Halozyme Therapeutics, Inc. (HALO) Earnings Call Transcript & Summary

Good afternoon, everyone. My name is Jess Fye. I'm a senior biotech analyst at JPMorgan. And we're continuing the 2021 health care conference today with Halozyme. This year is a little different. So I'm sort of going across the hall for the breakout session. [Operator Instructions] But without further delay, let me turn it over to Halozyme's CEO, Helen Torley.

Thank you, Jess, and thank you, everybody, for joining us today. 2020 was a year of remarkable progress and accomplishments at Halozyme. While we'll give our 2020 financial results in February, I'm pleased to report that we expect our revenues to be within the guidance range of $265 million to $275 million, which represents at least 35% growth year-over-year, and we expect our earnings per share to be in the range of $0.90 to $0.95, which was our -- also our updated guidance. Now this great performance was driven by the ongoing progress in our lean and leverageable ENHANZE business model, where the growth of DARZALEX FASPRO, in particular, resulted in a return to royalty revenue growth and where our partner progress moving multiple products into Phase I and Phase III development resulted in substantial milestone revenues as well. In the next 25 minutes, I'll provide an overview of the ongoing and indeed accelerating momentum in our business that is resulting in the potential for over $1 billion in revenues in 2027 driven by these royalties and the milestones as well. Now moving to Slide 2. In the course of this presentation, we will be making forward-looking statements, and I refer you to our SEC filings for a full listing of the risks and uncertainties. Let me begin with an overview of our business. And we are the sole owners of the only FDA-approved recombinant human hyaluronidase that is approved to be combined with partner molecules and allow them to be transformed from IV drugs to be given simply in a short injection underneath the skin. Now with 5 products already approved in the U.S., Europe and multiple other regions, this platform is substantially derisked, both from a regulatory and also from a commercial standpoint. And the 5 products that are already approved have substantial opportunity. In 2020, the projected revenues from these 5 products for the parent molecules is $18 billion, and this is projected to grow to $22 billion in 2024. Now what's going to be important to Halozyme is how much of this market converts to subcutaneous use as we receive on average a mid-single-digit royalty on the net sales of the subcu products. So we have substantial opportunity ahead of us today, but this really is just the beginning. In 2020, we ended the year with 12 products in development in addition to the 5 marketed products, and we expect this to grow to 17 products in development by the end of 2021. It is this large and diverse portfolio and the momentum we're seeing in our portfolio that results in the potential for us to be able to deliver $1 billion in royalty revenues in 2027, which represents substantial growth between now and then. Now I've divided the presentation into 5 chapters. So it's really going to overview our business model, take you through the exciting portfolio of products and then show you why we have such conviction in the long-term growth potential of this platform. Let me begin with the first chapter, which is to talk about how uniquely positioned our platform is and the momentum that already exists. Let me begin with an overview of how ENHANZE works. To date, many important therapies need to be given in a long intravenous infusion or injection, and this is because they have to be administered in a large volume of fluid. What ENHANZE does when we can combine it with these molecules is that it allows them to be injected underneath the skin in a short simple injection, and this is because the ENHANZE enables fluid flow and dispersion of the drug underneath the subcutaneous space by breaking down the hyaluronidase. Now let's turn to what this can mean for patients, for caregivers and indeed for the health care system. Illustrated on the left is somebody receiving a traditional IV infusion. This can take many hours. On the right is an example of an ENHANZE-enabled injection. This is given as a simple subcu injection into the abdomen or into the thigh and it will take just minutes in the majority of cases. Now you can think what a different experience this is for the patient, but our partners have also been able to demonstrate that this shorter injection can take less health care resources and, as a result, be associated with lower cost of delivering care. Now we've been working on ENHANZE for 15 years and already over 400,000 patients have been treated with ENHANZE-enabled drugs in the commercial setting. Let me point you to the left-hand side of the slide, which is what we call our Wave 1 ENHANZE products. These are products that were launched between 2013 and 2018, and these really serve to create the foundation for ENHANZE demonstrating the regulatory pathway, but also at tangible commercial success as well. If we move to the Wave 2 products, which were in the middle section, in 2019, we repositioned the company, restructured and focused our attention solely on our ENHANZE platform. In 2020, we were delighted to be supporting our partner, Janssen, in the launch of FASPRO, which is a subcutaneous version of DARZALEX, and also Roche for the launch of Phesgo. Now these products will result in a significant revenue potential between -- for several years to come beginning now. And if I turn to the right-hand panel and we look what's to come in the upcoming years, the products that I mentioned that were in clinical development, 17, if these proceed into clinical development, these will form the basis of multiple additional waves of product launches for many years to come. Now let me move to describe our low-risk