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 (UNKNOWN:VPHM.DL). 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.