What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-02-18 compared with 2024-02-20 · 249 added, 242 removed, 1469 unchanged (25% of the section changed)

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Changes in Internal Control Over Financial Reporting

There have been no significant changes in our internal control over financial reporting that occurred during the period ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no significant changes in our internal control over financial reporting that occurred during the last fiscal quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, cash flows and stockholders’ equity for each of the three years in the period ended December 31, 2023, and the related notes the financial statement schedule listed in the Index at Item 15(a) and our report dated February 20, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows and stockholders’ equity for each of the three years in the period ended December 31, 2024, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (2) and our report dated February 18, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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Other Information

During the three months ended December 31, 2023, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-rule 10b5-1 trading arrangement (as such terms are defined pursuant to Item 408(a) of Regulation S-K).

During the three months ended December 31, 2024, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-rule 10b5-1 trading arrangement (as such terms are defined pursuant to Item 408 of Regulation S-K).

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Directors, Executive Officers and Corporate Governance

The information required by this item regarding directors is incorporated by reference to our definitive Proxy Statement (the “Proxy Statement”) to be filed with the Securities and Exchange Commission in connection with our 2024 Annual Meeting of Stockholders no later than 120 days after December 31, 2023 under the heading “ Election of Directors .” The information required by this item regarding our code of ethics is incorporated by reference to the information under the caption “Code of Conduct and Ethics and Corporate Governance Guidelines” to be contained in the Proxy Statement.

The information required by this item regarding directors is incorporated by reference to our definitive Proxy Statement (the “Proxy Statement”) to be filed with the Securities and Exchange Commission in connection with our 2025 Annual Meeting of Stockholders no later than 120 days after December 31, 2024 under the heading “Election of Directors.” Our Code of Conduct and Ethics applies to all of our employees, officers and directors and is available on our website at www.halozyme.com.

Amendments to or waivers of our Code of Conduct and Ethics granted to any of our directors or executive officers will be published promptly within four business days on our website, www.halozyme.com.

Please note that the information on our website is not incorporated by reference in this Annual Report on Form 10-K.

The information required by this item regarding our Audit Committee is incorporated by reference to the information under the caption “Board Meetings and Committees—Audit Committee” to be contained in the Proxy Statement.

The information required by this item regarding material changes, if any, to the process by which stockholders may recommend nominees to our Board of Directors is incorporated by reference to the information under the caption “Board Meetings and Committees—Nominating and Governance Committee” to be contained in the Proxy Statement.

The information required by this item regarding our insider trading policies and procedures is incorporated by reference to the information under the caption “Insider Trading Policies and Procedures” to be contained in our Proxy Statement.

Executive Officers

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Prior to joining the Company, Ms.

LaBrosse was an auditor with PricewaterhouseCoopers, LLP from 2004 to 2015.

LaBrosse was an auditor with

PricewaterhouseCoopers, LLP from 2004 to 2015.

She received a certified public accounting license after receiving a B.S.

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Snyder joined Halozyme in January 2022 as Senior Vice President, General Counsel, Chief Compliance Officer and Secretary.

over 30 years of experience in legal and business management roles.

Snyder has over 30 years of experience in legal and business management roles.

Prior to joining Halozyme, from January 2008 to December 2021, Mr.

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Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Income for Each of the Years Ended December 31, 2023, 2022 and 2021 F- 4

Consolidated Statements of Income for Each of the Years Ended December 31, 2024, 2023 and 2022

Consolidated Statements of Comprehensive Income for Each of the Years Ended December 31, 2024, 2023 and 2022

Consolidated Statements of Cash Flows for Each of the Years Ended December 31, 2023, 2022 and 2021 F- 6

Consolidated Statements of Cash Flows for Each of the Years Ended December 31, 2024, 2023 and 2022

Consolidated Statements of Stockholders’ Equity for Each of the Years Ended December 31, 2024, 2023 and 2022

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3.1 Amended and Restated Certification of Incorporation of Halozyme Therapeutics, Inc.

8-K 4/26/2024

3.2 The Company's Bylaws, as amended

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4.1 Indenture, dated March 1, 2021, between Halozyme Therapeutics, Inc.

and The Bank of New York Mellon Trust Company, N.A., as trustee, and the Registrant

and The Bank of New York Mellon Trust Company, N.A., as trustee

4.2 Form of Note, dated March 1, 2021, between Halozyme Therapeutics, Inc.

and The Bank of New York Mellon Trust Company, N.A., as trustee, and the Registrant

and The Bank of New York Mellon Trust Company, N.A., as trustee

4.3 Indenture, dated August 18, 2022, between Halozyme Therapeutics, Inc.

and The Bank of New York Mellon Trust Company, N.A., as trustee and registrant .

and The Bank of New York Mellon Trust Company, N.A., as trustee

8-K 8/18/2022

4.4 Form of Note, dated August 18, 2022, between Halozyme Therapeutics, Inc.

and The Bank of New York Mellon Trust Company, N.A., as trustee, and the Registrant (included within Exhibit 4.5)

and The Bank of New York Mellon Trust Company, N.A., as trustee (included within Exhibit 4.3)

8-K 8/18/2022

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8-K 8/19/2022

10.5 A mendment No.

10.5 Amendment No.

2 to the Credit Agreement

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Form of Restricted Stock Units Agreement for Officers (2021 Plan updated May 2023)

Form of Restricted Stock Units Agreement (2021 Plan Sell-to-Cover updated May 2023)

Form of Restricted Stock Units Agreement (2021 Plan Sell-to-Cover updated June 2024)

Letter Agreement Amending Exercise Period for Employee Option

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Form of Directors Restricted Stock Units Agreement (2021 Stock Plan)

F orm of Director Stock Option Agreement (2021 Plan)

Form of Director Stock Option Agreement (2021 Plan)

Halozyme Therapeutics, Inc.

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Severance Policy

10-K 2/20/2024

Form of Amended and Restated Change In Control Agreement with Officer

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10-K 2/22/2022

H alozyme Therapeutics, Inc.

Insider Trading Policy

21.1 Subsidiaries of Registrant

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Incentive Compensation Recoupment Policy

10-K 2/20/2024

101.INS XBRL Instance Document - the instance document does not appear in the interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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Halozyme Therapeutics, Inc.,

a Delaware corporation

February 18, 2025 By:

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Chair of the Board of Directors February 18, 2025

/s/ Jean-Pierre Bizzari

Director February 20, 2024

Jean-Pierre Bizzari

/s/ Bernadette Connaughton

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Barbara Duncan

/s/ Mahesh Krishnan, M.D.