business model, Chapter 2. We begin by targeting large attractive markets, and by bringing a meaningful differentiation to our partner products, this is resulting in diverse and growing revenue streams for Halozyme, which is resulting in increased cash flow, and we're using that to return value and cash to our shareholders. Now I'm going into each of these in a little bit more detail to describe this in additional detail. Let me just begin with talking about the markets we focus on. There's really been a shift from small molecules to antibodies over the last several years, and this market trend really plays to our strength. For many of these important antibodies, they need to be administered in a volume of fluid that's at least 10 milliliters. If you want to inject 10 milliliters into the subcutaneous space, we believe there is no alternate available but to use ENHANZE. That is our sweet spot. Now if you turn to the right, you can see the examples of monoclonal antibodies that are in development. Today, there are already 79 approved products, and this is actually projected to grow with over 600 products in clinical development. So what we do is we focus on the companies that are developing drugs like these monoclonal antibodies, look at them to see if ENHANZE can bring the potential to increase their success by enhancing their competitive differentiation. And on Slide 11, we have already signed 10 agreements with these exciting pharmaceutical and biotech companies that are shown on the left of the slide. Now these partners in signing up to use ENHANZE have gained access to use ENHANZE with 60 different targets. And for targets, think about those as being drugs with different mechanisms of action. And we're working with our partners in multiple therapeutic areas. While the initial approvals were in oncology, today, we're working in neurology, autoimmune disease and also in rare diseases. And a great example of this is our most recent contract, which we signed with Horizon Therapeutics to develop with them a subcutaneous version of TEPEZZA, their drug for thyroid eye disease, which is an autoimmune disease, a huge unmet need. And as a result, this is a very exciting product for us to be working on with our Horizon colleagues. Now moving to Slide 12. Let me spend a moment on why partners want to use the ENHANZE technology. As a summary, it really is because ENHANZE will bring for them meaningful differentiation and true value creation, and it does it in a number of ways. If we begin with the top of the row, we can reduce the treatment burden and health care costs by being able to administer the drug subcutaneously. And this actually is the approach that Roche used in advance of biosimilar launches to create subcutaneous versions of Herceptin and also of Rituxan. Today, the vast majority of partners are coming to us, though, for competitive differentiation, either to maintain a leading market position or to be able to create that leading market position by having the optimal product offering for patients. Thirdly, we also offer the potential to combine 2 therapeutic antibodies in a single injection. This is the approach Roche has taken with Phesgo, which is a fixed-dose combination of 2 of their antibodies, Perjeta and Herceptin. Now today, if a patient receiving that therapy IV, they need to receive it as 2 separate sequential injections, which can take several hours. With Phesgo, this fixed-dose combination, they receive their treatment in a 5- to 8-minute subcutaneous injection. And this is actually an approach Bristol-Myers Squibb is exploring with combinations of immune checkpoint inhibitors as well. On the next row, the next reason is we can also reduce the number of treatments a patient needs by being able to facilitate higher injections at one-time and so lengthen the time between treatments. This is being demonstrated with HYQVIA, which is a treatment for primary immune deficiency. And then finally, but very importantly, we also offer the potential for the partner to gain new intellectual property for the co-formulated product. This will be granted if a novelty can be found when ENHANZE is combined with that product and can provide up to 20 additional years of exclusivity for that co-formulated product. Now let me use DARZALEX as a case study to illustrate some of these areas. DARZALEX is a treatment which is Janssen's treatment for multiple myeloma. It was approved as an IV in the U.S. in 2015. But even at that time, with a focus on patients and an eye on future competition, Janssen began developing this subcutaneous version of DARZALEX. And this is already a product that is very successful. Estimated 2020 sales are $4 billion, and it's projected to grow to $7 billion by 2024. A patient receiving IV DARZALEX can expect the first dose to generally take on average 7 hours. That's the actual treatment time of the length of when they're receiving the treatment. Each subsequent dose on average is 3.5 hours. Now with the subcutaneous version of DARZALEX, which was approved just last year, the patient receives every dose in just 5 minutes. Obviously, it's a very different experience for the patient, but also for their caregivers. In addition, with the subcutaneous DARZALEX, an interesting observation was made that the rate of infusion-related reactions was also lower with the subcutaneous version. Now let's look at how the market has responded to the availability of subcutaneous DARZALEX on Slide 14. Illustrated here, you can see that's shown in the green. From the launch in May 2020 to this data, which is from October of 2020, in the United States, by October, 40% share of sales of overall DARZALEX was the subcutaneous version. I think you'll agree, this is a remarkably fast uptake, and it really does speak to the value proposition that the subcutaneous version is bringing for patients. Now turning to Slide 15, I'll spend a moment on the role we play in ENHANZE