosis (“MS”) or RMS or PMS. In July 2024, Roche announced the MHRA approved OCREVUS SC in the United Kingdom. In September 2024, Roche announced the FDA approved OCREVUS ZUNOVO with ENHANZE.
In October 2019, Roche nominated a new undisclosed exclusive target to be studied using ENHANZE technology. In November 2021, Roche initiated a Phase 1 study with the undisclosed target and ENHANZE.
Takeda Collaboration
In September 2007, we and Takeda entered into a collaboration and license agreement under which Takeda obtained a worldwide, exclusive license to develop and commercialize product combinations of rHuPH20 with GAMMAGARD LIQUID (HYQVIA®) (the “Takeda Collaboration”). HYQVIA is indicated for the treatment of primary immunodeficiency disorders associated with defects in the immune system.
In May 2013, the EC granted Takeda marketing authorization in all EU Member States for the use of HYQVIA as replacement therapy for adult patients with primary and secondary immunodeficiencies. Takeda launched HYQVIA in the first EU country in July 2013 and has continued to launch in additional countries. In May 2016, Takeda announced that HYQVIA received a marketing authorization from the EC for a pediatric indication.
In September 2014, HYQVIA was approved by the FDA for treatment of adult patients with primary immunodeficiency in the U.S. HYQVIA is the first SC immune globulin (“IG”) treatment approved for adult primary immunodeficiency patients with a dosing regimen requiring only one infusion up to once per month (every three to four weeks) and one injection site per infusion in most patients, to deliver a full therapeutic dose of IG.
In September 2020, Takeda announced the EMA approved a label update for HYQVIA broadening its use and making it the first and only facilitated SC immunoglobulin replacement therapy in adults, adolescents and children with an expanded range of secondary immunodeficiencies (“SID”).
In October 2021, Takeda initiated a Phase 1 single-dose, single-center, open-label, three-arm study to assess the tolerability and safety of immune globulin SC (human), 20% solution with ENHANZE (TAK-881) at various infusion rates in healthy adult subjects. In October 2023, Takeda initiated a Phase 2/3 study to evaluate PK, safety, and tolerability of subcutaneous administration of TAK-881 in adult and pediatric participants with Primary Immunodeficiency Diseases (“PIDD”).
In July 2022, Takeda announced positive topline results from a pivotal Phase 3 trial evaluating HYQVIA, for maintenance treatment of CIDP. In June 2023, Takeda announced positive full results from a pivotal Phase 3 trial evaluating HYQVIA for maintenance treatment of CIDP and confirmed regulatory applications were under review in the U.S. and EU for HYQVIA use as a maintenance therapy in adults with stable CIDP. In January 2024, Takeda received FDA and EC approval for HYQVIA for the treatment of CIDP.
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In April 2023, Takeda announced the FDA approved the sBLA to expand the use of HYQVIA to treat primary immunodeficiency in children. In February 2024, Takeda submitted a NDA in Japan seeking approval for TAK-771, subcutaneous 10% human immunoglobulin with ENHANZE, for treatment of primary immunodeficiency. In June 2024, Takeda announced Health Canada approved HYQVIA as replacement therapy for primary humoral immunodeficiency and secondary humoral immunodeficiency in pediatric patients two years of age and older. In August 2024, Takeda submitted a NDA in Japan seeking approval for TAK-771 with ENHANZE for treatment of CIDP/MMN.
Pfizer Collaboration
In December 2012, we and Pfizer entered into a collaboration and license agreement, under which Pfizer has the worldwide license to develop and commercialize products combining our rHuPH20 enzyme with Pfizer proprietary biologics in primary care and specialty care indications. Pfizer currently has one non-exclusive target.
Janssen Collaboration
In December 2014, we and Janssen entered into a collaboration and license agreement, under which Janssen has the worldwide license to develop and commercialize products combining our rHuPH20 enzyme with Janssen proprietary biologics directed to up to five targets. Targets may be selected on an exclusive basis. Janssen elected CD38 and initiated several Phase 3 studies, Phase 2 studies and Phase 1 studies of DARZALEX® (daratumumab), directed at CD38, using ENHANZE technology in patients with amyloidosis, smoldering myeloma and multiple myeloma.
In May 2020, Janssen launched the commercial sale of DARZALEX FASPRO® (DARZALEX utilizing ENHANZE technology) in four regimens across five indications in multiple myeloma patients, including newly diagnosed, transplant-ineligible patients as well as relapsed or refractory patients. As a fixed-dose formulation, DARZALEX FASPRO can be administered over three to five minutes, significantly less time than DARZALEX IV which requires multi-hour infusions. In June 2020, we announced that Janssen received European marketing authorization and launched the commercial sale of DARZALEX SC utilizing ENHANZE in the EU. Subsequent to these approvals, Janssen received several additional regulatory approvals for additional indications and patient populations in the U.S., EU, Japan and China. Beginning with the U.S., Janssen has marketing authorization for DARZALEX FASPRO in combination with bortezomib, thalidomide, and dexamethasone in NDMM patients who are eligible for autologous stem cell transplant, in combination with bortezomib, cyclophosphamide and dexamethasone (“D-VCd”) for the treatment of adult patients with newly diagnosed AL amyloidosis, in combination with pomalidomide and dexamethasone (“D-Pd”) for patients with multiple myeloma after first or subsequent relapse, and in combination with Kyprolis® (carfilzomib) and dexamethasone for patients with relapsed or refractory multiple myeloma who have received one to three prior lines of therapy. In the EU, Janssen has marketing authorization for DARZALEX SC in combination with D-VCd in newly diagnosed adult patients with AL amyloidosis and in combination with D-Pd in adult patients with relapsed or refractory multiple myeloma. In Japan, Janssen has marketing authorization for the SC formulation of DARZALEX (known as DARZQURO) for the treatment of multiple myeloma and systemic AL amyloidosis. In China, Janssen has marketing authorization for DARZALEX SC for the treatment of primary light chain amyloidosis, in combination with D-VCd in newly diagnosed patients. In July 2024, Janssen announced the FDA approved DARZALEX FASPRO in combination with D-VRd for induction and consolidation treatment and with lenalidomide (“D-R”) for maintenance treatment of adult patients who are NDMM and are eligible for autologous stem cell transplant (“ASCT”) with approval also received by the EC in October 2024. In September 2024, Janssen announced the submission of a sBLA to the FDA for approval of a new indication of DARZALEX FASPRO in combination with D-VRd for the treatment of adult patients with NDMM for whom ASCT is deferred or who are ineligible for ASCT.
