On February 29, 2016 Halozyme Therapeutics, Inc. (NASDAQ: HALO) reported financial results for the fourth quarter and full year ended December 31, 2015, which included a fourth quarter increase in royalty revenue of 136 percent from the prior year period and net income of $4.3 million, or $0.03 per share, compared to a net loss in the fourth quarter of 2014 of $5.3 million, or $0.04 per share (Press release, Halozyme, FEB 29, 2016, View Source [SID:1234509280]). For the full year, total revenue increased 79 percent to $135.1 million compared to $75.3 million in the prior year.

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"We closed 2015 with record progress across both pillars of our strategy and enter 2016 with strong momentum," said Dr. Helen Torley, president and chief executive officer. "In our oncology pillar, an investigational device exemption was submitted to the FDA earlier this month by our partner Ventana for the PEGPH20 companion diagnostic test. We remain on track to dose the first patient in March in our Phase 3 study in pancreatic cancer patients. We are also continuing to evaluate the dose of PEGPH20 in our lung and gastric cancer trials and are preparing for the initiation of the breast cancer trial with our clinical partner Eisai.

"At the same time, our ENHANZE platform continues to generate more value than any other time in company history. With royalty revenue growth in the fourth quarter, a newly signed licensing and collaboration agreement with Eli Lilly and four co-formulated products in the clinic, our ENHANZE platform remains a clear differentiator in any market environment."

Fourth Quarter 2015 Highlights and Subsequent Events include:

Submitting an investigational device exemption to the FDA for the companion diagnostic test developed with Ventana to prospectively identify patients with high levels of hyaluronan, or HA.

Remaining on track to dose first patient in HALO-301 | Pancreatic study in March 2016, a Phase 3 study to explore PEGPH20 with gemcitabine and ABRAXANE (nab-paclitaxel) in metastatic pancreatic cancer patients at approximately 200 sites in 20 countries located in North America, Europe, South America and Asia Pacific.

Closing enrollment in HALO-202 | Pancreatic study with 133 patients in Stage 2 (total 279 patients enrolled), the company remains blinded to the efficacy results and continues to project mature progression-free survival data and overall response rate data in the fourth quarter of 2016.

Continuing to explore the pan-tumor potential of PEGPH20, the company made progress towards identifying the maximum tolerated dose of PEGPH20 in its phase 1b/2 PRIMAL study of PEGPH20 plus docetaxel in lung cancer patients, and Phase 1b study of PEGPH20 plus KEYTRUDA (pembrolizumab) in lung and gastric cancer patients. In addition, Halozyme expects to initiate the study of PEGPH20 plus eribulin in HER2 negative breast cancer patients through a clinical collaboration with Eisai in the second quarter of 2016.

Signing the company’s sixth collaboration and licensing agreement for Halozyme’s proprietary ENHANZE technology platform with Eli Lilly for up to five targets, each with potential milestone payments of $160 million. The agreement resulted in a $25 million upfront license fee to Halozyme that was recorded in the fourth quarter.

Earlier this month, dosing the first subject in Pfizer’s Phase 1 clinical trial evaluating the safety, tolerability and pharmacokinetics of bococizumab, an investigational PCSK9 inhibitor developed by Pfizer, Inc. using Halozyme’s ENHANZE platform. The initiation of the clinical trial triggered a $1 million milestone payment to Halozyme under the collaboration and license agreement between Halozyme and Pfizer entered into in 2012.

In January, dosing the first subject in AbbVie’s Phase 1 clinical trial evaluating the safety and pharmacokinetics of adalimumab (HUMIRA) with Halozyme’s ENHANZE platform, resulting in a $5 million milestone payment under the collaboration and license agreement between Halozyme and AbbVie entered into in June of 2015.

In the fourth quarter, dosing the first subjects in Pfizer’s Phase 1 clinical trial of rivipansel and Janssen’s Phase 1b clinical trial of daratumumab with Halozyme’s ENHANZE platform.

Fourth Quarter and Full Year 2015 Financial Highlights

Revenue for the fourth quarter was $52.2 million, compared to $30.4 million for the fourth quarter of 2014, driven primarily by the upfront license fee from Eli Lilly and royalties from partner sales of Herceptin SC, MabThera SC and HyQvia. Revenue for the quarter included $9.5 million in royalties, $9.3 million in sales of bulk rHuPH20 for use in manufacturing collaboration products and $4.3 million in HYLENEX recombinant (hyaluronidase human injection) product sales. Revenue for the full year was $135.1 million compared to $75.3 million in the previous year.

Research and development expenses for the fourth quarter were $27.7 million, compared to $19.7 million for the fourth quarter of 2014. The planned increases were primarily due to expenses for preclinical and clinical support of PEGPH20.
Selling, general and administrative expenses for the fourth quarter were $10.6 million, compared to $8.4 million for the fourth quarter of 2014. The increase was primarily due to an increase in personnel expenses, including stock compensation, for the period.

Net income for the fourth quarter was $4.3 million, or $0.03 per share, compared to a net loss in the fourth quarter of 2014 of $5.3 million, or $0.04 per share. The net loss for the full year totaled $32.2 million, or $0.25 per share, compared to a net loss of $68.4 million, or $0.56 per share, for 2014.

Cash, cash equivalents and marketable securities were $108.3 million at Dec. 31, compared to $123.7 million at Sept. 30, 2015. Net cash burn during 2015 was approximately $27.3 million.

Financial Outlook for 2016
For the full year 2016, the company maintains its previously announced guidance of:

Net revenues to be in the range of $110 million to $125 million;

Operating expenses to be in the range of $240 million to $260 million;

Cash Flow to be in the range of $35 million to $55 million; and

Year-end cash balance of $140 million to $160 million.

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