Director February 18, 2025

Mahesh Krishnan, M.D.

/s/ Connie L.

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Marketable securities, available-for-sale 480,224 217,630

Accounts receivable, net and other contract assets 234,210 231,072

Inventories, net

Accounts receivable, net and contract assets

308,455 234,210

141,860 127,601

Prepaid expenses and other current assets 38,951 48,613

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Deferred tax assets, net 3,855 4,386

Restricted cash — 500

Total assets $ 2,063,477 $ 1,733,270

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Accrued expenses 128,851 100,678

Current portion of long-term debt, net — 13,334

Total current liabilities 139,100 112,494

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Other long-term liabilities 54,758 37,720

Contingent liability — 15,472

Total liabilities

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Additional paid-in capital — 2,409

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

3,829 ( 9,278 )

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Interest expense ( 18,095 ) ( 18,762 ) ( 16,947 )

Net income before income taxes 348,329 248,918 248,518

Income tax expense (benefit) 66,735 46,789 ( 154,192 )

Income before income tax expense

557,132 348,329 248,918

Income tax expense

113,041 66,735 46,789

Net income $ 444,091 $ 281,594 $ 202,129

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Other comprehensive income

Unrealized gain (loss) on marketable securities

Unrealized (loss) gain on marketable securities, net

( 358 ) 1,097 ( 349 )

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Unrealized gain on foreign currency

Unrealized loss on derivative instruments, net

Unrealized gain (loss) on derivative instruments, net

14,693 ( 9,406 ) —

Realized gain on derivative instruments, net

( 1,224 ) ( 74 ) —

Comprehensive income

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Amortization of debt discount 7,350 7,304 7,839

Amortization of (premium) discounts on marketable securities, net

Accretion of (premium) discount on marketable securities, net

( 10,918 ) ( 6,319 ) 1,106

Realized loss on marketable securities — 1,727 —

Realized gain (loss) on marketable securities

( 7 ) — 1,727

Loss on disposal of equipment

1,529 611 129

Contingent liability fair value measurement adjustment

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Recognition of deferred revenue — — ( 2,494 )

Lease payments deferred 1,270 ( 903 ) ( 751 )

Lease payments recognized (deferred)

1,067 1,270 ( 903 )

Induced conversion expense related to convertible notes — — 2,712

Deferred income taxes (including benefit from valuation allowance release) 34,506 40,005 ( 155,434 )

Deferred income taxes

532 34,506 40,005

Other — — ( 227 )

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( 74,245 ) ( 3,339 ) ( 83,941 )

Inventories, net

( 67,381 ) ( 26,884 ) ( 17,481 )

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Repayment of revolving credit facilities — — ( 120,000 )

Proceeds from issuance of 2027 Convertible Notes, net — — 784,875

Repayment of 2024 Convertible Notes

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Interest paid $ 10,565 $ 11,410 $ 6,107

Income taxes paid (received), net $ 31,756 $ 16,224 $ ( 375 )

Income taxes paid, net

$ 80,618 $ 31,756 $ 16,224

Supplemental disclosure of non-cash investing and financing activities

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Common stock issued for conversion of 2024 Convertible Notes $ — $ 125 $ 1,018

$ 125 $ 1,018 $ 7,865

See accompanying notes to consolidated financial statements.

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137,498 $ 138 $ 256,347 $ ( 620 ) $ ( 58,912 ) $ 196,953

Cumulative adjustment from adoption of ASU 2020-06 — — ( 65,535 ) — 12,971 ( 52,564 )

Share-based compensation expense — — 24,397 — — 24,397

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1,077 1 14,049 — — 14,050

Capped call transaction

— — ( 69,120 ) — — ( 69,120 )

Repurchase of common stock ( 4,933 ) ( 5 ) ( 199,997 ) — — ( 200,002 )

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Share-based compensation expense — — 36,620 — — 36,620

Issuance of common stock for the induced conversion of 2024 Convertible Notes

Issuance of common stock for the conversion of 2024 Convertible Notes

289 — ( 126 ) — — ( 126 )

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945 2 7,877 — — 7,879

Capped call transaction — — ( 69,120 ) — — ( 69,120 )

Repurchase of common stock ( 9,618 ) ( 10 ) ( 69,330 ) — ( 334,261 ) ( 403,601 )

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Share-based compensation expense — — 43,385 — — 43,385

Issuance of common stock for the conversion of 2024 Convertible Notes

289 — ( 126 ) — — ( 126 )

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock and performance stock units, net and shares issued under the ESPP plan

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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 reducing the treatment burden for patients.

We license our technology to biopharmaceutical companies to collaboratively develop products that combine ENHANZE with our partners’ proprietary compounds.

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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.

rHuPH20 works by breaking down hyaluronan, 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 the ENHANZE technology to form collaborations with biopharmaceutical companies that develop 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 has 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.

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.

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(“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.

(“Chugai”) and Acumen Pharmaceuticals, Inc.

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 four of these collaborations, including royalties from sales of one product from the Takeda collaboration, four products from the Roche collaboration, one product from the Janssen collaboration and one product from the argenx collaboration.

We have commercialized auto-injector products with several pharmaceutical companies including Teva Pharmaceutical Industries, Ltd.

We currently earn royalties from sales of nine commercial products including sales of five commercial products from the Roche collaboration and one commercial product from each of the Takeda, Janssen, argenx and BMS collaborations.

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.

Our commercial portfolio of proprietary products includes Hylenex®, utilizing rHuPH20, and our specialty product XYOSTED ® , utilizing our auto-injector technology.

We have development programs including our auto-injectors with Idorsia Pharmaceuticals Ltd.

Our commercial portfolio of proprietary products includes Hylenex ® , utilizing rHuPH20, and XYOSTED ® , utilizing our auto-injector technology.

Except where specifically noted or the context otherwise requires, references to “Halozyme,” “the Company,” “we,” “our,” and “us” in these notes to consolidated financial statements refer to Halozyme Therapeutics, Inc.

and each of its directly and indirectly wholly owned subsidiaries as disclosed in Note 2, Summary of Significant Accounting Policies .

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Halozyme Therapeutics, Inc.

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Cash equivalents consist of highly liquid investments, readily convertible to cash, which mature within 90 days or less from the date of purchase.

As of December 31, 2023, our cash and cash equivalents consisted of money market funds, bank certificate of deposits, U.S.

treasury securities and demand deposits at commercial banks.

As of December 31, 2024, our cash and cash equivalents consisted of money market funds, bank certificate of deposits and demand deposits at commercial banks.

