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Halozyme Therapeutics (NASDAQ:HALO)

Q3 2013 Earnings Call

November 08, 2013 8:30 am ET

Executives

Schond Greenway

Gregory I. Frost - Co-Founder, Chief Executive Officer, President and Director

David A. Ramsay - Chief Financial Officer and Vice President

Analysts

Andrew R. Peters - UBS Investment Bank, Research Division

Jim Birchenough - BMO Capital Markets U.S.

Jason N. Butler - JMP Securities LLC, Research Division

Ying Huang - Barclays Capital, Research Division

Charles C. Duncan - Piper Jaffray Companies, Research Division

Chris Geston

Operator

Greetings and welcome to the Halozyme Therapeutics Third Quarter 2013 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Schond Greenway, Executive Director, Strategy and Investor Relations at Halozyme Therapeutics. Thank you, Mr. Greenway, you may begin your conference.

Schond Greenway

Good morning, everyone, and welcome to Halozyme's quarterly update conference call. Joining me on the call today is Gregory Frost, President and Chief Executive Officer; and David Ramsay, Chief Financial Officer.

This morning, Halozyme released financial results for the third quarter 2013. If you have not received this news release or if you would like to be added to the company's distribution list, please e-mail Temre Johnson at tjohnson@halozyme.com.

A live webcast of this call can be found at our homepage, which is www.halozyme.com, along with a replay that will be available on the company's website for the next 14 days.

Before we begin, let me remind you that during this conference call, we will be making forward-looking statements. All statements made during this call that are not statements of historical fact constitute forward-looking statements. The company's actual results may differ materially from those expressed and, or indicated by, such forward-looking statements. For a description of the risks that may affect our results, please refer to our 10-Q and 10-K filings with the Securities and Exchange Commission.

With that, I would like to turn the call over to Gregory Frost, Halozyme's President and CEO. Greg?

Gregory I. Frost

Thank you, Schond. Good morning to everyone. We appreciate all of you joining us on Halozyme's third quarter 2013 earnings call. I would like to provide you additional comments on the items in the news release issued earlier today, including updates on the status of our key clinical programs and partnership collaborations. David will then give a financial summary of the quarter to go over the P&L and cash flows for you in more detail.

2013 continues to be a pivotal year for us at Halozyme, as the first products from nearly 15 years of R&D investment on our platform technology enter commercialization, while the next horizon of programs such as PEGPH20 and Hylenex for insulin pumps enter key developmental inflection points. Additionally, as our new manufacturing facilities and scale come online in 2014, we can expect additional operational efficiencies.

So let's begin with our partnered programs. During the third quarter, Halozyme's Herceptin program with Roche and Baxter's HyQvia achieved the important milestone of product introduction into Europe. Both of these products utilize Halozyme's proprietary recombinant human enzyme platform technology, rHuPH20, which enables products previously available as intravenous formulations to become much easier-to-use subcutaneous versions.

Halozyme is a company that is built on a hybrid revenue model. We receive royalty streams and milestones from partner products, which we expect to blend well with future revenue from our own proprietary products and development. This diversity of revenue marked by Roche and Baxter product introductions as we work on studies to grow the Hylenex brand show this blended strategy is coming together well.

In September, the European Commission approved Herceptin SC in the EU for the treatment of HER2-positive breast cancer. Product launches in Germany, U.K., Portugal and Chile shortly afterwards triggered the payment of a $10 million milestone by Roche to Halozyme. Herceptin SC is a simple fixed-dose subcutaneous formulation that can be administered in 2 to 5 minutes, compared to the 30 to 90 minutes required for the intravenous formulation. This enhanced and more efficient treatment option also reduces pharmacy prep time and studies have shown that the subcutaneous administration is preferred by 9 out of 10 patients.

