Halozyme Therapeutics Inc (HALO)

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http://seekingalpha.com/article/2285453-2nd-half-of-2014-biotechnology-catalysts-part-2?uprof=46&dr=1


July 31 Halozyme FDA Advisory Panel

Halozyme Therapeutics (HALO) will face an FDA advisory panel on July 31. This panel will be over Halozyme's drug HyQvia, and will make a recommendation on whether or not the FDA should approve the drug for commercial sale in the United States. It is important to note, however, that the panel vote is nonbinding, so the FDA is in no way bound to follow the advice of its panels. Still, the FDA very rarely overrules the advice of its panels, so this will be a crucial step for Halozyme.

Halozyme is attempting to obtain approval for HyQvia as a primary replacement therapy in patients with primary immunodeficiency. If approved, this drug would add to Halozyme's growing drug portfolio and add another revenue pathway for the company. Halozyme needs this revenue, as the company lost $26.5 million last quarter on $12 million in revenue. The product is partnered with Baxter International (BAX), and is approved for use in multiple European countries. Should HyQvia obtain FDA approval, it would allow for Halozyme to obtain much needed revenue in order to continue advancing the other parts of its development pipeline. Halozyme is entitled to mid-single digit royalties on net sales of the drug. HyQvia is already approved in a variety of European countries which, although the FDA is not bound to follow the decisions of other countries, should help to make investors confident in the approvability of HyQvia. We are not exactly sure of the approval date for HyQvia after the FDA panel. I project the PDUFA date to be August 21, 2014, as the letter was dated 5/21/2014 announcing that the FDA was choosing to extend the drug review time. The typical extension time is a three-month extension, which is how I arrived at the August 21, 2014 PDUFA date. This decision will be important to both Halozyme and Baxter moving forward, as it has the potential to provide both companies with significant revenue. Investors should get a good idea of how the FDA views the treatment through the briefing documents released before the panel, and a panel vote in favor of HyQvia should go a long way towards obtaining FDA approval for the drug. I do expect a slight run-up in share price before the FDA advisory panel, as this decision will be very important to Halozyme shareholders. However, in my opinion after the panel's decision we will not likely see a large run-up due to the fact that approval or denial will likely be baked into the share price of the stock at that point.