Marketable securities are investments with original maturities of more than 90 days from the date of purchase that are specifically identified to fund current operations.

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These investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current balance sheet date which reflects management’s intention to use the proceeds from the sale of these investments to fund our operations, as necessary.

Such available-for-sale investments are carried at fair value with unrealized gains and losses recorded in other comprehensive income (loss) and included as a separate component of stockholders’ equity.

Such available-for-sale investments are carried at fair value with unrealized gains and losses recorded in other comprehensive income and included as a separate component of stockholders’ equity.

The cost of marketable securities is adjusted for amortization of premiums or accretion of discounts to maturity, and such amortization or accretion is included in investment and other income, net in our consolidated statements of income.

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None of the realized gains and losses and declines in value that were judged to be as a result of credit loss on marketable securities, if any, are included in investment and other income, net in our consolidated statements of income.

Restricted Cash

Under the lease terms of our facilities, we may be required to maintain letters of credit as security deposits during the terms of such leases.

As of December 31, 2023, no restricted cash remained pledged as collateral for the letters of credit as the associated lease was terminated.

As of December 31, 2022, restricted cash of $ 0.5 million was pledged as collateral for the letters of credit.

Fair Value of Financial Instruments

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The carrying amount of cash equivalents, accounts receivable, prepaid expenses and other assets, accounts payable and accrued expenses are generally considered to be representative of their respective fair values because of the short-term nature of those instruments.

Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

Available-for-sale marketable securities consist of asset-backed securities, corporate debt securities, U.S.

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We validate the fair values of Level 2 financial instruments provided by our investment manager by comparing these fair values to a third-party pricing source.

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Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

Concentrations of Credit Risk, Sources of Supply and Significant Customers

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We are also subject to credit risk from our accounts receivable related to our product sales and revenues under our license and collaborative agreements.

We have license and collaborative agreements with pharmaceutical companies under which we receive payments for royalties, license fees, milestone payments for specific achievements designated in the collaborative agreements, reimbursements of research and development services and supply of bulk formulation of rHuPH20.

In addition, we sell proprietary products in the United States (“U.S.”) to a limited number of established wholesale distributors in the pharmaceutical industry.

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Management monitors our exposure to accounts receivable by periodically evaluating the collectability of the accounts receivable based on a variety of factors including the length of time the receivables are past due, the financial health of the customer and historical experience.

Based upon the review of these factors, we recorded no allowance for doubtful accounts as of December 31, 2023 and 2022.

Approximately 69 % of the accounts receivable balance as of December 31, 2023 represents amounts due from Janssen, Roche and Teva.

Based upon the review of these factors, we recorded no significant allowance for doubtful accounts as of December 31, 2024 and 2023.

Approximately 60 % of the accounts receivable balance as of December 31, 2024 represents amounts due from Janssen and Roche.

Approximately 69 % of the accounts receivable balance as of December 31, 2023 represents amounts due from Janssen, Roche and Teva.

The following table indicates the percentage of total revenues in excess of 10% with any single customer:

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Total revenues $ 1,015,324 $ 829,253 $ 660,116

Accounts Receivable, net and Contract Assets

Accounts receivable is recorded at the invoiced amount and is non-interest bearing.

Accounts receivable is recorded net of estimated prompt pay discounts, distribution fees and chargebacks.

Contract assets are recorded when revenue is earned but an invoice has not been issued for payment.

Contract assets relate 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 but is not yet billable to the customer in accordance with the terms of the contract.

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Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

Accounts Receivable, net

Accounts receivable is recorded at the invoiced amount and is non-interest bearing.

Accounts receivable is recorded net of cash discounts for prompt payment, distribution fees and chargebacks.

We recorded no allowance for doubtful accounts as of December 31, 2023 and 2022 as the collectability of accounts receivable was reasonably assured.

Inventories are stated at lower of cost or net realizable value.

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We have entered into operating leases primarily for real estate and automobiles.

These leases have contractual terms which range from 3 years to 12 years.

These leases have contractual terms which range from three years to twelve years .

We determine if an arrangement contains a lease at inception.

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These options are included in the lease term when it is reasonably certain that we will exercise that option.

Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet.

Short-term leases with an initial term of 12 months or less are not recorded on our consolidated balance sheet.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

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We account for long-lived assets in accordance with authoritative guidance for impairment or disposal of long-lived assets.

Long-lived assets are reviewed for events or changes in circumstances, which indicate that their carrying value may not be recoverable.

Long-lived assets are reviewed for events or changes in circumstances, which indicate their carrying value may not be recoverable.

Comprehensive Income

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Based on our analysis, we account for each of our Convertible Notes as single units of accounting, a liability, because we concluded that the conversion features do not require bifurcation as a derivative under embedded derivative authoritative guidance.

Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

Cash Flow Hedges - Currency Risks

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We hedge these cash flow exposures to reduce the risk of our earnings and cash flows being adversely affected by fluctuations in exchange rates.

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Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

In accordance with the hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge and are highly effective in offsetting changes to future cash flows on hedged transactions.

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As of December 31, 2024, all hedges were determined to be highly effective.

The assets or liabilities associated with our hedging contracts are recorded at fair market value in prepaid expense and other current assets, accrued expenses, or other long-term liabilities, respectively, in our consolidated balance sheets.

The assets or liabilities associated with our hedging contracts are recorded at fair market value in prepaid expense and other current assets, prepaid expenses and other assets, accrued expenses, or other long-term liabilities, respectively, in our consolidated balance sheets.

Gains and losses related to changes in the fair market value of these hedging contracts are recorded as a component of accumulated other comprehensive income (loss) (“AOCI”) within stockholder’s equity in our consolidated balance sheets and reclassified to royalty revenue in our consolidated statements of income in the same period as the recognition of the underlying hedged transaction.

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We perform our goodwill impairment analysis at the reporting unit level, which aligns with our reporting and operating segment structure and availability of discrete financial information.

During the goodwill impairment review, we assess qualitative factors to determine whether it is more likely than not that the fair values of our reporting unit is less than the

Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

carrying amount, including goodwill.

During the goodwill impairment review, we assess qualitative factors to determine whether it is more likely than not that the fair values of our reporting unit is less than the carrying amount, including goodwill.

The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations, and our overall financial performance.

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Otherwise, we proceed to compare the estimated fair value of the reporting unit with the carrying value, including goodwill.

If the carrying amount of the reporting unit exceeds the fair value, we record an impairment loss based on the difference.

