Halozyme Therapeutics Inc (HALO) 2009 Q4 法說會逐字稿

Good morning. My name is Trinity, and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter and 2009 financial results. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session.

(Operator Instructions). Thank you.

You may begin your conference.

Thank you Trinity, and thanks also to everyone for participating in today's call. I am Robert Uhl, Senior Director of Investor Relations at Halozyme. Joining me on the call today from Halozyme are Jonathan Lim, President and Chief Executive Officer, and Kurt Gustafson, Chief Financial Officer. Additional members of the Halozyme management team will also be available to address your questions during the q-and-a portion of the call.

This morning, Halozyme's released 2009 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 Alex 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 seven days.

Before we begin, let me remind you that during this conference call we will be making 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 in 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 turn the call over to Jonathan Lim, President and CEO.

Thank you Robert. Good morning everyone, and thank you for joining us on the call.

These are very exciting times for Halozyme. Our product and technologies have the opportunity to touch patients lives throughout the world. Last year we made exceptional progress in 2009, and we expect 2010 will be another strong year. Today I'm going to review our recent accomplishments and update the status of our key proprietary product development programs, and our three alliance programs with Roche and Baxter. Also on the call today, Kurt Gustafson, our CFO, will provide the highlights of our financial results for the most recently completed quarter and year, and provide some financial guidance for 2010.

2009 was a year of important accomplishments for Halozyme. Two of our partner programs advanced in the pivotal Phase III programs, Subcutaneous Herceptin with Roche, and Subcutaneous GAMMAGARD with Baxter. A third Roche biologic entered the clinic in September, 2009, and I'm happy to say it's been subsequently identified as MabThera, also known as rituximab.

In 2009, we also presented the results of three clinical trials from our Ultra-Fast Insulin Program, including a Phase II meal study in Type One diabetic patients. PEGPH20, which is a pegylated form of our PH20 enzyme for the treatment of solid tumors from a systemic perspective, advanced into Phase One clinical development in 2009. Halozyme's Dermatology Research Program stayed active in 2009 with HTI-501, a conditionally active collagen-degrading enzyme, continuing to undergo a variety of preclinical testing.

I believe people are starting to recognize Halozyme as an incredibly unique and attractive investment opportunity. Our core technology is being applied to existing blockbuster products, such as Herceptin, a product with $5.1 billion in worldwide sales; MabThera, with sales of $5.8 billion worldwide; and GAMMAGARD which was a substantial share of the $6 billion worldwide market. These applications further validate our technology, and should also translate into significant value in terms of royalties that the Company may receive in the future.

We also continue to develop our own proprietary compounds that focus on large, multi-billion dollar franchise opportunities in the areas of Endocrinology, Oncology and Dermatology. Our goal is to identify innovative new drugs with differentiated value added characteristics that will allow them to be either best in class or first in class products that make an impact on patient's lives. Halo currently maintains all commercial rights on a worldwide basis to all of its proprietary programs.

In the case of our partnered programs, we out-licensed an approved product based on our technology for specific applications. As the partnerships with Roche and Baxter advance in development and reach commercialization, Halozyme expects to receive milestones and royalty payment,s which we may used to help fund develop and commercialization of our propriety programs. In fact, as you look back over the last three years, we have received over $100 million from these three alliance partners.

Recently, the Halozyme/Roche alliance has made several advances. This past October, Roche attained a significant milestone, with the first patient dosing in the Phase III registration trial for a subcutaneous formulation of Herceptin with PH20 in a treatment of HER2-Positive breast cancer. Roche also began a Phase One clinical trial in September, with a subcutaneous formulation of MabThera that also uses our PH20 enzyme. MabThera represents the third exclusive target covered by the Halozyme/Roche alliance to enter the clinic.

Recently in January, Roche announced an investment of $185 million to develop a ready-to-use device that would be capable of administering Herceptin subcutaneously in less than five minutes. For most patients, treatment with Herceptin involves an inconvenient and time consuming 30 minute to 90 minute IV infusion. Subcutaneous administration, with the combination of Herceptin and PH20 with a proprietary injection device, holds the promise of a five-minute injection, which could be done on an outpatient or self administration basis.

