Halozyme Therapeutics Inc (HALO) 2008 Q4 法說會逐字稿

Welcome to the Halozyme 2008 fourth-quarter and full-year financial results and pipeline update conference call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded today, March 13, 2009.

I would now like to turn the call over to Robert Uhl. Please go ahead.

Thank you and thanks also to everyone for participating in today's call. I'm Robert Uhl, Senior Director of Investor Relations at Halozyme Therapeutics. Joining me on the call today from Halozyme are Jonathan Lim, President and Chief Executive Officer, and David Ramsay, Chief Financial Officer. Additional members of the Halozyme management team will also be available to address your questions during the Q&A portion of the call.

This morning, Halozyme released 2008 fourth-quarter and full-year financial results. If you have not received this news release or if you would like to be added to the Company's distribution list, please call [Alec Schlam] at 858-704-8288.

This call is also being webcast live over the Internet at www.Halozyme.com, and a replay will be available on the Company's website for the next 30 days.

Before we begin, let me remind you that during this conference call, we will make forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for forward-looking statements. All statements made during this conference call that are not statements of historical fact constitute forward-looking statements. The matters referred to in forward-looking statements could be affected by the risks and uncertainties of Halozyme's business, both known and unknown. Such risks inherent to the Company's business are described in our filings with the Securities and Exchange Commission as well as in our news releases.

The Company's actual results may differ materially from those expressed in or indicated by such forward-looking statements. With that, I would like to turn the call over to Jonathan Lim, President and CEO.

Thank you, Robert. Good morning, everyone. Thank you for joining us.

On the call today I will briefly review our major accomplishments in 2008, update the status of our key product development programs, and provide an overview of our business plan and how each program fits within that plan. Also on the call today David Ramsay, our CFO, will provide the highlights of our financial results and some thoughts about the current year.

I am pleased with the tremendous progress Halozyme has made in 2008 and so far in 2009. As a result of this forward momentum, HALO's fundamentals are stronger than they have ever been since our founding just over a decade ago.

During the fourth quarter of 2008, four of our programs made important advances in clinical development, as two programs entered Phase 1, one entered Phase 2, and one began a Phase 3 clinical trial. Specifically, these four programs are bisphosphonate-PH20, which began a Phase 1 clinical trial in osteoporosis patients; Roche, which initiated its first Phase 1 clinical trial for one of its biologics with PH20 and has subsequently initiated an additional Phase 1 clinical trial in 2009; Insulin-PH20, which advanced to a Phase 2 clinical trial in type 1 diabetic patients; and GAMMAGARD LIQUID with PH20, in a development alignment alliance with Baxter BioScience, began a Phase 3 registration study in patients with primary immunodeficiency.

PEGPH20 for the treatment of solid tumors made strong progress in preclinical studies in 2008 that are paving the way for it to begin patient dosing in a Phase 1 cancer study soon.

We firmly believe that the development milestones that I have just described, along with the development activities related to other proprietary and partnered product candidates, are significantly raising the intrinsic value of Halozyme. So one of the important value creators is our proprietary product development program. So Halozyme continues to pursue in parallel four multi-billion-dollar franchise opportunities in the areas of endocrinology, oncology, dermatology, and drug delivery.

Within these four therapeutic areas, we have proprietary product development programs where our goal is to identify innovative new drugs with highly differentiated value-added characteristics that will allow them to be either best-in-class or first-in-class products with large commercial sales potential.

All of our proprietary programs utilize our unique enzyme technology that permits a temporary alteration of the extracellular matrix, which is the area outside of the cell, in order to permit the delivery of a pharmaceutical or biologic in a unique way. We maintain worldwide rights to our proprietary programs and may continue to pursue development of each of these on our own or choose to enter a development partnership or licensing arrangement with another company.

Within endocrinology, we have Insulin-PH20 and bisphosphonate-PH20. In the oncology franchise, we have PEGPH20 and Chemophase. And in the derm franchise we had HTI-501.

So now I am going to dig into the individual proprietary program starting with Insulin-PH20. I'm pleased to announce today that the abstract for our ongoing Phase 2 insulin study has been accepted for a poster presentation on Saturday, June 6, at the American Diabetes Association meeting in New Orleans. For this Phase 2 study, we enroll type 1 diabetic patients, and we believe we will be able to demonstrate that a gold standard insulin analog treatment, such as Humalog, administered at a therapeutic dose along with our enzyme, will show a superior profile relative to the analog alone.