In December 2019, Janssen elected epidermal growth factor receptor (“EGFR”) and mesenchymal-epithelial transition factor (“cMET”) as a bispecific antibody (amivantamab) target on an exclusive basis, which is being studied in solid tumors. In September 2022, following a Phase 1 study, Janssen initiated a Phase 3 study of lazertinib and amivantamab with ENHANZE in patients with EGFR-mutated advanced or metastatic non-small cell lung cancer (PALOMA-3). In November 2022, Janssen initiated a Phase 2 study of amivantamab with ENHANZE in multiple regimens in patients with advanced or metastatic solid tumors including EGFR-mutated non-small cell lung cancer (PALOMA-2). In May 2024, Janssen announced positive data from the Phase 3 PALOMA-3 study which supported the submission of a marketing authorization application to the EMA for SC formulation of RYBREVANT (amivantamab) with ENHANZE for the treatment of patients with EGFR-mutated non-small cell lung cancer (“NSCLC”). In June 2024, Janssen announced the submission of a BLA to the FDA for amivantamab SC co-formulated with ENHANZE also for patients with EGFR-mutated NSCLC. The administration time for SC amivantamab was reduced to approximately five minutes from five hours for the first IV amivantamab infusion (across two days) and showed a five-fold reduction in infusion-related reactions. SC amivantamab also demonstrated longer overall survival, progression-free survival and duration of response. In August 2024, the FDA designated Janssen’s BLA priority review status for amivantamab SC in combination with LAZCLUZE for currently approved or submitted indication of IV in certain patients with NSCLC.
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AbbVie Collaboration
In June 2015, we and AbbVie entered into a collaboration and license agreement, under which AbbVie has the worldwide license to develop and commercialize products combining our rHuPH20 enzyme with AbbVie proprietary biologics directed to up to nine targets. Targets may be selected on an exclusive basis.
Lilly Collaboration
In December 2015, we and Lilly entered into a collaboration and license agreement, under which Lilly has the worldwide license to develop and commercialize products combining our rHuPH20 enzyme with Lilly proprietary biologics. Lilly currently has the right to select up to three targets. Targets may be selected on an exclusive basis.
BMS Collaboration
In September 2017, we and BMS entered into a collaboration and license agreement, which became effective in November 2017, under which BMS had the worldwide license to develop and commercialize products combining our rHuPH20 enzyme with BMS products directed at up to eleven targets. Targets may be selected on an exclusive basis or non-exclusive basis. BMS has designated multiple immuno-oncology targets including programmed death 1 (“PD-1”) and has an option to select three additional targets by September 2026. In October 2019, BMS initiated a Phase 1 study of relatlimab, an anti-LAG-3 antibody, in combination with nivolumab using ENHANZE technology. In May 2021, BMS initiated a Phase 3 of nivolumab using ENHANZE technology for patients with advanced or metastatic clear cell renal cell carcinoma (CheckMate-67T), leveraging data and insights from Phase 1/2 CA209-8KX study in patients with solid tumors. In October 2023, BMS reported positive top-line data from the Phase 3 CheckMate-67T trial evaluating a SC formulation of Opdivo (nivolumab) with ENHANZE in patients with advanced or metastatic clear cell renal cell carcinoma (“ccRCC”) who have received prior systemic therapy. The study met its co-primary PK endpoints and a key secondary endpoint. In May 2024, BMS announced that the FDA accepted its BLA for the subcutaneous formulation of Opdivo (nivolumab) co-formulated with ENHANZE and assigned a PDUFA goal date of February 28, 2025. In May 2024, BMS announced the FDA assigned an updated PDUFA goal date of December 29, 2024 for the subcutaneous formulation of Opdivo (nivolumab) co-formulated with ENHANZE. In June 2024, BMS announced the EMA validated its Extension Application for the subcutaneous formulation of Opdivo (nivolumab) co-formulated with ENHANZE.