In addition, Roche has introduced the product into EU markets priced at parity to the IV formulation of Herceptin. We're pleased with everything we're seeing from the Herceptin SC introduction so far and believe it is proceeding to plan. With Herceptin SC now launching in multiple countries, we await approval in the EU for MabThera SC, our second development program with Roche, which is under review by European regulators for the treatment of non-Hodgkin's lymphoma. This could transform the product from an IV infusion requiring up to several hours of chair time for the patient and caregivers down to a more simplified administration that can be completed in just a few minutes.

Roche filed the MAA for MabThera SC in December of 2012. And thus, we might receive regulatory opinion by the end of the year. As you may have seen, new abstracts for MabThera SC are now available on the ASH website. Roche will be presenting data for 2 subcu MabThera studies at the meeting in early December.

Additionally, Baxter received marketing authorization from the European Medicines Agency in July for the use of HyQvia as a replacement therapy for adults with primary and secondary immunodeficiencies. HyQvia is a combination of immunoglobulin 10% and Halozyme's recombinant human hyaluronidase rHuPH20 to facilitate the dispersion and absorption of the immunoglobulin subcutaneously. To illustrate the breadth of utility of our technology, HyQvia enables the delivery of nearly 0.5 liter of immunoglobulin and administered under the skin at a single site every 3 or 4 weeks at a rate that is equal to or slightly faster than IV.

Importantly for patients on HyQvia, immunoglobulin therapy is administered subcutaneously at the same dose and frequency as their previous intravenous administration. This may offer enhanced convenience over the currently available product choices for patients managing their primary immunodeficiency.

The launch of HyQvia in the EU and the first commercial sale has triggered a $4 million milestone payment to Halozyme. Recall that the EU filing was a new marketing authorization application, not a line extension as in the case of Roche, so we expect this to take a bit longer to go through the establishment of pricing on a country-by-country basis.

With regard to the status of HyQvia in the U.S., Baxter articulated on their most recent earnings call in October that they continue to believe the preclinical data they have prepared puts them on track for a BLA resubmission to FDA before year-end.

So with 2 product launches underway by Baxter and Roche, and potentially another one MabThera SC in the coming months, we're excited about these applications of our rHuPH20 technology entering a new and expanded commercial stage of its life cycle. Our manufacturing operations continue to be very active in the production of the hyaluronidase enzyme to support our partners in their global product rollouts.

Finally, let me mention that we continue to make excellent progress in our collaboration with Pfizer, with a number of different program teams now working in parallel. In September, Pfizer elected a fourth exclusive target as part of our agreement. In addition, on its most recent earnings call, Pfizer disclosed PCSK9 as one of the 4 exclusive targets, we're working on with them.

Now let's move to our proprietary products and programs, beginning with PEGPH20. PEGPH20 represents a completely different approach to thinking about cancer in that it has a direct effect on the tumor microenvironment. Certain types of tumors cloak themselves with a unique hyaluronan or HA-rich matrix, which through its water absorbing properties enables them to expand rapidly into surrounding tissue, while evading systemic therapies and the immune system. Interestingly, developing data suggests that this HA-rich matrix may also be an independent indicator for poor prognosis for a number of hard-to-treat solid tumor malignancies, such as pancreas cancer.

PEGPH20 has been developed to deplete tumors of this matrix component, which rapidly alters the tumor microenvironment, normalizing tumor pressure, perfusion and hypoxia. In doing so, we believe this completely novel approach may improve both chemotherapy and immune effector function against tumors that accumulate this type of matrix.

Evolving preclinical data also suggest that depletion of this coat from tumor cells with PEGPH20 may promote a number of differentiation pathways that may explain why some tumors produce this matrix in the first place. Based on our clinical investigations to date, we found that PEGPH20, at the doses we are testing, can deplete this matrix target from tumors and have observed a number of translational clinical markers supportive of our underlying hypothesis.