because that's very important to understand and appreciate how lean and leverageable our business model is. In a nutshell, our role is predominantly advisory with the partner being responsible for the majority of the operational activities that are happening. And these are illustrated on the left-hand side of the slide. So from the formulation development to the conduct of the clinical studies to the launches, these are conducted and they're funded by the partner. Our one key operational role at Halozyme is to oversee the production and the release of the API. Other than that, we are advisory, sitting side-by-side with their partners and all of the activities, but not having to invest the resources on the execution. And this is why our team members at Halozyme are able to support multiple partners at the same time and it's why when we add new partnerships or we expand the number of products in the clinic, that can result in no increase in resources or only a modest increase in resources being needed. I'll turn now on Slide 16 to how we make money on ENHANZE, and there really are 3 core revenue streams. The first is milestones, the second is royalties and the third is from product sales. Beginning at the top of the slide with a focus on the milestones. We receive an upfront payment when partners gain access to combine ENHANZE with their molecules. Now recall, we usually do exclusive licenses for a partner to use ENHANZE with a specific drug or mechanism of action. If a partner wants access to 1 or 2 exclusive targets, they generally pay us, $30 million to $40 million for that access. And then as the product progresses into clinical development and commercialization, we have the opportunity to earn up to $160 million per target for -- in additional milestones. I'll move now to the royalties. We receive on average a mid-single-digit royalty on net sales of the subcutaneous version of the product. And then at the bottom of the slide, for product sales, we receive a 20% markup on the API. Now what I really wanted to highlight on the right-hand side at this stage, while today the milestones have been the predominant driver of the revenues and contributor among these 3 different revenue streams, we project over the next 5 years based on future launches that we are projecting that the royalty revenues, which are the recurring revenues, are going to become the dominant revenue stream for us at about 60%. With this great business model that we have that is lean and leverageable and there's expectation of growing revenues, let me turn now to our cash flow. And illustrated on this slide is our EBITDA by year, which closely meters our cash flow. And what you can see very clearly is that in 2021, we're projecting a substantial increase in our cash flow that really has been driven by our lean business model and the growing revenue stream. So I'll turn now to our capital allocation priorities. Our first one is to maintain a strong balance sheet. Now in the end of Q3 2020, we had $367 million in cash and cash equivalents, and we have a convertible debt of $460 million. With the projection of increasing cash flow at the end of 2019, we implemented a 3-year $550 million share buyback program. I'm pleased to report today that we've already completed $350 million of this program. The average price of which we've been able to acquire shares has been $19.88. Now with our stock price trading today at above $40, I think you will agree, this has been a very good way for us to return cash and capital to our shareholders. And because of this, we plan to continue our share buyback program, and we have announced that it's our goal in 2021 to buy back another $125 million in shares, pending market conditions and other factors. I'll move now to our third priority, which is internal and external growth. We will invest to fund to maximize our ENHANZE platform, and we have also indicated that we'll evaluate the potential for M&A. With our goal to acquire a platform that has many of the similar features to ENHANZE in that it is a platform technology that we can license to multiple different partners in return for a growing revenue stream at a low investment cost so that we can continue with this great business model we have today with the growing revenue on a low expense base. Now let me turn to Slide 19, and I'm going to move now to our growing portfolio of products, and we're going to begin with the marketed products. Our Wave 1 products are illustrated on this slide. They include HYQVIA, Rituxan and Herceptin. Now as I mentioned earlier, these really have formed a strong foundation for us as demonstrating great commercial success, particularly in Europe. And if we look at Herceptin in Europe as an example, at peak, Herceptin achieved 60% all share of sales volume in the launch markets was in the subcutaneous version. Now if we look at the adoption there, it was also strong. The end of the first year, Herceptin was about 30 -- Herceptin subcu, sorry, was approximately 30% share of sales volume, growing to the 60% over an approximate 3-year period. And this really is because of the value that was seen in the subcu version, taking less time for administration and being associated with lower health care costs. Now we expect in 2020 that we will see a gradual decline in our revenues from these more legacy products. And this is because of the ongoing impact of biosimilars that has continued to impact it, particularly related to price. But we're very excited, as I mentioned earlier, to have 2 new launches that are resulting in substantial growth and these are DARZALEX, FASPRO and subcu as well as Phesgo, which just launched in the middle of 2020 and are at the beginning of their life cycle. And if we look at the revenue potential coming from these Wave 2 products, over on the right-hand slide is shown in blue just DARZALEX and Perjeta in 2020 are estimated by analysts to have the potential for