Memorandum
Earlier today, Halozyme President and CEO Dr. Helen Torley led the company’s Analyst and Investor Meeting. While the call focused almost exclusively on the company’s PEGPH20 program for the treatment of certain cancers, management did touch on the impact of the decision not to pursue further development of Hylenex pretreatment for use with insulin pumps without a partner, which we first learned about during the company’s 3Q14 update. Management noted that Halozyme expects only modest increases (to ~$144-$155 million) in operating expenses despite substantial expansion of the PEGPH20 program and asserted that this is due in large part to the decision to de-prioritize the diabetes program. As in the 3Q14 update, management remarked that the decision stemmed from a portfolio review as well as discussions with the FDA; Halozyme is still awaiting “regulatory clarity” from the FDA on what is needed before beginning partnership discussions, and we have not heard any updates on this front. We are disappointed (though not entirely surprised) to see the company’s focus shift away from diabetes given the potential benefits that Hylenex could confer for insulin pump users (the costs had seemed high). Six-month data from the CONSISTENT I trial demonstrated non-inferior A1c reductions at six months with Hylenex vs. standard pump therapy, and Hylenex appeared to provide an advantage with regard to hypoglycemia. We will be on the lookout to see whether a potential partner pick this up once a clearer regulatory path emerges; the slow pace of feedback from the FDA has been quite frustrating to see though this is also not particularly surprising given how under-resourced the FDA is.