Halozyme Therapeutics, Inc. Morgan Stanley 24th Annual Global Healthcare Conference
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Good morning, everyone. I'm Sean Laaman, head of U.S. Mid-Cap Biotech Equity Research here at Morgan Stanley, and welcome to Morgan Stanley Global Healthcare Conference. Before we commence, I'll make you aware of some important disclosures. For those disclosures, please go to the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have from Halozyme Therapeutics, Helen Torley and Darren Snellgrove. Welcome to the both of you, and thanks for your time.
Appreciate it. Maybe just to help me out here and start with some macro questions.
I guess, how is the China origin innovation story changing your competitive positioning, if at all, and is it influencing your R&D and BD playbook?
Yeah. For Halozyme, I think where China is impacting us is obviously a lot of our large partners and partner targets are highly engaged with China in seeking to expand their pipeline. That simply expands the opportunity for us. Very recently, we have signed our first deal for ADCs, and I really look at China as having a lot of innovation in ADCs.
We look at that as a pretty important market expansion opportunity for us. In terms of Halozyme, China is really all upside.
Wonderful. Are you implementing AI adoption across your business? If so, can you point to a specific area where it's saved a cost increase to POS, changed the timeline?
Darren's going to address that. He has recently joined the company as our new CFO just a few months ago and has really brought a lot of knowledge and expertise, particularly in that area from J&J. I'll ask him to comment.
Absolutely. AI is definitely very much in action at Halozyme. Maybe I can give a few specific examples. First of all, we're using it for our scientific publications. We've been able to save about $50,000 per publication, do them about 2-3 times faster. In manufacturing, we have a system that basically allows for more uptime and prevents downtime in terms of the manufacturing side of things. Then in our business development, we're able to do landscape analysis about 30% faster than we have in the past. We're definitely seeing the pull-through. You can tell that it's really taking root at Halozyme. We had an off-site meeting a few months ago, 70 new ideas brought forward by the employees. It's amazing to see how much it's taken root, and we're tracking the financial impact as well.
It is something we are paying close attention to, how much we are investing, what kind of returns we are getting from the AI projects. Most importantly, we are tracking the efficiency and the effectiveness of the programs, which I think at the end of the day is what is most important.
Sure. Darren, if I can just give an example that just blew my mind last week.
Sure. One of the things we are doing is pairing operational effectiveness and AI together, because that is really where the value creation is added.
We were wanting to map some of our processes that relate to early development of one of our technologies. Rather than the weeks-long people sitting in rooms doing Post-it notes, our team brought in videotaping of people doing the process, then paired it with one of the AI process maps. What normally would have taken weeks to do spat out in days a very comprehensive set of process maps that can be used for training, for continuous improvement. I would never have thought that you could bring those two together. It is amazing what AI can do, and we really are expecting and seeing adoption across the entire company, but always with a human in the loop.
Sure And always appropriate controls.
Sure. Thank you, Helen. Which policy variable, is it like FDA, Medicare negotiations, MFN, tariffs, or global pricing matters most to your economics? What, if anything, do you change because of it?
Yeah. Obviously, in that list, there isn't clarity on final policies on all of them, Sean. I'll comment on the ones where we do have a lot more clarity, and I would say for Medicare price negotiations, particularly as it relates to IRA 2029, we have little to no impact, which is terrific that draft policy has come out and brought, I think, very strong clarity to that topic. I'd also say for tariffs, because of the way our contracts are done and the way our products are distributed in the U.S., we have no tariff impact either. Obviously, on the global pricing, MFN, there just isn't clarity yet to be able to comment on those areas. I was listening yesterday, though, to Carl, the CFO for argenx, and I think we absolutely believe and are pursuing the same thing they are.
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