Halozyme Therapeutics (NASDAQ: HALO) is a biotechnology company focused on developing and commercializing novel oncology therapies that target the tumor microenvironment. Halozyme’s lead proprietary program, investigational drug PEGPH20, applies a unique approach to targeting solid tumors, allowing increased access of co-administered cancer drug therapies to the tumor in animal models.
PEGPH20 is currently in development for metastatic pancreas cancer, non-small cell lung cancer, gastric cancer, metastatic breast cancer and has potential across additional cancers in combination with different types of cancer therapies.
During June 2017, the company presented encouraging results from a Phase 2 randomized, multi-center clinical trial in pancreas cancer patients. The study met its primary endpoints and the key secondary endpoint of progression-free survival (PFS) in patients with high levels of a biomarker, hyaluronan (HA-High). Halozyme is currently conducting a global Phase 3 clinical trial, HALO-301, in a similar population of HA-High stage IV pancreas cancer patients.
As per management, HALO is driven in its study of PEGPH20 by the goal of providing new options to patients affected by some of the hardest to treat cancers. The HALO-202 results in HA-High pancreas cancer patients provide encouraging insights into a potentially new treatment option and support its ongoing study of PEGPH20 in the global Phase 3 HALO-301 study.
Pancreas cancer is the third-leading cause of cancer related death in the United States, and more than 65,000 people in the U.S. and top five European countries are diagnosed annually with advanced cases of the disease.
The company also announced that an Oncologic Drug Advisory Committee of the U.S. Food and Drug Administration voted 11 to 0 that the benefit/risk of rituximab/hyaluronidase for subcutaneous (under the skin) injection was favorable for patients in the proposed indications of follicular lymphoma, diffuse large B-cell lymphoma, and chronic lymphocytic leukemia. The FDA action date is tentatively June 26, 2017. This is one of the major potential near term catalyst for the company.
As per the company, subcutaneous rituximab can be administered in five to seven minutes compared to an hour and a half or more for intravenous Rituxan. The significant reduction in administration time could especially benefit people with blood cancer who may receive years of treatment, and therefore the committee unanimously supported this new co-formulation.
Rituximab co-formulated with Halozyme’s recombinant human hyaluronidase was approved in Europe in 2014 and is currently marketed as the subcutaneous (SC) formulation of MabThera® (rituximab) in approximately 50 countries worldwide.
The European approved version of the similar drug, Mabthera, resulted into $7.32 billion dollars in revenue during 2016. The treatment for two extremely common cancers which patients are treated for years has extreme potential. If we factor in that the IV treatment version of the composition takes nearly 20x as long as this subcutaneous version. This creates an attractive value proposition for the company and its investors.
The Company announced its quarterly earnings data on Monday, May 15th. Revenue for the first quarter was $29.6 million compared to $42.5 million for the first quarter of 2016. Net loss for the first quarter was $32.9 million, or $0.26 per share, compared to net loss in the first quarter of 2016 of $19.8 million, or $0.16 per share.
Notwithstanding the muted results, core fundamentals (over the longer term) of the company continue to remain promising & the management is pleased with the Company’s momentum as it makes progress towards launching its promising pipeline.
With the recent developments, analyst have revised their outlook on the stocks:
Firm: Rating: Price: Date:
Deutsche Bank AG BUY $16.00 Mar’30th
Zacks HOLD $16.00 May’12th
The stock currently has an average rating of “BUY” and a consensus price target of $16.77. Considering present valuation, HALO is at a favorable risk reward position.
About the Company: Halozyme Therapeutics is a biotechnology company focused on developing and commercializing novel oncology therapies that target the tumor microenvironment. Halozyme’s lead proprietary program, investigational drug PEGPH20, applies a unique approach to targeting solid tumors, allowing increased access of co-administered cancer drug therapies to the tumor in animal models. PEGPH20 is currently in development for metastatic pancreatic cancer, non-small cell lung cancer, gastric cancer, metastatic breast cancer and has potential across additional cancers in combination with different types of cancer therapies. In addition to its proprietary product portfolio, Halozyme has established value-driving partnerships with leading pharmaceutical companies including Roche, Baxalta, Pfizer, Janssen, AbbVie, and Lilly for its ENHANZE® drug delivery technology. Halozyme is headquartered in San Diego.
