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Research Background- I only invest in areas of interest that are familiar.
  • 2 Crucial Q4 HALO Earnings Report Morsels You Need To Know- The Rest Was Boiler Plate 15 comments
    Feb 27, 2014 11:20 PM

    Helen Torley sounded so uninspired in comparison to Greg Frost, her CEO predecessor, as if she's got one foot in and one foot out ready to sell. She said PegpH20 is her Rx of interest, because it's the one that's going to lead to a buyout- to Celgene for Abraxane Pancreas-to Lilly for Ramucirumab for Breast and Lung Cancer -high hyaluronan NSCS- AND Ultrafast insulin (LLY dropped ADOC their previous partner in ultrafast when Yale chose Halo for artificial pancreas) or by Roche if the Herceptin SC and MabThera SC royalties add up and they decide to stop paying them.... SO, what are the 2 morsels?

    1. Revenues- true earnings from sale of product were $8.3 M in Q4 2012 and $12.5 in Q4 2013- 50% HIGHER= the milestone treatment changed from 2012 to 2013. In 2012, Milestones were taken as revenue- $13.5M in Roche and Pfizer Milestone Payments added to the $8.3M - in 2013 these $13.5M would have been amortized over 14 yrs- as the Herceptin and HyQvia milestones were and the MabThera will be. So apples to apples- There was a 50% Year to YEar beat this Quarter.

    2. HTI-501 was part of HALO's only foreign-Mexican- proprietary trials- no US regulatory IND filed. WELL NO MORE- the Cellulite Treatment- also for Peyronie's, Frozen Shoulder , and Dupuytren's Hand Contracture - Is crossing the Rio Grande- probably in preparation for Partnering after successful preclinical work by HALO to Pfizer (dropped Auxilium for same diagnoses last yr) or Allergan (home of Botox). Torley's quote tonight conveyed this move- "We will need additional chemistry, manufacturing and controls work prior to being able to file an IND in the U.S." (for HTI-501).

    Torley is here to deal- not wow us with her presentation- she was part of the ONXX buyout by her company of 14 yrs AMGN- Her gravitas will be important next to Randall Kirk at the table across from CELG, LLY, or Roche

    So, it while it was a boring rehashed call- except for these 2 morsels- boilerplate- BMO saw fit this AM to RAISE the PT on HALO to $24, while maintaining their OUTPERFORM Rating! They base this on growth both in the Partnered and Proprietary Products, but I believe there is some anticpated M&A in that number.

    Please add some tidbits you found in the comments section.

    Disclosure: I am long HALO.

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Comments (15)
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  • Pentech
    , contributor
    Comments (11) | Send Message
     
    When would you expect HALO's pancreatic cancer drug to be approved and on the market? It seems to be at Phase 1 now so presumably it will have to go through large Phase 2 and 3 trials, which could take many years.
    28 Feb, 08:58 AM Reply Like
  • fezziwig2008
    , contributor
    Comments (123) | Send Message
     
    Author’s reply » Well Pentech- anyone who follows Biotech knows of ICPT and their planned accelerated approval from Ph2 data following Breakthrough Designation- familiar?.... Well PegpH20 is in trial with Peg-Abraxane as well as with Folrirnox under a CRADA from the NCI- giving Halo full patent rights- if either or both trial results in the tripling of MOS seen in peg-gem Ph1b- it's the same tale as ICPT for HALO and it's Shareholders.
    2 Mar, 01:56 AM Reply Like
  • Michael Vascocu
    , contributor
    Comments (358) | Send Message
     
    I also do not understand why Roche would not want to pursue the Herceptin & Mabthera SC dosage forms in the USA, guesses? Maybe to control the price of Halo and force a low ball buyout price? Torley's response was odd too - something like, "they have not informed us of that intention"....why not say, that they will likely do so, or we are in talks on that. Would it not make sense for Roche to want to, to help the patient, and further their product line? Makes me think it has to be a buyout on the way, just hoping I can be patient until then. Be nice too when Pfizer unveils their idiotic 'top-secret' plans. It also should not be so difficult to bring to market a much more convenient and obviously more patient beneficial dosage form.
    28 Feb, 11:40 AM Reply Like
  • fezziwig2008
    , contributor
    Comments (123) | Send Message
     
    Author’s reply » 2019- the year Herceptin and MabThera US patents expire- so look for Roche to start trials around 2017 to get their Biosimilar defense- Herceptin SC and MabTheraSC - in place- that's Roche's CEO's term for his SC drugs. Pfizer is working the opther side of the streety- except for RN316 for PCSK9 inhibition, I think their biosimilar campaigbn will enlist HALO- perhaps first their Humira Biosimilar. It's all soon to unfold and amazing for $1.7B Halo.
    28 Feb, 12:19 PM Reply Like
  • fezziwig2008
    , contributor
    Comments (123) | Send Message
     
