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Edited Transcript of HALO earnings conference call or presentation 7-Nov-17 9:30pm GMT

SAN DIEGO Nov 8, 2017 (Thomson StreetEvents) -- Edited Transcript of Halozyme Therapeutics Inc earnings conference call or presentation Tuesday, November 7, 2017 at 9:30:00pm GMT

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* Helen I. Torley

Halozyme Therapeutics, Inc. - President, CEO & Director

* James S. Mazzola

* Laurie D. Stelzer

Halozyme Therapeutics, Inc. - CFO and SVP

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* Nicholas M. Abbott

* Yuko Oku

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Operator [1]

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Good afternoon, and welcome to the Halozyme Therapeutics Third Quarter 2017 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Jim Mazzola, Vice President of Investor Relations at Halozyme. Mr. Mazzola, you may begin your conference.

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James S. Mazzola, Halozyme Therapeutics, Inc. - VP of Corporate Communications & IR [2]

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Thank you, Todd, and good afternoon, everyone. Welcome to our Third Quarter 2017 Financial Results Conference Call. Following market close today, we issued a news release with a summary of our results and posted a short slide presentation to accompany this call. You will find both of these on the investor page at halozyme.com. Leading our call today is Halozyme's President and Chief Executive Officer, Dr. Helen Torley, who'll provide an overview and update on our business; and then Laurie Stelzer, our Chief Financial Officer, will review financial results for the September quarter, followed by a Q&A period. Also with us today for the call is Dr. Dimitrios Chondros, our Chief Medical Officer. Before we begin, let me remind you that during the conference call we will be making forward-looking statements. The company's actual results may differ materially from those expressed in or indicated by such forward-looking statements. For a description of risks, please refer to our quarterly and annual filings with the Security and Exchange Commission. Now let me turn the call over to Helen.

Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [3]

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Thank you, Jim, and good afternoon, everybody, and thank you for joining us today. This has been a strong quarter progress for Halozyme, and I'm going to begin the call with 5 key highlights. Firstly, we began the quarter with Genentech's launch of RITUXAN HYCELA in the United States. This marks the first of what we now expect to be many oncology approvals for ENHANZE in the U.S. Secondly, in September, we announced the signing of 2 new ENHANZE agreements. Our agreement Bristol-Myers Squibb is the largest in company history, both in terms of the number of targets and the upfront milestone. And we were delighted that Roche continued to expand our collaboration with the selection of a new target. These 2 agreements set the standard for financial terms for future ENHANZE agreements. I would also like to highlight that with a singular focus on immuno-oncology targets, Bristol-Myers Squibb is recognizing not just the transformative potential for ENHANZE to reduce the treatment burden for patients and increase competitive differentiation, but it's also foreseeing, as we do, a future reimbursement roles for both patient preference and care delivery play a more prominent role. The third highlight relates to progress on PEGPH20. Clinical studies in 4 tumor types were initiated during the quarter evaluating the combination of PEGPH20 and TECENTRIQ, as part of our clinical collaboration with Roche to explore the pan-tumor potential of PEGPH20.

The fourth and fifth highlights relate to the strength of our business model and our reported financials. Royalties from our launched products utilizing ENHANZE showed strong year-on-year growth of 31%, with quarter-on-quarter revenue also growing robustly at 16%. And finally, as a result of the robust royalty revenue growth and continued strength in product sales and collaboration revenue, we are raising our revenues and year end cash guidance again and are now estimating to end the year with $400 million to $415 million in cash. With those highlights, let me now provide some additional color on our ENHANZE strategic pillar, where we license our rHuPH20 enzyme to leading companies: Including Roche, Baxalta, Pfizer, Janssen, AbbVie, Eli Lilly and mostly recently, Bristol-Myers Squibb.