Use of the device would not require any mixing or reconstitution of the drug by a pharmacist, which is a potential savings for healthcare resources, and the promise of more convenient dosing for Herceptin could enhance the quality of life for hundreds of thousands of women all over the world who undergo treatment for breast cancer every year. Use of this injection device could also be applied to other biologics covered by the Halozyme/Roche alliance. We believe this progress by Roche, its commitment to multiple clinical studies, and its substantial investment in the development of an injection device for subcu administration of Roche biologics, further signifies and validates their belief in our core PH20 technology. We are excited by Roche's many clinical advancements that we have seen during the past year, and while we cannot predict the specific timing for future milestones covered in the Roche agreement, we expect additional clinical progress in milestone activity to occur during 2010.

We also have two alliance programs with Baxter, GAMMAGARD with Baxter Bioscience and Hylenex with Baxter Medication Delivery. In July 2009, we announced that Baxter Bioscience completed enrollment in its pivotal Phase III clinical trial for subcutaneous GAMMAGARD with PH20 in the treatment of primary immunodeficiency disorder, or PID. This clinical study is a prospective open label non-control design underway in the US and Canada, and has enrolled approximately 80 patients.

The primary end point assesses the prevention of acute serious bacterial infections during 12 months of treatment with once monthly subcutaneous administration of GAMMAGARD and PH20. Baxter has indicated that this trial should be completed during the fourth quarter of 2010, followed by a BLA filing in 2011, and the goal of the GAMMAGARD PH20 development program is a once monthly subcutaneous product offering, to be administered through a single injection site. Such a product would allow patients the convenience of self administration in the home setting, and more freedom and flexibility in the decision of when to administer their treatment.

Switching gears to Baxter Medication Delivery, they launched Hylenex for pediatric rehydration at the American College of Emergency Physicians Meeting, which was held last October, and a full scale selling and marketing effort is currently underway. Hylenex allows fluid administration subcutaneously instead of IV, and therefore eliminates the need to find a vein and the multiple sticks that can significantly delay the start of hydration treatment. Publication of Baxter's clinical first Pediatric Hydration clinical study in the Peer Reviewed Journal of Pediatrics occurred just as the launch began.

A second PEDS hydration study, called PEDS-2, directly compares subcu hydration with Hylenex to conventional IV administration. Final results of this study should be available later this year. We are pleased with Baxter's progress and look forward to a positive sales trend for Hylenex in 2010.

So you can see, 2009 was a significant year for our partner programs, as two of our alliance products candidates, subcutaneous Herceptin and subcutaneous GAMMAGARD, began pivotal Phase III registration trials. In addition, we are hopeful that the resources allocated by Baxter to support the full scale promotion of Hylenex will lead to the realization of this product's full potential. I believe you can see that important progress has been made for our partnered alliance programs.

So now I'm going to highlight for you some of our individual programs beginning with Ultra-Fast insulin. The primary goal for the Ultra-Fast Insulin Program is to develop a best-in-class mealtime insulin product, in comparison to the current gold standard analog products that participate in the growing $3 billion prandial, or mealtime insulin market. With the more rapidly absorbed faster acting insulin product, we seek to demonstrate one or more significant improvements relative to existing treatment, such as improved glycemic control, less hypoglycemia and less waking. Currently we are wrapping up three ongoing insulin studies as part of our Ultra-Fast Insulin Program, and we plan to present the results at medical meetings during 2010.

I'm going to summarize the design and purpose of each of these studies. The first is a Phase II treatment study that I employs a two-way crossover design in patients with Type One diabetes, that compares three times a day dosing of regular insulin with PH20 to insulin analog alone. After a one month dose stabilization period, patients were randomized to three months of treatment with each study drug. This study will provide insight into the ability of PH20 to improve regular insulin compared to treatment with analog insulin, and will also provide important safety information with respect to three times a day chronic dosing for our PH20 enzyme over a three month period. Results should be available in the fall of this year.

Last July, we began our first study in Type Two diabetes patients. It's a standard meal three way crossover study that compares three test drugs, insulin lispro plus PH20, regular insulin plus PH20, and lispro alone. Lispro is the genetic name for Humalog, a widely prescribed insulin analog. The primary end point of this trial is glycemic excursion over the first four hours following the meal challenge.

Results from this Type Two study are expected in the middle of the year, possibly at the ADA meeting in June. We believe that the absorption benefits associated with PH20 may be greater in this patient group, because there's a disproportionate acceleration of prandial insulin absorption with PH20 when using the higher doses of insulin typically used by Type Two patients. We believe this study may further understanding in this arena.