If the carrying amount of the reporting unit exceeds the fair value, we record an

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Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

impairment loss based on the difference.

We may elect to bypass the qualitative assessment in a period and proceed to perform the quantitative goodwill impairment test.

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Upon any such termination, the license granted to partners (in total or with respect to the terminated target, as applicable) will terminate provided;

however, that in the event of expiration of the agreement (as opposed to a termination), the on-going licenses granted will become perpetual, non-exclusive and fully paid.

however, that in the event of expiration of the agreement (as opposed to a termination), the on-going licenses granted may become perpetual, non-exclusive and fully paid.

Sales-based milestones and royalties are recognized in the period the underlying sales or milestones occur.

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The royalties are generally reported and payable to us within 45 to 60 days after the end of the period in which the commercial sales are made.

We base our estimates of royalties earned on actual sales information from our partners when available or estimated, prescription sales from external sources and estimated net selling

Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

We base our estimates of royalties earned on actual sales information from our partners when available or estimated prescription sales from external sources and estimated net selling price.

We will record adjustments in the following quarter, if necessary, when final royalty reports are received.

To date, we have not recorded any material adjustments.

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Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

Revenue under ENHANZE and Device Collaborative Agreements

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These provisions are part of assurance that the licenses meet the agreements’ representations and are not obligations to provide goods or services.

We also fulfill purchase orders for supply of bulk rHuPH20 and perform research and development services pursuant to projects authorization forms for our partners, which represent separate contracts.

We also fulfill purchase orders for supply of bulk rHuPH20 and perform research and development services pursuant to project authorization forms for our partners, which represent separate contracts.

In addition to our licenses, we price our supply of bulk rHuPH20 and research and development services at our regular selling prices, called standalone selling prices (“SSP”).

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With respect to other development milestones, e.g., dosing of a first patient in a clinical trial, achievement could be considered probable prior to its actual occurrence, based on the progress towards commencement of the trial.

In order to evaluate progress towards commencement of a trial, we assess the status of activities

In order to evaluate progress towards commencement of a trial, we assess the status of activities leading up to our partner’s initiation of a trial such as feedback received from the applicable regulatory authorities, completion of investigational new drug or equivalent filings, readiness and availability of drug, readiness of study sites and our partner’s

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Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

leading up to our partner’s initiation of a trial such as feedback received from the applicable regulatory authorities, completion of Investigational New Drug (“IND”) or equivalent filings, readiness and availability of drug, readiness of study sites and our partner’s commitment of resources to the program.

commitment of resources to the program.

We do not include any amounts subject to uncertainties in the transaction price until it is probable that the amount will not result in a significant reversal of revenue in the future.

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When allocation is needed, we perform an allocation of the upfront amount based on relative SSP of licenses for individual targets.

We determine license SSP using an income-based valuation approach utilizing risk-adjusted discounted cash flow projections of the estimated return a licensor would receive.

We determine license SSP using an income-based valuation approach utilizing risk-adjusted discounted cash flow projections of the estimated return a licensor would receive where applicable, or an alternative valuation method such as indicative value from historical transactions.

When amounts subject to uncertainties, such as milestones and royalties, are included in the transaction price, we attribute them to the specific individual target licenses which generate such milestone or royalty amounts.

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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 typical 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 within deferred revenue and deferred revenue, long-term in our consolidated balance sheets and recognized as revenue in our consolidated statements of income when the associated performance obligations have been satisfied.

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 consolidated balance sheets and recognized as revenue in our 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

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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 use contract manufacturers to produce our proprietary products and third-party logistic 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 significant obligations to wholesalers to generate pull-through sales.

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.

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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.

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, pharmacy benefit managers and government programs.

We also pay quarterly distribution fees to certain wholesalers for inventory reporting and chargeback processing, and to pharmacy benefit managers and group purchasing organizations 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.

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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.

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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 consolidated balance sheets due to the short-term nature in which the amount is ultimately expected to be billed and collected from the customer.

All 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.

We recognize revenue from the sale of certain products, devices and/or components as product sales and related cost of sales at the point in time in which control is transferred to the customer, which is typically upon shipment of the goods to our partner.

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 or profit-sharing 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.

Revenue Presentation

In our consolidated statements of income, we report the upfront payments, event-based development and regulatory milestones and sales milestones as revenues under collaborative agreements.

We also include in this category revenues from separate research and development contracts pursuant to project authorization forms.

We report royalties received from partners as a separate line in our consolidated statements of income.

Revenues from sales of our proprietary and partnered products are included in product sales, net in our consolidated statements of income.

In the footnotes to our consolidated financial statements, we provide disaggregated revenue information by type of arrangement (royalties;

product sales, net;

and collaborative agreements), and additionally, by type of payment stream received under collaborative agreements (upfront license and target nomination fees;

event-based development and regulatory milestones and other fees;

sales-based milestones;

and device licensing and development revenue).

We provide a standard warranty that the product conforms to specifications.

We use contract manufacturers to produce certain products, devices and/or components, and have concluded we are the principal in the sales to partners.

Revenue is recognized at the transaction price, which includes the contractual per unit selling price.

Allocation of the transaction price to individual quantities of the product is usually not required because each order contains only one type of product.

Cost of Sales

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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.

Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

Research and Development Expenses

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Forfeitures are recognized as a reduction of share-based compensation expense as they occur.

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Notes to Consolidated Financial Statements — (Continued)

We provide for income taxes using the liability method.

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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, which are based on complex and evolving tax regulations.

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.

Segment Information

We generate revenues from payments received (i) as royalties from licensing our EHHANZE technology and other royalty arrangements, (ii) under collaborative agreements with our partners and (iii) from sales of our proprietary and partnered products.

There are no intra-entity sales or transfers.

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 .

This operating segment also includes revenues and expenses related to (i) research and development and manufacturing activities conducted under our collaborative agreements with third parties, (ii) product sales of proprietary and partnered products, and (iii) associated selling, general and administrative expenses.

The chief operating decision-maker (“CODM”), our Chief Executive Officer, reviews the operating results on an aggregate basis and manages the operations as a single operating segment.

The CODM assesses the segment’s performance and decides how to allocate resources based on consolidated net income that is reported in our consolidated statements of income.

The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets.

The significant expense categories regularly provided to the CODM include cost of sales, research and development, amortization of intangibles, and selling, general and administrative expenses.

These expense categories are reported as separate line items in our consolidated statements of income.

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Improvements to Reportable Segment Disclosures.

The new standard 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 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.

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Retrospective

We are currently evaluating the impact of the standard on our consolidated financial statements and related disclosures.