Slide 2 highlights the key elements of our landmark collaboration agreement with Bristol-Myers Squibb, which includes a $105 million upfront payment, $160 million in potential milestones for each of 11 immuno-oncology targets and their initial selection of the PD-1 target. The decision by Bristol-Myers to develop a subcutaneous formulation of PD-1 using ENHANZE is notable, as checkpoint inhibitors have evolved into a cornerstone therapy for many cancers. Bristol-Myers is a leader in the PD-1 market, which is currently annualizing at over $8 billion in global sales and is estimated to increase to $25 billion by 2025. On Bristol's recent quarterly call, Murdo Gordon, the Chief Commercial Officer, highlighted how they are thinking beyond patient convenience and infusion share times to where care may take place in the future. Possibly moving from academic hospitals and cancer centers to more office-based treatments, particularly if patients are on therapies beyond one year or have long travel distances. BMS also highlighted the possibility, at least in the U.S., for an injectable product to be reimbursed through a different payment channel. With the potential to develop over 11 different assets under our agreement, including the combination of various therapies and 1 subcutaneous injection, our ENHANZE technology may allow Bristol-Myers Squibb to improve again how patients receive their therapies. I'm also pleased to announce that the customary antitrust waiting period has expired, and our agreement with Bristol-Myers has now become effective. Our team is already hard at work supporting BMS, as they begin planning to enter the clinic. Also in September, Roche extended their original collaboration agreement from 2006 by licensing a new ENHANZE target, resulting in $30 million upfront payment to Halozyme and the potential for up to $160 million in development, regulatory and sales based milestones. Slide 3 shows the potential opportunity for the currently marketed products that utilize ENHANZE. The 2016 sales of individual products in the geographies and indications where the subcutaneous formulations are approved are in excess of $10 billion, representing a substantial market opportunity. The actual subcutaneous portion of these sales will depend, of course, on the number of indications approved and the degree of market penetration over time, with Halozyme revenue being based on an average mid-single digit royalty on net sales. A significant portion of this market opportunity follows the approval of RITUXAN HYCELA in June in the United States for the indications of diffused large B-cell lymphoma, follicular lymphoma and chronic lymphocytic leukemia. With oncology sales for rituximab in the United States estimated to have exceeded $3 billion in 2016. This approval represents a substantial new royalty revenue opportunity for Halozyme and we -- that we expect to begin to see reflected in our royalties in 2018, given the one quarter reporting lag in 2017. On their most recent earnings call, Roche commented that the RITUXAN HYCELA launch is off to a good start in the United States. With a strong focus on the many hospitals and infusion centers that are experiencing capacity constraints, a shorter treatment duration time is expected to be seen as a benefit for both patients and for those delivering care.

Turning now to Slide 4. We've outlined the potential opportunity with our partner pipeline, which includes subcutaneous formulation of Janssen's DARZALEX, which is now in Phase III testing and Roche Perjeta, which is completing Phase I testing.

Data from the Phase I PAVO trial of subcutaneous DARZALEX in patients with relapsed or refractory multiple myeloma have been accepted for the upcoming American Society of Hematology Annual Meeting and Exposition. Based on these results, Janssen has finalized a 15 mL injection of co-formulated daratumumab class rHuPH20 to be delivered in 5 minutes or less. And we have dozed the first amyloidosis patient in a Phase III trial. This is the first of 3 Phase III studies Janssen plans to initiate in the near term. The others will be in multiple myeloma and in smoldering myeloma patients. Upon the dozing of this third patient, Halozyme will earn a $15 million milestone payment. As has been demonstrated previously, once a partner begins a Phase III study using our technology, approval has been ultimately granted by the applicable regulatory agency in all cases. We have 3 for 3 and therefore, view the start of the daratumumab Phase III trial as a meaningful derisking event for the combination. To finish on DARZALEX, market reception to the IV formation remains strong. Janssen reported sales in their third quarter of $317 million, already on an annual run rate of over $1 billion, with analysts projecting DARZALEX sales in excess of $3.5 billion in 2020.