We designed this Phase 2 study to compare glycemic control of a standardized liquid meal challenge and insulin pharmacokinetics, or PK, after administration of each of four dosage regimens -- Humulin R with and without PH20, and Humalog with and without PH20. The combination doses of insulin plus enzyme are comixed and administered to the patients as a single injection.

This crossover design, single blind, open label liquid meal study collects data on at least 20 patients who will complete the trial. Each study drug is injected subcutaneously into the abdomen immediately prior to ingestion of the liquid meal. The primary endpoint in the study is area under the curve, or AUC, during the first 60 minutes after the injection of the test drug.

We believe that the insulin analog plus PH20 enzyme combination should result in significantly greater AUC during this early time period relative to the analog alone. This faster absorption of insulin when administered with our PH20 enzyme means insulin can potentially produce its therapeutic effects more rapidly.

Along with faster absorption and onset of effect which more closely resemble real-time insulin release in a healthy person, we should also observe a faster offset. So the faster onset and more rapid offset should translate into tangible patient benefits such as less hypoglycemia, better glycemic control, and possibly less weight gain.

We submitted our ADA abstract early this year so it includes only a handful of patients and limited data from the trial. Our poster at ADA will be more complete than the abstract and will contain a significant amount of new info. But due to timing and logistical issues, the poster most likely will be a partial data set. We are planning to present the full data set of the Phase 2 results at the EASD in Europe in September.

Two additional insulin clinical studies are also underway. A Phase 1 dose-ranging PK and glucodynamics safety and tolerability study began during the fourth quarter of last year, and the enrollment of 40 subjects is proceeding according to plan.

The second study, which is an intra-patient variability study, just dosed the first of 18 subjects earlier this week. This trial will compare insulin PK measures in each subject for two doses of insulin analog alone; analog with PH20; and regular insulin with PH20. The purpose of this variability study is to evaluate and quantify whether or not the presence of PH20 produces a more consistent PK profile relative to the PK variance produced by the insulin analog alone.

In addition to the ongoing insulin clinical trials, a scientific paper describing the results of our initial Phase 1 study presented at the ADA in June of last year has been accepted for publication by a peer-reviewed journal. We anticipate publication of the article this summer.

As you can tell, our insulin program is moving forward at full speed with a broad array of clinical investigations underway and a great deal of progress being made.

Bisphosphonate-PH20 is the other program within our endocrinology franchise. This is well into the Phase 1 dose ranging safety and tolerability study, which began in the fourth quarter of last year. The recruitment and dosing of additional cohorts has proceeded exactly on plan, and we are encouraged by this progress.

In fact, this is an open label study; and based on what we have seen so far, we believe that this program is exceeding our expectations. We anticipate announcing the results of this trial by the end of the year.

So now let's shift over to our oncology programs. PEGPH20, which is the pegylated version of our hyaluronidase enzyme, is getting closer to the start of its first Phase 1 clinical study. This trial will be a range finding, repeat dose, PK and pharmacodynamic safety trial of PEGPH20 administered intravenously as a single agent in cancer patients with refractory solid tumors.

The primary outcome will be to determine the recommended dose for Phase 2 and to evaluate the safety and tolerability of the agent. Results from this first Phase 1 study should be available by the middle of next year.

Hyaluronan, or HA, is a dominant component of the tumor microenvironment for many subsets of solid tumors. This is why we believe that our hyaluronidase enzyme could eventually play an important role in the treatment of solid tumors. In fact, solid tumor types known to produce HA include a broad variety of tumor types such as prostate, ovarian, breast, colon, pancreas, and gastric.

Based on our test in mouse tumor models that produce HA, the removal of HA with our novel PEGPH20 enzyme occurs in a dose-dependent manner, which results in a meaningful reduction in tumor size and prolonged time to progression compared to controls.

HA removal also leads to significant reductions in tumor interstitial fluid pressure, or IFP, and tumor diffusion weighted MRI. Many bladder tumor cell types also produce HA.

Chemophase, our combination product for the treatment of superficial bladder cancer, consists of PH20 and the antineoplastic agent mitomycin C administered intravesically, or directly into the bladder. Chemophase continues in two ongoing clinical trials, which we expect to wrap up by the fourth quarter of this year.