In September 2009, we began a Phase One study to compare the three approved prandial insulin analogs, with and without PH20, in a six-way crossover design trial in healthy subjects. This euglycemic clamp study will compare the post-prandial pharmacokinetics [and] glucodynamics of the insulin analogs. It's a head to head comparison of all three analogs and the way our enzyme may influence their effects. Results should be available in mid 2010, also possibly at the ADA meeting.

During the fourth quarter of 2009, we were active in presenting the results from our recently completed studies in our Ultra-Fast Insulin Program, and let me highlight some of these for you. The results from a Phase One dose ranging PK glucodynamics safety and tolerability study were presented at the International Diabetes Federation's Triannual World Diabetes Congress in Montreal in October. This study successfully determined the optimal ratio of enzyme to insulin concentration that should be utilized in our future clinical trials.

An [interest] subject variability study was presented at the Diabetes Technology Society meeting in November. One of the problems in diabetes management is that the amount of insulin absorbed by the patient can vary from dose to dose. This trial characterized the PK and glucodynamic response, and associated variability in each subject for two doses of each of the three test drug formulations, insulin lispro alone, insulin lispro with PH20, and regular insulin with PH20.

The study demonstrated a reduction in variability of about 50% for key PK measures, such as early AUC during the first 60 minutes after dosing, and the timing of insulin exposure for the insulin plus PH20 combinations. As expected, total exposure and total AUC remained consistent for insulin alone and insulin with PH20.

Our second treatment study should be getting underway in the middle of this year, and we'll compare analog insulin with and without PH20, and we should have results about a year later in the middle of 2011. At that point we'll have data from at least eight ultra-fast insulin clinical trials.

Our partnering strategy and the timing for such a decision, with regard to our Ultra-Fast Insulin Program, is consistent with how we've described it in the past. We are a data driven organization, and our Clinical Development Program is designed to provide information regarding key product attributes that we, as well as a potential partner, would want to know. We are driving the value of the program with the results from our clinical trials, and we provide periodic updates to potential partners as new information becomes available. These discussions are ongoing, as we seek to maximize the value of this asset.

So now let's shift over to our PEGPH20 Oncology Program. As you'll recall, this is the pegylated version of our hyaluronidase enzyme, which began its first Phase One clinical study last year, and is still in early stage development. Pegylation of the enzyme increases its half life from less than a minute to about 48 to 72 hours.

This trial in cancer patients with refractory solid tumors is a range finding repeat dose PK and pharmacodynamics safety trial of PEGPH20 administered IV as a single agent. The study is designed to determine the recommended dose for future trials and to evaluate the safety and tolerability of PEGPH20. A wide array of solid tumor types produce hyaluronan, or HA, including prostate, ovarian, breast, colon, pancreas, and gastric.

Based on investigations that we and others have conducted, it appears that almost 90% of pancreatic tumors are over-producers of HA. Halozyme [has] conducted studies in animal tumor models that produce HA found that the removal of HA with our novel PEGPH20 enzyme occurs in a dose-dependent manner, which results in a meaning reduction in tumor size and prolonged time to progression compared to controls. We'll be presenting additional pre-clinical test results for PEGPH20 at the AACR meeting in April.

So those are the latest updates on our proprietary product programs and our development partnerships. Our programs continue moving forward, and we are pleased by this steady progress. Now I'll turn the call over to Kurt Gustafson for his financial commentary.

Thank you Jonathan, and good morning everyone. The net loss for the fourth quarter of 2009 was $12.7 million or $0.14 per share, compared with a net loss for the fourth quarter of 2008 of $16.8 million or $0.21 per share. For the year ended December 31, we reported a net loss of $58.4 million or $0.67 per share, compared with a net loss of $48.7 million or $0.61 per share for 2009.

Revenue for the fourth quarter of 2009 was $6.4 million, compared with $3.1 million for the fourth quarter of 2008. Revenues under our collaborative agreements for the fourth quarter of 2009 were $6.1 million, compared to $2.8 million for the fourth quarter last year. Revenues under the collaborative agreements for the fourth quarter of 2009 were positively impacted by the receipt of a milestone payment from Roche for the start of their Phase III program with Herceptin.

