Halozyme's Q1 Loss Widens - Analyst Blog

Halozyme Therapeutics, Inc. HALO reported first quarter 2014 loss of 22 cents per share, wider than the year-ago loss of 17 cents per share and the Zacks Consensus Estimate of a loss of 16 cents per share.

First quarter revenues increased 1.1% from the year-ago quarter to $11.9 million, missing the Zacks Consensus Estimate of $15 million.

The Quarter in Detail

In the reported quarter, Halozyme earned collaboration and royalty revenues and from the sale of rHuPH20. Hylenex generated net sales of $2.5 million.

R&D expenses decreased 2.8% year over year to $21.4 million. This decrease was primarily driven by lower manufacturing costs.

SG&A expenses increased 35.7% year over year to $10.3 million. The increase was primarily attributable to increase in compensation costs.

Pipeline Updates

We remind investors that in Apr 2014, the U.S. Food and Drug Administration (FDA) had placed a clinical hold on patient enrollment and dosing of PEGPH20 in a phase II study (Study 202) evaluating PEGPH20 as a first-line therapy for patients suffering from stage IV metastatic pancreatic cancer. However, in May 2014, after reviewing the data provided by Halozyme, the Data Monitoring Committee (DMC) decided that the study may proceed, with modifications, to continue patient enrollment and dosing of PEGPH20.

Halozyme has provided this information to the FDA requesting the agency to withdraw the clinical hold on Study 202. The company can resume patient enrolment once the clinical hold is lifted.

Halozyme also has a number of partnered programs. Roche's (RHHBY) MabThera SC (subcutaneous formulation of MabThera), developed using Halozyme's rHuPH20, was approved by the European Commission EC in Mar 2014 for the treatment of common forms of non-Hodgkin's lymphoma (NHL), which includes follicular lymphoma and diffuse large B cell lymphoma.

This new subcutaneous formulation of MabThera can be administered within 5 minutes (compared to 2.5 hours for the intravenous formulation). Roche intends to launch MabThera SC in the EU over the next several months.

Meanwhile, Hylenex recombinant met the primary endpoint in the CONSISTENT 1 study. Hylenex recombinant and a new formulation of Hylenex are under FDA review as pre-treatment of the insulin infusion site in type I diabetes patients dependent on continuous subcutaneous insulin infusion CSII.

Halozyme also announced positive top-line results from a proof of concept phase I/II study on HTI-501 for the treatment of cellulite.

Additionally, Halozyme is in discussions with the FDA regarding a label update for Hylenex to include important safety and efficacy data.

Halozyme carries a Zacks Rank #3 (Hold). We expect investor focus to remain on the FDA's decision regarding the lifting of the clinical hold on Study 202. Some better-ranked stocks in the health care sector are Gilead Sciences Inc. GILD and ANI Pharmaceuticals, Inc. ANIP. Both carry a Zacks Rank #1 (Strong Buy).