In March 2023, BMS initiated a Phase 3 trial to demonstrate the drug exposure levels of nivolumab and relatlimab fixed-dose combination with ENHANZE is not inferior to IV administration in participants with previously untreated metastatic or unresectable melanoma (RELATIVITY-127).
argenx Collaboration
In February 2019, we and argenx entered into an agreement for the right to develop and commercialize one exclusive target, the human neonatal Fc receptor FcRn, which includes argenx’s lead asset efgartigimod (ARGX-113), and an option to select two additional targets using ENHANZE technology. In May 2019, argenx nominated a second target to be studied using ENHANZE technology, a human complement factor C2 associated with the product candidate ARGX-117, which is being developed to treat severe autoimmune diseases in MMN. In October 2020, we and argenx entered into an agreement to expand the collaboration relationship, adding three targets for a total of up to six targets under the collaboration. In September 2024, argenx nominated four additional targets under its global collaboration and license agreement that provides them with exclusive access to our ENHANZE drug delivery technology for these targets, for a total of six targets.
In June 2023, argenx received FDA approval under the brand name VYVGART® Hytrulo for the injection with ENHANZE for SC use of treatment of gMG in adult patients who are anti-acetylcholine receptor (“AChR”) antibody positive. In November 2023, argenx received EC approval of VYVGART SC for the treatment of gMG, which also provides the option for patient self-administration. In January 2024, argenx received Japan approval for VYVDURA® (efgartigimod alfa and hyaluronidase-qvfc) co-formulated with ENHANZE for the treatment of adult patients with gMG including options for self-administration. In July 2024, argenx announced the NMPA approved the BLA of efgartigimod alfa SC (efgartigimod SC) for gMG patients in China.
In July 2023, argenx reported positive data from the ADHERE study evaluating VYVGART® Hytrulo with ENHANZE in adults with CIDP. In June 2024, argenx announced the FDA approved VYVGART Hytrulo with ENHANZE for the treatment of CIDP. In the second quarter of 2024, argenx completed the regulatory submissions of VYVGART SC for CIDP for regulatory approval in Japan, Europe, and China. Submission to Canadian Health Authorities for regulatory approval is expected in 2024. In September 2023, Zai Lab limited (argenx commercial partner for China) announced the Center for Drug Evaluation (“CDE”) of the NMPA granted Breakthrough Therapy Designation for efgartigimod SC for the treatment of patients with CIDP.
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argenx is currently conducting the following studies with the goal of expanding approved indications for efgartigimod with ENHANZE: Phase 2/3 (ALKIVIA) study in active idiopathic inflammatory myopathy (Myositis), two registrational studies in thyroid eye disease (“TED”), Phase 2 (Shamrock) study for kidney transplant recipients with AMR and Phase 3 (ADAPT oculus) study for adult patients with oMG. Evaluation is ongoing to determine the path forward in BALLAD study evaluating efgartigimod in bullous pemphigoid (“BP”) with an update expected in 2024.
ViiV Healthcare Collaboration
In June 2021, we and ViiV entered into a global collaboration and license agreement that gives ViiV exclusive access to our ENHANZE technology for four specific small and large molecule targets for the treatment and prevention of HIV. These targets are integrase inhibitors, reverse transcriptase inhibitors limited to nucleoside reverse transcriptase inhibitors (“NRTI”) and nucleoside reverse transcriptase translocation inhibitors (“NRTTIs”), capsid inhibitors and broadly neutralising monoclonal antibodies (“bNAbs”), that bind to the gp120 CD4 binding site. In February 2022, ViiV initiated enrollment of a Phase 1 study to evaluate the safety and PKs of N6LS, a broadly neutralizing antibody, administered subcutaneously with ENHANZE technology. In June 2022, ViiV initiated enrollment of a Phase 1 single dose escalation study to evaluate PKs, safety and tolerability of long-acting cabotegravir administered subcutaneously with ENHANZE technology. In August 2023, ViiV initiated a Phase 2b study to evaluate the efficacy, safety, PKs and tolerability of VH3810109 (N6LS) administered subcutaneously with rHuPH20 in combination with cabotegravir. In the third quarter of 2023, ViiV initiated a Phase 1 study with ENHANZE for an undisclosed program. In March 2024, ViiV initiated a Phase 1 study of VH4524184 with ENHANZE to evaluate the safety, tolerability, and pharmacokinetics in healthy adults.
In September 2024, we and ViiV expanded the existing global collaboration and license agreement, providing ViiV exclusive access to our ENHANZE drug delivery technology for one additional undisclosed target.
Chugai Collaboration
In March 2022, we and Chugai entered into a global collaboration and license agreement that gives Chugai exclusive access to ENHANZE technology for an undisclosed target. Chugai intends to explore the potential use of ENHANZE for a Chugai drug candidate. In May 2022, Chugai initiated a Phase 1 study to evaluate the PKs, pharmacodynamics, and safety of a targeted antibody administered subcutaneously with ENHANZE.
Acumen Collaboration
In November 2023, we and Acumen entered into a global collaboration and non-exclusive license agreement that provides Acumen access to ENHANZE for a single target. Acumen intends to explore the potential use of ENHANZE for ACU193, Acumen’s clinical stage monoclonal antibody candidate to target Amyloid-β Oligomers for the treatment of early Alzheimer’s disease. In May 2024, Acumen initiated a Phase 2 IV study for ACU193. In July 2024, Acumen initiated a Phase 1 study of sabirnetug (ACU193) with ENHANZE to compare the PK between SC and IV administrations in healthy volunteers.
