Halozyme Surges on Pfizer Deal

Halozyme Therapeutics (NASDAQ: HALO  ) has soared 27% today on news of a deal with Pfizer (NYSE: PFE  ) . Pfizer paid $8 million up front to use Halozyme's recombinant human hyaluronidase enzyme, or rHuPH20, on two therapeutic targets with the option to add four more targets upon subsequent payments.

What it means
Halozyme's specialty is in the extracellular matrix, an area outside of the cell that handles several important functions. rHuPH20 is an enzyme that affects the extracellular matrix in a way that allows the skin to absorb drugs more effectively.

The impact for Pfizer is that it gains access to a promising drug delivery agent at a low initial cost for use in combination with its biologic products. Pfizer currently has 23 biologic or biosimilar products in its pipeline. The first two targets were not disclosed in the announcement. Several good fits exist, including a couple of Pfizer's diabetes drugs in Phase 1 and a rheumatoid arthritis biosimilar in Phase 1.

Halozyme gains several benefits from the arrangement. Financially, $8 million isn't small potatoes for a company that reported revenue of $20.5 million for the first nine months of this year -- and there's the potential to make much more. If Pfizer hits certain milestones related to development, regulatory approval, and sales, Halozyme could receive up to $507 million over time, plus potential royalties.

Landing a partner with the scale and deep pockets of Pfizer is another big plus. Halozyme has entered into agreements with other companies in the past, including Roche, Baxter (NYSE: BAX  ) , and ViroPharma (NASDAQ: VPHM  ) . The agreement with Pfizer underscores the value of the technology Halozyme has to offer. 

Looking ahead
The Pfizer deal has the potential to enable Halozyme to mount a recovery from bad news received a few months ago. In August, the FDA rejected Baxter's Biologics License Application for HyQ, which targeted primary immunodeficiency disease and used rHuPH20. Halozyme's shares tanked on the disappointing news.

However, Halozyme's shares attempted to bounce back in September following news that the FDA was allowing ViroPharma to resume clinical studies of Cinryze in combination with rHuPH20. That comeback quickly faded, though.

There's no guarantee that the latest resurgence will last, either. Good news is good news, though. We take it when we can get it.

And here's some good news for you: The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out what it is in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2166247, ~/Articles/ArticleHandler.aspx, 7/22/2014 10:28:36 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement