After Ending Cancer Drug Program, Halozyme Predicts Profits in 2020

Xconomy San Diego — 

Halozyme suffered a setback in November when its investigational pancreatic drug failed a Phase 3 clinical trial, but its CEO says the biotech’s drug delivery technology will make the company profitable as early as the second quarter of this year.

The San Diego-based company’s technology, called Enhanze, allows some drugs traditionally given intravenously over hours to be delivered instead by subcutaneous injection in minutes.

“There was a lot of passion in the company for this mission for pancreatic cancer patients, so there was a lot of disappointment that it didn’t work, but we’d been very clear on the business strategy so we were able to move forward to do what we need to do, which is focus on what we do great, and that’s support our Enhanze partners,” CEO Helen Torley said in an interview at the JP Morgan Healthcare Confererence in San Francisco. “We’re able to [reach profitability] because of the projected growth of our Enhanze business, coming from both our royalties and the milestones.”

This year Halozyme (NASDAQ: HALO) anticipates its collaborations will earn it $230 million to $245 million in revenue, from 18 percent to 26 percent more than its anticipated 2019 revenue.

Having cut its oncology operations, the company anticipates reducing its operating expenses, excluding the costs of goods sold, to an annualized $65 million to $75 million by the fourth quarter, compared to an expected $215 million to $225 million in 2019. (Halozyme is slated to report full-year financial results on Feb. 24.)

Pharmaceutical companies were the first to partner with Halozyme to use the tech. It struck its ninth deal, and its first with a biotech, Argenx (NASDAQ: ARGX), about a year ago.

Torley says the company is confident it will ink deals with additional partners, and that Halozyme remains in “active discussion” with pharmas and biotechs considering teaming up on new collaborations that leverage Enhanze.

Three products developed using Enhanze are on the market today: two Roche oncology medicines and a treatment from Baxalta, now a part of Takeda Pharmaceutical (NYSE: TAK), for adults with adult patients with primary immunodeficiency diseases, disorders in which part of the immune system is missing or not working correctly.

As of the end of December, Halozyme reported 14 development-stage products using Enhanze. The furthest along is a subcutaneous version of Janssen’s daratumumab (Darzalex), for multiple myeloma, which the FDA is reviewing. The collaboration product would allow patients to receive a five-minute injection instead of a four to six hour IV, Torley says. The agency’s decision is anticipated in July.

Another potential product intended for early breast cancer patients is designed to combine two Roche antibodies—pertuzumab (Perjeta) and trastuzumab (Herceptin)—into one injection, delivered in combination with chemotherapy. That combo treatment could also get a regulatory decision this year; Halozyme anticipates Roche could receive an FDA ruling in the fourth quarter or the first quarter of 2021.

Halozyme expects at least three new Phase 3 trials, one new Phase 2 trial, plus five Phase 1 studies of products being developed with Enhanze to kick off this year, bringing the number of clinical-stage products being developed using its technology to 19 by year’s end. Halozyme’s agreements with the companies developing the products mean as each advances, the San Diego company receives payments tied to development milestones. For approved products, it is eligible for commercial milestone payments, plus royalties on net sales.

At the conference Torley called the November restructuring, which involved 155 layoffs, “virtually complete.” Among those leaving the company are its general counsel, Harry Leonhardt; chief medical officer, Dimitrios Chondros; and chief commercial officer, Ben Hickey, who has since landed at Mirati Therapeutics (NASDAQ: MRTX). The company has consolidated its operations from four to two buildings.

Investors have responded positively since the company cut its oncology operations. Halozyme’s stock price closed at $20.13 the day Torley presented at JPM, up 30 percent compared to the day it announced the trial failure in November.