This substantial market opportunity combined with the dramatic potential benefit for patients of reducing the current 4 to 6 IV infusions down to 5 minutes or less using ENHANZE has resulted in significant excitement for the future potential of this product. And just closing on ENHANZE, as ever, we continue to assess new collaborative agreements to expand the value of the ENHANZE portfolio and believe many targets are still available that may benefit from our technology. In addition to the progress of our already marketed products and those in clinical development, our pipeline of active partner discussions remains robust, and we continue to pursue opportunities to maximize the value of ENHANZE.

Now turning to our oncology pillar and our investigational drug PEGPH20. PEGPH20 is a targeted therapy that temporarily degrades hyaluronan, or HA, the kind that accumulates around certain tumors and constrict the tumor vasculature. We're setting PEGPH20 with a companion diagnostic developed with our partner Ventana to identify patients with high HA tumors. On Slide 5 is an overview of our Phase III study evaluating PEGPH20 in combination with ABRAXANE and gemcitabine in first-line pancreas cancer patients. HALO-301 is a global double-blind placebo-controlled randomized trials of patients with stage 4 pancreatic ductal adenocarcinoma who have been prospectively identified and randomized based on high levels of HA. Investigator interest remains strong in the study, resulted in continued progress with enrollment. Recall, an interim analysis will be conducted for our first primary endpoint when we achieve target number of progression free survival events. We project the target number of PFS events will be achieved in the late fourth -- in the fourth quarter of 2018. At that time, we project we will have enrolled approximately 500 patients. Our team continues to execute well and global investigators remain highly engaged in the study.

Turning out to Slide 6. I will provide an update on our clinical development program to assess the potential of PEGPH20 in other tumors. Beginning with our trials in combination with checkpoint inhibitors. We are studying PEGPH20 plus KEYTRUDA, or pembrolizumab, in non-small cell lung and gastric cancer patients. At the end of 2016, we moved into the dose expansion phase of the study, where we are now selecting patients for higher HA levels, with the target enrollment of approximately 50 patients at 30 U.S. sites. We are now nearly halfway through enrollment of this PD-L1 all-comer population, who we will test retrospectively for PD-L1 status with the goal of exploring 2 key questions. Firstly, whether adding PEGPH20 will allow PD-L1 negative patients to respond to KEYTRUDA. And secondly, whether adding PEGPH20 can increase the response rate or the depth of response to KEYTRUDA in PD-L1 positive patients. To adequately address these question, we will need to enroll more patients than are currently in the study. And now believe it is more likely we'll be in a position to share early response-rate data in the second half of 2018. Investigator interest remains strong, and we look forward to sharing data once we have an adequate number of patients. I'm also very pleased with the progress in our collaboration with Genentech to study PEGPH20 with their cancer immunotherapy TECENTRIQ, or atezolizumab, an anti-PD-L1 monoclona antibody. As has been recently announced, 2 Phase Ib to open-label multiarm randomized double trials funded and operated by Genentech were initiated in patients with previously treated pancreas cancer and previously treated gastric cancer. Both studies are part of Genentech's MORPHEUS immunotherapy clinical trial platform in which they will evaluate PEGPH20 and TECENTRIQ in up to 4 additional tumor types. With Genentech funding and operating both studies, the collaboration is a very efficient way for Halozyme to have expanded our exploration of the pan-tumor potential of PEGPH20. And as announced in October, we also initiated our Phase Ib open-label randomized study of TECENTRIQ in combination with PEGPH20 and chemotherapy in advanced or metastatic biliary and gallbladder cancers. And finally, enrollment is ongoing in the Phase Ib dose finding portion of Eisai clinical trials to evaluate Halaven in combination with PEGPH20 in patients with HER2-negative metastatic breast cancer.

In summary, this has been a strong quarter both financially and with our execution across both the ENHANZE and the PEGPH20 pillars. And with that, I'd now turn the call over to Laurie to discuss our financial results in greater detail. Laurie?

