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Halozyme Says Roche Work Unaffected by FDA Concerns over HyQ Program

Xconomy San Diego — 

San Diego’s Halozyme Therapeutics (NASDAQ: HALO) told analysts and investors today it cannot provide a new timeline for its derailed HyQ program until company officials can meet with FDA regulators. But when the company will meet with regulators was not addressed during a conference call this afternoon.

The price of Halozyme’s stock plunged by 50 percent last week, closing Thursday at $4.30 a share, after the company said the FDA had asked for more pre-clinical data about HyQ, which combines Baxter’s immunoglobulin with Halozyme’s recombinant human hyaluronidase, or rHuPH20. The stock has regained some lost ground since then, and closed at $4.82 today, after gaining 21 cents, or less than 5 percent in regular trading.

Halozyme has been working with Baxter on HyQ for treating immune deficiency, but the company developed rHuPH20 to be used with a wide variety of drugs. It is an enzyme designed to accelerate the distribution and cellular absorption of large-molecule, biologic drugs.

During this afternoon’s call, Halozyme CEO Greg Frost reiterated that the company does not expect the FDA’s concerns to extend to the company’s work with Roche, in which Halozyme’s proprietary enzyme is combined with the cancer drugs trastuzumab (Herceptin) and rituximab (Rituxan).

As a result, Halozyme CFO Kurt Gustafson told analysts said the company should still be able to meet its profitability goal of achieving profitability by 2014. “The major drivers for us to achieve profitability have always been the Roche programs, given the size of the programs,” Gustafson said. He added, though, that the company plans to recalculate its projections in the fall for a meeting with analysts and investors scheduled for Oct. 2.

Until the regulatory concerns can be addressed, however, the FDA’s Center for Biologics Evaluation and Research (CBER) asked Halozyme to halt the use of its enzyme in human patients in clinical studies with Baxter and ViroPharma, a Pennsylvania pharmaceutical focused on viral diseases.

In its statement last week, Halozyme said, “The primary issues raised in the letter focused on non-neutralizing antibodies generated against recombinant human hyaluronidase, and the possible effects of these antibodies on reproduction, [fetal] development, and fertility.”

Frost elaborated during the conference call, saying, the FDA was concerned about the absolute levels of antibodies seen in patient blood samples following HyQ injections. There were no signs of any type of allergic reaction, Frost said. In comparing patient blood samples taken before and after the injections, Frost said antibody levels “are orders of magnitude larger than in the general population.”

In contrast Frost said Halozyme has not seen a similar boost in antibody levels in before-and-after studies done with its proprietary drug and herceptin, Roche’s anticancer drug, or in studies that combine rHuPH20 with insulin to treat diabetes.

“There’s no adverse events that have been seen to date associated with anti-PH20 antibodies,” Frost said. “The questions [raised by] the blood products division aren’t based on any animal findings, for example, that we have with the enzyme, which include the full battery of tests, including fertility and development as well as chronic administration. However, due to the magnitude of the titers that were observed, they are essentially asking for pre-clinical safety studies to evaluate the potential risk of exposure to these antibodies in a similar battery of tests in relevant models.”

Halozyme reported a second-quarter net loss of $14 million, or 13 cents a share, compared with net income of $3.1 million, or 3 cents a share, during the second quarter of 2011. The company said second-quarter revenue amounted to $7.8million, compared to $23.2 million for the second quarter of 2011. Frost explained that most of the year-ago revenue was generated by partnership agreements signed at that time.