Lead Phase 3 Oncology Asset: PEGPH20: Targets and degrades Hyaluronan, a recognized prognostic biomarker, and barrier to effective treatment of pancreas cancer, Positive randomized Phase 2 data with a validated companion diagnostic, Phase 3 trial ongoing in target population, projected potential filing 2018-2020
ENHANZE®: Growing royalty revenue with potential for near-term revenue inflecting events
- Enrollment tracking to plan in HALO-301, the company’s Phase 3 study of pancreas cancer patients at over 200 global sites in 22 countries.
- Announcing an Oncologic Drug Advisory Committee of the U.S. Food and Drug Administration voted 11 to 0 that the benefit/risk of rituximab/hyaluronidase for subcutaneous injection was favorable for patients in the proposed indications of follicular lymphoma, diffuse large B-cell lymphoma, and chronic lymphocytic leukemia. The FDA action date is June 26. Analysts estimate rituxumab sales in oncology indications in the United States were approximately $3 billion in 2016.
- Advancing the development of multiple products using Halozyme’s ENHANZE® technology. Roche continues in its ongoing Phase 1 study to examine the combination of Herceptin SC and a subcutaneous formulation of Perjeta using ENHANZE®, including investigation into whether a single injection of the combination can be achieved, potentially providing a significant convenience for patients.
In addition, Janssen has developed a rapid delivery SC formulation of daratumumab using ENHANZE® technology and recently dosed the first patients as part of their ongoing Phase 1 study. Janssen is currently planning to initiate a Phase 3 study using the new formulation later this year.
The collaboration with Lilly using Halozyme’s ENHANZE® technology is progressing across multiple targets with preclinical and clinical studies this year and next.
First Quarter 2017 Financial Results:
Revenue for the first quarter was $29.6 million compared to $42.5 million for the first quarter of 2016. The year-over-year decrease was driven by $15.5 million received in license and milestone payments from Lilly, AbbVie, and Pfizer in the first quarter of 2016, partially offset by increases in royalties from partner sales of Herceptin® SC, MabThera® SC and HYQVIA®, and research and development reimbursements from ENHANZE® partners.
Revenue for the first quarter included $14 million in royalties, an increase of 23 percent from the prior-year period, $8.2 million in sales of bulk rHuPH20 primarily for use in manufacturing collaboration products and $3.2 million in HYLENEX® recombinant (hyaluronidase human injection) product sales.
Net loss for the first quarter was $32.9 million, or $0.26 per share, compared to net loss in the first quarter of 2016 of $19.8 million, or $0.16 per share. Cash, cash equivalents and marketable securities were $179 million at March 31, 2017, compared to $205 million at December 31, 2016.
Cash, cash equivalents and marketable securities were $179 million at March 31, 2017, compared to $205 million at December 31, 2016.
The amount and timing of cash requirements will depend on the progress and success of the company’s clinical development programs, regulatory and market acceptance, and the resources it devotes to research and commercialization activities.
As per management, current cash, cash equivalents and marketable securities will be sufficient to fund operations for at least the next twelve months. They expect to fund operations going forward with existing cash resources, anticipated revenues from existing collaborations and cash that the company may raise through future transactions.
It may raise cash through any one of the following financing vehicles: (i) the public offering of securities; (ii) new collaborative agreements; (iii) expansions or revisions to existing collaborative relationships; (iv) private financings; (v) other equity or debt financings; and/or (vi) monetizing assets.
Key risk factors and potential stock drivers:
The company is exposed to significant risk of the potential for dilution. The company is going to need incremental capital.
The favorable outcome of upcoming FDA action date on June 26, 2017, could be a near term trigger for the stock.
The company’s ability to ramp-up profitability while sustaining its revenue growth would be one of the key stock driver over the near to medium term.
On Friday, June 23rd, 2017, HALO closed at $14.89 (up 0.4%) on volume of 1.7 million shares exchanging hands. Market capitalization is $2.09 billion. The current RSI is 72.36
In the past 52 weeks, shares of HALO have traded as low as $7.70 and as high as $15.20.
At $14.89, shares of HALO are trading above its 50-day moving average (MA) at $13.43 and above its 200-day MA at $12.23
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