We conducted a strategic assessment during the first quarter of 2009 of the resources required to advance our various programs. As a result of this process, we decided to reallocate certain resources previously budgeted for Chemophase projects to other high-priority, high-value programs such as our Insulin-PH20 and PEGPH20 programs. We will finish the ongoing trials and activities associated with Chemophase; but we will not be initiating new studies or committing new resources to the program at this time. We are currently exploring strategic alternatives that will allow the Chemophase program to advance its clinical development.

So now I will speak briefly about our dermatology program. The key compound in our derm program is the human lysosomal enzyme, HTI-501, that degrades collagen. The protein only shows activity at a slightly acidic pH of 5 to 6 and does not appear active at normal physiological pH of roughly 7.4. We believe HTI-501 may play a role in both medical and aesthetic dermatology applications such as cellulite, Dupuytren's contracture, or scarring.

We have been conducting numerous studies in various animals to learn more about the dosing, formulation, and characterization of this enzyme. Our preclinical investigations will continue through 2009.

So those are the latest updates on our proprietary product programs. Now let's turn our attention to the development partnerships.

As many of you are aware, Halozyme has three partnerships. Two of these involve our Enhanze Technology with Roche and Baxter BioScience, while the third partnership is with Baxter medication delivery for Hylenex, our FDA approved drug. So first I am going to give you an update on our Roche activities.

So representing a small step for Roche but a giant leap for HALO, Roche entered the clinic this past December with its first biologic agent combined with PH20, directed against one of the four exclusive targets covered in our partnership. Soon after, another clinical study began in January with another Roche biologic combined with PH20, directed against a second exclusive target. We anticipate that both of these Phase 1 studies should be completed this summer.

Although we are not permitted to say which biologics in the partnership have entered the clinic, we are excited by these initial steps of clinical advancement and believe the progress by Roche exemplifies its commitment to our technology. As a result of these developments, we received $10.25 million from Roche.

In addition, the start of the second Phase 1 clinical trial in January triggered another milestone payment under the terms of the agreement. We cannot be precise in the timing for future milestones covered in the Roche agreement, but we expect additional milestone activity to occur in 2009.

As you may know, our other enhanced technology partnership is with Baxter BioScience. At the end of last year, Baxter began its pivotal Phase 3 clinical trial with GAMMAGARD LIQUID plus our Enhanze Technology as a monthly injection under the skin through a single site for the treatment of primary immunodeficiency, or PID. This clinical study is a prospective, open label, noncontrolled design that will be conducted in 10 to 20 centers in the US and Canada and will enroll approximately 80 patients.

It will assess the prevention of acute serious bacterial infections and the PK parameters of sub-cu administration of GAMMAGARD LIQUID and PH20. Patients in this study will be treated for approximately one year, and results may be available by the end of 2010.

This study represents Baxter BioScience's commitment to innovation and to superior patient care, and Halozyme is pleased with the progress the two companies have made since the partnership began in September 2007.

Our remaining partnership is with Baxter Medication Delivery for Hylenex. In early January, we received payment of $5.5 million from Baxter, representing the final prepaid product-based payment due under the terms of the Hylenex agreement. The payment has been booked as deferred revenue.

Hylenex has received FDA approval to increase the absorption and dispersion of other injected drugs and for subcutaneous fluid administration. Baxter Med Delivery plans to launch Hylenex into the pediatric hydration market during the fourth quarter of 2009 and continues to prepare its marketing capabilities to support the product.

Baxter completed a pediatric hydration clinical trial last year and presented the results at two medical meetings in October 2008. In addition, a second pediatric hydration study is currently underway.

So based on my brief comments here, I am sure that you can see that each of our partnered programs is moving forward and continuing to make steady progress. Now I will turn the call over to David Ramsay for his financial commentary.

Thank you, Jonathan, and good morning, everyone. The net loss for the fourth quarter of 2008 was $16.8 million or $0.21 per share, compared with a net loss for the fourth quarter of 2007 of $8.7 million or $0.11 per share.

For the year ended December 31, 2008, our net loss totaled $48.7 million or $0.61 per share, compared to a net loss of $23.9 million or $0.32 per share for the full year 2007.

Revenue for the fourth quarter of 2008 was $3.1 million compared to $1.3 million for the fourth quarter of 2007. Revenues under collaborative agreements for the fourth quarter of 2008 were $2.8 million compared to $1.2 million for the fourth quarter of 2007. Revenues under collaborative agreements for the fourth quarter of 2008 primarily consisted of the amortization of upfront fees received from Baxter and Roche of $1.6 million, and research and development reimbursements from Baxter and Roche of $1.2 million.