revenues of $8 billion, and this is expected to grow to $16 billion in 2024. So substantial opportunity here. And again, what's going to be key is how much of this converts to subcu use as we receive that on average mid-single-digit royalty on these sales. But you can see, there is enormous potential just from these Wave 2 products. And if I turn now to Slide 21 and our 2021 expectations in terms of royalty revenues, I'm delighted to say that the momentum being caused by FASPRO and Phesgo is resulting in our projection that we will double revenues in 2021 from our 2020 estimate, which is in the $80 million to $85 million. This is because we're going to continue to see, in 2021, the rollout of DARZALEX and Phesgo in multiple additional markets as well as increasing penetration in the current launch markets. We were particularly pleased to note the approval by the CHMP just in December of 2020 of Phesgo for Europe. And given what I've mentioned about the great performance of Herceptin, we certainly think that Europe offers a tremendous opportunity for Phesgo as we start to see the reimbursement approvals and the rollout of launches in Europe in 2021. Let me turn now to our expanding pipeline of products that we have. And what's important and how I want you to think about these is we've talked about the Wave 1 and Wave 2 products. This portfolio I'm about to show you are the basis for what we see as Wave 3, Wave 4 and then even potentially Wave 5 of launches of products enabled by ENHANZE to be given subcutaneously. On Slide 23 is our development pipeline shown by stage of development. In summary, we have 12 products in development, which are being developed in 15 indications. Let me focus you on the bottom of the slide, first of all, and on our products that are currently in Phase III. These include argenx's efgartigimod and also Roche's TECENTRIQ. Now for products that are in Phase III today, based on our historical development time lines, which are 4.5 to 5 years, we could project the potential for these products to be approved in the 2023 to 2025 time frame, and we're calling these the potential Wave 3 products. Both exciting products, and we're particularly pleased to see efgartigimod progressing in multiple Phase III studies, fulfilling its core potential. If I can now have you look at the top part of the slide, you can see all of the products that we have in Phase I clinical development. It's an exciting and diverse group of important products, which we're obviously very proud and excited about. Now 2 of these products will also move into Phase III development in 2021, and they will also have the potential, we believe, to launch in this 2023 to 2025 time frame. The remaining 8 products that are in Phase I development, again, applying these same time lines of 4.5 to 5 years for the development path, if the companies progress them forward, have the potential to launch them in the '25 to '27 time frame. And so just to summarize on Slide 24, how this launch concept is working and growing. If we look at the Phase III products, argenx and TECENTRIQ plus the 2 additional Phase III starts become the Wave 3 potential launches in this '23 to '25 time frame. Just behind that, the 8 products that we currently have left in Phase I with the expectation of 5 new partner Phase I trial starts in 2021 will give us 13 products that have the potential, if they progress, to launch in the '25 to '27 time frame. And it will stay with our portfolio because we're generally working with products that have already been approved and, therefore, derisked. We have a very high success rate with products progressing to full development and launch. Now if we roll this forward and think about what Halozyme could look like in 2025. With this momentum in progress, we see the potential in 2025 to have 10 marketed products in addition to have multiple products in Phase III clinical development also with the potential to launch before 2027. This really is, I think you will agree, a remarkable portfolio and a diverse portfolio with multiple partners resulting in these strong waves of upcoming potential launches. And we still see potential beyond that. I'm now on Slide 25. We mentioned at the start that we get 10 partners. We continue to work hard to sign additional partnerships, and we see potential for that. We're in active dialogue with a number of companies. We can never tell the exact timing of when we'll sign a partnership, which is why we never put a new deal in our guidance for the year, but I remain very confident that there are additional deals that we will be signing with ENHANZE. In addition, our current partners have access to a total of 60 targets. To date, more than 20 of these targets have not been selected. This means that this pool of 20 targets, think about it like maybe 5 or 6 potential new deals are just encompassed in the potential that already exists with our current partners. We see the potential to be continuing to work with those partners to select these targets and move them forward into clinical development as well. Now these are unprojected opportunity to date, but I wanted to mention it for you to think about these as the Wave 5 of potential launches as we continue to fully explore and exploit the full potential of the ENHANZE technology. Now let me turn to Slide 26 now and we'll review the strong growth trajectory that we predict is going to result from this exciting portfolio of products. And I'll begin with our milestone projections. A number of years ago, we began providing the 3-year milestone projection -- projections to help you with your modeling and understanding of how the pipeline momentum was generating this milestone revenue. And you can see this shown by year beginning in 2018 in the blue. In the green is how we're performing versus these expectations. And just a couple of points I'd like to make. Each year, we've provided this prediction. You have seen