Halozyme ends bid to acquire Evotec at €2 billion valuation

SAN DIEGO - Halozyme Therapeutics , Inc. (NASDAQ: NASDAQ:HALO), a biopharmaceutical company, announced today the withdrawal of its proposal to acquire Evotec SE (NASDAQ: EVO) for €11.00 per share in cash. This proposal had valued the fully diluted equity of Evotec at €2.0 billion. The decision comes after Evotec expressed a lack of interest in engaging in acquisition talks.

Halozyme's President and CEO, Helen Torley, stated that despite the belief that a merger would have been beneficial for shareholders, patients, and employees, Evotec has not been open to exploring the potential combination. Torley highlighted that Halozyme had conducted extensive due diligence and reached out to Evotec's Supervisory Board, but their attempts to engage were met with no acceptance.

The company had communicated its interest informally to a Supervisory Board member and later attempted to engage with Evotec’s Chairwoman of the Supervisory Board. However, multiple requests for a meeting were declined, leading Halozyme to make a formal proposal directly to Evotec's CEO. The lack of interest from Evotec's boards has led Halozyme to retract its offer.

Torley reiterated confidence in Halozyme's future, citing the company's strategy to continue improving patient treatment experiences. Halozyme anticipates 10 approved products with ENHANZE® technology by 2025 and projects $1 billion in royalty revenue by 2027. The company also raised its 2024 guidance for revenue to $970-$1,020 million and adjusted EBITDA to $595-$625 million, signaling strong growth momentum.

Halozyme specializes in ENHANZE® drug delivery technology, which facilitates the subcutaneous delivery of injected drugs, aiming to enhance patient experiences. The technology has been used in over 800,000 patient treatments worldwide across eight commercialized products. Halozyme has licensed ENHANZE® to several major pharmaceutical companies and also develops drug-device combination products, such as Hylenex® and XYOSTED®.

This announcement is based on a press release statement and does not include speculation or subjective assessments. Halozyme has provided forward-looking statements about its financial outlook and technology's potential, which involve risks and uncertainties that could cause actual results to differ. The company's financial projections are non-GAAP measures and do not have reconciliations to GAAP due to the difficulty in forecasting necessary amounts.

In other recent news, Halozyme Therapeutics has proposed a $2 billion acquisition of Evotec SE. This all-cash deal is aimed at establishing a global pharma services leader, significantly diversifying and expanding Halozyme's business scope. The proposed acquisition, which is still subject to regulatory approvals, is expected to leverage Halozyme's ENHANZE® drug delivery technology and Evotec's drug discovery and biologics manufacturing capabilities. Halozyme projects approximately $2 billion in annual revenue for the combined entity by 2025.

Evotec SE has reported stable revenue of €575.7 million for the first nine months of 2024, largely due to a 74% revenue increase from the Just-Evotec Biologics sector. The company's adjusted EBITDA for 2024 is projected to be between €15 million and €35 million, with total revenues expected to range from €790 million to €820 million.

Piper Sandler, maintaining a neutral rating on Halozyme, perceives this potential merger as a strategic move that could expand Halozyme's service offerings to drug developers. These are recent developments that continue to shape the trajectory of both Halozyme Therapeutics and Evotec SE.

InvestingPro Insights

To provide additional context to Halozyme's withdrawn proposal for Evotec SE, let's examine some key financial metrics and insights from InvestingPro.

Evotec's current market capitalization stands at $1.87 billion, which is slightly lower than Halozyme's proposed valuation of €2.0 billion. This difference might have played a role in Evotec's reluctance to engage in acquisition talks.

InvestingPro data shows that Evotec's revenue for the last twelve months as of Q3 2023 was $865.22 million, with a revenue growth of -5.33% over the same period. This decline in revenue could have been a factor in Halozyme's interest in acquiring the company, possibly seeing an opportunity for synergies and growth.

Two relevant InvestingPro Tips for Evotec are that the company operates with a moderate level of debt and that its liquid assets exceed short-term obligations. These factors suggest that Evotec has a relatively stable financial position, which might have contributed to its confidence in remaining independent.

It's worth noting that Evotec has seen strong returns over the last month and three months, with price total returns of 63.61% and 73.14% respectively. This recent stock performance could have influenced Evotec's decision to rebuff Halozyme's advances, as management might believe the company's value is on an upward trajectory.

For investors interested in a more comprehensive analysis, InvestingPro offers additional tips and insights on Evotec's financial health and market position. There are 5 more InvestingPro Tips available for Evotec, which could provide valuable information for those looking to understand the company's prospects in light of this recent development.

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