NEW YORK (AP) -- Shares of Halozyme Inc. plunged Thursday after the company said the Food and Drug Administration stopped most of the clinical trials involving an experimental enzyme the company developed.
THE SPARK: After the market closed Wednesday, Halozyme said the FDA placed a temporary hold on studies involving its recombinant hyaluronidase enzyme. The agency wants information about elevated levels of antibodies that are produced in response to the enzyme, and the effects those antibodies can have on fertility, reproduction, and fetal development.
The FDA also refused to approve an immune disease drug that combines the enzyme with a Baxter International Inc. drug, saying it wants more information about the product. The agency halted dosing of patients in trials of HyQ, the Baxter drug, and a version of ViroPharma Inc.'s drug Cinryze that also includes the recombinant hyaluronidase enzyme.
The agency wants more information about HyQ that comes from preclinical studies, or trials that don't involve testing the drug on humans.
The San Diego company said no side effects related to fertility have been observed in clinical trials, although some patients had elevated antibody levels.
Halozyme said the hold does not affect its only approved drug, Hylenex. Hylenex is used to help improve the body's absorption of fluids, in order to boost the effect of injected drugs and to increase the absorption of fluids and drugs administered under the skin.
THE BIG PICTURE: The recombinant hyaluronidase enzyme, or rHuPH20, is designed to temporarily break down a substance in the body that forms a barrier between cells so drugs can be absorbed faster. That would allow some drugs to be delivered by an injection instead of an IV drip.
Halozyme has partnerships with Roche, Baxter, and ViroPharma. All of those partnerships combine rHuPH20 with a drug that is already approved.
THE ANALYSIS: Jefferies & Co. analyst Eun Yang said the FDA is concerned about the effects of chronic use of rHuPH20. Yang said she had expected the FDA to ask for more information about HyQ, but did not expect the hold on clinical studies. She said the hold does not affect Halozyme's partnership with Roche because Roche is not seeking FDA approval for the rHuPH20 products, which include two cancer drugs and an anti-inflammatory drug.
Yang downgraded Halozyme shares to "Underperform" from "Market Perform" in a note to clients.
"Halozyme's value is entirely based on its rHuPH20 platform," she wrote.
SHARE ACTION: Halozyme shares lost $4.36, or 51 percent, to $4.20 in morning trading. Earlier the shares fell as low as $3.86, their lowest price since December 2008. In the last 52 weeks the stock has traded as high as $13.50.