Total revenues for the year 2008 were $8.8 million compared to $3.8 million reported for 2007. Revenues under collaboration collaborative agreements for the year 2008 totaled $8.1 million compared to $3.2 million for 2007. Revenues under collaborative agreements in 2008 consisted primarily of the amortization of upfront fees received from Baxter and Roche of $3.4 million versus $1.9 million for 2007. Revenues under collaborative agreements also include R&D reimbursement revenue primarily from Baxter and Roche, which jumped substantially to $4.7 million in 2008, compared to $1.3 million during the prior year 2007.

R&D expenses for the fourth quarter of 2008 were $16.8 million, compared with $7.3 million for the fourth quarter of 2007, primarily due to an increase in research and development headcount; spending on the PEGPH20, Insulin-PH20, and bisphosphonate-PH20 preclinical and clinical programs; and production costs associated with the manufacturing scale-up of our rHuPH20 and PEGPH20 enzymes.

During the fourth quarter, we incurred significant manufacturing expenses as we scaled up our capacity to provide materials to our partners Baxter and Roche. Approximately $2 million of this expense was originally planned for the first quarter of 2009, but was incurred ahead of plan in the fourth quarter.

Selling, general, and administrative expenses for the fourth quarter of 2008 were $3.2 million, compared with $3.9 million for the comparable period in 2007, reflecting decreases in legal and professional fees, marketing research, and employee recruiting expenses.

Our financial position remains very strong with cash and cash equivalents of $63.7 million as of December 31, 2008, compared with $97.7 million as of December 31, 2007, and $72.5 million as of September 30, 2008. Thus, our cash burn for the fourth quarter was roughly $8.8 million and for the full year 2008 was about $34 million.

For the full year 2009, we anticipate net cash burn of approximately $30 million to $35 million; and that depends on the progress of various preclinical and clinical programs; the timing of our manufacturing scale-up; and the achievement of various milestones under our existing collaborative agreements.

That concludes my remarks, and now I will turn the call back over to Jon.

Thank you, David. At this point, I would like to provide you with a summary listing of some of the important Halozyme milestones that we expect to occur during the remainder of 2009.

So we plan to begin dosing a Phase 1 clinical trial for PEGPH20 as a single agent in cancer patients with refractory solid tumors in the second quarter of this year.

For the insulin program, we will have multiple events this year, including presentation of interim Phase 2 data for Insulin-PH20 at the ADA meeting in June, followed by presentation of the full data set for Phase 2 Insulin-PH20 at the EASD meeting in September of 2009; initiation of the Insulin-PH20 with three times per day dosing in the fourth quarter of 2009; presenting top-line data from the bisphosphonate-PH20 Phase 1 clinical trial in the fourth quarter of this year; Hylenex launch by Baxter in pediatric hydration, also in the fourth quarter; and completion of enrollment by Baxter in the Phase 3 GAMMAGARD PH20 in the treatment of primary immunodeficiency during the fourth quarter of this year.

Additional milestones that we expect to occur this year, but where I can't give you precise timing, are the initiation of additional Roche clinical trials plus milestone payments.

At Halozyme, I believe we are making tremendous progress in advancing both our proprietary and partnership programs as rapidly as we can. With that overview, let's open it up for questions. Operator?

(Operator Instructions) Kevin DeGeeter.

Hey, good morning, guys. A couple of quick questions here. For the glucodynamic study and the interpatient variability study for insulin, when should we look for those being presented? Is that also EASD or is that some other forum?

Yes, we are not sure yet, Kevin, because we just started that, but we will give more guidance later this year. It should be a fairly quick study, though.

Likely in the third quarter in terms of when we might see that data in some context?

It could be. Still, it is a little early for us to know precisely when, but yes; Q3 or Q4 would be reasonable.

Okay. Maybe just one or two quick accounting questions for David here. Help me just, I guess, make sure I am thinking about the cash payments here from Roche in the right manner here.

The $10.25 million you received in December, that was all received in the fourth quarter, correct?

No, it wasn't, Kevin. Actually the majority of that was received on January 2.

Okay, and that is the $6 million?

Yes, correct.

So where is the other $4.25 million? Was that in December or is that still --?

That was received in December and booked to deferred revenue.

Okay, and the $6 million will be booked to deferred revenue as well?

