Loss Widens at Halozyme in Q2

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Halozyme Therapeutics, Inc. (HALO) reported second quarter 2013 loss of 20 cents per share, much wider than the Zacks Consensus Estimate of a loss of 14 cents per share and the year-ago loss of 13 cents per share. The wider loss was due to higher operating expenses.

The company’s net product revenue for the second quarter of 2013 shot up 86.3% to $14.5 million. Revenues were boosted by research and development (R&D) reimbursements from partners. The Zacks Consensus Estimate stood at $12 million for the second quarter of 2013.

In the second quarter of 2013, R&D expenses were $28 million, up 74.1% year over year. R&D expenses were driven by costs associated with product launches and clinical trials. Selling, general and administrative expenses increased 30.8% to $7.3 million, reflecting an increase in commercial activities.

Halozyme made significant progress with respect to its pipeline in the second quarter of 2013. Halozyme’s partner, Baxter International Inc. (BAX) received approval from the European Commission for HyQvia as replacement therapy for adults suffering from primary and secondary immunodeficiencies. HyQvia was launched the EU in Jul 2013, which triggered a $4 million milestone payment to Halozyme.

In Jun 2013, the Committee for Medicinal Products for Human Use granted Halozyme’s partner, Roche (RHHBY) a positive opinion on the subcutaneous (:SC) formulation of Herceptin. Roche is looking for Herceptin’s label expansion and get the drug approved for treating patients suffering from human epidermal growth factor receptor 2 (HER2)-positive breast cancer in the EU. Roche expects to launch the drug in the EU and the U.S. by the end of this year, subject to regulatory approval.

Apart from Herceptin SC, another drug, MabThera SC, developed in collaboration with Roche is under regulatory review in the EU.

However, Halozyme received a major setback when partner ViroPharma Inc. (VPHM) announced that it is discontinuing its phase II study on a SC version of Cinryze in combination with rHuPH20. The study was discontinued as a number of patients developed non-neutralizing rHuPH20 antibodies.

Halozyme carries a Zacks Rank #2 (Buy).

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