We adopted the new guidance on January 1, 2024.

The adoption resulted in expanded disclosures within our notes to the consolidated financial statements for our Annual Report on the Form 10-K and our future Form 10-Qs.

There was no other impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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We are currently evaluating the impact of the standard on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

The new guidance is intended to enhance expense disclosures by requiring disaggregation of certain expenses included in the consolidated statements of income into specified expense categories in the notes to the consolidated financial statements.

Annual periods beginning after December 15, 2026 (our 2027 Form 10-K), and interim reporting periods beginning after December 15, 2027 (our Q1 2028 Form 10-Q) - Early adoption is permitted.

Prospective or Retrospective

We are currently evaluating the impact of the standard on our consolidated financial statements and related disclosures.

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The acquisition of Antares was funded by cash on hand and borrowings under the new credit agreement with Bank of America, N.A.

(“BofA”) and other lenders that provides for (i) a $ 350 million revolving credit facility (the “Revolving Credit Facility”) and (ii) a $ 250 million term loan facility (the “Term Facility”, collectively with the Revolving Credit Facility, the “2022 Facility”) as described in Note 8, Long-term Debt, Net .

and other lenders that provided for (i) a $ 350 million revolving credit facility (the “Revolving Credit Facility”) and (ii) a $ 250 million term loan facility (the “Term Facility”, collectively with the Revolving Credit Facility, the “2022 Facility”) as described in Note 8, Long-Term Debt, Net .

We recognized transaction costs of $ 21.9 million in the twelve months ended December 31, 2022.

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Cash consideration for Antares shares outstanding as of May 24, 2022 $ 956,886

Consideration for Antares equity compensation awards (a)

Consideration for Antares equity compensation awards (1)

Consideration for seller transaction costs paid by Halozyme 22,906

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Total purchase consideration

(a) Consideration for Antares equity compensation awards consists of $ 32.2 million paid for vested equity awards as well as $ 13.6 million paid for the pre-combination portion of unvested equity awards that were accelerated as part of the Merger Agreement.

(1) Consideration for Antares equity compensation awards consists of $ 32.2 million paid for vested equity awards as well as $ 13.6 million paid for the pre-combination portion of unvested equity awards that were accelerated as part of the Merger Agreement.

The fair value of the unvested equity awards attributable to the post-combination period of $ 8.7 million is included in our consolidated statements of income during the year ended December 31, 2022.

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The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations.

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Amounts recognized as of 12/31/2023

Measurement period adjustment Amounts recognized as of 12/31/2023 (as adjusted )

Total purchase consideration, net of $ 46,548 cash acquired

$ 999,120 $ — $ 999,120

Short-term investments 498

Accounts receivable, net 81,960

Inventories, net 28,068 — 28,068

Prepaid expenses and other assets 5,241

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Fair value of intangible assets acquired $ 589,800

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The following unaudited pro forma financial information summarizes combined results of operations of Halozyme and Antares as if the companies had been combined as of the beginning of our fiscal year 2021 (in thousands).

Twelve Months Ended December 31,

Year Ended December 31,

Total revenues

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The unaudited pro forma financial information as presented is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal year 2021, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.

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Agency bonds 9,844 — ( 16 ) 9,828

Commercial paper 15,826 — — 15,826

Total marketable securities, available-for-sale $ 480,427 $ 592 $ ( 795 ) $ 480,224

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Total marketable securities, available-for-sale $ 217,475 $ 201 $ ( 46 ) $ 217,630

As of December 31, 2023, 20 available-for-sale marketable securities with a fair market value of $ 29.1 million were in a gross unrealized loss position of $ 46.3 thousand.

As of December 31, 2024, twenty-seven available-for-sale marketable securities with a fair market value of $ 250.3 million were in a gross unrealized loss position of $ 0.8 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 December 31, 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.

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Total estimated fair value of contractual maturities, available-for-sale $ 480,224 $ 217,630

(1) These investments are classified as current assets which reflects management’s intention to use the proceeds from the sale of these investments to fund operations, as necessary.

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December 31, 2024 December 31, 2023

Level 1 Level 2 Total estimated fair value Level 1 Level 2 Total estimated fair value

Level 1 Level 2 Total Estimated Fair Value

Cash equivalents

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— — — 2,000 — 2,000

Corporate debt securities — — — — — —

Available-for-sale marketable

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Commercial paper — — — — 15,826 15,826

Derivative instruments

Currency hedging contracts (1)

— 4,006 4,006 — — —

Total assets $ 432,580 $ 106,832 $ 539,412 $ 216,429 $ 25,343 $ 241,772

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Carrying amounts of the financial assets and liabilities are equal to the fair value.

As of December 31, 2023, the derivative liabilities recorded within accrued expenses and other long-term liabilities were $ 2.9 million and $ 6.6 million , respectively.

As of December 31, 2024, the derivative assets recorded within prepaid expenses and other current assets and prepaid expenses and other assets in our consolidated balance sheets were $ 2.4 million and $ 1.6 million , respectively.

The derivative liabilities recorded within other long-term liabilities in our consolidated balance sheets as of December 31, 2024 were not material.

We had no available-for-sale securities that were classified within Level 3 as of December 31, 2024 and 2023.

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Based on the fair value remeasurement performed, we recognized a gain on change in fair value of the contingent liability of $ 13.2 million for the twelve months ended December 31, 2023 in our consolidated statements of income.

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Product sales, net

Sales of bulk rHuPH20

Proprietary product sales

166,620 130,834 72,849

Sale of proprietary products 130,834 72,849 23,264

Sale of device partnered products

Bulk rHuPH20 sales

86,334 115,442 82,084

Device partnered product sales

50,538 54,578 36,097

Total product sales, net 303,492 300,854 191,030

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During the year ended December 31, 2024, we recognized revenue related to licenses granted to partners in prior periods in the amount of $ 673.5 million.

This amount represents royalties earned in the current period, in addition to $ 69.0 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 $ 3.2 million during the year ended December 31, 2023 that had been included in deferred revenues in our consolidated balance sheets as of December 31, 2022.

Accounts receivable, other contract assets and deferred revenues (contract liabilities) from contracts with customers, including partners, consisted of the following (in thousands):

This amount represents royalties and sales milestone earned in the current period, in addition to $ 72.5 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 year ended December 31, 2024 that had been included in accrued expense and other long-term liabilities in our 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):

December 31, 2024 December 31, 2023

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Deferred revenues 10,343 4,048

As of December 31, 2023, the amounts included in the transaction price of our contracts with customers, including partners, and allocated to goods and services not yet provided were $ 80.8 million of which $ 76.8 million relates to unfulfilled product purchase orders and $ 4.0 million has been collected and is reported as deferred revenues in our Consolidated Balance Sheets.