Device and Other Drug Product Collaborations
Teva License, Development and Supply Agreements
In July 2006, we entered into an exclusive license, development and supply agreement with Teva for an epinephrine auto- injector product to be marketed in the U.S. and Canada. We are the exclusive supplier of the device, which we developed, for Teva’s generic Epinephrine Injection USP products, indicated for emergency treatment of severe allergic reactions including those that are life threatening (anaphylaxis) in adults and certain pediatric patients. Teva’s Epinephrine Injection, utilizing our patented VIBEX® injection technology, was approved by the FDA as a generic drug product with an AB rating, meaning that it is therapeutically equivalent to the branded products EpiPen® and EpiPen Jr® and therefore, subject to state law, substitutable at the pharmacy.
In December 2007, we entered into a license, development and supply agreement with Teva under which we developed and supply a disposable pen injector for teriparatide. Under the agreement, we received an upfront payment and development milestones, and are entitled to receive royalties on net product sales by Teva in territories where commercialized. We are the exclusive supplier of the multi-dose pen, which we developed, used in Teva’s generic teriparatide injection product. In 2020, Teva launched Teriparatide Injection, the generic version of Eli Lilly’s branded product Forsteo® featuring our multi-dose pen platform, for commercial sale in several countries outside of the U.S. In November 2023, Teva announced FDA approval of the generic version of Forteo, featuring our multi-dose auto-injector pen platform for the treatment of osteoporosis among certain women and men.
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Pfizer Agreement
In August 2018, we entered into a development agreement with Pfizer to jointly develop a combination drug device rescue pen utilizing the QuickShot auto-injector and an undisclosed Pfizer drug. Pfizer has provided the intellectual property rights for further development of the product to us and has retained an option to assist in the marketing, distribution and sale if we complete development of the product and submit for regulatory approval. We are continuing to evaluate the next steps for this program.
Idorsia Agreement
In November 2019, we entered into a global agreement with Idorsia to develop a novel, drug-device product containing selatogrel. A new chemical entity, selatogrel is being developed for the treatment of a suspected acute myocardial infarction (“AMI”) in adult patients with a history of AMI.
In March 2024, the recruitment of the Phase 3 study with selatogrel for acute myocardial infarction had reached approximately 6,000 patients.
Otter Agreement
In December 2021, we entered into a supply agreement with Otter to manufacture the VIBEX auto-injection system device, designed and developed to incorporate a pre-filled syringe for delivery of methotrexate, assemble, package, label and supply the final OTREXUP product and related samples to Otter at cost plus mark-up. Otter is responsible for manufacturing, formulation and testing of methotrexate and the corresponding pre-filled syringe for assembly with the device manufactured by us, along with the commercialization and distribution of OTREXUP. OTREXUP is a SC methotrexate injection for once weekly self-administration with an easy-to-use, single dose, disposable auto injector, indicated for adults with severe active rheumatoid arthritis (“RA”), children with active polyarticular juvenile idiopathic arthritis and adults with severe recalcitrant psoriasis. Further, we entered into a license agreement with Otter in which we granted Otter a worldwide, exclusive, fully paid-up license to certain patents relating to OTREXUP that may also relate to our other products for Otter to commercialize and otherwise exploit OTREXUP in the field as defined in the license agreement.
45


Results of Operations
Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023
Royalties Royalties were as follows (in thousands):
Three Months Ended
Increase / (Decrease)
September 30,
20242023
Dollar
Percentage
Royalties$155,061 $114,433 $40,628 36 %
The increase in royalties was primarily driven by continued sales uptake of DARZALEX SC by Janssen and Phesgo by Roche in all geographies, and the prior year launch of VYVGART Hytrulo by argenx. We expect royalty revenue to further grow as a result of anticipated increasing partner product sales of DARZALEX SC and Phesgo, and sales of recently launched ENHANZE partner products, VYVGART Hytrulo, TECENTRIQ SC and OCREVUS SC. We expect modest price erosion to continue on earlier launched ENHANZE partner products, Herceptin and MabThera.
Product Sales, Net Product sales, net were as follows (in thousands):
Three Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Proprietary product sales
$39,925 $31,511 $8,414 27 %
Bulk rHuPH20 sales
31,493 37,001 (5,508)(15)%
Device partnered product sales
15,241 18,057 (2,816)(16)%
Total product sales, net$86,659 $86,569 $90 — %
Product sales, net were flat primarily due to contributions from our proprietary products, offset by lower sales of device partner products and bulk rHuPH20 driven by the timing of partner demand. We expect sales of our proprietary products will continue to grow in future years as we continue to gain market share in the TRT market. We expect product sales of bulk rHuPH20 and device partnered products to fluctuate in future periods based on the needs of our partners.
Revenues Under Collaborative Agreements Revenues under collaborative agreements were as follows (in thousands):
Three Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Upfront license fees, license fees for the election of additional targets, event-based payments, license maintenance fees and amortization of deferred upfront and other license fees:
Upfront license and target nomination fees$27,000 $— $27,000 100 %
Event-based development milestones and regulatory milestones and other fees18,000 13,000 5,000 38 %
Device licensing and development revenue3,364 2,031 1,333 66 %
Total revenues under collaborative agreements$48,364 $15,031 $33,333 222 %
The increase in revenues under collaborative agreements was primarily due to the timing of milestones achieved. Revenue from upfront licenses fees, license fees for the election of additional targets, license maintenance fees and other license fees and event-based payments vary from period to period based on our ENHANZE collaboration activity. We expect these revenues to continue to fluctuate in future periods based on our partners’ ability to meet various clinical and regulatory milestones set forth in such agreements and our ability to obtain new collaborative agreements.