Most of it, not all of it. But a good chunk of it.

Okay, and amortized over what period, or reversed under what circumstance?

Amortized until 2024.

Okay, perfect. And just help me, I guess I don't understand -- I don't want to dwell on it, but understand why we received the $4.25 million, then the $6 million. I mean, I am assuming it pertains to different elements of --

It does, Kevin. The $4.25 million is a maintenance payment that had a slightly different payment schedule, and so we received that prior to year-end. So that is something that we will receive on an annual basis, provided Roche keeps their remaining targets option period open.

Okay, and maybe one more for me then I will get back in queue. With regard to exploring strategic alternatives for Chemophase, are you going to wait until later this year and you have a full data package to go out with prospective partners? I am assuming that is how we should read that announcement. Or is that something you hope to move aggressively with the data that you have in hand?

Yes, Kevin, we are going to be packaging up Chemophase with the studies that we have and complete those and then put those as part of the package for potential discussions.

Okay, so we should think of that as more of a longer-term process at this point?

That's right.

Okay. Thanks so much.

Eun Yang.

Thanks very much. A quick question to David. In terms of the R&D spending, you mentioned that in the fourth quarter there is increased expenses associated with the manufacturing ramp-up. Could you actually give us some guidance what the quarterly run rate would be in 2009?

Sure, Eun. I think as I mentioned if you take a look at how $2 million of that number was shifted from Q1 '09 to Q4, if you just sort of back that out from Q4 that should give you a pretty good sort of estimate of the subsequent quarterly run rate in total.

Okay. Then your cash guidance -- the cash usage guidance of $30 million to $35 million. Based on the increased R&D expense, anticipated R&D expense in '09, what is the kind of revenue assumption that you have there?

Sure. So as you can see and as we incurred in even Q4, we had significant expense but offset by a fair amount of milestones coming in. So a lot of the '09 incoming cash, for example, we anticipate from continued receipts of cash from Baxter and Roche.

For example, we mentioned that in January we received $5.5 million from Baxter and $6 million from Roche. So that all is offsetting the burn to get you to that $30 million to $35 million number.

So we anticipate that continuing as we move our programs forward into the clinic, resulting in a net burn of $30 million to $35 million.

Some of the subtleties in that are, a lot of the cash we get we book to deferred revenue, so it is not revenue per se.

Okay, thanks. Then a last question to Jonathan. In the new administration's proposed budget, there is some element there where they are actually kind of proposing to prohibit brand biology manufacturers from reformulating existing products into new products and to restore the kind of exclusivity process. They called it like evergreening.

So I just want to get your thoughts on how you think PH20 program or Enhanze Technology that Halozyme is developing fitting into that newly proposed budget.

Eun, based on our current partnership activities, if it's a new BLA type of filing, then we don't believe that this new legislation would impact that.

So initially our understanding is that this Enhanze program would be like 505(b)(2) pathway at the FDA. Is it?

Not for biologics, Eun. So the option is either a supplemental BLA or a new BLA. But that is not to mean that there is any significant clinical pathway. So it is not a full-blown clinical development pathway for the Enhanze Technology type of program.

It is really just a matter of whether you file a new BLA for regulatory purposes versus file a supplement to an existing BLA.

So just to make sure I understand, so Enhanze, the product that Roche is developing, you do not think that that is kind of a reformulation of an existing product. Is that correct?

Correct. Absolutely correct.

Yes, so the timing is unchanged.

Okay, thank you.

[Chris Geston].

Good morning. Could you speak to the number of folks that are working directly on additional, let's call them, partnership opportunities? And is that different -- has it increased over the last six to 12 months?

Maybe it would be helpful to have the same kind of number of professionals working directly on and with Roche.

Yes, Chris, I will just say that in terms of business development, it is always a team effort. So we have enough bandwidth working on the various options that we are pursuing in parallel. So I will say that the amount of focus and attention on that pathway is significant.

Then in terms of the Roche alliance management, we have also a dedicated team of people working on the support activities. We also pull various degrees of bandwidth and support from existing departments -- for instance product development, manufacturing, R&D, and other areas -- as needed.

Terrific. Just going back to the first one, there was a conference call, and I don't remember the exact time, in which I think there was some disappointment over the number of two people that were working directly on additional partnership opportunities. My understanding or guess would be that that has been enhanced.

Is there any way you can give us a general number or increase percentage-wise?