As of December 31, 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 $ 110.2 million, of which $ 99.9 million relates to unfulfilled product purchase orders and $ 10.3 million has been collected and is reported as accrued expense and other long-term liabilities in our consolidated balance sheets.

The unfulfilled product purchase orders are estimated to be delivered by the end of 2026.

Of the total deferred revenues of $ 10.3 million, $ 2.0 million is expected to be used by our customers within the next 12 months.

We recognized contract assets of $ 1.0 million as of December 31, 2023, 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.

We recognized contract assets of $ 20.3 million as of December 31, 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 but is not yet billable to the customer in accordance with the terms of the contract.

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2024 December 31,

Accounts receivable from product sales to partners $ 58,588 $ 62,979

Accounts receivable from revenues under collaborative agreements 16,183 18,776

Accounts receivable from royalty payments 118,170 100,900

Accounts receivable from other product sales 47,060 6,229

Accounts receivable, net and contract assets

Product sales to partners

$ 37,599 $ 58,588

Revenues under collaborative agreements

29,452 16,183

Royalty payments

164,348 118,170

Other product sales

65,542 47,060

Contract assets 20,251 956

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Finished goods 142,944 69,930

Total inventories, net

Total inventories

197,128 127,601

Less long-term portion (1)

Total inventories, current

$ 141,860 $ 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 consolidated balance sheets.

Prepaid expenses and other assets consisted of the following (in thousands):

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Other prepaid expenses 10,562 12,902

Long-term inventories

Other assets 17,400 16,677

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119,547 66,429

Long-term portion

Less long-term portion

( 80,596 ) ( 17,816 )

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Such amounts are reclassified to work-in-process inventory as materials are used or the contract manufacturing organization services are complete.

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Right of use of assets 34,171 36,836

Property and equipment, net

Total property and equipment, net

$ 75,035 $ 74,944

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Accrued outsourced manufacturing expenses 16,682 12,361

Income taxes payable 963 —

Taxes payable

Product returns and sales allowance 54,588 41,932

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Cash paid for amounts related to leases for the twelve months ended December 31, 2024, 2023 and 2022 was $ 6.9 million, $ 6.7 million and $ 4.2 million, respectively.

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Notes to Consolidated Financial Statements — (Continued)

Goodwill and Intangible Assets

Goodwill and Intangible Assets, net

A summary of the activity impacting goodwill is presented below (in thousands):

Balance as of December 31, 2023

Measurement period adjustments (1)

Balance as of December 31, 2024

(1) Refer to Note 3, Business Combination , for further discussion on the measurement period adjustments.

Intangible Assets

Intangible Assets, net

Our acquired intangible assets are amortized using the straight-line method over their estimated useful lives of seven to ten years .

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Amortization Expense

2024 $ 71,049

Thereafter 32,621

Total $ 353,130

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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” and collectively with the 2024 Convertible Notes and 2027 Convertible Notes the “Convertible Notes”).

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.

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The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued or unpaid interest.

As of December 31, 2023, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.

As of December 31, 2024, we were in compliance with all covenants.

Capped Call Transactions

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Pursuant to their terms, the capped calls qualify for classification within stockholders’ equity in our 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 the consolidated balance sheets.

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 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 2028 Convertible Notes, and do not affect any holder’s rights under the 2028 Convertible Notes.

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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,

Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

after deducting the initial purchasers’ fee of $ 20.1 million, was approximately $ 784.9 million.

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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Notes to Consolidated Financial Statements — (Continued)

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 %.

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The conversion rate is subject to adjustment.

As of December 31, 2023, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.

As of December 31, 2024, we were in compliance with all covenants.

1.25 % Convertible Notes due 2024

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The conversion rate was subject to adjustment.

In March 2021, we completed a privately negotiated, induced conversion of $ 369.1 million principal amount of the 2024 Convertible Notes (“2021 Note Repurchases” or the “2021 Induced Conversion”).

In connection with the 2021 Induced Conversion, we paid approximately $ 370.2 million in cash, which included principal and accrued interest, and issued approximately 9.08 million shares of our common stock representing the intrinsic value based on the contractual conversion rate and incremental shares as an inducement for conversion.

As a result of the 2021 Induced Conversion, we recorded $ 21.0 million in induced conversion expense which was included in other income (expense) of our consolidated statements of income in 2021.

The induced conversion expense represented the fair value of the common stock issued upon conversion in excess of the common stock issuable under the original terms of the 2024 Convertible Notes.

In August 2022, we completed a privately negotiated induced conversion of $ 77.4 million principal amount of the 2024 Convertible Notes (“2022 Note Repurchases” or the “2022 Induced Conversion”).

In connection with the 2022 Induced Conversion, we paid approximately $ 77.6 million in cash, which included principal and accrued interest, and issued approximately 1.51 million shares of our common stock representing the intrinsic value based on the contractual conversion rate and incremental shares as an inducement for conversion.

As a result of the 2022 Induced Conversion, we recorded $ 2.7 million in induced conversion expense which was included in other income (expense) of our consolidated statements of income in 2022.

The induced conversion expense represented the fair value of the common stock issued upon conversion in excess of the common stock issuable under the original terms of the 2024 Convertible Notes.

Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

In January 2023, we issued a notice for the redemption of 2024 Convertible Notes.

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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.

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2028 Convertible Notes 720,000 720,000

Total principal amount

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2028 Convertible Notes ( 11,684 ) ( 14,802 )

2028 Convertible Notes ( 14,802 ) ( 17,875 )

Total unamortized debt discount $ ( 19,202 ) $ ( 25,752 )

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2028 Convertible Notes 708,316 705,198

2028 Convertible Notes 705,198 702,125

Total carrying amount $ 1,505,798 $ 1,499,248

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2028 Convertible Notes 779,882 670,522

2028 Convertible Notes 670,522 849,823

Total fair value of outstanding notes $ 1,549,100 $ 1,366,348

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2028 Convertible Notes 3.6 4.6

2028 Convertible Notes 4.6 5.6

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The following table summarizes the components of interest expense and the effective interest rates for each of our Convertible Notes (in thousands).

