Adding to its roster of big pharma partners, Halozyme Therapeutics Inc. inked a deal with Johnson & Johnson unit Janssen Biotech Inc. for use of its Enhanze technology, even as the San Diego firm looks at growing royalties from earlier partnered programs and advancing a promising internal program in cancer.

Based on the recombinant human hyaluronidase (rHuPH20) enzyme which degrades hyaluronan (HA), the technology can be formulated with new and existing drugs to allow for more convenient subcutaneous delivery. It already resulted in four approved products, most recently Baxter International Inc.’s Hyqvia, an rHuPH20-based plasma-derived immune globulin for subcutaneous administration in patients with primary immunodeficiency disease.

That approval, in September, proved a particularly big win for Halozyme in the wake of the 2012 complete response letter for Hyqvia, likely putting to rest some “lingering regulatory questions about Enhanze products in the U.S.,” noted J.P. Morgan analyst Jessica Fye. (See BioWorld Today, Aug. 3, 2012.)

President and CEO Helen Torley also acknowledged the importance of Hyqvia’s approval. “It was the final thing that helped answer everyone’s questions,” she told BioWorld Today.

Together with positive reimbursement decisions for Enhanze-based versions of Herceptin (trastuzumab, Roche AG) and Mabthera (rituximab, Roche AG) in Europe, that “definitely increased interest in our technology. So this year we continued our discussions with a number of companies, and that included Janssen.”

News of the agreement sent shares of Halozyme (NASDAQ:HALO) climbing $1.01, or 13 percent, to close Wednesday at $8.65.

The deal with Janssen comes with a modest $15 million cash payment up front – Halozyme is hardly hurting for cash, with $134.5 million as of Sept. 30 – and up to $566 million in milestones across up to five targets, plus royalties on sales of products formulated with the Enhanze technology. The royalty rate was not disclosed, but Torley said it was in line with Halozyme’s previous deals with the likes of Baxter, Roche and Pfizer Inc., which offered rates in the mid-single digits.

In its third quarter earnings, Halozyme reported royalty revenues totaling $2.9 million, a 70 percent increase quarter over quarter. Those revenues represented April to June sales – Mabthera SC was only launched in June. But Herceptin SC, which launched in September 2013 – triggering a $10 million milestone payment from Basel, Switzerland-based Roche – appeared to be progressing well. Halozyme reported about 20 percent overall market share in the countries launched so far – in some countries the market share was 50 percent – and noted that the product won reimbursement approval in France, one of Europe’s largest oncology markets.

“It’s really a very nice royalty ramp up,” Torley said.

Both Halozyme and Roche are banking on the more convenient dosing to continue to add market share. Torley pointed to a survey Roche conducted, with 92 percent of the Herceptin patients who responded indicating a preference for subcutaneous delivery. In addition, the cost to health care systems is less with subcutaneous delivery simply because it reduces the time required for nurses, doctors and pharmacies to administer those biologics intravenously.

It will be up to Janssen to disclose the specific targets and programs. Enhanze can be employed with both existing products – turning intravenous infusion of Herceptin and Mabthera into the more conveniently dosed subcutaneously delivered products, for example – and also for development-stage programs, as with Pfizer’s rivipansel for the treatment of vaso-occlusive crisis in individuals with sickle cell disease.

Piper Jaffray analyst Charles Duncan said the latest collaboration offered “additional validation on the value proposition of Enhanze,” and noted in a research report that “we would not be surprised to see additional deals of a similar nature signed in 2015 given the broad applicability of Halozyme’s platform.”

And that is, in fact, part of the company’s plan. Halozyme disclosed a corporate restructuring move in November, cutting 22 jobs – 13 percent of the work force – to focus its strategy on two parts of its business: adding Enhanze deals and advancing its internal program, PEGPH20, in various cancer types.

Halozyme also decided to end a study testing Hylenex in type 1 diabetes after the first year, with plans to seek guidance from the FDA and a collaborator to take that program forward.

Those moves are expected to save the firm between $10 million and $15 million in 2015, David Ramsey, vice president and chief financial officer, told investors at the Oppenheimer Healthcare Conference last week. That’s money that will be reallocated to PEGPH20, he said.

PANCREATIC CANCER AND BEYOND

Easily the biggest value driver for Halozyme, PEGPH20 is also based on the rHuPH20 technology; instead of being formulated with an existing drug, however, it is designed to work on its own, breaking down the HA that accumulates around tumors and protects them. High HA levels are found in multiple tumor types, including breast, prostate, bladder, stomach, lung and colon cancers. Preclinical studies in a mouse model of non-small-cell lung cancer (NSCLC) expressing high HA levels showed nearly a doubling of survival with PEGPH20.

Halozyme is planning to start a phase II study testing PEGPH20 in NSCLC this month. But its lead indication is metastatic pancreatic cancer, and the company is enrolling patients in the phase II Study 202 trial designed to test PEGPH20 plus gemcitabine and Abraxane (nab-paclitaxel, Celgene Corp.) vs. gemcitabine and Abraxane in first-line treatment of patients with stage IV disease.

The trial suffered a brief stutter in April when reports of an imbalance in thromboembolic events prompted a temporarily hold. But Halozyme was allowed to resume the study in July, adding a second primary endpoint: In additional to progression-free survival, the study also will assess the thromboembolic event rate. (See BioWorld Today, April 7, 2014.)

Secondary endpoints in the trial include objective response rate and overall survival.

Because it’s an event-driven study, Torley said the firm has not yet disclosed a timeline for completion and data readout. In November, the company reported that 25 of the planned 100 patients expected to be enrolled in the post-clinical hold portion of the study had been recruited. Investors will be looking for additional details at Halozyme’s R&D Jan. 7.

Data from Study 202 are expected to inform the design of a registrational study, and continuing positive data could mean potential launch of PEGPH20 in 2019 – a conservative estimate – noted J.P. Morgan’s Fye. “Assuming 50 percent penetration into pancreatic cancer, we believe PEGPH20 could generate peak revenues to Halozyme approaching $500 million over time,” she wrote in a Dec. 9 research report.

As of now, the firm has no plans to partner PEGPH20, which received FDA fast track status in September, and is getting its clinical studies up and running on its own. “We’ve been adding oncology talent,” Torley said.

Meanwhile, a separate trial being conducted by SWOG Cancer Research, is testing PEGPH20 in combination with FOLFIRINOX chemotherapy in advanced pancreatic cancer. That phase Ib/II study also was halted temporarily earlier this year to accommodate a revised protocol.

In addition to the planned NSCLC study, Halozyme also is looking to start a trial shortly testing PEGPH20 in combination with an immune-oncology agent. And beyond that, Torley noted, “it has potential it tumors of lots of different types.”