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Laurie D. Stelzer, Halozyme Therapeutics, Inc. - CFO and SVP [4]

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Thank you, Helen. I will begin on Slide 7, where you will see that revenue for the third quarter was $63.7 million compared to $31.9 million in the prior year period, largely driven by the $30 million upfront payment from Roche. Royalty revenue totaled $17.1 million, an increase of 31% from the third quarter of 2016. Bulk sales of rHuPH20 totaled $9.8 million. Hylenex product sales totaled $3.8 million and other collaboration revenue totaled $33 million, which includes the $30 million upfront payment from Roche.

Turning to Slide 8 for a more detailed breakdown of our P&L. Cost of product sales was $8.3 million in the quarter compared to $9.1 million in the prior year period. Research and development expenses for the quarter were $34 million, which was essentially flat to the third quarter of 2016. Selling, general and administrative expenses were $13.3 million compared to $11.6 million for the third quarter of 2016. The increase was primarily due to personnel expenses, including stock-based compensation for the period. Net income for the quarter was $22.7 million or $0.02 per share compared to a net loss of $28.9 million or $0.23 per share in the third quarter of 2016. Cash, cash equivalents and marketable securities were $316.9 million at September 30, 2017 compared to $297.5 million at June 30, 2017. With strong revenue and disciplined expense management through the first 3 quarters of the year and a good line of sight to the fourth quarter, I would now like to update our guidance ranges for 2017, as shown on Slide 9. For the full year 2017, we now expect net revenue increasing from the prior range of $245 million to $260 million, announced on September 14, to $265 million to $280 million driven by a stronger product sales, royalties and sponsored research. I expect we will be at the high end of this range if we dozed the third patient in the studies of subcutaneous DARZALEX and recognize the associated $15 million milestone payment by year-end. Further, due to our agreement with Bristol-Myers Squibb now being effective, we will recognized $101 million of the $105 million upfront payment in the fourth quarter, with the remaining $4 million to be deferred to a future period.

Operating expense guidance is decreasing from the prior range of $240 million to $250 million to a new range of $230 million to $240 million. Positive operating cash flow is increasing from the prior range of $50 million to $60 million to a new range of $70 million to $85 million. Year-end cash balance is increasing from the prior range of $380 million to $395 million to a new range of $400 million to $415 million. The substantial jump in our cash position this year is testament to the value of our business model, leaving us well-capitalized as we exit 2017. Finally, I would like to briefly discuss an upcoming impact to our financial statements following a planned adoption in January of FASB topic 606, as it applies to how we record royalty revenue. Historically, we have recognized royalty revenue one quarter in arrears due to the timing difference between our financial close and when we receive payment from our partners. Under the new revenue recognition guidance, starting in 2018, we will be recording an estimate for royalty revenue for the current reporting quarter, and we will reflect the difference between the actual payment and the estimate in the subsequent period. Note that we plan to provide a reconciliation schedule as part of our Q4 2017 earnings call to assist in the transition, as the new accounting standard will be effective on January 1. With that, let me turn the call back to Helen, who will provide closing comments.

Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [5]

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Thank you, Laurie. In summary, we continue to make great strides across both pillars of our strategy during the third quarter at delivering a strong performance. And our ENHANZE portfolio delivered significant value, as we established ENHANZE as a go to technology for taking IV drugs subcutaneously with 2 new agreements. And we saw increased recognition by partners of how ENHANZE has the potential to increase the competitiveness and market adoption of their products. As Janssen also dozed the first patient in their Phase III trial of DARZALEX HC, our currently marketed products delivered yet another quarter of robust royalty growth and new therapies progressed in their clinical development. In the oncology pillar, conviction and support from opinion leaders and investigators remains high for our HALO-301 study, with the potential for achieving the target number of PFS events later in the fourth quarter of 2018. We and Genentech made great progress in HC studies in 4 tumor types to evaluate the combination of PEGPH20 and TECENTRIQ, and we continue to progress in the dose expansion phase of our KEYTRUDA steady. Above all, we remain confident that the investments we are making in both pillars of our strategy will generate near and long-term value for our shareholders and our partners. And I want to close by expressing, as ever, my ongoing gratitude and appreciation for the talented Halozyme team for their continued hard work to advance our programs and in support of our partners and patients. As we're now ready to take your questions, operator, please would you open the call.

