Halozyme hits the big time

It might have taken the immuno-oncology trigger word, but it seems that Halozyme’s drug delivery technology has finally hit the big time. The company unveiled two major collaborations today with Bristol-Myers Squibb and Roche for access to its platform, deals that include $135m in up-front payments, far surpassing anything partners have paid before (see table).

True, the committed cash probably reflects the potential of the assets being brought in by these partners more than any surge in the underlying value of Halozyme’s tech, which can reformulate biologicals for subcutaneous administration. Bristol-Myers has named PD-1 as a target and while Roche is remaining tight-lipped it is probably safe to assume that work will be ongoing in a similar field.

The Roche deal is essentially an extension of a collaboration that has been running since 2006, and has seen subcutaneous versions of Herceptin, Rituxan and Actemra reach various global markets. Today’s announcement concerns a new, undisclosed target that will be addressed using Halozyme’s Enhanze technology; the chunky $30m up-front fee is perhaps partly explained by the fact that this is an exclusive deal over the target.

As owner of the first anti-PD-L1 antibody to reach the market in Tecentriq, it is not inconceivable that this MAb is the subject of the collaboration. Tecentriq is forecast to generate sales of $1.5bn next year, a figure that could also help explain the large up-front, relative to previous deals.

Halozyme's Enhanze technology deals
Date Partner Deal details Notable progress
2017 Bristol-Myers Squibb Includes up to 11 immuno-oncology targets; $105m up front
2017 Roche Deal over one undisclosed target; $30m up front
2015 Abbvie Includes up to nine collaboration targets; $23m up front First target, Humira, abandoned in 2016
2015 Lilly Includes up to five targets; $25m up front; $8m milestone in 2016 First target started phase I 2017
2014 Johnson & Johnson Includes up to five targets; $15m up front Darzalex SC vs IV in phase III (NCT03277105)
2012 Pfizer  Includes up to six biologic targets; $8m up front Rivipansel SC entered phase I in 2015
2007 Baxter (now part of Shire) Developing SC forms of Gammagard Liquid; $10m up front Hyqvia 10% launched in 2014; Cuvitru 20% launched 2016
2006 Roche Includes up to 13 biologic targets; $20 up front EU lauches: Roactemra SC, Mabthera SC 2014, Herceptin SC 2013. US lauches: Actemra 2013, Rituxan Hycela 2017
Source: EvaluatePharma, EP Vantage.

A bit more information was released on the Bristol-Myers deal, which has set a new benchmark for Halozyme’s Enhanze platform. The pharma giant will pay a huge $105m up front in a collaboration that could extend to 11 targets; multiple immuno-oncology projects have already been designated, including PD-1.

Presumably Opdivo will be a key focus, and with Bristol falling behind its rival Merck & Co here, its motivation to find a differentiating factor is clear.

Building profits

Halozyme shares opened 20% higher on news of the deals, breaching $15 for the first time since the biotech bubble burst at the end of 2015. This cash injection is clearly welcome, particularly as the California company has been tilting towards internal drug development over the past few years.

Both fields of its work are related: while Enhanze seeks to combine existing IV biologicals with Halozyme’s recombinant form of hyaluronidase to enable subcutaneous delivery, its R&D work focuses on its own version of pegylated hyaluronidase, PEGPH20, for combination anticancer use.

But, while the first business is making Halozyme money, the latter is costing it; the company is expected to spend around $160m on R&D this year. Interim results from a phase III trial combining PEGPH20 with Abraxane in pancreatic cancer could emerge next year, and represent a big test of whether this expense has been worth it, the inherent risks of working in pancreatic cancer notwithstanding.

Some investors would probably prefer Halozyme to focus on building a profitable business based on the sort of collaborations that it has delivered today. But, with investor support for biotech stocks showing little sign of waning, such a strategy is unlikely to emerge for now.

Still, while the size of the Bristol-Myers deal shows what is possible, it also increases the pressure on Halozyme to prove that it is spending its cash wisely.

To contact the writer of this story email Amy Brown in London at AmyB@epvantage.com or follow @ByAmyBrown on Twitter

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