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Biotech Catalyst Play: Halozyme Therapeutics, Inc. (NASDAQ:HALO)

Biotech Catalyst Play: Halozyme Therapeutics, Inc. (NASDAQ:HALO)
Written by
Chris Sandburg
Published on
June 5, 2017
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InsidrFinancial

On June 26, the FDA will report its decision on the application of drug called subcutaneous rituximab. The drug is a reformulation of an already very well established oncology drug and is under application as a potential therapy for the treatment of certain blood cancers, including previously untreated follicular lymphoma, previously untreated diffuse large B-cell lymphoma (DLBCL), relapsed or refractory low grade or follicular lymphoma, and previously untreated and relapsed or refractory chronic lymphocytic leukemia (CLL).The Biologics Licensing Application (BLA) is a Genentech submission, so the outcome is going to translate to some movement in Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY). We're not that interested in that impact, however. A favorable outcome will probably only move the aforementioned a couple percentage points and here at Insider Financial, we like our runs much bigger than that.So why are we discussing it here? Well, the drug is a combination of a Genentech asset and a technology created by a much smaller company, Halozyme Therapeutics, Inc. (NASDAQ:HALO). The collaboration is more than a decade old, and a regulatory green light will see Halozyme pick up milestone payments and royalties on a drug that – in its current form – generates more than $3 billion annually.With this in mind, then, if the decision comes out as favorable, Halozyme is going to run. Low to mid double digits is likely, more is a possibility.Here's what we're looking at.The drug's called subcutaneous rituximab and – as its name suggests – it's designed as a subcutaneous administration type formulation of the already approved cancer drug, rituximab, better known as Rituxan. It's most often used in patients with blood type cancers, things like non-Hodgkin's lymphoma, chronic lymphocytic leukemia, and it's a chemotherapy drug that – right now, in the US – requires intravenous (IV) administration. It works, and it's used widely, but this administration type takes between 2-4 hours. Some of these patients need dosing a few times a week, so to sit for hours at a healthcare facility can be a real hassle. A necessary hassle, of course, but a hassle nonetheless.Halozyme has invented what it calls recombinant human hyaluronidase (rHuPH20), which is an enzyme that allows for the quick delivery of an otherwise intravenous active ingredient by way of injection under the skin. It's this enzyme that Roche has licensed from the company and combined with Rituxan to create this alternative delivery method. The efficacy of the drug is the same or similar, as is the tolerability profile. What's different, however, is the administration time. The drug takes between 5 and 7 minutes to administer, wiping close to 98% off the time a patient has to spend under-dose. That's a massive difference for patients that need weekly or more dosing, and if the drug is approved, chances are we'll see it pick up a large portion of the IV market, very quickly. And we're not guessing here – it's already approved in Europe (where it's called MabThera) where it's most commonly administered subcutaneously.So, we're obviously looking for an FDA green light for the drug when the agency reports its decision, but what are the chances of us seeing one?Very good.The data that supports the application is strong and thorough. The drug's already approved and widely used in Europe. The active compound is already regarded as safe and effective in the US. A panel validated the asset as part of an advisory meeting earlier this year, at which physicians and oncology experts voted unanimously (11-0) in favor of the FDA approving the drug. Things look good and we'd be surprised if the decision didn’t go Halozyme's way come June 26. Of course, there's always room for a surprise – this is the biotechnology space – but from a risk limitation perspective, this one's about as good as you're going to get.Note that the action date is June 26, but there's a chance we might see a decision hit press earlier, hence our highlighting of this one now.We will be updating our subscribers as soon as we know more. For the latest updates on HALO, sign up below!Disclosure: We have no position in any of the securities mentioned and have not been compensated for this article.

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