Regulatory Concerns Over Halozyme’s Flagship Product Trigger Selloff

Xconomy San Diego — 

Shares of Halozyme Therapeutics (NASDAQ: HALO) plunged by more than 55 percent this evening, after the 14-year-old biopharmaceutical said FDA regulators have raised concerns about the potential effects its adjunctive enzyme technology might have on human fertility and reproduction.

In a statement released after regular trading, San Diego-based Halozyme says a complete response letter issued by the FDA’s Center for Biologics Evaluation and Research (CBER) asks for additional preclinical data to support a Biologics License Application submitted by Baxter, the Illinois pharmaceutical giant.

Until key questions can be addressed, the regulators asked Halozyme to halt the use of its enzyme in human patients in clinical studies with Baxter and ViroPharma, a Pennsylvania pharmaceutical focused on viral diseases. Baxter had submitted its application for an experimental drug called HyQ, which combines Baxter’s disease-fighting immunoglobulin product with Halozyme’s proprietary product, an enzyme called recombinant human hyaluronidase, or rHuPH20. Baxter is developing HyQ as a treatment for immune deficiency disorders that would be faster acting and easier to administer than an intravenous drip.

Baxter and Halozyme had disclosed on April 16 that the FDA was seeking additional information “related to the long-term chronic use of HyQ” to complete its review. No details were provided at the time.

In today’s statement, Halozyme says, “The primary issues raised in the letter focused on non-neutralizing antibodies generated against recombinant human hyaluronidase and the possible effects of these antibodies on reproduction, [fetal] development, and fertility.”

Halozyme developed the enzyme to be used with a wide variety of drugs, making it easier for drugs that usually must be infused intravenously to instead be injected just beneath the skin, which makes it possible for patients to more conveniently inject themselves at home. In effect, the enzyme is intended to accelerate the distribution and cellular absorption of immunoglobulin and other large-molecule, biologic drugs.

The San Diego company also has been working with Roche to develop injectable versions of the cancer drugs trastuzumab (Herceptin) and rituximab (Rituxan). In a statement emailed to Reuters, Halozyme said Roche officials do not believe the FDA query will impact its program at this time. But Roche has been developing combined versions of the two cancer drugs for use in Europe.

“Halozyme made it sound like the request for additional data was not a big deal, and they made it sound like the issue the FDA was having was specific to the Baxter product,” Brad Loncar, a Halozyme shareholder, told me this afternoon. “With today’s news, the truth has come out. It’s clear that it’s a much bigger problem than they had previously indicated. They are testing this enzyme with multiple drugs and multiple partners.’

“The uncertainty level on a scale of one to 10 right now is like a 10,” Loncar said.

ViroPharma said it plans to proceed with studies of its C1 esterase inhibitor (Cinryze) as a stand-alone therapy. In a separate statement, ViroPharma says, “FDA stated that the issues are not specific to Cinryze and that ViroPharma could continue to evaluate subcutaneous administration of Cinryze without rHuPH20 [the Halozyme enzyme].

The price of Halozyme shares plunged by $4.76 a share, or more than 55 percent, to $3.80 in after-hours trading. In regular trading, the company’s stock had closed at $8.56 per share.