that the amount of revenue has grown. And this really makes a lot of sense as we've seen an expansion and a maturing in our product portfolio. Shown in green, you can see our performance. We're tracking very well to our expectations in terms of meeting these 3-year milestone revenue projections. And then if I can focus you on the bottom point, this is our projection for '21 to '23 milestones. It is growing once again, and this is projected to be in the $400 million to $450 million range. So exciting continued revenue to come from our partners in terms of these milestones. Slide 28, I'll now move to the royalty projections. We see the potential for our royalty revenues to achieve approximately $1 billion in 2027, driven by the Wave 1, 2, 3 and 4 products that we have discussed. Now this is a non-risk-adjusted number and does assume global launches in multiple markets. And as I mentioned earlier, with the 2021 royalty revenues, we're already on a very good start towards meeting this with the doubling in royalty revenues in 2021 over what is shown here for the 2020 expectation. And let me just say a word now about the potential to continue to grow royalty revenues even beyond 2027, and I'm on Slide 29 for this. Because of a number of factors, we do see very clearly the path to continue royalty revenue growth. And this is really driven by the factors that are shown on the right-hand slide of the side here. If I begin with the contract structure, the way our contracts are structured as we receive royalty revenues for the later of 10 years after the first commercial sale or the less expiring rHuPH20 patent. Now if the patent should expire when we're in this 10-year window post the first commercial sale, we do get a step down in the royalty rate to approximately 50%. I want to take you back to the Wave 2, 3 and 4 launches, which are happening in 2020 to 2027. Each of these will be launching, the products will be growing, and we'll continue to see the potential for royalty revenues well into the 2030s obviously for these products based on this launch time line. So that's the first point. We also see the potential for the Wave 5 launches to add to the picture that I've just shown you, this potential for $1 billion, which is based on Wave 1 to 4 and recall these Wave 5 launches are going to come from new partnerships moving products into the clinic but also from our current partners, using some of those 20 open slots that they have today to advance new programs and targets into the clinic. And the third factor is our co-formulation patents. We talked about those earlier. Recall, those can be granted for novelty. They're not guaranteed, but they can be granted when there's a co-formulation of some novel finding there. For Halozyme, co-formulation patents are important because they, in general, have the effect of extending the duration of time for our royalty revenues even beyond the 10 years I mentioned earlier. But they also can push out the time to the royalty step down. And then finally, over and above the ENHANZE business, our plan to look for the opportunity to add additional platform, which can also accelerate the top line revenue growth gives us an additional factor that will continue to drive royalty revenue growth beyond 2027. So we know exactly what we need to do, and this is a plan we're executing to additional launches, more co-formulation patents and the potential to add an additional platform. Let me move now to the 2021 guidance. I'm very pleased to say that for 2021, we project our revenues in the range of $375 million to $395 million, which is growth of 40% to 45%, predominantly driven by the great performance we're projecting in royalty revenues. This, as ever, does not include the potential for a new ENHANZE deal as we don't put that in our projections. Other color I can provide with regard to this revenue, we do expect product sales to increase significantly driven by supporting the exciting and ongoing launches that we have. And if I move to the EPS guidance, this is projected to be $1.40 to $1.55, which excitingly represents 55% to 70% growth over expected 2020. Now this is based on operating expenses, excluding COGS, in the range of $80 million to $83 million, it includes the impact of an accounting change that eliminates $12 million in noncash interest expense in 2021, and it also excludes the potential impact of our share buyback program. But I think you can see that we are continuing to see very strong momentum in our ENHANZE platform that is resulting in this strong, continued growth in revenues and also earnings per share. And so with that, we started by saying 2020 was a transformative year for Halozyme. 2021 is going to be similarly impactful, and it's really driven by these important value-driving events that are listed on this slide. We continue to see the potential for strong launch momentum of the Wave 2 products with DARZALEX and Phesgo launching in additional markets and DARZALEX also having the potential to have some additional indications, in particular, light chain amyloidosis. We're going to see the momentum of our portfolio with progress for the Wave 3 and Wave 4 product launches within expansion and the number of products in development, giving that increased momentum and potential that exists for the future revenues being driven by these approvals and launches. We will continue to work hard on gaining new partners, advancing new nominations and trial starts out, setting up the future even beyond what's visible today for what we're calling our Wave 5 launches. And then finally, all of the progress and momentum is giving us the opportunity to return capital to our shareholders through our continued share buyback, and we will also continue to pursue the potential for M&A. Thank you so much for your attention today. I certainly can tell you I couldn't be more excited for the ongoing exciting future we have at Halozyme. Thank you.