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Operating expenses Operating expenses were as follows (in thousands):
Three Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Cost of sales$49,426 $54,823 $(5,397)(10)%
Amortization of intangibles17,762 20,341 (2,579)(13)%
Research and development18,458 17,321 1,137 %
Selling, general and administrative41,241 35,269 5,972 17 %
Cost of SalesCost of sales consists primarily of raw materials, third-party manufacturing costs, fill and finish costs, freight costs, internal costs and manufacturing overhead associated with the production of our proprietary products, device partnered products and bulk rHuPH20. The decrease in cost of sales was primarily due to lower device and bulk rHuPH20 sales.
Amortization of intangibles Amortization of intangibles consists primarily of expense associated with the amortization of acquired device technologies and product rights. The decrease in amortization of intangibles expense was primarily due to an impairment charge of $2.5 million recognized in the prior year to fully impair the TLANDO product rights intangible asset.
Research and Development Research and development expenses consist of external costs, salaries and benefits and allocation of facilities and other overhead expenses related to research manufacturing, preclinical and regulatory activities related to our collaborations, and our development platforms. The modest increase in research and development expense was primarily due to increased compensation expense.
Selling, General and Administrative – Selling, general and administrative (“SG&A”) expenses consist primarily of salaries and related costs for personnel in executive, selling and administrative functions as well as professional fees for legal and accounting, business development, commercial operations support for proprietary products and alliance management and marketing support for our collaborations. The increase in SG&A expense was primarily due to increased compensation expense and consulting and professional service fees.
Investment and other income, net investment and other income, net was as follows (in thousands):
Three Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Investment and other income, net$6,474 $4,786 $1,688 35 %
Investment and other income, net consists primarily of interest income on our cash, cash-equivalent and marketable securities. The increase in investment and other income, net was primarily due to an increase in the average invested balance.
Interest Expense Interest expense was as follows (in thousands):
Three Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Interest expense$4,524 $4,505 $19 — %
Interest expense consists primarily of costs related to our convertible notes and revolving credit facility. Interest expense was flat year over year.
Income Tax Expense Income tax expense was as follows (in thousands):
Three Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Income tax expense$28,136 $19,923 $8,213 41 %
The increase in income tax expense was primarily due to higher income before income tax expense, partially offset by an increase in tax benefits mainly related to a share-based compensation windfall and a Foreign Derived Intangible Income (“FDII”) deduction recognized in the current period. Our annual effective tax rate is estimated to be approximately 19% for 2024, which differs from the U.S. federal statutory rate primarily due to a decrease from a share-based compensation windfall tax benefit, FDII deduction, and research and development credit generation, partially offset by state income tax and Section 162(m) disallowance.
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Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Royalties Royalties were as follows (in thousands):
Nine Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Royalties$400,572 $325,813 $74,759 23 %
The increase in royalties was primarily driven by continued sales uptake of DARZALEX SC by Janssen and Phesgo by Roche in all geographies, and the prior year launch of Vyvgart Hytrulo by argenx.
Product Sales, Net Product sales, net were as follows (in thousands):
Nine Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Sales of proprietary products$119,319 $91,765 $27,554 30 %
Sales of bulk rHuPH2066,637 86,203 (19,566)(23)%
Sales of device partnered product38,172 43,284 (5,112)(12)%
Total product sales, net$224,128 $221,252 $2,876 %
The increase in product sales, net was primarily due to contributions from our proprietary products, partially offset by lower sales of bulk rHuPH20 and device partnered products driven by the timing of partner demand.
Revenues Under Collaborative Agreements – Revenues under collaborative agreements were as follows (in thousands):
Nine Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Upfront license fees, license fees for the election of additional targets, event-based payments, license maintenance fees and amortization of deferred upfront and other license fees:
Upfront license and target nomination fees$27,000 $— $27,000 100 %
Event-based development milestones and regulatory milestones and other fees57,500 46,000 11,500 25 %
Device licensing and development revenue8,116 6,149 1,967 32 %
Total revenues under collaborative agreements$92,616 $52,149 $40,467 78 %
The increase in revenues under collaborative agreements was primarily due to the timing of milestones achieved.
Operating expenses - Operating expenses were as follows (in thousands):
Nine Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Cost of sales$117,362 $140,063 $(22,701)(16)%
Amortization of intangibles53,287 56,011 (2,724)(5)%
Research and development58,607 55,027 3,580 %
Selling, general and administrative112,086 111,574 512 — %
Cost of SalesThe decrease in cost of sales was primarily due to lower bulk rHuPH20 and device sales, partially offset by higher proprietary product sales.
Amortization of intangibles The decrease in amortization of intangibles expense was primarily due to an impairment charge of $2.5 million recognized in the prior year to fully impair the TLANDO product rights intangible asset.
Research and Development The increase in research and development expense was primarily due to planned investments in ENHANZE related to the development of our new high-yield rHuPH20 manufacturing processes.
Selling, General and Administrative – The increase in SG&A expense was primarily due to increased compensation expense and consulting and professional service fees, partially offset by planned reductions in commercial marketing expense.
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Investment and other income, net - Investment and other income, net was as follows (in thousands):
Nine Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Investment and other income, net$16,499 $10,957 $5,542 51 %
The increase in investment and other income, net was primarily due to an increase in the average invested balance.
Interest Expense Interest expense was as follows (in thousands):
Nine Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Interest expense$13,555 $13,542 $13 — %
Interest expense was flat year over year.
