On August 10, 2015 Halozyme Therapeutics, Inc. (NASDAQ: HALO), a biotechnology company developing novel oncology and drug-delivery therapies, reported financial results for the second quarter ended June 30, 2015 (Press release, Halozyme, AUG 10, 2015, View Source [SID:1234507141]). Financial highlights include revenues of $43.4 million and net income of $3.0 million, or $0.02 per share, compared to revenues of $18.4 million and a net loss of $16.3 million, or $0.13 per share, for the second quarter of 2014.
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"Our performance in the quarter continued to demonstrate the strength of our two-pillar strategy," said Dr. Helen Torley, president and CEO. "In the ENHANZE pillar, we signed our largest licensing agreement in company history with AbbVie, which has the potential to generate new royalty revenue and approximately $130 million for each of up to nine targets.
"In our oncology pillar, we continued to make good progress toward the planned initiation of our phase 3 trial in metastatic pancreatic cancer patients, and expanded our efforts to explore and demonstrate the pan-tumor potential of our investigational new drug, PEGPH20, through our first oncology clinical collaboration agreement. This agreement with Eisai will broaden the PEGPH20 development plan into breast cancer, building on our ongoing work in pancreatic and non-small cell lung cancer, exploring combinations with chemotherapies and immunotherapies."
Second Quarter 2015 Highlights and Subsequent Events
Global clinical collaboration with Eisai Co., Ltd. to investigate HALAVEN (eribulin) and PEGPH20 in metastatic breast cancer: Halozyme entered into a worldwide clinical collaboration with Eisai Co. Ltd. to evaluate HALAVEN in combination with PEGPH20 in first line HER2-negative metastatic breast cancer patients. The companies will co-fund a phase 1b/2 clinical trial to explore whether HALAVEN in combination with PEGPH20 can improve overall response rate, as compared with HALAVEN alone.
Received feedback from the European Medicines Agency (EMA) on the Phase 3 Study 301 design. During the quarter, the company received scientific advice from the EMA for its planned Phase 3 registration study in metastatic pancreatic cancer patients with high-HA tumors. Based on feedback received to date from the U.S. Food and Drug Administration (FDA) and the EMA, the company plans to proceed with the trial design previously discussed with the FDA and continues to target the end of first quarter 2016 to initiate the study.
Global collaboration with AbbVie to develop and commercialize products using ENHANZE technology: Halozyme entered into a worldwide collaboration and license agreement with AbbVie for the purpose of developing and commercializing products combining proprietary AbbVie compounds with Halozyme’s ENHANZE technology. Halozyme received an initial payment of $23 million in June 2015. The agreement provides for milestone payments totaling approximately $130 million for each of up to nine collaboration targets, in addition to tiered royalty payments based on net sales of products using ENHANZE technology.
Interim results from Study 202 evaluating PEGPH20 with gemcitabine and ABRAXANE (nab-paclitaxel) in metastatic pancreatic cancer patients were presented at the annual meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper): In a retrospectively defined sub-population of patients, the data showed a doubling in median progression free survival in metastatic pancreatic cancer patients with high levels of hyaluronan (HA) who were treated with PEGPH20 combined with ABRAXANE and gemcitabine (9.2 months vs. 4.3 months in patients treated with ABRAXANE and gemcitabine alone). Additional reported results included:
A more than doubling of overall response rate of 52 percent versus 24 percent (p-value of 0.038) and a duration of response of 8.1 months compared to 3.7 months in high HA patients treated with PEGPH20 combined with ABRAXANE and gemcitabine (PAG) versus ABRAXANE and gemcitabine (AG);
A trend toward improvement in median overall survival of 12 months compared to 9 months in high HA patients treated with PAG versus AG (hazard ratio of 0.62) despite discontinuation of PEGPH20 in more than half of the PAG-treated patients at the time of the clinical hold in April 2014.
A thromboembolic event (TE) event rate of 13 percent in 38 patients treated with PAG versus 18 percent in 17 patients receiving AG.
Global agreement with Ventana Medical Systems to collaboratively develop a companion diagnostic for cancer treatment: Entered into a global agreement with Ventana to develop and commercialize a companion diagnostic assay for use with PEGPH20. Under the agreement, Ventana will develop the in vitro diagnostic, with the intent of submitting it for regulatory approval in the United States, Europe and other countries.
Second Quarter 2015 Financial Highlights
Revenues for the second quarter of 2015 were $43.4 million, compared to $18.4 million for the second quarter of 2014, driven by a $23 million payment for initiation of a global collaboration agreement with AbbVie. Revenues in the second quarter included $6.4 million in royalty revenue from sales of products under collaboration agreements, $7.7 million in product sales of bulk rHuPH20 for use in manufacturing collaboration products for Roche and Baxalta, $4.2 million in Hylenex recombinant (hyaluronidase human injection) product sales, and $24.7 million in collaboration revenues, which includes the $23 million payment from AbbVie. Royalty revenues represent January to March 2015 partnered product sales as a result of the one quarter lag in royalty reports.
Research and development expenses for the second quarter of 2015 were $21.2 million, compared to $18.6 million for the second quarter of 2014. The increase was primarily due to an increase in expenses related to preclinical and clinical activities for PEGPH20, off-set by a planned decrease in expenses associated with discontinued development programs.
Selling, general and administrative expenses for the second quarter of 2015 were $9.8 million, compared to $8.8 million for the second quarter of 2014. The increase was primarily due to an increase in personnel expenses, including stock compensation, for the period.
Net income for the second quarter of 2015 was $3.0 million, or $0.02 per share, compared to a net loss for the second quarter of 2014 of $16.3 million, or $0.13 per share.
Cash, cash equivalents and marketable securities were $140.7 million at June 30, 2015, compared to $128.5 million at March 31, 2015. Net cash increase in the second quarter of 2015 was approximately $12.2 million.
Financial Outlook for 2015
For the full year 2015, the company revised its previously disclosed guidance to the following:
Net revenues to be in the range of $110 million to $115 million, from a prior range of $85 million to $95 million.
Operating expenses to be in the range of $160 million to $170 million, from a prior range of $145 million to $155 million.
Net cash burn to be between $20 million to $30 million, from a prior range of $35 to $45 million, with year-end cash balance expected to be $105 million to $115 million.
The company raised its revenue projection due to payment received from the AbbVie agreement. Operating expenses are expected to increase primarily due to acceleration of a bulk PH20 manufacturing campaign to fulfill current and future orders, and the building of capabilities related to an expansion of the PEGPH20 clinical program from 2 to 5 trials, including assuring readiness for the global phase 3 study at the end of Q1 2016. Cash burn is expected to decrease due to the inflow of new revenue, partially offset by the increase in planned expenses.