The first type we are exploring is pancreatic cancer because this tumor type produces large amounts of this specific matrix target for PEGPH20. And the clear unmet need for patients with this devastating disease is very clear. Following an initial Phase I translational trial with PEGPH20 is a single agent in patients with multiple solid tumors, we tested this agent with gemcitabine and presented encouraging Phase Ib data at ASCO this past June. No new toxicities were observed, relative to gemcitabine alone or PEGPH20 as a single agent. Additionally, radiologic data from 24 patients in the intent-to-treat population, in combination with gemcitabine, showed a 42% overall response rate.

While this was a single-agent trial, it is notable that gemcitabine alone has historically demonstrated an ORR in the 5% to 10% range. More mature data from this study were presented at the European Cancer Congress in September, with encouraging progression-free survival for 154 days in the intent-to-treat population. Further exploratory analysis from a subset of these patients with available biopsies show that high levels of tumor hyaluronan had more favorable progression-free survival, with 219 days in the HA-high group compared to 108 days for patients with low levels of tumor cell associated HA.

While these numbers are very small and data are not yet mature, overall survival in the HA-high group was 529 days compared to 174 days for the low HA group, which is supportive of the underlying hypothesis. Based on these encouraging early results, we've initiated randomized Phase II trials in pancreatic cancer that combine PEGPH20 with the most advanced treatment regimens available to patients today.

In April, we initiated a Phase II, multicenter trial in 124 patients to receive nab-paclitaxel or Abraxane with gemcitabine, with and without PEGPH20, for the treatment of Stage 4 pancreas cancer. The primary outcome measure is progression-free survival, with secondary endpoints including progression-free survival by HA status using the companion diagnostic we are developing.

In October, SWOG initiated a second randomized Phase Ib 2 protocol, but this time testing modified FOLFIRINOX, with and without PEGPH20 in 140 patients with Stage 4 metastatic pancreas cancer. The initial Phase Ib running arm at the trial is designed to confirm the optimal dose of PEGPH20 with FOLFIRINOX for the Phase II portion of the trial. The primary endpoint from the Phase II is overall survival of patients receiving modified FOLFIRINOX, in combination with PEGPH20, compared to those receiving modified FOLFIRINOX alone. Secondary endpoints include progression-free survival, objective tumor response, as well as the frequency, severity and tolerability of adverse events.

Now let's talk about Hylenex in our insulin pump studies. Our first FDA approved product, Hylenex, is approved for the dispersion and absorption of other injected drugs which targets the current market in the U.S. of roughly 25 million. With just a small internal sales force, we've now achieved 60% market share. With respect to the potential application of Hylenex for the insulin pump market, we've conducted extensive market analysis of patients needs, in addition to the clinical pharmacology studies completed today.

Studies have shown that patients who receive their insulin with a pump require dosing about 20 minutes before a meal to achieve optimal post-meal control. An additional challenge that we, and others, have reported in clinical studies is an inconsistency of insulin absorption over the 3-day life of the infusion set that people use to pump their insulin, further complicating diabetes management. In our 2 previously completed pump studies, pre-administration of the single-dose hyaluronidase at each infusion site change was found to significantly increase insulin absorption at meals, provided a more consistent pharmacokinetic profile over 3 days of infusion set use, leading to lower post-meal sugars without increasing hypoglycemia risk. These data suggest that Hylenex might provide people living with type 1 diabetes an additional tool to better manage their insulin use from a pump.

So to test the use of Hylenex in a take-home setting, we initiated CONSISTENT 1, evaluating the safety and feasibility of Hylenex use in over 400 adults with type 1 diabetes. The primary endpoints of this study are metabolic and safety outcomes at 4 months. This study is designed to evaluate the effect of Hylenex pre-administration, in conjunction with all rapid acting analog insulins for adults with type 1 diabetes on insulin pump therapy.

No safety signals have been observed to date, and we await top line results for the 4-month primary endpoint in the first quarter of 2014, and are continuing to evaluate strategies to maximize availability for patients that can benefit.

