Halozyme Therapeutics Reports Third Quarter 2009 Financial Results

November 6, 2009 7:29 AM EST

SAN DIEGO--(BUSINESS WIRE)-- Halozyme Therapeutics, Inc. (Nasdaq: HALO), a biopharmaceutical company developing and commercializing products targeting the extracellular matrix for the endocrinology, oncology, dermatology and drug delivery markets, today reported financial results for the three and nine months ended September 30, 2009.

"Our alliances have continued to achieve strong progress with Roche's initiation of the Phase 3 registration trial for subcutaneous Herceptin, and Baxter's completion of patient enrollment in the Phase 3 GAMMAGARD with PH20 pivotal study and the launch of Hylenex in pediatric hydration," said Jonathan Lim, M.D., president and CEO. "Our balanced business strategy consisting of partnered development programs and proprietary pipeline product candidates made noteworthy advances through another quarter."

Third Quarter 2009 and Recent Corporate Developments and Scientific Achievements

    --  Roche initiated a Phase 3 clinical trial with subcutaneous Herceptin
        formulated with Halozyme's recombinant PH20 enzyme. This represents the
        first Roche product to enter a Phase 3 registration trial as part of the
        Halozyme-Roche collaboration, and initiation of this clinical trial
        triggered a milestone payment of $5 million to Halozyme. Roche intends
        to enroll 552 patients with HER2-positive breast cancer in the study.
    --  Roche also initiated a Phase 1 pharmacokinetic clinical trial with a
        subcutaneous formulation of a Roche biologic using Halozyme's
        recombinant PH20 hyaluronidase enzyme. This biologic represents the
        third Roche proprietary compound directed to an exclusive target to
        enter the clinic as part of the Halozyme-Roche collaboration. Initiation
        of the study triggered a milestone payment to Halozyme for an
        undisclosed amount.

    --  Halozyme's ultrafast insulin program moved forward during the third
        quarter. A Phase 1 clinical study began in September that will assess
        the effects of three approved prandial (mealtime) insulin analogs
        administered with PH20 compared to each of the analogs alone. This
        randomized, six-way cross-over design, euglycemic clamp study will
        compare the pharmacokinetics (PK) and glucodynamics (GD) of three
        insulin analogs. Previous studies conducted by Halozyme have
        demonstrated that the combination of insulin lispro (Humalog(R)) with
        PH20 yielded faster systemic insulin absorption, increased peak insulin
        concentrations, and improved glycemic control when compared to insulin
        lispro alone. The study is expected to enroll 18 healthy subjects and
        the results should be available by 2Q10. Our goal is to develop a best
        in class insulin product in comparison to the current gold standard
        analog products on the market today.
    --  Baxter, Halozyme's licensee, launched Hylenex (hyaluronidase human
        injection) in early October at the scientific assembly of the American
        College of Emergency Physicians (ACEP) for use in pediatric rehydration.
        Hylenex allows fluids to be administered subcutaneously rather than
        through a vein, which can help lead to successful rehydration more
        quickly. Clinical data presented at the ACEP meeting showed that
        subcutaneous treatment facilitated by Hylenex successfully rehydrated
        94% of pediatric patients, that 90% of catheters were successfully
        inserted on the first attempt, and 96% of clinicians rated the procedure
        easy to perform. Hylenex rehydration was preferred by parents as nine
        out of 10 surveyed were satisfied or very satisfied with the procedure.

Third Quarter 2009 Financial Results

The net loss for the third quarter of 2009 was $13.9 million, or $0.16 per share, compared with a net loss for the third quarter of 2008 of $10.9 million, or $0.14 per share. Net loss for the nine months ended September 30, 2009 was $45.7 million, or $0.54 per share, compared with a net loss of $31.8 million, or $0.40 per share for the comparable period last year.

    --  Revenue for the third quarter of 2009 was $3.0 million, compared to $2.5
        million for the third quarter of 2008. Revenues under collaborative
        agreements for the third quarter of 2009 were $2.6 million, compared to
        $2.2 million for the third quarter of 2008. Revenues under collaborative
        agreements in the third quarter of 2009 primarily consisted of the
        amortization of license fees and a milestone payment received from
        Baxter and Roche of $1.8 million and research and development
        reimbursements from Baxter and Roche of $0.8 million.
    --  Research and development expenses for the third quarter of 2009 were
        $13.2 million, compared to $10.1 million for the third quarter of 2008,
        primarily due to an increase in clinical trial expenses as a result of
        higher spending on the ultrafast insulin program, and an increase in
        research and development headcount.
    --  Selling, general and administrative expenses for the third quarter of
        2009 were $3.7 million, compared to $3.5 million for the third quarter
        of 2008.
    --  Cash and cash equivalents totaled $77.6 million as of September 30,
        2009, compared with $63.7 million as of December 31, 2008 and $72.5
        million as of September 30, 2008. During the third quarter of 2009 the
        company received cash of $2.8 million related to warrant exercises. Net
        cash burn for the third quarter of 2009 was $11.6 million.

