I don't have access to the latest report but here is the previous one in case you have not seen it:
Piper - Like ENHANZE, Two New Deals Break Down Barriers for Enhanced Revenue Visibility - Raise Target $20 to $26
Halozyme Therapeutics, Inc. (HALO) Overweight
Like ENHANZE, Two New Deals Break Down Barriers for Enhanced Revenue Visibility
PRICE: US$13.18
TARGET: US$26.00
Rating — Overweight
Price Tgt US$20.00 US$26.00
FY17E Rev (mil) US$128.1 US$258.1
FY18E Rev (mil) US$156.5 US$161.5
FY17E EPS US$(1.05) US$(0.07)
FY18E EPS US$(0.90) US$(0.86)
52-Week High / Low US$15.20 / US$8.18
Shares Out (mil) 141.5
Market Cap. (mil) US$1,865.0
Avg Daily Vol (000) 911
Book Value/Share US$0.43
Net Cash Per Share US$2.98
Debt to Total Capital NA
Div (ann) NA
Fiscal Year End Dec
CONCLUSION
Halozyme announced a new ENHANZE license agreement with BMS focused in immunooncology,
as well as an expansion of its current agreement with Roche. We see three
key positives take-aways. First, we had pointed to additional ENHANZE agreements as
a growth driver for HALO in 2017/2018. The size and focus of the BMS agreement is
notable and supports our thesis, as well as diversifies risk to this growth outlook for
the entire ENHANZE pipeline. Second, we see both agreements as further validating
the clinical/commercial value proposition from ENHANZE, which remains a key tenet
of our perspective on the sustainability of Halo’s hybrid business model. Finally, these
agreements strengthen the BS and should extend cash runway and reduce execution risk
on the expanding scope of the company’s clinical efforts in oncology. For these reasons,
we're adding in value for the first BMS target and taking our PT to $26 from $20.
• BMS Agreement. The BMS oncology agreement announced this morning is the seventh,
and we believe largest, ENHANZE agreement Halozyme has inked to date. In addition to
a $105M upfront, it will receive milestones of up to $160M per target, and up to 11 targets
may be named in the next 5 years. As with Halozyme’s other ENHANZE partnerships, we expect mid-single-digit royalties on sales of any approved partnered products. Halozyme
has announced that an initial target will be PD-L1, and we’d hope to see CTLA-4 to
follow. BMS also has a number of intriguing antibody targets currently in Phase II for
solid tumors and hematological malignancies, as mono or combo therapy with OPDIVO,
including anti-CD137, anti-KIR, and anti-LAG3. While we don’t expect detailed disclosure
on the other targets to be studied, at least initially, overall we are encouraged by the
number of potential targets and size of potential end markets that could be accessed
with the BMS partnership. Please see Exhibit 1 for an overview of its cancer pipeline
from this year’s ASCO.
• Expansion of Roche. In addition, Halozyme and Roche expanded their existing
ENHANZE collaboration to include a new undisclosed target. Given that Roche is
already marketing ENHANZE products in the EU and now US, we see this news as
offering a validation of value from ENHANZE technology which is informed by significant
commercial experience. In addition, we’re reassured to see the additional commitment
from this long-standing partner, whose experience may allow for an efficient clinical and
regulatory development path for the new target.
• Model Updates: PT to $26. We are updating our model to reflect the upfront milestones
associated with these updates ($105M from BMS, $30M from Roche), of which $130M
we expect to be recorded as revenue during 2017. In addition, our revenue projections
and YE17 cash now reflect the company’s updated guidance of $245-$260M and
$380-395M, respectively.
We believe the company’s cash now extends into 2020 given our current assumptions on R&D spending. Thinking about the valuation, we are adding in value for the first BMS oncology target at this time. This, together with the updated cash, brings our PT from $20 to $26 – Exhibit 2. In advance of further ENHANZE development and commercial updates, as well as progress on the Phase III in pancreatic cancer, we reiterate OW on HALO.