We are also excited that Hylenex is being studied under IND in people with diabetes for use in an artificial pancreas closed-loop study being conducted by researchers at Yale, with independent funding from JDRF. Approximately 20 subjects with type 1 diabetes will receive treatment over 3.5 consecutive days in random sequence, with one of the following: analog insulin alone; a co-formulation of insulin lispro and rHuPH20; or pretreatment with 150 units of Hylenex administered through the subcutaneous insulin infusion set, followed by the analog insulin alone.

The study will measure blood glucose control during meal challenge for each of the 3 different treatment regimens. The hypothesis is that the more rapid and predictable absorption of insulin with hyaluronidase may better enable a closed loop system to more tightly control glucose, and we look forward to seeing the results from this very exciting study.

Finally, our HTI-501 program in aesthetic dermatology. HTI-501, a recombinant human proteinase that targets collagen is being explored as a potential treatment for both esoteric [ph] and other connective tissue disorders. A Phase I-II clinical trial evaluating HTI-501 fully enrolled to achieve 34 evaluable patients for the primary 28-day observation endpoint. The HTI-501 enzyme and its formulation have well-tolerated so far in clinical studies at all doses and formulations tested, with no serious or severe adverse events. We previously reported interim results in 12 patients indicating pharmacologic activity at the primary 28-day observation endpoint of physician assessment, as well as secondary analytical measurements. We have now completed the 28-day blinded, independent expert panel review and will be sharing these data, along with the 3- and 6-month follow-up images with prospective partners.

With that, I'll now turn the call over to David Ramsay, who can provide more detail on our financial results released this morning.

David A. Ramsay

Thanks, Greg. The net loss for the third quarter of 2013 was $19.3 million or $0.17 per share compared with a net loss for the third quarter of 2012 of $20 million or $0.18 per share. Revenues for the third quarter of 2013 were $16 million compared to $5.3 million for the same period last year. Our reported revenue for the third quarter included $7.9 million in product sales of PH20 API for use in Herceptin SC manufacturing, as well as $3.7 million in research services reimbursement, and a $1.5 million license fee from Pfizer for the fourth exclusive target. As a reminder, there are no royalties on sales of HyQvia and Herceptin SC for this quarter as we will book royalties on a 1 quarter lag.

The $4 million launch milestone from Baxter and the $10 million launch milestone from Roche will be deferred and recognized over the life of the remaining patent term for these agreements. So while we receive the cash for these milestones, the revenue will be recognized over the next 14 years, so about $1 million a year going forward.

Research and development expenses for the third quarter of 2013 were $25.7 million compared with $19.5 million for the third quarter of 2012. Similar to R&D expenses for the first 2 quarters of this year, a significant portion of it is going toward the manufacture of launch inventory for our partners.

Selling, general and administrative expenses for the third quarter of 2013 were $8.1 million compared to $5.6 million for the third quarter of 2012. Cash, cash equivalents and marketable securities were $65.3 million at September 30, 2013 compared with $99.5 million at June 30, 2013, and 89.5 -- excuse me, $99.5 million at December 31, 2012, rather than June 30. Net cash used in the third quarter of 2013 was approximately $10.7 million, and the cash balance for Q3 does not include the $10 million milestone payment from Roche, as this was received in October.

Financial guidance for 2013 remains unchanged and we expect our net cash burn to be between $45 million and $50 million for the year.

I'll now turn the call back over to Greg, who will provide some additional comments.

Gregory I. Frost

Thanks, David. Before the close of this part of today's call, I want to say that I'm very excited by the progress we are making at Halozyme and our partner programs with HyQvia, Herceptin SC commercialization underway, and the potential for a MabThera SC decision this year. This is a truly important and exciting transitional period for the company.

Important data are expected for PEGPH20 and pancreas cancer, our insulin pump investigations with Hylenex, and HTI-501 in aesthetic dermatology. Our blended business strategy of royalty and milestone revenue, combined with the potential for products on the proprietary side of the business, has never been stronger.