Research and development expenses for the fourth quarter of 2009 were $14.9 million, compared with $16.8 million for the fourth quarter of 2008. This decrease is primarily due to lower manufacturing costs incurred in the quarter, associated with making clinical trial material. SG&A cost for the fourth quarter of 2009 were $4.1 million, compared to $3.2 million last year.

We closed the year with cash and cash equivalents of $67.5 million, compared with $63.7 million as of December 31, 2008. Our net cash burn for the fourth quarter of 2009 was approximately $10.2 million. Excluding the proceeds of $38.2 million from our equity financing in June, our net cash burn for 2009 was approximately $34.4 million.

For 2010, Halozyme anticipates total operating expenses to be in line with those reported for 2009, which were approximately $72 million. Net cash burn is expected to be between $40 million and $45 million. The increase in this net cash burn for 2010, relative to 2009, relates to the absence of proceeds from the exercise of warrants in 2010, and to a lesser extent the amount of anticipated payments we expect to receive from our alliance partners in 2010. Just as a reminder, we received just over $6 million in proceeds from warrants in 2009, and this was a one-time benefit, as the Company has no further outstanding warrants.

Our guidance is based on estimates for various pre-clinical and clinical programs and the achievement of various milestones under our existing collaborative agreements. We've included milestones which, based on our estimates, have a high probability of occurring. Our guidance does not assume any cash flows associated with new alliances. And with that, I'll turn the call back to Jonathan. Thank you Kurt.

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

(Operator Instructions) Your first question comes from Eun Yang.

Thanks. Roche mentioned that the primary analysis of HER2 subcu Herceptin data may be expected in 2011, and this study is obviously a [non-inferiority] trial comparing it to IV Herceptin. Can you comment on what we may expect in the primary analysis in 2011?

Yes. Eun, there are two primary endpoints that compare Herceptin subcu to IV, pathologic complete response measured between cycles eight and nine, and serum concentrations throughout cycles one to eight. Roche expects to file for approval in the EU in 2012, and in terms of the reporting of the primary endpoints, naturally they'll be using the information for their filing, and as to the reporting, we haven't disclosed when that would occur.

Okay. And then in terms of safety, and obviously subcu administration of Herceptin could provide a better safety profile for patients, the fact that Herceptin is now carrying a black box warning, do you think that there is a potential that subcu Herceptin might not get a black box warning?

This is Greg Frost here. The specific issues regarding black box warnings going through of compounds like this, besides the population that you study, obviously there are many drugs that have black box warnings that are self-injected, like Enbrel, for example, and other compounds [of the TNF alpha class]. So I think in the [context] from a data standpoint, you have to complete the trials before you get a sense what the impact will be.

Thank you.

Your next question is from David Moskowitz.

Thanks, good morning. I have a couple of questions. One, when I do the calculation from your operating cash burn to the actual net burn that you guys anticipate, it seems to me that there's about $15 million to $20 million in milestone payments. Number one, is that correct? And number two, you did mention that these are payments that you have a very high level of confidence in getting, is that right?

Yes, thanks for the question. We are not going to provide any more specific guidance than we have already. The one thing that I would just point out, though, for your models is from a revenue standpoint, if you take a look at our P&L, some of our revenue is associated with up front payments that we received from partners, and those revenues are deferred and amortized over time. So when you are taking a look at the revenue line on our P&L it's not necessarily milestones that are occurring in the current year. So I can provide that basic guidance, but at this point we are not going to provide any more detailed guidance on revenues.

Okay, but again, it seems that even if I assume sort of a straight line on the revenue line, it looks like there's additional milestones that come in in that range of $15 million to $20 million dollars as we saw, I guess, a similar level last year. So $15 million to $20 million, that's a big number when you consider that you guys received $5 million for a movement of a product into Phase III, $5 million for when Roche declares another exclusive target.

So to get $15 million to $20 million of new milestones there's got to be, I want to focus on the qualitative side of that. You guys have been consistent in the financial side, but it seems to me like there are a of couple nice potential catalysts that could happen this year, based on those milestones and your high level of confidence of them happening.

David, I'll go back to my opening remarks in which we are moving forward with Roche alliance, and so we look forward to reporting on clinical progress in 2010.

Okay. And I just missed what you said about insulin PH20. Did you guys say that the data will be available in April, the Phase II data?

No. The Phase II data from the regular insulin plus PH20 compared to analog, the three times daily trial, will be available in the fall of this year. And then there are two studies that could report out at the June ADA conference. One is the Type Two Meal Study and then the other is the Comprehensive Analog Study.