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Operator [1]

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(Operator Instructions) Our first question comes from Jessica Fye with JP Morgan.

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Hi, this is Yuko on the call for Jessica. For Study 301, could you remind us of how often you get updates from the DSMB? And how many patients are enrolled in the study thus far?

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [3]

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Yes, let me ask Dimitrios to address the question of the DSMB.

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Dimitrios Chondros, Halozyme Therapeutics, Inc. - Chief Medical Officer [4]

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Yes. Thank you, Helen. The [IMC] of the study or DSMB meets at least every quarter on a regular basis. So far the recommendation was always to continue the study as planned without any modifications. Regarding enrollments, the study is enrolling according to our expectations, and we expect the final number of progression free surviving events to be reached towards the end of Q4 2018.

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Operator [5]

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Our next question comes from Charles Duncan with Piper Jaffray.

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Sarah Reid Weber, Piper Jaffray Companies, Research Division - Research Analyst [6]

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Hi, this is Sarah on for Charles. Few quick questions, so first, any idea how quickly Janssen could move into Phase III for both multiple myeloma and smoldering myeloma?

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [7]

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Well, certainly for multiple myeloma, the previously made comments that it will happen before the end of this year. So I do think absolutely in the next weeks for the multiple myeloma study. I don't think they've given the specifics on the smoldering myeloma, but we know they're working all 3 of the studies in parallel. So it will begin soon as well.

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Sarah Reid Weber, Piper Jaffray Companies, Research Division - Research Analyst [8]

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Great. And then just one follow-up. Can you talk in a little bit more detail about some of the factors behind raising 2017 revenue guidance today? And is that related to the RITUXAN HYCELA launch yet or not yet?

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [9]

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Great. Let me ask Laurie to address that.

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Laurie D. Stelzer, Halozyme Therapeutics, Inc. - CFO and SVP [10]

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Sarah, so as you know we don't typically give out the components of our guidance, and so for revenue no exceptions, but what I can say is we're continuing to see strength across all the categories of our revenue. We've seen robust growth in our royalty revenue. We've had some increase in API, which as you know, we talked about before, can be a bit lumpy in its nature. And we've seen strength in our sponsored research as well, and this is reimbursed for -- reimbursement of sponsored research from our partners. On as far as impact from HYCELA, again, remember in 2017 we're continuing to book 1 quarter in arrears. And so we didn't expect and have not seen an uplift yet, but we do consider -- anticipate that to be a factor going into 2018.

Operator [11]

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And our next question comes from Joel Beatty with Citi.

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Joel Lawrence Beatty, Citigroup Inc, Research Division - VP and Analyst [12]

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The first question is for the PEGPH20 Phase III trial. Now that looks like data could be coming at the end of 2018, could you provide any comments on the powering assumptions for that trial? And how many events are needed for that assessment?

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [13]

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Yes, Joel, thanks for the question. It's not our practice to give any of the details on these statistics and, with the study still ongoing, we're not going to do that. I think you are aware that we have given one piece of information, and that is that we are seeking a PFS hazard ratio of 0.59. That's the only information on the statistics that we are going to provide at this time.

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Joel Lawrence Beatty, Citigroup Inc, Research Division - VP and Analyst [14]

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Okay, sure that's fine. And another question is with multiple trials -- combo trials going on of PEGPH20 such as with KEYTRUDA, TECENTRIQ and Halaven, are you able to get any data internally that helps assess the responses in the context of HA status?