    Author’s reply » So, If you want to know something about Halo- don't ask Torley- she is on board to position and sell it- and don't ask Pentech- also known as notorious Basher "Fgnoms"- changed his handle when HerceptinSC Approved- he guaranteed Roche didn't want it approved,claims on Yahoo that he's Long Halozyme and that he invests money for European clients- Ask me.
    28 Feb, 12:29 PM Reply Like
  • Pentech
    , contributor
    Comments (11) | Send Message
     
    Trickdog - that's an easy one. Roche make more money selling the non SC versions. They are pricing the SC versions at the same price as the non SC so by not offering the SC in the US they make 5% more profit by saving on the HALO royalty. Also doctors and hospitals have said that they will refuse to deal with Roche if SC is introduced in the US as that will cut their income - can you believe it but it's true. Also of course Roche will be replacing both Mabthera and Herceptin before the expiry of the US patents so the prospects for HALO in the US look bleak. Of course in Europe the situation is different. The patents runs out before the replacements are approved and socialised medicine likes cost cutting. Why US insurance companies aren't beating down Roche's door demanding the introduction of SC or else they won't deal with Roche is beyond me. The free market doesn't always work? But Roche is in a strong position. They can say they can't afford the US trials - or blame the FDA or something like that.
    28 Feb, 12:24 PM Reply Like
  • mholmstrom
    , contributor
    Comments (11) | Send Message
     
    I have to agree Pentech in parts.

     

    Main issue is US system that practitioners make tons of $ in the US from IV herceptin and mabthera. Why would they reduce the time to fractions since they would have to get 20 times more clients in to make up the revenue? Plus Roche isn't in a hurry until US Patents expire, they make less money paying HALO. Unless they feel it is a competitive advantage or Herceptin gets threaten by competition they have little drive to push change.

     

    Everything is pushed to the consumer so they are the one's that get screwed not only with time but $ as well since practitioners charge tons more for Herceptin IV admin vs. SC.

     

    Welcome to the good ol US medical system. At least other EU countries value patients time and efficiencies more than the US. Unless systematic change in philosophy I don't see any Roche SC products until patent expires, they have made this clear too. Insurance companies and Consumers pushing Roche on SC in the US is the only hope.
    28 Feb, 01:02 PM Reply Like
  • mholmstrom
    , contributor
    Comments (11) | Send Message
     
    My thoughts:
    In the who cares but interesting, Slightly lower than expected revenue. While somewhat expected with higher than expected product sales in Q3 filling up inventory for Herceptin SC probably just timing issue. I expect a beat if not Q1, definitely Q2 will be a big beat looking at analyst estimates. Will have to fill Mabthera product pipeline and hopefully US Hyqvia as well. Plus royalties kick in starting this Q (will be very small at first, much less than product revenue.

     

    Product margins. This is an interesting surprise to me on margins getting on rHuPH20 from partnerships. So per Ramsey last Q herceptin SC product revenue cost will start flowing through COGS. So rough estimate if you look at previous data, Hylenex product margins are in the mid 50’s. So if you remove $4M from product revenue and $1.3M from COGS (note $1M hylenex revenue adjustment was positive so COGS based on $3M sales). That leaves other product revenue close to 60% margin. There could be some other non approved product revenue, but I received a response from Schond confirming majority of product revenue is approved products and costs are now coming through COGS for Herceptin. They will be getting 5% royalties plus a little less than 60% ish margin on product revenues going forward on Roche/Baxter partnerships.

     

    Felt all the talk about next target of Pegph20 kind of status quo. They will likely choose Breast (or prostate), I would rather a partner on the secondary one to reduce risk and get more cash to help fund. Could speed it along too if they go with partner.
    Phase II PegPH20- status quo. Hoping for further insight on enrollment, maybe next Q. As expected with trial design, won’t be a look along the way. Will have to wait for 8-12 mo (depending on OFS/data) post enrollment for any data. Probably best case 2015 ASCO. I honestly think the trial could end early given how well Phase 1B went. I want to see that Phase 1B final data re-published, likely ASCO 2014?

     

    Very disappointed on questions asked, not sure if easy on Torley since new, but felt they should have pushed more questions on Insulin pump, especially asking about mfg ramp up plans and progress. I get they are early regarding label discussions, but have heard they are ramping in preparation. I would have liked to known if that is in the cash burn guidance, additional costs on ramp up. It would sense confidence level if they are ramping.

     

    Consistent 1- very happy on explanation of change of time point. Not data related, FDA prefers to measure HbA1C 6 months vs. 4 months that explains data release delay likely mid-late March now vs. Jan I was expecting.
    HTI- Always felt Frost wanted this partnered months ago which may have not required them to raise $$. I feel Helen think differently, and wanted more flexibility with partnerships/opportuni... Saying they are planning to file US IND with or without partner gives more leverage. More progress they make without partnership, more $$ they will get. Even stating they are willing to go alone gives some leverage.

