A look at a small-cap biotech company that investors should consider.
Small-cap companies are often overlooked by investors. In that regard, Brian Feroldi, writing for The Motley Fool, takes a look at a small-cap biotech company that investors should consider.
Based in San Diego, Halozyme Therapeutics focuses on the oncology area. Its lead program is PEGPH20 (pegvorhyaluronidase alfa) for solid tumors.
The company has two arms of its business model. One is its ENHANZE technology, which it uses in partnership with pharma companies to allow infused drugs to be delivered by way of a subcutaneous injection. The second is PEGH20, which is being evaluated in pancreatic cancer. In a Phase II trial, PEGPH20 with Celgene’s Abraxane and Gemzar therapies nearly doubled progression-free survival in some patients.
On Nov. 10, the company presented nonclinical data at the 32nd Annual Meeting of the Society for Immunotherapy of Cancer (SITC) that showed PEGPH20 increased infiltration of immune cells into the tumor microenvironment. This resulted in enhanced effectiveness of immuno-oncology compounds in a colon tumor model.
And on Dec. 10, the company signed a collaboration and license deal with Alexion Pharmaceuticals that allows Alexion to use the ENHANZE technology. The deal lets Alexion work on up to four targets, including a next-generation subcutaneous formulation of ALXN1210, a long-acting C5 complement inhibitor.
Halozyme received an upfront payment of $40 million from Alexion with the potential of additional payments up to $160 million for each target developed. There are also possible mid-single digit royalties on sales of commercial products.
“Alexion’s goal is to provide continued innovation and more treatment options that can significantly improve the lives of patients with rare diseases,” said John Orloff, Alexion’s executive vice president and head of Research & Development, in a statement. “We are excited to partner with Halozyme and look forward to utilizing its ENHANZE technology.”
Halozyme has similar partnerships with Roche, Johnson & Johnson, and Bristol-Myers Squibb.
At its third-quarter financial report on Nov. 7, Halozyme reported total revenues of $63.7 million for the quarter and $127 million for the nine-month period. Its overall operating expenses for the quarter were $55.5 million, and for the three-quarter period, total operating expenses were $171.9 million.
“During the third quarter, we realized clear benefits from strategies we have been executing against in both the ENHANZE and PEGPH20 pillars of our business,” said Helen Torley, Halozyme’s president and chief executive officer, in a statement. “On ENHANZE we significantly increased 2017 revenue and the potential future value of the technology with the signing of the landmark collaboration agreement with Bristol-Myers Squibb for development of up to 11 immuno-oncology targets, and with the expansion of our collaboration agreement with Roche. In addition, our partner Janssen took an important step towards the commercialization of a subcutaneous formulation of Darzalex with the initiation of a Phase III study.”
Feroldi noted, “In total, Halozyme offers investors a lucrative royalty business with PEGPH20 as a growth kicker. That’s a compelling combination that makes Halozyme worthy of a closer look.”
