Finally, pps estimates reflecting my own assessment. From Scott Matusow in a Seeking Alpha article today 10/15/13. Note that he does not even mention fast insulin, another game changer IMHO. These pps estimates are more likely what R. Kirk is thinking when big pharma comes a courtin'. If anyone thinks he'll sell out for a measly $20, he has not really done his research. http://seekingalpha.com/article/1745142-our-best-small-cap-biotech-picks-for-the-rest-of-this-year?source=yahoo
Halozyme (HALO) engages in the research, development, and commercialization of human enzymes. Its research focuses on human enzymes that transiently modify tissue under the skin to facilitate the delivery of injected drugs and fluids, or to alter abnormal tissue structures for clinical benefit. The company?'s products are based on the Enhanze technology, a patented human recombinant hyaluronidase enzyme that enables the subcutaneous delivery of injectable biologics, such as monoclonal antibodies and other therapeutic molecules,
As explained to us by an anonymous investor who goes by the pseudonym "Fezziwig2008," Halozyme's platform uses Hyaluronidase, a naturally occurring human enzyme. It is released by the acrosome of the sperm cell to aid in penetrating the outer wall of the ovum, allowing fertilization. While animal forms of this enzyme have been used for decades, it was not until Halozyme began producing human recombinant hyaluronidase, or rhupH20, that the pure enzyme has been applied to multiple clinical targets, mostly via the subcutaneous space.
Pegylation is simply the addition of a polyethylene glycol moiety to any therapeutic molecule. In the case of rhupH20, that addition creates PEGPH20. The aim of this process is to enhance the delivery of the enzyme as an IV medication. Given as an enhancing agent with intravenous chemotherapy, PEGPH20 could reach a tumor and alter its environment in a unique and targeted two pronged approach.
PEGPH20 works by improving the blood flow to the tumor, It does this by removing hyaluron from the body of the tumor, physically de-bulking it. Since hyaluron is highly hydrophilic, its removal also removes water from the tumor, thereby decreasing the interstitial pressure surrounding the arterioles being used to deliver chemotherapy to the tumor. This reduction allows the arterioles to expand and more effectively deliver the treatment. Since pancreatic cancer is a high hyaluron producing tumor, Halozyme chose this form of cancerous tumor to test the effectiveness of PEGPH20. Other types of malignancies that have high hyaluron content include bladder, ovarian, and some forms of breast cancer. Of great interest is that high levels of hyaluron are found more in metastatic than in primary lesions. As a component of the extracellular matrix, it promotes spread by acting as a scaffold for tumor migration. So, by removing hyaluron, PEGPH20 should allow for more intense chemotherapy and reduces one means of tumor spread.
Halozyme has initiated a Phase 2 multicenter, randomized clinical trial evaluating PEGPH20 in combination with nab-paclitaxel and gemcitabine to confirm the combination treatment effect (ORR, PFS and OS) based on HA levels. The study plans to enroll approximately 124 patients with stage IV pancreatic ductal adenocarcinoma. Halozyme is also developing an HA diagnostic tool to be used in this study to evaluate the potential treatment benefit based on tumor HA levels at baseline. This diagnostic approach may enable additional PEGPH20 combination clinical studies in other HA-rich tumor types.
We should see some data in a few months from this study. If successful, PEGPH20 could be a lifesaver for those suffering from hard to treat cancers -- especially Pancreatic cancer. Halozyme owns 100% of this technology and plans to "go-it-alone" with this treatment.
The company also has 2 near-term catalysts approaching; the first one expected is an update from its partner Baxter International (BAX) which plans to announce an update in an earnings conference call on October 17th, concerning Hylenex recombinant launch Details for Germany and Scandanavia, plus an FDA re-filing of the drug.
The second is a much bigger catalyst when the Committee for Medicinal Products for Human Use (CHMP) convenes October 21-24 to decide whether to recommend MabThera Subcutaneous (MabTheraSC) to the European Medical Agency (EMA) for approval.
The CHMP is like a European version of an FDA Advisory Committee Meeting (ADCOMM), in the sense that a recommendation or opinion is given for approval or rejection.
In June, the CHMP announced a positive opinion for Herceptin and the stock rallied nearly $2 in one day. A similar situation could be setting up for Halozyme with MabTheraSC, and we feel it has yet to be valued into the stock.
Halozyme is our best small-cap long-term speculative investment pick, as we feel a stock price over $20 in the next year is likely, and potentially over $50 in the next three years or so. One biotech investor I have spoken with has indicated to me that he holds 2M shares of Halozyme and agrees with our assessment of Halozyme's future prospects.
Baker Brothers LLC also holds over 6M shares of Halozyme, which is also very bullish. The Bakers are well-known throughout the market as top-notch small cap biotech investors. They have done very well over the last year, and their record is well documented. With multiple drugs approved already, Halozyme could be net cash positive next year, and if PEGPH20 continues to show positive results, Halozyme could be touching $100 a share in 5 years or so. Jazz Pharma (JAZZ) was once a stock selling $3 just 5 years ago, and currently sells for over $84 a share, with a recent all-time high of over $93. We believe Halozyme could see similar price appreciation in time.