Income Tax Expense Income tax expense was as follows (in thousands):
Nine Months EndedIncrease / (Decrease)
September 30,
20242023
Dollar
Percentage
Income tax expense$71,839 $50,948 $20,891 41 %
The increase in income tax expense was primarily due to higher income before income tax expense, partially offset by an increase in tax benefits mainly related to with a share-based compensation windfall and a FDII deduction recognized during the current period.

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Liquidity and Capital Resources
Overview
Our principal sources of liquidity are our existing cash, cash equivalents and available-for-sale marketable securities. As of September 30, 2024, we had cash, cash equivalents and marketable securities of $666.3 million. We believe that our current cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next twelve months. We expect to fund our operations going forward with existing cash resources, anticipated revenues from our existing collaborative agreements and cash that we may raise through future transactions. We may raise cash through any one of the following financing vehicles: (i) new collaborative agreements; (ii) expansions or revisions to existing collaborative relationships; (iii) private financings; (iv) other equity or debt financings; (v) monetizing assets; and/or (vi) the public offering of securities.
We may, in the future, draw on our existing line of credit or offer and sell additional equity, debt securities and warrants to purchase any of such securities, either individually or in units to raise capital for additional working capital, capital expenditures, share repurchases, acquisitions or for other general corporate purposes.
Cash Flows
Nine Months Ended September 30,
 (in thousands)
20242023Change
Net cash provided by operating activities$300,597 $286,217 $14,380 
Net cash used in investing activities(292,203)(88,618)(203,585)
Net cash provided by (used in) financing activities27,554 (158,067)185,621 
Net increase in cash, cash equivalents and restricted cash$35,948 $39,532 $(3,584)
Operating Activities
The increase in net cash provided by operations was primarily due to an increase in revenue, partially offset by higher working capital spend.
Investing Activities
The increase in net cash used in investing activities was primarily due to an increase in net purchases of marketable securities, partially offset by a decrease in capital spend for property and equipment.
Financing Activities
The decrease in net cash used in financing activities was primarily due to the repurchase of $150.1 million in common stock in the prior year and $13.5 million in cash paid on the conversion of our 2024 Convertible Notes in the prior year, partially offset by an increase in net proceeds from the issuance of common stock under our equity incentive plan.
Share Repurchases
In December 2021, our Board of Directors approved a share repurchase program to repurchase up to $750.0 million of our outstanding common stock which we completed in June 2024. In February 2024, our Board of Directors authorized a new capital return program to repurchase up to $750.0 million of our outstanding common stock. Refer to Note 9, Stockholders’ Equity, of our condensed consolidated financial statements for additional information regarding our share repurchases.
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Long-Term Debt
1.00% Convertible Notes due 2028
In August 2022, we completed the sale of $720.0 million in aggregate principal amount of 1.00% Convertible Senior Notes due 2028 (the “2028 Convertible Notes”). The net proceeds in connection with the issuance of the 2028 Convertible Notes, after deducting the initial purchasers’ fee of $18.0 million, was approximately $702.0 million. We also incurred additional debt issuance costs totaling $1.0 million. Debt issuance costs and the initial purchasers’ fee are presented as a debt discount.
The 2028 Convertible Notes pay interest semi-annually in arrears on February 15th and August 15th of each year at an annual rate of 1.00%. The 2028 Convertible Notes are general unsecured obligations and rank senior in right of payment to all indebtedness that is expressly subordinated in right of payment to the 2028 Convertible Notes, rank equally in right of payment with all existing and future liabilities that are not so subordinated, are effectively junior to any secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities (including trade payables) of our current or future subsidiaries. The 2028 Convertible Notes have a maturity date of August 15, 2028.
Holders may convert their 2028 Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2022, if the last reported sale price per share of common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on our common stock, as described in the offering memorandum for the 2028 Convertible Notes; (4) if we call such notes for redemption; and (5) at any time from, and including, February 15, 2028 until the close of business on the second scheduled trading day immediately before the maturity date. As of September 30, 2024, the 2028 Convertible Notes were not convertible.
Upon conversion, we will pay cash for the settlement of principal, and for the premium, if applicable, we will pay cash, deliver shares of common stock or a combination of cash and shares of common stock, at our election. The initial conversion rate for the 2028 Convertible Notes is 17.8517 shares of common stock per $1,000 in principal amount of 2028 Convertible Notes, equivalent to a conversion price of approximately $56.02 per share of our common stock. The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued or unpaid interest.
Capped Call Transactions
In connection with the offering of the 2028 Convertible Notes, we entered into capped call transactions with certain counterparties (the “Capped Call Transactions”). The Capped Call Transactions are expected generally to reduce potential dilution to holders of our common stock upon conversion of the 2028 Convertible Notes or at our election (subject to certain conditions) offset any cash payments we are required to make in excess of the principal amount of such converted 2028 Convertible Notes. The cap price of the Capped Call Transactions is initially $75.4075 per share of common stock, representing a premium of 75% above the last reported sale price of $43.09 per share of common stock on August 15, 2022, and is subject to certain adjustments under the terms of the Capped Call Transactions. As of September 30, 2024, no capped calls had been exercised.
Pursuant to their terms, the capped calls qualify for classification within stockholders’ equity in our condensed consolidated balance sheets, and their fair value is not remeasured and adjusted as long as they continue to qualify for stockholders’ equity classification. We paid approximately $69.1 million for the Capped Calls, including applicable transaction costs, which was recorded as a reduction to additional paid-in capital in our condensed consolidated balance sheets. The Capped Call Transactions are separate transactions entered into by us with the capped call Counterparties, are not part of the terms of the Convertible Notes, and do not affect any holder’s rights under the Convertible Notes. Holders of the Convertible Notes do not have any rights with respect to the Capped Call Transactions.