Twelve Months Ended December 31,

Year Ended December 31,

2024 2023 2022

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2027 Convertible Notes 0.7 % 0.7 % 0.7 %

2028 Convertible Notes 1.5 % 1.5 % n/a

Revolving Credit and Term Loan Facilities (May 2022)

In May 2022, in connection with the closing of the Antares acquisition, we entered into a credit agreement, which was subsequently amended, 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 $ 350 million revolving credit facility (the “Revolving Credit Facility”) and (ii) a $ 250 million term loan facility (the “Term Facility”).

Proceeds from a $ 120 million draw on the Revolving Credit Facility and the $ 250 million Term Facility were used to fund a portion of the Antares acquisition, repay Antares’ existing debt and pay fees and expenses in connection with the Antares acquisition.

The 2022 Credit Agreement contains an expansion feature, which allows us, subject to certain conditions, to increase the aggregate principal amount of the 2022 Facility, provided we remain in compliance with underlying financial covenants on a pro forma basis including the consolidated interest coverage ratio and the consolidated net leverage ratio covenants set forth in the 2022 Credit Agreement.

2028 Convertible Notes 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.

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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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Notes to Consolidated Financial Statements — (Continued)

Borrowings under the 2022 Facility bear interest, at our option, at a rate equal to an applicable margin plus:

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The commitment fees range from 0.15 % to 0.35 % per annum based on our consolidated net leverage ratio.

In August 2022, we entered into Amendment No.

1 to the Credit Agreement (the “Amendment”) among the Company, the Guarantors (as defined in the Credit Agreement), each L/C Issuer from time to time party thereto, Bank of America, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) and swing line lender (in such capacity, the “Swing Line Lender”), and each lender party thereto, which amends the Credit Agreement dated as of May 24, 2022 (the “Credit Agreement”) among the Company, the Guarantors, the Administrative Agent, the Swing Line Lender, each Lender and the L/C Issuers.

The Amendment, among other things, increased the size of the revolving credit facility from $ 350 million to $ 575 million.

The terms of the Revolving Credit Facility were otherwise unchanged.

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.

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Notes to Consolidated Financial Statements — (Continued)

As of December 31, 2024, the Revolving Credit Facility was undrawn.

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Long-term debt, less current portion and unamortized debt discount $ 1,505,798

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Share-based Compensation

We currently grant stock options, RSUs and PSUs under the Amended and Restated 2021 Stock Plan (“2021 Stock Plan”), which was approved by the stockholders on May 5, 2021 an d provides for the grant of up to 17.8 million shares of common stock to selected employees, consultants and non-employee members of our Board of Directors as stock options, stock appreciation rights (“SARs”), RSAs, RSUs and PSUs.

We currently grant stock options, RSUs and PSUs under our Amended and Restated 2021 Stock Plan (“2021 Stock Plan”), which was approved by the stockholders on May 5, 2021 an d provides for the grant of up to 17.8 million shares of common stock to selected employees, consultants and non-employee members of our Board of Directors as stock options, stock appreciation rights, RSUs and PSUs.

Awards are subject to terms and conditions established by the Compensation Committee of our Board of Directors.

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As of December 31, 2024, 7.4 million shares were subject to outstanding awards and 10.1 million shares were available for future grants of share-based awards.

Total share-based compensation expense related to share-based awards was comprised of the following (in thousands):

The following table summarized share-based compensation expense included in our consolidated statements of income related to share-based awards (in thousands):

Year Ended December 31,

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$ 43,385 $ 36,620 $ 24,397

Share-based compensation expense by type of share-based award (in thousands):

Share-based compensation expense by type of share-based award was as follows (in thousands):

Year Ended December 31,

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Stock options $ 16,078 $ 16,351 $ 10,973

RSAs, RSUs, PSUs and ESPP 20,269 13,424 10,568

RSUs, PSUs and ESPP

27,307 20,269 13,424

Total share-based compensation expense

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During the twelve months ended December 31, 2024, 44,628 shares were issued pursuant to the 2021 ESPP.

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Expected dividend yield — — —

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The fair value of PSUs vested during the years ended December 31, 2024, 2023 and 2022 was $ 1.6 million, $ 0.2 million and $ 0.2 million, respectively.

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Notes to Consolidated Financial Statements — (Continued)

Stockholders’ Equity

During the years ended December 31, 2024, 2023 and 2022, we issued an aggregate of 1,207,914 , 565,343 and 789,870 shares of common stock, respectively, in connection with the exercises of stock options, for net proceeds of approximately $ 32.7 million, $ 10.0 million and $ 15.3 million, respectively.

For the years ended December 31, 2023, 2022 and 2021, we issued 333,379 , 254,907 and 299,958 shares of common stock, respectively, upon vesting of certain RSUs and PSUs for which the RSU holders surrendered 70,733 , 68,425 and 94,795 RSUs, respectively, to pay for minimum withholding taxes totaling approximately $ 7.3 million, $ 4.4 million and $ 8.2 million, respectively.

For the years ended December 31, 2024, 2023 and 2022, we issued 363,155 , 333,379 and 254,907 shares of common stock, respectively, upon vesting of certain RSUs and PSUs for which the RSU and PSU holders surrendered 88,825 , 70,733 and 68,425 RSUs and PSUs, respectively.

Stock options and unvested restricted units totaling approximately 7.4 million, 7.8 million and 6.6 million shares of our common stock were outstanding as of December 31, 2024, 2023 and 2022, 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.

During 2021, we repurchased 3.9 million shares of common stock for $ 150.0 million at an average price of $ 38.51 .

During 2022, we repurchased 4.5 million shares of common stock for $ 200.0 million at an average price of $ 44.44 .

We accelerated the initiation of our planned 2024 share repurchases and in November 2023, we entered into an Accelerated Share Repurchase (“ASR”) agreement with Bank of America to accelerate the remaining $ 250.0 million of share repurchases under the approved capital return program.

Pursuant to the agreement, at the inception of the ASR, we paid $ 250.0 million to Bank of America and took initial delivery of 5.5 million shares.

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 .

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.

In December 2024, we entered into an Accelerated Share Repurchase (“ASR”) agreement with Bank of America to repurchase $ 250.0 million of our common stock.

Pursuant to the agreement, at the inception of the ASR, we paid $ 250.0 million to Bank of America and took initial delivery of 4.2 million shares, representing approximately 80 percent of the total shares that will be repurchased under the ASR agreement measured based on the closing price of our common stock on the transaction trade date.

The final share count will be determined at the transaction settlement date.

All shares repurchased under our capital return programs have been retired and have resumed their status of authorized and unissued shares.

