Senior Staff Writer
Halozyme Therapeutics Inc.'s stock surged 59.2 percent Wednesday following news of an Enhanze technology licensing deal with F. Hoffmann-La Roche Ltd. worth up to $612 million plus royalties.
"This really is a landmark achievement for Enhanze technology and Halozyme," the company's CEO and president Jonathan Lim told BioWorld Today.
The agreement not only validates the delivery technology - which is slated to launch its first product early in 2007 - but it paves the way for additional partnerships and provides Halozyme with cash to grow its business.
The company's shares (AMEX:HTI) climbed $1.70 Wednesday, to end the day at $4.55.
The deal with Basel, Switzerland-based Roche calls for Halozyme to receive a $20 million up-front payment for a license to apply the technology to three pre-defined Roche biologic targets. Roche also will have an option over the next 10 years to combine the Enhanze technology, which is based on the company's recombinant human hyaluronidase (rHuPH20), with an additional 10 targets, also pre-defined.
For the initial three targets, Halozyme could receive clinical, regulatory and sales milestones of up to $111 million, and if Roche takes an option on all 10 additional targets, it could mean another $470 million - $47 million per target - in up-front and milestone payments to Halozyme. The company also is eligible for sales royalties on products using rHuPH20 in combination with all 13 Roche targets. In addition, Roche Venture Fund is investing $11 million in Halozyme's stock, giving it a 5 percent stake in the company.
Lim said the first product from the collaboration could reach the market sometime in 2009. Roche will hold all development and commercialization rights to the product combinations, and Halozyme is free to partner out its technology for any other targets.
"For monoclonal antibodies alone, there are nearly 40 commercial and Phase III targets, and about 1,000 discovery to Phase II targets in existence," Lim said, later adding that "these figures don't include non-monoclonal antibody biologics such as cytokines."
Analysts Eun Yang and Molly Chiaramonte, of New York-based Jefferies & Co. Inc., also saw the upside of additional partnerships for Enhanze technology.
"While initial targets for development have not been disclosed by Roche, potential injectable biologic targets include Rituxan, Herceptin, Avastin and Pegasys, to name a few," they wrote in a research note. "Combined together, these products alone generated over $7 billion in 2005 sales."
The Enhanze technology is based on rHuPH20, an analogue of a human enzyme that clears space in the matrix of tissues. It basically breaks down hyaluronic acid, the "space-filling gel-like substance that's a major component of tissues throughout the body," Lim said.
It acts as a "molecular machete to facilitate the penetration and dispersion of [injectable] drugs by temporarily opening flow channels under the skin," he added. The technology enables molecules as large as 200 nanometers to pass through the perforated extracellular matrix, which returns to its normal density within a day.
Halozyme also is working on Chemophase, which is in Phase I/II trials for superficial bladder cancer and should enter Phase II/III pivotal trials in late 2007. The company received FDA approval in December 2005 for its first Enhanze technology product, Hylenex, to improve the delivery of local anesthesia and other drugs, and for subcutaneous fluid replacement. (See BioWorld Today, Dec. 6, 2005.)
Hylenex will be launched early in 2007 with Halozyme's partner, Deerfield, Ill.-based Baxter Healthcare Corp.
"We believe Hylenex is tapping into a greater than $300 million market opportunity," Lim said.
As of the end of the third quarter, Halozyme had $16 million in cash. The $20 million up-front payment and $11 million investment from Roche will add another $31 million. Lim said the company will disclose its growth strategy for its pipeline in the first quarter of 2007, and it continues to be in partnership discussions for its technology.