Okay, so what I'm getting at is, depending on when that data completes, you guys are looking to have partnering discussions around PH20. I guess my question would be do you think companies will have access to Phase II data ahead of the June ADA meeting, or do you think everybody will have to wait to see that data until after or during the meeting?

Yes, companies would have access under confidentiality to the data.

Okay. And just real quick on the Roche plants for the device, big investment. Not sure how long it would take them to outfit those plants. Can you give us sense of timing on when Roche has communicated, at least to you, on when those plans might be completed?

I'll tell you what I can about the device. As you know, Roche announced the investment of approximately $185 million to develop this proprietary device to administer Herceptin subcu in less than five minutes. The ready-to-use device will contain a premix formulation of Herceptin with PH20 that doesn't require reconstitution or preparation by the pharmacist, and we believe that, compared to the 30-minute to 90-minute IV infusion, this added convenience will be important for patients who undergo Herceptin treatment for one year. In terms of guidance on the timing of manufacturing and other things, just stay tuned on that.

Okay. Thanks a lot.

Your next question is from Andrew Vaino.

Thanks for taking my questions. Is there anything going on with your Chemophase program? I know you guys were talking about may trying to out-license that.

Chemophase has been packaged up and we are having licensing discussions on that program.

And on the PEGPH20, I'm not sure if I missed or not, will there be any clinical data out this year on the Phase One study?

This is Greg Frost here Andrew. We anticipate to go through and get some top line information to you folks probably on the back end of this year, from the standpoint of some updates. So won't be anything coming out at ASCO, but from a timing standpoint, game plan, we'll be able to get a high level update probably Q3 or Q4.

And then on the PEGPH20, have you guys, and I'm not sure how you would do this, but I am assuming it can be done, have you done any preclinical experiment to look at differences in rates of metathesis of tumors exposed to the PEGPH20?

Oh sure, we have done that, actually it was one of the first programs we did actually in bladder cancer, going back even if you're just looking at intra-lesional administration, and so in those studies what we found in the first sets of models is simply that with intra-lesional administration, we found that the enzyme had no effect on metathesis either for cells that had metastatic propensity and those that did not. So in that context, consider it neutral. In some of the other models that we've looked at, we found a favorable effect in some of the experimental models. Those are in ones that are in some of the syngeneic animal models.

Okay, and those are, that is with the pegylated version?

The syngeneics are with the pegylated version. That's right.

Okay. That's great. Thank you.

Sure.

Thanks.

Your next question is from [Chris Geston].

Good morning.

Good morning.

All right. So it struck me that given the, I'll call it independent approach to the diabetes opportunity with using some competitor analogs, are you thinking, or have you planned out, plotted out, initiating studies on other large drugs that maybe are coming off a patent in a couple of years, maybe with the idea of you handling the front end, like with the diabetes scenario, and then forcing the hand of, or attracting the drug maker, with the plan B being that you might be able to attract another partner upon expiration, distribution partner, and go kind of on your own. Is that a model that we can expect from you or get our arms around?

Chris, we are taking a look at that, and as you identified, insulin as a great example of how you can do that, and the six way crossover study in terms of taking the comprehensive analog study and examining all three analogs in a competitive marketplace is a great example of that strategy. So we are looking at that, but as you can imagine, we are focusing most of our resources and attention on the proprietary insulin program, the PEGPH20 and then we also have some very exciting dermatology assets.

Okay, perfect. And just curious, as you continue to show consistency in safety and efficacy across all these different applications, whether it be partnered or not, can you see a time, I just don't know the entire process and how it works, but when you talk about conducting the studies, attracting partners, and getting to market, does it become easier, does it become cheaper, faster, are there things that we can point to, or am I off base with that assumption?

No, it's a good assumption. Our team continues to gain experience with the PH20 enzyme and the insulin products in the context of these Phase II studies and PK studies, and so they are getting even more and more efficient with each study, and the dialogue is an [iterative] process. So I would say that it's going very well.

Can I extrapolate that to suggest that every time the FDA has approached then, given these combinations, will it be any easier for them?

In terms of the studies themselves?

My apologies, in terms of granting approval, checking the boxes and moving through that more quickly as well.

Yes. I wouldn't read too much into that, because you really don't know until you actually file the regulatory filing. But in terms of just the quality of the data that we continue to generate, we're feeling pretty good about it.

