End Of September Catalyst: Pancreatic Cancer Data For HaloZyme

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Halozyme (NASDAQ: HALO) is developing PEGPH20 ((PEGylated recombinant human hyaluronidase) in combination with gemcitabine (chemotherapy) for the treatment of patients with stage IV metastatic pancreatic cancer. Positive results were released at ASCO in June of this year pertaining to the Phase Ib trial studying PEGPH20/gemcitabine. Preliminary safety and efficacy data were released with very good response rates. Halozyme is to present more extensive data on it pancreatic cancer therapy at the 32nd European Cancer Congress (ESMO) at the end of September of this year.

Overall survival and progression free survival rates will be presented at a poster session at ESMO. Pancreatic cancer is one of the most difficult cancers to treat with non-chemo therapies, so a breakthrough here would definitely be welcomed in this market.

Cancer drugs that treat unmet needs tend to receive more speculation value over others, mainly because the companies who make and market these drugs can charge pretty much what they want for the treatment. Insurance companies under current law are required to pay for these treatments. This is why we see some of these small cap biotech companies with potential unmet need drugs being acquired for hefty premiums.

Additional Near-Term Catalysts:

  • MabThera

Herceptin SC was one of two monoclonal antibody therapies combined with Halozyme’s proprietary delivery technology to have received a positive opinion by the CHMP (Committee for Medicinal Products for Human Use). The second therapy is MabThera SC, or Rituximab, with trade name Rituxan.

Rituxan was approved in the US in 1997 for the treatment of non-Hodgkin’s lymphoma. With validation of the approval of the monoclonal antibody Herceptin SC, it’s looking like MabThera will also be getting a good opinion in favor of the line extension application for MabThera to be used subcutaneously. The CHMP meeting is scheduled for September 16-19th. It is also extremely important to note that a member of PRAC (Pharmacovigilance Risk Assessment Committee) gave MabThera a positive endorsement and perhaps signals good news coming later this week. Here is what the committee member Doris Stenver has stated in the minutes released from the May meeting of this year:

As per agreed criteria, the PRAC endorsed without further planary discussion the conclusions of the Rapporteur on the assessment of this updated 9.1 of the RMP for the above mentioned medicine provided in support of a variation for a line extension to add subcutaneous route of administration.

The Pharmacovigilance Risk Assessment Committee (PRAC) is the committee at the EMA that is responsible for assessing and monitoring safety issues for human medicines. From this statement and endorsement, it is reasonable to speculate that MabThera will be getting a positive opinion this upcoming week.

  • Insider Buying and Option Activity

Recently, company director Kathryn E. Falberg bought $681.6K of the company’s stock, at an average cost of $6.82 a share. This “buy” was not an option grant, but an actual open market buy, where she is actually risking her own money. Falberg has had major success before investing in a company where she was a sitting board member. On 08/31/2010 Falberg bought 50,000 shares of Jazz Pharma (JAZZ) at an average price of $8.72 a share. Jazz has three major drugs on the market; Xyrem for the treatment of cataplexy and excessive daytime sleepiness in patients with narcolepsy, Erwinaze to treat acute lymphoblastic leukemia, and Prialt for the management of severe chronic pain. All of these have proven to be successful for the company. Lately, the buzz surrounding Jazz has been its rumored acquisition interest, causing a further rally in the stock to over $88 a share.

David A Ramsay, Halozyme Therapeutics’s VP and Chief Financial Officer, recently acquired 130,000 on September 16, 2013. Ramsay now owns 236,735 shares of the company.

Halo reminds us of Jazz Pharma quite a bit, as its business model is similar — starting out as a royalty based company, and using those royalties to grow its proprietary products.

  • Baker Brothers are Bullish on Halozyme

Baker Brothers LLC holds at least 6,553,150 share of Halo, which is also significant, considering the recent success it has had with ACADIA Pharma (NASDAQ: ACAD) , buying shares when Acadia’s stock was selling for under $2 per share. Many investors felt ACADIA was a long shot, at best to receive positive data from its 2nd Phase III trial of pimavanserin, which is designed to treat Parkinson’s disease psychosis (PDP). However, on November 27th, 2012, the company reported positive data results, prompting a huge rally in the stock that has continued to this day. Pimavanserin, if approved by the FDA, could be worth billions to the company and its investors.

The Bakers received much notoriety for their Acadia buy, as the stock has appreciated over 1000% in less than one year. While we do not feel Halo has the type of price appreciation potential as Acadia, we do believe the stock will see gains over 100% in the next year or so.

StockMatusow’s 1 year price target opinion is somewhere between $18 and $21 a share, depending on the success or failure of PEGPH20 in further clinical trials. Our short term target opinion is $10 to $10.25 running into the near term catalyst events by the end of the current month.

Disclosure: I am long HALO.

Disclaimer: This article is intended for informational and entertainment use only, and should not be construed as professional investment advice. They are my opinions only. Trading stocks is risky — always be sure to know and understand your risk tolerance. You can incur substantial financial losses in any trade or investment. Always do your own due diligence before buying and selling any stock, and/or consult with a licensed financial adviser.can incur substantial financial losses in any trade or investment. Always do your own due diligence before buying and selling any stock, and/or consult with a licensed financial adviser.

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