Operator, could you please open the line for questions?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Matthew Roden with UBS.

Andrew R. Peters - UBS Investment Bank, Research Division

This is Andrew Peters, in for Matt. Just a couple of questions, if the first is when you think about the launch for Herceptin subcu and HyQvia, how should we think about disclosures around sales and royalties? Will you be reporting actual sales or just royalty revenue and kind of leave the math up to us? And secondly, for the PCSK9 program, I know you're limited on what you can say specifically. But when you think about the class categorically and the technology, do you think injection volume is a potential differentiator? Is this more about getting the program on the same level as competing programs from Amgen and Sanofi, given that they are already subcu?

Gregory I. Frost

Thanks. Let me go through and let David answer the first question, I'll try and cover the second.

David A. Ramsay

Yes, Andrew. So we get royalty reports from the partners and it will just outline the royalties to us. So that's what we'll be reporting in our financial results going forward. We don't know if our partners will break out subcutaneous sales of their products going forward. So that's something they may or may not choose to do in future periods. And with the 1 quarter lag, obviously that would make it even more difficult to tie it in. But we plan on at least disclosing the royalty piece of it by partner.

Gregory I. Frost

And I guess, Andrew, from the perspective of the Pfizer collaboration, the PCSK9, while this is something we can't really go into any detail on beyond what we've stated publicly, obviously, rHuPH20 and subcutaneous formulations has a number of attributes that it can provide, one of which is facilitating volume as administration, the second is improving absorption or bioavailability. So think of it, if you have to put in, for example, 10 milliliters of a 100-milligram per milliliter solution of antibody, the increased absorption could allow you to use a lower volume. So any of these components can lead to either reduced volume of administration, reduced amount of antibody that must be delivered, dosing frequency, as well as some other factors. So I can't specifically speak to the strategic direction. This is obviously something that is Pfizer's program. But I can tell you that, strategically, the way that they're thinking about this, I believe, is very smart from both the differentiation standpoint, as well as the overarching strategy.

Operator

Our next question comes from the line of Jim Birchenough with BMO Capital Markets.

Jim Birchenough - BMO Capital Markets U.S.

Just first on the PEGPH20 program and the randomized Phase II studies, any insights into how enrollment's go in there? And whether you're seeing HA distributions in terms of patients with increased HA that are consistent with what we saw in the prior Gemzar study? And then the second question is just on API that Roche is paying you for. How often do we see that payment coming through? I'm just trying to get a sense of the $7.9 million, what amount of API does that represent? And is that going to be something that we should expect to see every year or every quarter?

Gregory I. Frost

All right. Well, I will go in -- let me try to answer the first question on PEGPH20 and I'll have David answer the question regarding API and accounting. So with regards to PEGPH20 in pancreas cancer from the gemPEG Abraxane trial, what I told folks was that we would give an estimate by year-end of when we think enrollment will wrap up. I'm very pleased by how the rate is going to date and I think we've seen all the sites, very enthusiastic. So I think they're going very well, but I will go through in officially, we will wait till year-end to give our target of when in 2014, we believe enrollment will complete. With regards to the HA status, obviously the data from the patients from a biopsy standpoint, as well as the rest of the components of the trial, are blinded. So that's not data that I have available. We've obviously -- with regard to your question about distribution, we have seen with normal patient biopsies that are available without long-term follow-up data, that a distribution it is quite high in pancreas cancer, both with the primaries as well as the metastases. But we feel very good about, #1, trial enrollment and we certainly feel good that the evolving data is going in the right direction for us. David, you want to cover on the basis of the manufacturing side.

David A. Ramsay

Yes, Jim. To answer your question, we do anticipate and we do ship API to Roche quarterly. So we do anticipate that to continue going forward. The level that we've seen in 2013, obviously, is taking into account building launch inventory. So that level is, and for the last few quarters it's been pretty high. But going forward, we will be shipping material quarterly.