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [15]

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It certainly is a question that we are seeking to address in the studies, Joel. For the majority of the studies, we are evaluating data in an HA-enriched population, and that will give us the initial data to be able to look to correlate HA levels with responses we see in each of the populations. If you recall, that was a core goal of the 202 study was to generate that data. So we're really at that stage again in all of these tumor types where we want to generate the data so we can look at the relationship, but we obviously don't have that yet. And as we complete these studies and get to the end of them. That will certainly be one of the examinations of data that we plan to do.

Operator [16]

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And one last question if I could. With the change in revenue recognition beginning next year, could you just discuss a little bit on how accurate you expect the estimates to be able to be -- and how much data you'll have to give those estimates?

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Laurie D. Stelzer, Halozyme Therapeutics, Inc. - CFO and SVP [17]

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Hi, Joel, this is Laurie. We are going to be working very closely with our partners so that we can zero in on those estimates and make those estimates as close to real as we possibly can. So again, working very closely with our partners, and I anticipate not having estimates that we book follow-up from the actuals.

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Operator [18]

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And our next question comes from Andrew Peters with Deutsche Bank.

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Andrew Ross Peters, Deutsche Bank AG, Research Division - Director [19]

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I guess, a couple for me. Just first on the potential for new ENHANZE deals. I guess, can you describe just the process around dealing with the selection of new targets under ENHANZE, as it relates to potential areas where some of the -- your existing partners who already kind of staked claim if they haven't been named yet publicly? And then just the second one on PEGPH20, as we think about some of the combination data, especially the upcoming readout in lung and gastric with KEYTRUDA, how should we think about what the appropriate comparator data set should be? Do you expect any sort of difference to be seen as it relates to HA status? Or is there any information that you have to help kind of frame a true apples-to-apples comparison, as we await that data?

Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [20]

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Great, thanks, Andrew. I'll address the ENHANZE question, and then I'll have Dimitrios talk about the background rates that are going on in a -- with the I/O agent. For ENHANZE, I think it's fair to say that as you look at the targets that have been selected by current partners, we have a heavy emphasis on oncology targets. And what's important to remember is that we believe ENHANZE can bring utility in multiple other different disease areas. If you look at inflammation, you can look at neurology, you can look at many other areas. And the process generally is that once a partner enters into bona fide discussions with us and they start to seek out if a target is available, we can let them know at that point in time if that target is available. But as I mentioned in my prepared remarks, there are a number of targets that we believe we could be very beneficial for, and that's why I do believe that we will find future ENHANZE deals. We can never quite predict the timing of them, but we certainly believe they are more targets out there that would benefit from ENHANZE. Let me turn it over to Dimitrios just to talk about the expected efficacy rates that we would be comparing our data to.

Dimitrios Chondros, Halozyme Therapeutics, Inc. - Chief Medical Officer [21]

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Sure. Thank you very much, Helen. So we would expect to demonstrate a clinically meaningful difference above historical control data. And as you are aware, there's a plethora of data out there, and to come back to the apples-and-apples comparison you asked about is the most relevant data set is -- was presented earlier this year at the ASCO annual meeting for pembrolizumab in the previously treated gastric cancer patients as a mono therapy, and the overall response rate there in the all-comer's population was a little bit above 11% and 15.5%, as I recall, in the PD-L1 positive patients. And the respective numbers for the lung cancer population, again, for pembrolizumab monotherapy was 18% to 19% in the all-comer's population and actual 30% in the PD-L1 high expressors. So this would be our benchmark, but again, we would go for -- we're looking for a clinically meaningful difference above these standards.

Andrew Ross Peters, Deutsche Bank AG, Research Division - Director [22]

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Okay. I guess, just a quick follow-up on that. You guys have longed talked about high-HA being a kind of prognostic factor for patients, potentially doing -- high-HA patients potentially doing worse. Do you have any sense of -- or is there any data if lung cancer patients are equally impacted by HA status? Is there any kind of preclinical data on that? Or any way you can tease that out?