0.25% Convertible Notes due 2027
In March 2021, we completed the sale of $805.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2027 (the “2027 Convertible Notes”). The net proceeds in connection with the issuance of the 2027 Convertible Notes, after deducting the initial purchasers’ fee of $20.1 million, was approximately $784.9 million. We also incurred additional debt issuance costs totaling $0.4 million. Debt issuance costs and the initial purchasers’ fee are presented as a debt discount.
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The 2027 Convertible Notes pay interest semi-annually in arrears on March 1st and September 1st of each year at an annual rate of 0.25%. The 2027 Convertible Notes are general unsecured obligations and rank senior in right of payment to all indebtedness that is expressly subordinated in right of payment to the 2027 Convertible Notes, will rank equally in right of payment with all existing and future liabilities that are not so subordinated, are effectively junior to any secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities (including trade payables) of our current or future subsidiaries. The 2027 Convertible Notes have a maturity date of March 1, 2027.
Holders may convert their 2027 Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021, if the last reported sale price per share of common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on our common stock, as described in the offering memorandum for the 2027 Convertible Notes; (4) if we call such notes for redemption; and (5) at any time from, and including, September 1, 2026 until the close of business on the scheduled trading day immediately before the maturity date. As of September 30, 2024, the 2027 Convertible Notes were not convertible.
Upon conversion, we will pay cash for the settlement of principal, and for the premium, if applicable, we will pay cash, deliver shares of common stock or a combination of cash and shares of common stock, at our election. The initial conversion rate for the 2027 Convertible Notes is 12.9576 shares of common stock per $1,000 in principal amount of 2027 Convertible Notes, equivalent to a conversion price of approximately $77.17 per share of our common stock. The conversion rate is subject to adjustment.
1.25% Convertible Notes due 2024
In November 2019, we completed the sale of $460.0 million in aggregate principal amount of 1.25% Convertible Senior Notes due 2024 (the “2024 Convertible Notes”). The net proceeds in connection with the issuance of the 2024 Convertible Notes, after deducting the initial purchasers’ fee of $12.7 million, was approximately $447.3 million. We also incurred debt issuance cost totaling $0.3 million. Debt issuance costs and the initial purchasers’ fee were presented as a debt discount.
In January 2021, we notified the note holders of our irrevocable election to settle the principal of the 2024 Convertible Notes in cash and for the premium, to deliver shares of common stock. The conversion rate for the 2024 Convertible Notes was 41.9208 shares of common stock per $1,000 in principal amount of 2024 Convertible Notes, equivalent to a conversion price of approximately $23.85 per share of our common stock. The conversion rate was subject to adjustment.
In January 2023, we issued a notice for the redemption of 2024 Convertible Notes. Holders of the notes could convert their notes at any time prior to the close of the business day prior to the redemption date. In March 2023, holders of the notes elected to convert the 2024 Convertible Notes in full. In connection with the conversion, we paid approximately $13.5 million in cash which included principal and accrued interest, and issued 288,886 shares of our common stock representing the intrinsic value based on the contractual conversion rate.
Revolving Credit and Term Loan Facilities
In May 2022, we entered into a credit agreement, which was subsequently amended in August 2022 (the “Amendment”), with Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, and the other lenders and L/C Issuers party thereto (the “2022 Credit Agreement”), evidencing a credit facility (the “2022 Facility”) that provides for (i) a $575 million revolving credit facility (the “Revolving Credit Facility”) and (ii) a $250 million term loan facility (the “Term Facility”). Concurrently, with the entry into the Amendment, we repaid the entire outstanding Term Loan Facility and repaid all outstanding loans under the Revolving Credit Facility under the 2022 Credit Agreement. The 2022 Facility will mature on November 30, 2026 unless either the Revolving Credit Facility or the Term Facility is extended prior to such date in accordance with the 2022 Credit Agreement.
The Term Facility requires quarterly scheduled repayments of the term loans in each of the first, second, third and fourth years following the closing in annual amounts equal to 2.50%, 5.00%, 7.50% and 10.00% of the initial principal amount of the term loans, respectively. The term loans are also subject to mandatory prepayments from the proceeds of certain asset sales, subject to our right to reinvest the proceeds thereof.
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Borrowings under the 2022 Facility bear interest, at our option, at a rate equal to an applicable margin plus: (a) the applicable Term Secured Overnight Financing Rate (“SOFR”) (which includes a SOFR adjustment of 0.10%), or (b) a base rate determined by reference to the highest of (1) the federal funds effective rate plus 0.50%, (2) the Bank of America prime rate, (3) the Term SOFR rate for an interest period of one month plus 1.10%, and (4) 1.00%. The margin for the 2022 Facility ranges, based on our consolidated total net leverage ratio, from 0.25% to 1.25% in the case of base rate loans and from 1.25% to 2.25% in the case of Term SOFR rate loans. In addition to paying interest on the outstanding principal under the 2022 Facility, we will pay (i) a commitment fee in respect of the unutilized commitments thereunder and (ii) customary letter of credit fees and agency fees. The commitment fees range from 0.15% to 0.35% per annum based on our consolidated net leverage ratio.
As of September 30, 2024, the revolving credit facility was undrawn.