Jim Birchenough - BMO Capital Markets U.S.

How's that price that -- is that just cost?

David A. Ramsay

It's cost, it's fully burdened cost plus a markup, and that's the way to think about it. So in future periods, we will have -- you'll see that revenue number in product sales and then you'll see a corresponding cost of goods sold. That number in 2013 was in R&D expenses because we expensed it prior to approval. And now that Herceptin SC is approved, that inventory, that material is being flowed through inventory and it flows through COGS going forward. So you will see a COG associated with that product sales going forward and you'll see a markup on that. So there'll be a difference.

Operator

Our next question comes from the line of Jason Butler with JMP Securities.

Jason N. Butler - JMP Securities LLC, Research Division

Just on the Baxter HyQ NDA resubmission, could you talk about what you're seeing in the preclinical data that's been generated? Or at least talk to us about what you were asked by FDA to show and what your level of comfort is given the Baxter are intending to refile the NDA soon?

Gregory I. Frost

So Jason, obviously, we could go into extensive detail as far as the studies which will probably be outside of the scope of most folks from the technical side. But what I can tell you is that the studies that have been performed really expose from cradle to grave, if you will, from animal safety studies, as well as laboratory investigations with detailed characterization, looking at exposure to characterize the safety of antibodies [ph] that were observed in that trial with the HyQvia product. And certainly from the standpoint of the depth of data, it is a very large, massive studies that have been performed. And what I can only conclude is that the safety analysis that has been performed to date on all of the findings have been unremarkable. In other words, no findings. But happy to go into it offline if you have specific questions beyond that.

Jason N. Butler - JMP Securities LLC, Research Division

Okay, great. Thanks. And then just want to follow-up on the PEGPH20 Phase IIb enrollment question. Could you maybe just say whether you think it's still possible or likely that you will have pre-assessed data from that trial in 2014?

Gregory I. Frost

I think that certainly from the model where we've seen the control versus treatment arm, obviously you need both arms to get out by their medium for the readout there. And this is a study which because of the label design, it does not have any interim reads in it of maintaining the integrity of the design. So I wish there were pieces along the way that where we could like at that, but from a data integrity perspective we cannot. So I cannot give an expectation on that as far as the exact timing. The best thing that I can do will be, by year-end, is to tell you when we think it will complete enrollment. But obviously, we had a run-in phase that was performed from a safety check. We've evaluated those data and from the context of additional data sets, we're looking at some additional trials that will be kicking off next year.

Operator

Our next question comes from the line of Ying Huang with Barclays.

Ying Huang - Barclays Capital, Research Division

The first question is on HyQ. So obviously, Baxter said they're going to submit some new data to FDA around this time. Compared to the data they submitted to EMA for the HyQvia approval, and [indiscernible] what their package is? And then also for PEGPH20 trial, are you stratifying patients based on the level of hyaluronan here in this trial?

Gregory I. Frost

So let me cover first with the HyQvia program. First what I would say that the differences between the packages between those which were provided in the HyQvia submission to Europe versus the U.S., the first point I just wanted to note is, there are significant differences in review cycles and just processes by which questions can be answered in Europe versus the U.S. So rather than a defined PDUFA date and information response process, data to the Food and Drug Administration for that file, essentially was as of essentially I think, May or June of last year. So to that regard, there's a large amount of data which was available to Europe which was not available to the U.S. But there are additional studies with longer-term follow-up which was available that Baxter has been providing. So these are additional safety studies in animals from the different life cycles that were looked at. And all of those data have come back unremarkable, as I noted. With regard to the PEGPH20, I'm sorry could you repeat that question for me?

Ying Huang - Barclays Capital, Research Division

Yes, are you stratifying the patients in this trial based on their hyaluronan level?

Gregory I. Frost

We are not. And the reason for that is the turnaround time you would have challenges for patients currently based upon the central laboratory of getting core biopsies in, getting that readout, you need to get patients into therapy quickly. So that's something which we will have the efficiency to do in the future very readily. But for now, that's not something that we wanted to compromise.