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [23]

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Andrew, this is Helen. There is some retrospective case cohort types of studies out there is in pancreas. Looking at patients that have high-HA versus no HA, and it does suggest across multiple tumors, including breast and colon and I believe lung, to say that HA is prognostic factor in those as well, but obviously, those are retrospective from (inaudible) at the data, but we believe their relationship holds.

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Operator [24]

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And our next question comes from Jim Birchenough with Wells Fargo.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [25]

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It's Nick on for Jim this afternoon. Two questions if I may, and I apologize if I should know the answer to one or both of them, but so for the 301 trial as originally listed is 420 patients, I see you have a range on the slide of 420 to 570 in the PFS analysis what we've done, when you expect 500 patients to be enrolled. Can you just enlighten me as to what the gating factor is in terms of the final enrollment?

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [26]

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Nick, when we started the study, we'd originally mentioned the fact that this is a study that would go from 420 to 570 patients, if I recall, because of the adaptive design. With the first endpoint -- the first primary endpoint being looked at being progression free survival. What we now see based on the accumulation of data as we've been executing the study is that we estimate will be just about 500 patients by the time we get to that first primary analysis, which is on the PSF, which is triggered by a target number of PSF events. And we just thought that was a useful bit of information to update you all with regard to.

Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [27]

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So basically the event rate is a little slower than was anticipated? Is that the way to interpret it?

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [28]

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It's an accumulation of some factors go into that, Nick, and we're not going to be breaking that out. I think what's important, obviously, is that we're delivering as it's in the fourth quarter of '18, which is right in the middle of the window that we had predicted when we started the study, which would be that we'd be in the position to be filing sometime in the '18 to '20 timeframe. So we are delighted that we're kind of tracking to our original plans.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [29]

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Okay, terrific. My second question is on exclusivity of targets. So for example, if you pick the PD-1 path way, presumably then nobody else can have a subcu formulation of a PD-1 inhibitor. But does not extend to a PD-L1 inhibitor, a PD-1 by specific with something else. How do you sort of allow me to slice that exclusively?

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [30]

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So it's a very good question, and I will say PD-1 and PD-L1 are considered different targets as are like free supporting all those new types of things. So we have a database, which gives us, based on scientific criteria, what are considered separate targets, and that's how we do it.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [31]

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And so the Bristol targets, then they don't have exclusive options to all 11. They were available when they did the collaboration, but they would have to actually sign up for each individual one to complete the landgrab?

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [32]

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That is correct. What we said at the time of the announcement was that BMS is taking 11 targets. The only one that's announced publicly is PD-1, but they have selected for exclusivity several other targets, but they haven't named how many, or they haven't named what they are, but we also have some open slots.

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Operator [33]

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(Operator Instructions) Our next question comes from Michael Palmer with Guggenheim.

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Unidentified Analyst, [34]

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Did I miss an update on the ORR for PEG 10?

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [35]

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No, what we indicated was that as we seek to explore the -- both the efficacy of the PEG 10 different tumor types and across a range of PD-L1 expressions. While we've gotten to almost halfway through our target enrollment, we don't have sufficient number of patients to be able to provide the data at this point in time. So we're going to continue enrolling in the study and now expect to be reporting that data out in 2018. It was always a question of would we have enough patients and the answer is we don't. It's going to be a 2018 readout.

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James S. Mazzola, Halozyme Therapeutics, Inc. - VP of Corporate Communications & IR [36]

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And operator there's no further questions, and we turn the call back over to Helen for closing comments.

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Helen I. Torley, Halozyme Therapeutics, Inc. - President, CEO & Director [37]

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That's great. Well, thank you, we really appreciate everyone's attention and the great questions that you've asked today. And obviously, we're delighted with the progress, and we look forward to continuing this progress and providing an update to you next quarter. Thank you very much.

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Operator [38]

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Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.


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