Additional Capital Requirements
Our expected working capital and other capital requirements are described in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023. As of September 30, 2024, there have been no material changes to our expected working capital and other capital requirements described in our Annual Report on Form 10-K for the year ended December 31, 2023.
 Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.
Our significant accounting policies are described in Part II, Item 8, Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. The accounting policies and estimates that are most critical to a full understanding and evaluation of our reported financial results are described in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2023. There were no material changes to our critical accounting policies or estimates during the nine months ended September 30, 2024.
Recent Accounting Pronouncements
Refer to Note 2, Summary of Significant Accounting Policies, of our condensed consolidated financial statements for a discussion of recent accounting pronouncements and their effect, if any.
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Item 3.Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in our market risks during the quarter ended September 30, 2024.
As of September 30, 2024, our cash equivalents and marketable securities consisted of investments in money market funds, asset-backed securities, U.S. Treasury securities, corporate debt securities, agency bonds and commercial paper. These investments were made in accordance with our investment policy which specifies the categories, allocations, and ratings of securities we may consider for investment. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive without significantly increasing risk. Some of the financial instruments that we invest in could be subject to market risk. This means that a change in prevailing interest rates may cause the value of the instruments to fluctuate. For example, if we purchase a security that was issued with a fixed interest rate and the prevailing interest rate later rises, the value of that security may decline. Based on our current investment portfolio as of September 30, 2024, we do not believe that our results of operations would be materially impacted by an immediate change of 10% in interest rates.
We hedge a portion of foreign currency exchange risk associated with forecasted royalties revenue denominated in Swiss francs to reduce the risk of our earnings and cash flows being adversely affected by fluctuations in exchange rates. These transactions are designated and qualify as cash flow hedges. The cash flow hedges are carried at fair value with mark-to-market gains and losses recorded within AOCI in our condensed consolidated balance sheets and reclassified to royalty revenue in our condensed consolidated statements of income in the same period as the recognition of the underlying hedged transaction. We do not issue derivatives, derivative commodity instruments or other financial instruments for speculative trading purposes.
Further, we do not believe our cash, cash equivalents and marketable securities have significant risk of default or illiquidity. We made this determination based on discussions with our investment advisors and a review of our holdings. While we believe our cash, cash equivalents and marketable securities do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. All of our cash equivalents and marketable securities are recorded at fair market value.

Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the timelines specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decision regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.
Changes in Internal Control Over Financial Reporting
There have been no significant changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1.Legal Proceedings
From time to time, we may be involved in disputes, including litigation, relating to claims arising out of operations in the normal course of our business. Any of these claims could subject us to costly legal expenses and, while we generally believe that we have adequate insurance to cover many different types of liabilities, our insurance carriers may deny coverage or our policy limits may be inadequate to fully satisfy any damage awards or settlements. If this were to happen, the payment of any such awards could have a material adverse effect on our condensed consolidated statements of income and balance sheets. Additionally, any such claims, whether or not successful, could damage our reputation and business. We currently are not a party to any legal proceedings, the adverse outcome of which, in our opinion, individually or in the aggregate, would have a material adverse effect on our condensed consolidated statements of income or balance sheets.
Item 1A.Risk Factors
There have been no material changes to the risk factors set forth under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
In December 2021, the Board of Directors authorized a capital return program to repurchase up to $750.0 million of outstanding stock over a three-year period which we completed in June 2024.
In February 2024, our Board of Directors authorized a new capital return program to repurchase up to $750.0 million of our outstanding common stock. There were no share repurchases made during the third quarter of 2024.
Item 3.Defaults Upon Senior Securities
Not applicable.
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other Information
During the three months ended September 30, 2024, the following director and officer each adopted a Rule 10b5-1 trading arrangement (as such terms are defined pursuant to Item 408(a) of Regulation S-K) as noted in the table below.
Trading Arrangement
Name and Title
Action
Date
Rule 10b5-1*
Non-Rule 10b5-1**
Total Shares To Be Sold
Expiration Date
Jeffrey W. Henderson
Adoption
9/17/2024
X
25,000 
The earlier of 04/30/2025 or date all shares are sold
Director (Board Chair)
Michael J. LaBarre
Adoption
9/18/2024
X
40,000 
The earlier of 08/27/2025 or date all shares are sold
Senior Vice President and Chief Technical Officer
*    Contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.
**    Non-Rule 10b5-1 trading arrangement as defined in Item 408(c) of Regulation S-K under the Exchange Act.
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Item 6.Exhibits
3.1
3.2
4.1
4.2
4.3
4.4
31.1
31.2
32
101.INSInstance Document - the instance document does not appear in the interactive Data File because its XBRL tags are embedded within the Inline XBRL document (filed herewith)
101.SCHInline Taxonomy Extension Schema Document (filed herewith)
101.CALInline Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEFInline Taxonomy Extension Definition Linkbase Document (filed herewith)
101.LABInline Taxonomy Extension Label Linkbase Document (filed herewith)
101.PREInline Taxonomy Extension Presentation Linkbase Document (filed herewith)
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) (filed herewith)




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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 
 
Halozyme Therapeutics, Inc.
(Registrant)
 
Dated: October 31, 2024/s/ Helen I. Torley, M.B. Ch.B., M.R.C.P.
 Helen I. Torley, M.B. Ch.B., M.R.C.P.
President and Chief Executive Officer
(Principal Executive Officer)
 
 
Dated:October 31, 2024/s/ Nicole LaBrosse
 Nicole LaBrosse
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
 
 

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