Ying Huang - Barclays Capital, Research Division

And then, Greg, I just had one follow-up on subcu MabThera. The application was submitted end of last year. So do you have any color on what kind of questions or the nature of questions Roche is being asked in this application, compared to subcu Herceptin?

David A. Ramsay

Well, I'm not aware of any questions that Roche has been asked with regards to MabThera from the time cycle. This is in the regular kind of review cycle that one would have from the perspective of response. And certainly from the standpoint of the timing for it, about 12 months is not unusual from the sort of time cycle that one would expect. So this is something that we might expect by year-end, is certainly reasonable. But I'm not aware of any questions or holdups that we've been informed of.

Operator

Our next question comes from the line of Charles Duncan with Piper Jaffray.

Charles C. Duncan - Piper Jaffray Companies, Research Division

Greg, I had a couple of questions. You mentioned in your prepared remarks, around Hylenex, strategies for that you're evaluating for patients to benefit from data. I know we have yet to see the data, but I'm assuming it's going to be good out of CONSISTENT 1, and I'm just wondering if you could share with us some additional color on the strategies that you might consider.

Gregory I. Frost

Yes, I would go through from the perspectives, there's a lot of work that the teams are doing. We're making really good progress on all fronts and certainly look forward to reviewing the data once it's available in Q1. And this is going to be a key driver in helping us position the product. But we'll provide more of that in Q1. There's a lot of work folks are doing on manufacturing, scale-up, on devices, as well as on the clinical study in support of market research. So I don't want to get ahead of ourselves for 2014, but we'll certainly go and weave all this together nicely, I think, from the standpoint of as we look at the data. We're excited to go through and turn over that card and see how it looks.

Charles C. Duncan - Piper Jaffray Companies, Research Division

Okay. And then hopping over to PEGPH20, I know that you are not stratifying this study for HA levels or anything. But could you see a companion diagnostic strategy emerge from data that you're collecting from that study?

Gregory I. Frost

Yes, certainly. Well, it is certainly a -- it is a secondary endpoint of the trial, Charles, to evaluate PFS by HA status. And to that regard, the endpoints and the method itself, just to give you some color about how this is being done, the patient biopsies go into a GOP laboratory, whereby the methods then are staying in batch and scored by independent pathologists. So those data will be very important, both from the clinical validation of the control arm, as well as in the treatment arm. And so, effectively, I can go into details maybe offline, have to basically [ph] or correlate analysis of them. But we do believe that from the investments that we've made, in the CDx, it is certainly as compatible on traditional pathology read systems. It's a recombinant reagent that our folks manufacture. But there's obviously a lot of technical details around that we can't go into. But we do believe this would be a very good diagnostic strategy, but we have to really wait and look at the data. But we're continuing to do that, of looking over broad sets of different cancers and seeing what that clinical correlation looks like.

Charles C. Duncan - Piper Jaffray Companies, Research Division

Okay, that's helpful. And then, my final question is regarding the Herceptin subcu launch in Europe, I'm wondering if you have any early market experience feedback in terms of is the product performing as is designed? And then I know it was a line extension, but has it been as easy to get folks to start to adopt the product as perhaps you anticipated?

Gregory I. Frost

Well, I would say that at the base level, what I say, it disappears to be proceeding as to plan. We're very pleased with the rollout. We're pleased with -- certainly, you take a look at certain countries like the U.K., which normally are very challenging for introduction. And because of the line extension and the price parity on this, we were just remarkably impressed with the time frame by which the National Health Service endorsed Herceptin subcu within 2 weeks of approval by the European Commission. So to date, what I've heard is, that the product rollout appears to be going very well. I'm very happy with the strength behind which Roche is putting for this product in Europe. And it is certainly early days, but I think that it's rolling out as to plan. So that's the sort of things that I personally like to see.

