Halozyme Gains on Narrower-than-Expected Loss, Revenues Up

Zacks

Halozyme Therapeutics, Inc.’s (HALO) shares gained 3.39% following the announcement of the second quarter 2014 results. Shares have declined marginally since then.

The company’s second quarter 2014 loss came in at 13 cents per share, narrower than the year-ago loss of 20 cents per share and the Zacks Consensus Estimate of a loss of 18 cents per share.

 

Second quarter revenues increased 27.2% to $18.4 million, surpassing the Zacks Consensus Estimate of $14.2 million.

The Quarter in Detail

The company generated revenues of $6 million and $3 million from the sale of rHuPH20 and Hylenex, respectively. The company earned $1.7 million from royalties and $7.2 million from collaborations.

R&D expenses decreased 33.4% to $18.6 million. This decrease was primarily driven by lower manufacturing costs.

SG&A expenses increased 19.9% to $8.8 million. This increase was essentially due to higher compensation costs and patent expenses.

Pipeline Updates

Halozyme announced that the FDA has removed the clinical hold from a phase II study (Study 202) evaluating PEGPH20 as a first-line therapy in patients suffering from stage IV metastatic pancreatic cancer. Following the removal of the clinical hold, the company has resumed patient enrollment and dosing of PEGPH20.

Halozyme has a number of partnered programs. The subcutaneous formulation of  Roche’s (RHHBY) MabThera developed using Halozyme’s rHuPH20 for the treatment of common forms of non-Hodgkin's lymphoma (:NHL), which includes follicular lymphoma and diffuse large B cell lymphoma was launched in the EU. The launch triggered a milestone payment of $5 million to Halozyme.

Apart from Roche, Halozyme also has an agreement with Baxter International Inc. (BAX). Halozyme announced that Baxter’s HyQvia (for the treatment of primary immunodeficiency) received a positive recommendation from the Blood Products Advisory Committee (TWSI) of the FDA.

Based on the pre-clinical and clinical data, the Advisory Committee voted (15 to 1) that HyQvia has a favourable risk-benefit profile. HyQvia is a combination of immunoglobin and rHuPH20.

The FDA will examine the recommendation from the BPAC in its review of Baxter’s amendment to the Biologics License Application (:BLA) submitted in Dec 2013. The company expects the FDA to come up with its response by Sep 30, 2014.

Additionally, Halozyme is in discussion with the FDA regarding a label update for Hylenex.

We expect investor focus to remain on pipeline updates.

Halozyme carries a Zacks Rank #2 (Buy). A better-ranked stock in the health care sector is Actelion Ltd. (ALIOF) carrying a Zacks Rank #1 (Strong Buy).

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