Shares of biotech company Halozyme Therapeutics (NASDAQ:
) were unchanged in pre-market trading on Tuesday following
Monday's gain of more than 15 percent. Investors bid up the stock
after BMO Capital Markets analyst Jim Birchenough upgraded it
from "Market Perform" to "Outperform" and raised his price target
from $4 to $12.
Halozyme might not carry the notoriety of other hot biotechs
like Dendrion (NASDAQ:
) or Gilead Sciences (NASDAQ:
) among traders, but perhaps it should.
According to Halozyme, the company's ENHANZE technology uses
an enzyme that breaks down hyaluronan -- a chemical that sits
just below the top layer of skin. By temporarily breaking down
hyaluronan, drugs that could only be administered by IV can now
be injected just like a flu shot.
Injecting a drug cuts down on the cost to administer,
increases customer convenience, and increases efficacy.
It is no wonder big pharma has its collective eyes on
Halozyme. Both Roche (OTC:
) and Pfizer (NYSE:
) have shown interest. Roche and Halozyme are currently waiting
for European approval for a Herceptin that uses the ENHANZE
Herceptin is already a blockbuster breast cancer drug for
Roche, with 2011 sales coming in at $5.7 billion. Roche recently
paid Halozyme $4 million after the company filed for European
approval of MabThera, a drug to treat non-Hodgkin's lymphoma.
This is part of a 2006 deal that includes up to $111 million
in payments to Halozyme. Roche has agreed to pay $47 million
upfront per targeted drug in addition to royalties, according to
a Roche investor update.
Pfizer is testing six of its compounds for possible use with
the ENHANZE technology. This could be worth more than $500
million, according to
The Associated Press
. That's half of the company's total market cap.
Other interested pharmaceutical companies include ViroPharma
) and Baxter (NYSE:
). Halozyme has royalty terms in place with companies interested
in using ENHANZE, making the technology a major revenue driver
Halozyme's stock lost half its value when the FDA voiced
concerns about the safety of the technology in August. It halted
some studies because of possible side effects on fetal
development and fertility.
Pfizer has helped to mute those concerns by conducting further
studies on a new generation of the enzyme used in ENHANZE.
Looking at the numbers, Halozyme has more than doubled from
its $3.86 low but traders should be careful. Although the stock
broke its 200-day moving average, resistance is only 30 cents
away at its September top of $8.55. Technically, if it can break
that level, at least short term, upside could follow.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Gain access to more investing ideas, tools & education.
Get Started on Marketfy, the first ever curated
& verified Marketplace for everything trading.