Yes, I wouldn't focus too much on the number of people within business development. It is more, are we fully and adequately supporting the outreach efforts that are needed? And the question is -- or the answer is a definitive yes.

Perfect. Thanks very much.

Matt Osborne.

Hi. Thanks for taking the question. Just if you can clarify the manufacturing with Cook now, where it stands. Is Roche now treating patients with supplies from that facility? And what the capacity is there for that, in terms of liters of manufacturing.

Does it need to go to another round of increased capacity before Roche moves into Phase 2? Thank you.

Yes, the capacity is 2,500 liters, and we will be using material both from Abbott as well as Cook at various stages of development of the Roche products.

Is any further progress from Roche dependent upon additional scale that is required? Or is there sufficient scale now for them to move forward into Phase 2 or Phase 3?

Yes, manufacturing will not be rate limiting in Roche's development.

Okay, great. Thank you.

Andrew Vaino.

Thanks for taking my call and kudos to you guys for having your earnings call on Friday the 13th. That's fantastic.

I was wondering if you could comment. You mentioned that your R&D headcount increased. Can you comment by how much?

Yes, you know, we ended the year, Andrew, with about 130 employees; and about 100 or 97 of those are involved in R&D. That is a significant increase, for example from year-end 2007, when I believe we ended the year with about 87 employees and about 60 or so were R&D.

So it is probably year-over-year, probably about a 50% or almost 50% increase in R&D headcount. And that really is divided or allocated throughout the whole R&D chain. So for example, we hired people in research, pharmacology, preclinical, regulatory, clinical, just the whole gamut there.

Particularly now as we have scaled up our clinical programs, for example having three insulin trials running simultaneously right now, extra headcount there was required to move those programs along expeditiously.

So that just kind of gives you a sense. Most of the increase was in the R&D side.

We don't expect to see that kind of increase in '09. The increase in '09 will be much more modest in terms of headcount, anywhere between 10 to 12 people or so. The bulk of the infrastructure we needed to build out now, we have done and it's able to handle all of our proprietary as well as partnered programs.

Okay, excellent. You mentioned that you had a paper accepted in a peer-reviewed journal. Is it possible that to know which one?

We will comment on that in the future.

Okay. Secondly, I am just trying to -- I was challenged in evaluating your Company. Do you guys have any idea of what you expect in terms of revenues for say 2011, 2012? Is it still very much premature?

We do, Andrew, but we don't disclose it. A lot of that revenue comes from milestones and such from partners; and so they have asked us -- and particularly, Roche has asked us -- not to give guidance as to those milestones.

But we have a very detailed forecast and as you can imagine do scenario planning and have all sorts of scenarios built into that forecast. It is that type of planning that gives us the granularity to be able to say that we anticipate '09 cash burn to be about $30 million to 35 million.

Excellent. Thank you very much.

(Operator Instructions) [Stephen Lerus].

Good morning, gentlemen. A very basic question about Roche and Genentech. Do you have a team internally that is going through some of the Genentech products to see if your relationship with Roche can get any deeper after this acquisition?

Yes, what I can say about the Roche and Genentech acquisition is that two targets covered in our partnership with Roche are in Phase 1 clinical trials and both of these began during the midst of the Genentech bidding process. So we don't believe that the acquisition process affected the progress of our partnership.

The gating factors are all of the usual things you would expect in drug development, such as formulation, tox, discussions with regulators, etc. So that it is a comment on that.

Then in terms of the possibility of adding other targets to the mix based on the acquisition, well, that is always a possibility.

You have no further questions at this time.

Okay. Well, Halozyme's unique and exciting business model strikes a balance between proprietary product development programs and partnerships with other companies that aim to leverage our core technology and knowledge base.

We are applying our core technology and expertise across several therapeutic categories that represent large established markets and substantial multi-billion-dollar commercial opportunities.

Despite the breadth of our programs and the depth of our activities, we continue to operate in a capital-efficient manner as demonstrated by our use of $34 million of net cash during the full year 2008. We believe this strategy will provide multiple opportunities for success that can drive significant value for our shareholders.

We look forward to updating you again soon on our progress and will be presenting at the Cowen Health Care Conference next week on Wednesday, March 18. We will also be presenting three abstracts on preclinical results for PEGPH20 at the AACR meeting in Denver on April 19.

Again, thank you for your support and for your interest in Halozyme and for your participation in today's call. Take care, everyone.