[Operator Instructions] Can ENHANZE be applied to COVID antibody therapies, such as those from Lilly and Regeneron?

Yes. We believe there is a potential to combine ENHANZE with any antibody that requires a large volume to inject into it. We haven't done any work specifically with the COVID antibodies, but I can say we find our formulation is compatible with most antibodies, which is always the first question we answer in considering a new partnership. Then you need to do the study to make sure you understand the dosing with the subcu versus the IV. We have been in early discussion with a number of companies who are working on COVID. Nothing we can -- it's all early exploratory, but we certainly would be excited to move forward to seek to be able to help the COVID situation by making it easier to receive these antibodies, but we need to generate some data first.

Okay. Got it. Maybe thinking about Slide 16 a little bit more. I thought that was interesting and sort of helpful to think about the evolution of the revenue mix, particularly the shift more towards royalties. Is it possible to refine that at all? And help us understand the rate at which you might achieve that mix. Is this something we should think of as being more linear? Or are there time points over the next 5 years where you see a particular inflection?

Yes. I think with the series of launches that we have, Jess, I do think we've got launches that are going to occur '23, '24, '25, '26, '27, exactly what the time line is for each of those. But I do think the fact that we have this potential for just steady launches sometimes -- some years it may be 2, some years it will be one. It should be relatively a stable growth year-over-year, but it will all be driven by the actual approval dates and time lines. So I think a good way to think about it is that it will be generally growing year-upon-year with no stages, no big jumps at any year, but that is a little bit subject to the final timing and approvals.

Okay. Makes sense. You've also talked about 2021 as potentially robust period for Phesgo and maybe the potential to mimic DARZALEX FASPRO's launch in 2020. What factors or efforts do you see on both the American and European side of that launch to support that potential?

Yes. Maybe just giving a little bit more description on Phesgo, which is Roche has fixed-dose combination for Perjeta and Herceptin. Now each of those products as the IV form sells about $4 billion today. So this is a large opportunity that exists with the majority of that use I've talked about $8 billion being in breast cancer and being in combination. Today, patients receiving Perjeta and Herceptin IV, it takes several hours. With Phesgo, it can be given in just 5 to 8 minutes. And so when we think about Europe, in particular, which is the most recent approval, as I mentioned, the dynamic that's going on there is the same as in the U.S. There's a shortage of infusion centers, there's a shortage of nurses, and there is, in particular, in Europe, a very strong focus on reducing the cost of care. And so all of those are very good dynamics for supporting a robust uptake in Europe. As we saw, and I mentioned, we saw with Herceptin, which in the first year got to 30% share of sales volume in the European launch countries, but got to 60% at a 3-year mark. And so that's why we're very excited now to see the imminent rollout of Phesgo in Europe. For the United States, any injectable product in the U.S. does tend to have a period of time where it takes time to get onto the electronic medical records, get reimbursement confidence and get the formulary set. With that having happened in large part in 2020, we do see 2021 is the time where we're going to see increased penetration and uptake of Phesgo in the U.S. as well.

Okay. Got it. Maybe time for one more question here coming off the portal. So as there was a big step down in SG&A from 2019 to 2020, could it step down again in 2021?

Yes, maybe I'll ask Elaine to address that.

I think as we've indicated in 2021, we provided guidance with respect to OpEx of $80 million to $83 million. I think I'd emphasize there that we've got a very leverageable business model where we're able to leverage our existing resources to support multiple products and programs. We don't typically give guidance sort of in terms of the components of that. But OpEx excluding COGS of $80 million to $83 million is our expectation for 2021.

Okay. Super. Well, we're out of time. So thanks, everybody, for tuning in, and thanks so much to the Halozyme team.

Appreciate everyone's attention. Thank you. Bye-bye.

Thanks.