Halozyme Therapeutics (NASDAQ:HALO) stock was a loser yesterday while other biotech firms have rebounded after dipping during the few days' of an angry market. The reason for the stock decline was the announcement of pricing of Halozyme's previously announced underwritten public offering of 7,692,307 shares of its common stock at a public offering price of $13.00 per share. The offering is expected to close on February 10, 2014, subject to customary closing conditions. In addition, Halozyme has granted the underwriters a 30-day option to purchase up to an additional 1,153,846 shares of common stock.
Halozyme intends to use the net proceeds from this offering to fund research and development of proprietary programs. The firm's press release has specifically mentioned the potential acceleration of the PEGPH20 program.
The PEGPH20 program
The program, which Halozyme wants to finance, represents a novel approach to treating cancer, especially solid tumors. The rationale behind the treatment is that in some cancers, including pancreatic, breast, colon and prostate, high levels of hyaluronan (HA) along with other matrix components accumulate in the tumors, which increases their interstitial fluid pressure, thus constricting tumor vasculature. The obstruction of tumors' blood vessels makes it hard for drugs to be delivered into the cancers, hindering the potential effectiveness of anti-cancer agents. Dismantling the HA in the tumors reopens the constricted vessels, hence increases the delivery of drugs to their targeted cancers.
A New Product
While unable to use its FDA approved recombinant human hyaluronidase enzyme, Hylenex® (rHuPH20) on cancers, Halozyme created PEGPH20 - a PEGylated form of Hylenex. This new PEGylated enzyme has an increased half-life in the blood, hence can be administered intravenously. The inability to use Hyalex for cancer is that this approved product acts only locally at the injection site, it is rapidly inactivated in the body, and does not survive in the blood.
Treatment of mice bearing tumors PEGPH20 given alone was found to significantly reduce the growth of tumors that accumulate HA. PEGPH20 was also used on various tumor types with outcomes suggesting that it has been active against tumors that contain high levels of HA. Other preclinical studies demonstrated that PEGPH20 degrades tumor-associated HA and reduces interstitial fluid pressure in tumors with elevated HA.
An estimated 20% to 30% of solid tumors are thought to contain high levels of HA. Further testing on animals demonstrates that PEGPH20 in combination with other chemotherapeutic agents, such as docetaxel, liposomal doxorubicin or gemcitabine, decrease tumor burden and can increase survival when compared to either agent used alone. These studies supported progression to clinical trials to confirm the effectiveness of PEGPH20 as an enhancer of chemotherapeutic agents in tumors rich in HA.
A Phase 1 clinical trial was initiated back in 2009 to assess the safety and tolerability of PEGPH20 in patients with solid tumors refractory to prior therapies. A range of doses and frequencies were tried in order to assess the safety and tolerability of the treatment in patients with solid tumor refractory to prior therapies. The trial included patients with pancreatic cancer. In the clinical trials being currently conducted with PEGPH20 for solid tumors, a dose of oral dexamethasone, a steroid, is administered to all patients before and after intravenous administration of PEGPH20 to minimize the side effects of PEGPH20.
A Phase 2 clinical trial, with a Phase 1b run-in period, for patients with metastatic pancreatic cancer is currently ongoing, and the enrollment of the run-in phase is complete. Halozyme has identified the dose of PEGPH20 to to be used in an upcoming Phase 2 in combination with the chemotherapeutic drug gemcitabine,
The preliminary efficacy and safety results were presented at the 2013 American Society of Clinical Oncology (OTC:ASCO) Annual Meeting. In this single-arm Phase 1b trial, the overall response rate (complete response + partial response) was 42 percent for those treated at therapeutic dose levels of PEGPH20 as assessed by an independent radiology review. In subjects with high levels of hyaluronan (HA), which surrounds many pancreatic cancers, the overall response rate was 64 percent (7 of 11 subjects with available biopsy). Moreover, 43 percent saw a reduction of at least 70 percent in the serum biomarker 19-9 (CA 19-9), which often correlates with tumor cell burden.
As a result, Halozyme has initiated a new Phase 2 multicenter, randomized clinical trial evaluating PEGPH20 as a first-line therapy for patients with stage IV metastatic pancreatic cancer. Approximately 124 patients will participate in the study and receive gemcitabine and nab-paclitaxel either with or without PEGPH20. The primary outcome will be measuring progression-free survival between patients administered PEGPH20 to those who are not. This is one of the projects that Halozyme indicated will benefit from the proceeds of the offering mentioned above. The offering, like usual, led to the decline of HALO'S price yesterday.
Is the project worth financing? Our answer is yes.
Disclosure: No positions