As of December 31, 2023, excluding the shares we received under the ASR, we have repurchased a total of 12.6 million shares for $ 500.0 million at an average price per share of $ 39.81 under our $ 750 million 3-year share repurchase plan.

We had the following activity under the approved share repurchase programs (dollars in thousands, except share and per share data)

Total Number of Shares Purchased Weighted Average Price Paid Per Share

Total Cost (1)

First quarter 4,165,258 $ 36.01 $ 150,083

Second quarter — — —

Third quarter

Fourth quarter — — —

4,165,258 36.01 $ 150,083

Accelerated share repurchase (2)

5,452,563 $ — $ 250,000

(1) Included in the total cost of shares purchased is a commission fee of $ 0.02 per share.

(2) Purchased through an ASR agreement executed to repurchase $ 250.0 million of common stock.

In November 2023, we took initial delivery of 5.5 million shares in accordance with the ASR.

Final shares will be delivered on or before June 10, 2024.

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Notes to Consolidated Financial Statements — (Continued)

Earnings per share

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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):

Twelve Months Ended December 31,

Year Ended December 31,

2024 2023 2022

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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):

Twelve Months Ended December 31,

Year Ended December 31,

2024 2023 2022

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(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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We pay a pro rata share of operating costs, insurance costs, utilities and real property taxes.

Additionally, we lease certain office equipment under operating leases.

Additionally, we lease certain office equipment and vehicles under operating leases.

Total rent expense was approximately $ 8.6 million, $ 9.3 million and $ 3.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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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 consolidated results of operations or financial position.

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Notes to Consolidated Financial Statements — (Continued)

Total income (loss) before income taxes summarized by region was as follows (in thousands):

Total income before income tax expense summarized by region was as follows (in thousands):

Year Ended December 31,

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Foreign ( 720 ) ( 499 ) —

Net income before income taxes $ 348,329 $ 248,918 $ 248,518

Income before income tax expense

$ 557,132 $ 348,329 $ 248,918

Significant components of our net deferred tax assets (liabilities) were as follows (in thousands).

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Net operating loss carryforwards $ 20,736 $ 32,753

Deferred revenue 31 837

Research and development and orphan drug credits 17,868 38,192

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Capitalized research expense 30,253 19,543

Transaction related expense — 2,354

Inventory related reserves 19,867 13,561

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Non-deductible book amortization ( 89,247 ) ( 103,492 )

Depreciation ( 3,522 ) ( 2,559 )

ASC 842 right of use asset ( 7,882 ) ( 8,259 )

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A valuation allowance of $ 2.4 million and $ 2.6 million has been established to offset the net DTAs as of December 31, 2024 and 2023, respectively, as realization of such assets is uncertain.

On a periodic basis, we reassess the valuation allowance of 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.

In 2021, we demonstrated profitability and cumulative pretax income and are forecasting income growth in future tax years.

After assessing both the positive and negative evidence, we determined that it was more likely than not that our DTAs would be realized and released the valuation allowance in 2021.

On May 24, 2022, we acquired the outstanding shares of Antares.

This transaction was treated as a non-taxable acquisition.

We have increased our DTLs by approximately $ 119.7 million related to the acquired intellectual property and a step-up to the value of the inventory, the amortization of which will not be tax deductible.

On a periodic basis, we reassess the valuation allowance of our DTAs, weighing all positive and negative evidence, to assess if it is more-likely-than-not that some or all our DTAs will be realized.

After assessing both positive and negative evidence, we determined that it was more likely than not that our DTAs would be realized except for certain deferred tax assets associated with unrealized cash flow hedge and net operating losses in foreign jurisdictions where we do not expect benefit.

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Deferred - state ( 675 ) 2,018 ( 6,650 )

Total income tax expense (benefit)

Total income tax expense

$ 113,041 $ 66,735 $ 46,789

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2.25 % 2.76 % 0.82 %

Decrease in valuation allowance

— % ( 0.39 ) % ( 84.92 ) %

Foreign income subject to tax at other than federal statutory rate 0.03 % — % 0.02 %

Share-based compensation ( 0.21 ) % ( 0.66 ) % ( 2.50 ) %

Executive compensation limitation 0.58 % 0.90 % 2.61 %

Non-deductible expenses and other 0.80 % ( 0.40 ) % 0.54 %

Foreign-derived intangible income ( 3.81 ) % ( 3.44 ) % ( 5.06 ) %

Transaction costs — % 0.88 % — %

Research and development credits, net ( 0.39 ) % ( 2.71 ) % — %

Non-deductible expenses and other 0.66 % 0.62 % ( 0.57 ) %

Effective income tax rate

20.29 % 19.13 % 18.80 %

As of December 31, 2023, our unrecognized tax benefit and uncertain tax positions were $ 21.9 million, which will impact the effective tax rate when resolved.

As of December 31, 2024, our unrecognized tax benefit and uncertain tax positions were $ 24.5 million, of which $ 23.6 million will impact the effective tax rate when resolved.

Of the unrecognized tax benefits, we do not expect any significant changes to occur in the next 12 months.

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Gross unrecognized tax benefits, end of period $ 24,519 $ 21,918 $ 19,482

Halozyme Therapeutics, Inc.

Notes to Consolidated Financial Statements — (Continued)

As of December 31, 2023, we had federal, California and other state tax net operating loss carryforwards of approximately $ 46.8 million, $ 235.8 million and $ 66.8 million, respectively.

The California and Minnesota net operating loss carryforwards begin to expire in 2037 and 2028, respectively.

As of December 31, 2024, we had California and other state net operating loss carryforwards of approximately $ 236.9 million and $ 63.1 million, respectively.

The California and other state net operating loss carryforwards begin to expire in 2029.

As of December 31, 2024, we had federal and California research and development tax credit carryforwards of approximately $ 1.1 million, and $ 25.2 million, respectively.

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The California research and development tax credits will carryforward indefinitely until utilized.

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Notes to Consolidated Financial Statements — (Continued)

Pursuant to Internal Revenue Code Section 382, the annual use of the net operating loss carryforwards and research and development tax credits could be limited by any greater than 50% ownership change during any three-year testing period.

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and in various state and foreign jurisdictions.

Our tax years for 2008 and forward are subject to examination by the U.S., California, and Minnesota tax authorities due to the carryforward of unutilized net operating losses and research and development credits.

Our tax years for 2008 and forward are subject to examination by the U.S.

federal and state tax authorities due to the carryforward of unutilized net operating losses and research and development credits.

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Valuation and Qualifying Accounts

Schedule II - Valuation and Qualifying Accounts

(in thousands)

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures