On February 21, 2019 Halozyme Therapeutics, Inc. (NASDAQ: HALO), a biotechnology company developing novel oncology and drug-delivery therapies, reported financial results for the fourth quarter and full year ended December 31, 2018 and provided an update on recent corporate activities (Press release, Halozyme, FEB 21, 2019, View Source [SID1234533533]).
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"Our latest collaboration with argenx demonstrates the broad applicability of our ENHANZE drug delivery technology and is a great way to start the year," said Dr. Helen Torley, president and chief executive officer. "We anticipate multiple additional key milestones in our ENHANZE business including potential approval of Herceptin SC later this quarter and potential regulatory submissions for a subcutaneous formulation of Darzalex in the second half of the year. With a total of nine ENHANZE collaborations spanning from established products to new, innovative therapies addressing unmet needs, we remain confident in the potential for $1 billion in royalty revenue in 2027."
"Our PEGPH20 oncology program achieved a critical milestone during the fourth quarter with the completion of enrollment in our pivotal HALO-301 pancreas cancer study with approximately 500 patients. We also reached agreement with the FDA to change the primary endpoint for HALO-301 to a single primary endpoint of overall survival (OS), which we believe incrementally de-risked the study. We look forward with excitement to topline results from HALO-301, which we currently project in the second half of 2019."
Fourth Quarter 2018 and Recent Highlights Include:
In February 2019, Halozyme licensed its ENHANZE drug delivery technology to argenx providing exclusive access to ENHANZE for any product targeting the human neonatal Fc receptor FcRn, including argenx’s lead asset efgartigimod (ARGX-113), and up to two additional targets. Under the terms of the agreement, argenx paid an upfront payment of $30 million to Halozyme, and will pay Halozyme $10 million per target for future target nominations and potential future payments of up to $160 million per selected target subject to achievement of specified development, regulatory and sales-based milestones. Halozyme will also receive mid-single digit royalties on sales of commercialized products.
In January 2019, the U.S. Food and Drug Administration completed its review of the submitted clinical study protocol amendment and statistical analysis plan for HALO-301, which included a change in the primary endpoint to a single primary endpoint of overall survival (OS), with no additional questions or comments.
In December, enrollment in HALO-301, the company’s Phase 3 study evaluating PEGPH20 in metastatic pancreas cancer, was completed with approximately 500 subjects enrolled. The company projects the study will achieve its target of 330 OS events between August and November of 2019. Based on achieving this timeline, the company projects topline results will be available in the second half of 2019.
In December, Roche dosed the first patient in a Phase 1b/2 study of Tecentriq (atezolizumab) with ENHANZE triggering a $5 million milestone payment to Halozyme.
During the fourth quarter, BMS began recruitment for a Phase 1 study of OPDIVO (nivolumab) with ENHANZE.
ENHANZE partner Janssen continued to make progress in clinical studies for a subcutaneous co-formulation of Darzalex (daratumumab) with the recent initiation of two additional Phase 3 trials. Janssen is planning regulatory filings in the second half of 2019.
In October, Halozyme expanded its collaboration with Roche by licensing its ENHANZE drug-delivery technology for exclusive development of a new undisclosed clinical stage therapeutic target resulting in an upfront payment of $25 million.
Fourth Quarter and Full Year 2018 Financial Highlights
Revenue for the fourth quarter was $60.2 million compared to $189.6 million for the fourth quarter of 2017. The year-over-year decrease was driven by $141.4 million upfront license fees for the BMS and Alexion agreements and a $15.0 million milestone payment from Janssen recognized in 2017, compared to $30.0 million in upfront and milestone revenue for the Roche collaboration recognized in 2018. The decrease was offset by a 9 percent growth in royalties on a reported basis from partner sales. Revenue for the fourth quarter included $19.3 million in royalties and $4.2 million in HYLENEX recombinant (hyaluronidase human injection) product sales.
Revenue for the full year was $151.9 million, compared to $316.6 million in 2017.
Revenue from royalties for the full year was $79.0 million, up 24% on an as-reported basis compared to $63.5 million in 2017.
Research and development expenses for the fourth quarter were $36.7 million, compared to $41.4 million for the fourth quarter of 2017.
Research and development expenses for the full year were $150.3 million, compared to $150.6 million in 2017.
Selling, general and administrative expenses for the fourth quarter were $18.0 million, compared to $14.8 million for the fourth quarter of 2017.
Selling, general and administrative expenses for 2018 were $60.8 million, compared to $53.8 million in 2017.
Net loss for the fourth quarter was $2.1 million, or $0.01 per share, compared to net income in the fourth quarter of 2017 of $123.9 million, or $0.85 per share.
Net loss for the full year was $80.3 million, or $0.56 per share, compared to net income of $63.0 million in 2017, or $0.45 per share.
Cash, cash equivalents and marketable securities were $354.5 million at December 31, 2018, compared to $469.2 million at December 31, 2017.
Financial Outlook for 2019
Halozyme updated its 2019 financial guidance, first provided on January 9, 2019, to reflect the recent argenx collaboration and license agreement:
Net revenue of $205 million to $215 million, excluding revenue from any additional, new ENHANZE global collaboration and licensing agreements;
Operating expenses of $265 million to $275 million, or $225 million to $235 million excluding an expected increase in cost of goods sold. Excluding the cost of goods sold the modest increase in expenses is driven by ENHANZE partner support, and support of the potential commercialization of PEGPH20;
Operating cash burn of $45 million to $55 million;
Debt repayment of approximately $90 million, the company expects to pay off the remainder of the royalty-backed debt by the end of the first quarter of 2020;
Year-end cash, cash equivalents and marketable securities balance of $210 million to $220 million.
Webcast and Conference Call
Halozyme will webcast its Quarterly Update Conference Call for the fourth quarter of 2018 today, Thursday, February 21 at 4:30 p.m. ET/1:30 p.m. PT. Dr. Torley will lead the call, which will be webcast live through the "Investors" section of Halozyme’s corporate website and a replay will be available following the close of the call. To access the webcast and additional documents related to the call, please visit halozyme.com approximately fifteen minutes prior to the call to register, download and install any necessary audio software. The call may also be accessed by dialing (877) 410-5657 (domestic callers) or (334) 323-7224 (international callers) using passcode 387156. A telephone replay will be available after the call by dialing (877) 919-4059 (domestic callers) or (334) 323-0140 (international callers) using replay ID number 68892505.