     

    Not that I am too high on Ramsey, but glad he is presenting at Cohen vs. Torley. I think more financial questions and the margin piece may be a nice surprise on clarification. Torley doesn’t seem to ra ra like Frost, which I am very happy with. I felt Frost promised a little too much and “pumped” a little too much. Think Torley straight shooter non promotional fact based answers. Maybe she could work a little on cheerleading though.

     

    Positive on the horizon (and people are selling!?!? Cmon!!):
    -2 trial results released in March 2014. Insulin pump could have huge impact as soon as next year. HTI will pave way for partnership or have flexibility to start process on own since have cash.
    -Mabthera SC approval March/April 2014-marketing launch/milestone payment May/June 2014.
    -FDA decision to Hyqvia May/June 2014, marketing Aug/Sept with milestone payment
    -Likely final Phase 1B pegph20 data presented at ASCO 2014
    -Q2 conference call likely much better clarification on path forward on Insulin label pathway from FDA
    -Fully enrollment of pegph20 trial July-Sept2014 (I think it will be early full enrollment due to design)
    -Revenue beat due to royalty ramp and product sales on launches in Q2. There is no or very little revenue ramp in analyst estimates.
    -PFE second target announced.

     

    Risks
    -FDA denies HyQvia
    -Poor data from HTI or Consistent 1
    -I don’t consider low sales from Mabthera/Herceptin a risk, already priced in given analyst estimates.
    28 Feb, 12:39 PM Reply Like
  • mholmstrom
    , contributor
    Comments (11) | Send Message
     
    Just to correct my margin comment. Reading the 10-K my product margin assumption was wrong. They indicated still some zero cost inventory for Herceptin SC flowed through. They expect COGS to be 83% of the API so 17% margin on product + 5% lagging royalty. About what I was originally expecting.
    28 Feb, 05:05 PM Reply Like
  • Pentech
    , contributor
    Comments (11) | Send Message
     
    Nasty question from the analyst about potential black box warning for HyQ. And Fezz had always argued that titers were a non issue. They got HyQ a CRL first time around and got SQ Cinryse trial cancelled by the FDA twice. And Torley couldn't even say that that was all sorted now.
    28 Feb, 02:10 PM Reply Like
  • Michael Vascocu
    , contributor
    Comments (358) | Send Message
     
    Pentech - you are one sick individual (with all due respect) if you are the same repetitive poster I see all over the notorious yahoo msg boards. Dude, if I hate a stock I do not hang around and blab all day long what I do not like about it, and I don't even post on yahoo anyway. As a pharmacist, I doubt what you argue is so true about Roche's reasons for not going after SC/SQ in the US. Maybe just their plate is full with other goals, and/or wanted to try it overseas first. Also, HALO is much more than just Roche products of course, with Baxter and Pfizer and others to come. I cannot think of any other biotech of this size with so much potential and what I thought was the safest play up to now. Just MMs shaking the tree today for those cheap shares....imo.
    28 Feb, 02:26 PM Reply Like
  • fezziwig2008
    , contributor
    Comments (123) | Send Message
     
    Author’s reply » MabThera SC and Herceptin sC prove Titers are a non issue- you posted on Yahoo M Board that they would sink MabThera SC- wrong. These titers are actually seen preclinically- as was seem in Hylenex-Insulin trial. Don't be surprised: they come from previous exposure to pH20- acrosomal hyaluronidase. After all- they are antrHupH20 antibodies. THey are probably coursing throuh your veins Pentech. They come from previous internal exposure to foreign spermatazoa. But don't worry- in no instance in history has an adverse effect been associated with their presence.
    28 Feb, 08:31 PM Reply Like
  • fezziwig2008
    , contributor
    Comments (123) | Send Message
     
    Author’s reply » Absolutey agree Trickdog- Pentech's mother may be the One example of exposure to acrosomal pH20 resulting in an effect worthy of a black box warning!
    28 Feb, 08:34 PM Reply Like
  • fezziwig2008
    , contributor
    Comments (123) | Send Message
     
    Author’s reply » Absolutey agree Trickdog- Pentech's mother may be the One example of exposure to acrosomal pH20 resulting in an effect worthy of a black box warning!
    28 Feb, 08:34 PM Reply Like
  • Michael Vascocu
    , contributor
    Comments (358) | Send Message
     
    Halo will likely be sold this year (as we are hearing all the web to include Feurerstein on Street dot com) - probably due to the huge potential and the drive from a big pharma such as Roche to own 'all' the rev potential and for Halo to get out from under regulatory and commercialization headaches and I am betting that Kirk would like to get it done and move on, just like Mr. Frost has already done, over now at Intrexon too. Halo truly does have all the potential &more that Alkermes had at a similar price, and is now up huge from that growth.
    28 Feb, 04:11 PM Reply Like
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