Operator

Our next question comes on the line of Chris Geston with UBS.

Chris Geston

So 2 questions on the diabetes front, if I may. The first one, assuming that the 28-day first quarter data that we get on the pump site is clean positive, whatever you were looking for occurs there. Is there any reason we shouldn't or wouldn't expect that the next step would be your roll out, your commercial launch? Has that been determined?

Gregory I. Frost

No. I think -- essentially, Chris, don't want to kind of get ahead of ourselves. Effectively, for the 4-month data, there's an integrated summary that we'll need to do of all of the data, putting that together and doing the analysis. So we have obviously activities that are for manufacturing scale up that they're being done. We have infusion sets and components of adapters that are coming together, as well as the studies. So what I would say is that we will go through and give you good details when we get the top line data in, and we'll move from there. But we're certainly excited about it. We think that the potential for patients is significant.

Chris Geston

Understood. So I guess, the follow up is, have you formally announced or would you say formally, that you are going this alone and that it will not be a partner program?

Gregory I. Frost

These are sorts of things that, from the opportunity, we look at every opportunity of the relative value in our hands versus our partner's hands. And so that's a disciplined process you always have to take. What I personally like is strategic options where you're very well-positioned either way, where there's no asymmetry in the footprint. So that's about all I would say from that side.

Chris Geston

Fair enough. And lastly, on the -- let's call it the co-formulation front, which has obviously taken less of a front seat given all your other successes. Is there any clear next steps or, I guess, tangible, measurable announcements and areas that would make you decide what to do with that? Are there some revised goals, perhaps, that you haven't stated in the past?

Gregory I. Frost

No. We'll go and give our general forecast for 2014 at JPMorgan, as long as -- as well as how we're looking from a standpoint of our other projections. What I would tell you is, right now, we are really laser-focused between PEG, pumps and our partners. And from that perspective, even HTI-501, which is a very exciting asset for us. It's something which we may go through and strategically look for partnering opportunities there. But as from the standpoint of really maximizing our success towards the things that are highest value to us, it's been our focus.

Operator

Our next question is a follow-up question from Jim Birchenough with BMO Capital Markets.

Jim Birchenough - BMO Capital Markets U.S.

Questions. One, are there any usability studies that you need to do to show that patients can work with the new adapters, to start on that side of things. And then also just wondering if you have any insight as to whether Roche will seek approval for Herceptin subcu and other subcu antibodies in the U.S.? Or where they're at with their thought process in U.S. filings for the subcu antibodies?

Gregory I. Frost

Sure. First one, as far as handling studies, there's I think it's about an 80-patient study. That -- I haven't seen the finalized data, it's still underway I think of putting it all together. Which is, in fact, a handling study looking at the different infusion sets and instructions for use on the pump side, Jim. So that is absolutely something that it's been going on in the background, we just haven't been talking about it. But I don't have the complete data on that. But to date, what I've seen is I think it's gone well, from the perspective of usability. From the perspective of some of the Roche programs in the U.S. between Herceptin subcu and MabThera subcu, I don't have any additional color for those. All I can say is the strategy and regulatory design that Roche developed for Herceptin and MabThera subcu were really focused first around the regulatory endpoints needed for market introduction in places where they had patent expiries happening the most rapidly and obviously the U.S. is further out. So those designs, the trials I think were specifically suited to support those. As far as additional data from those trials as they mature, and the suitability for use in the U.S., it's something that I don't have any updates on. But that's effectively data from pathologic complete response moving to PFS for example on the HannaH trial. Those sorts of data would presumably need to mature before I think they could have those discussions.

Operator

Dr. Frost, we have no further questions at this time. I would now like to turn the floor back over to you for closing comments.

Gregory I. Frost

I would like to thank everyone for listening to our call today. Of course, if you have any questions or need additional information, please feel free to contact me or David Ramsay. Have a great day. Or Schond Greenway. Thanks so much.

Operator

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

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