Upcoming Corporate and Scientific Presentations

Halozyme management will be presenting at the Lazard Capital Markets 6th Annual Healthcare Conference to be held in New York City on November 18, 2009 at 11:30 a.m. To listen to the event live or to hear the replay please visit the Halozyme corporate Web site. The company will also be presenting results from an intra-patient variability clinical study at the Diabetes Technology Society in San Francisco on November 6, 2009.

Conference Call

Halozyme management will host a conference call and webcast on November 6, 2009 to discuss these topics beginning at 8:00 a.m. PST (11:00 a.m. EST). To participate via telephone, please call 888-256-9044 for domestic callers or 706-643-5585 for international callers. The conference ID # is 37881291. A telephone replay will be available beginning approximately two hours after the call by dialing 800-642-1687 for domestic callers or 706-645-9291 for international callers. The conference call will be broadcast live over the Internet at www.halozyme.com and the replay will be available on the company's Web site for seven days.

About Halozyme Therapeutics, Inc.

Halozyme is a biopharmaceutical company developing and commercializing products targeting the extracellular matrix for the endocrinology, oncology, dermatology and drug delivery markets. The company's portfolio of products and product candidates is based on intellectual property covering the family of human enzymes known as hyaluronidases and additional enzymes that affect the extracellular matrix. Halozyme's Enhanze(TM) technology is a novel drug delivery platform designed to increase the dispersion and absorption of biologics. The company has key partnerships with Roche to apply Enhanze technology to Roche's biological therapeutics for up to 13 targets and with Baxter BioScience to apply Enhanze technology to Baxter's biological therapeutic compound, GAMMAGARD(R) Liquid. The product candidates in Halozyme's research pipeline target multiple areas of significant unmet medical need. For more information visit www.halozyme.com.

Safe Harbor Statement

In addition to historical information, the statements set forth above include forward-looking statements (including, without limitation, statements concerning the timing and scope of our clinical trials as well as clinical trials performed by our partners) that involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. The forward-looking statements are also identified through use of the words "believe," "enable," "may," "will," "could," "intends," "estimate," "anticipate," "plan," "predict," "probable," "potential," "possible," "should," "continue," and other words of similar meaning. Actual results could differ materially from the expectations contained in forward-looking statements as a result of several factors, including regulatory approval requirements and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the company's reports on Forms 10-K, 10-Q, and other filings with the Securities and Exchange Commission.

Halozyme Therapeutics, Inc.

Condensed Consolidated Statements of Operations

                Quarters Ended                    Nine Months Ended

                September 30,                     September 30,

                2009             2008             2009             2008

                (unaudited)      (unaudited)      (unaudited)      (unaudited)

REVENUES:

Revenues under
collaboration   $ 2,617,776      $ 2,194,325      $ 6,558,145      $ 5,209,897
agreements

Product sales     411,109          267,901          669,267          492,066

Total revenues    3,028,885        2,462,226        7,227,412        5,701,963

OPERATING
EXPENSES:

Cost of           102,638          130,720          151,939          205,036
product sales

Research and      13,162,748       10,080,775       41,763,972       27,450,454
development

Selling,
general and       3,703,099        3,450,450        11,093,563       11,454,228
administrative

Total
operating         16,968,485       13,661,945       53,009,474       39,109,718
expenses

OPERATING LOSS    (13,939,600 )    (11,199,719 )    (45,782,062 )    (33,407,755 )

Interest          29,318           327,561          86,391           1,579,210
income

NET LOSS        $ (13,910,282 )  $ (10,872,158 )  $ (45,695,671 )  $ (31,828,545 )

Basic and
diluted net     $ (0.16       )  $ (0.14       )  $ (0.54       )  $ (0.40       )
loss per share

Shares used in
computing
basic and         89,570,540       80,293,800       85,086,456       79,383,614
diluted net
loss per share

Halozyme Therapeutics, Inc.

Condensed Consolidated Balance Sheets

                                            September 30,     December 31,

                                            2009              2008

                                            (unaudited)

ASSETS

Current assets:

Cash and cash equivalents                   $ 77,635,792      $ 63,715,906

Accounts receivable                           1,589,750         7,264,410

Inventory                                     1,238,254         441,323

Prepaid expenses and other assets             2,942,015         2,591,149

Total current assets                          83,405,811        74,012,788

Property and equipment, net                   2,703,592         2,549,925

Total Assets                                $ 86,109,403      $ 76,562,713

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable                            $ 5,121,914       $ 6,668,791

Accrued expenses                              5,749,610         3,995,897

Deferred revenue                              4,941,580         3,553,730

Total current liabilities                     15,813,104        14,218,418

Deferred revenue, net of current portion      52,747,933        45,894,726

Deferred rent, net of current portion         947,881           1,069,573

Stockholders' equity:

Common stock                                  91,095            81,554

Additional paid-in capital                    175,854,683       128,948,064

Accumulated deficit                           (159,345,293 )    (113,649,622 )

Total stockholders' equity                    16,600,485        15,379,996

Total Liabilities and Stockholders' Equity  $ 86,109,403      $ 76,562,713

    Source: Halozyme Therapeutics, Inc.

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