And if you'll allow me one more, kind of connected, can you speak to any changes that you've seen in the interest or motivation levels of other potential partners, given the progress and success you are seeing with Roche and even Baxter now?

As I mentioned, with the advancements by Roche and by Baxter, and then also with the insulin studies, where in my opening remarks I referenced the fact that we'll have eight completed studies, which is a very robust package for insulin, that the partnership dialogue continues to be very engaged.

Perfect. Thanks again.

Thank you.

Your next question comes from the line of (inaudible) .

Hi, thanks for taking my question. So Baxter relaunched Hylenex in the pediatric hydration setting last October. I was wondering when you guys might be able to see some meaningful revenue from that effort coming your way.

Yes. With the Hylenex products, Baxter is making a lot of progress with that. It was a successful launch in October, and their sales efforts are gaining traction in that marketplace. We received prepaid royalties of $10 million from 2007 to 2009, and depending on what your estimate is of the 20% to 30% royalty rate that we have on top line, your assumption can be that we would need to see cumulative sales of about $35 million to $50 million for that product ,to start to see the royalties come in for that.

And the royalties are booked on a one quarter lag basis, is that correct?

No. I believe we are booking them in the quarter, in which - - we get information fairly regularly from Baxter, so we are booking them realtime.

And just quickly on the HTI-501, can you guys update us on the status of that compound and when that might be able to move into the clinic?

Sure, this is Greg Frost here. I can comment a bit on it from the program. Obviously because it's a new biologic going through the key processes that you do of this of getting high producing cell lines, getting the cell banks laid down, getting the purification processes ready to go, and these things ready for entry into the clinic, I can say that all of the progress there, to a certain extent we have a lot of experience of how to do this from developing with rHuPH20 previously. That is all coming along very well.

So what we are looking at right now is a series of different strategies from the standpoint of first entry into the clinic. We may actually go through and be doing some proof of concept studies clinically, in which this case those would put us in a pretty strong foundation of bringing this into the clinic in the early part of 2011. But in essence right now where we are at is that the progress so far from the safety assessment and the manufacturing have been looking very good. And everything looks very consistent.

Just to be clear on these, obviously because of the different applications that we are looking at, we spend a lot of time on the safety assessment for compounds like this to really understand them well. And so that's kind of, if you think about it, the main components we are focused on.

Okay, thanks very much.

Thank you.

Your next question comes from Jonathan Aschoff.

Hi guys. I was wondering if you could tell me what is the timing for dosing in the Roche trial for the subcu Herceptin?

Timing as in - - ?

How long does it take a patient to receive the dose?

Less than five minutes.

Okay, so it's really just putting that on to a device, which is what they are doing beyond that. Okay. Can you remind me of when the subcu immunodeficiency Phase III data release comes?

So the trial will be completed by the end of this year, and Baxter has been pointing their investors to data in the first half of 2011.

Okay, thanks a lot.

Sure.

Your next question is from David Moskowitz.

Yes, thanks for the follow up. Can you hear me?

Yes.

Okay, thanks. Roche said something curious, I believe it was on their first quarter conference call. I think they were clear that the lead formulation for Actemra was their own concentrated formulation, and it appears that they are backing away from that and starting to talk about the fact that Halozyme technology could be used for Actemra in the future. Can you give us a little more color on why they are kind of shifting their direction on the technology?

Sure David, it's Greg Frost here. If you go through and you take a look at this, there are different strategies with regard to dosing frequency, volume, and overall life cycle maintenance in these sorts of areas. So if you take a product like Actemra with its current dosing profile going through, there are strategies, for example, where you can fractionate a does into a very small volume, give it with a very high frequency, and there's where you can do the exact IV dose and convert them over to going subcu with our technology. So I think what you can look at are just parallel pathways in that context.

Okay. I just thought it was curious that they do appear as though they are getting more favorable toward using your technology. That was just new to me. Thanks.

Thank you.

Your next question is from [Jeimiha Sheperd].

Thanks for taking my question. For the Type One diabetes study, is that an open label study?

Which Type One diabetes study are you referring to?

The one that was with Humilin R with PH20, relative to Humalog alone, that was started in May 2009.

The TID.

Oh, the TID study, yes that was open label.

And the target is 40 patients, right?

That's right.

And have you had a chance to look at any of the data that has come in so far?

It's open label, so yes.

So would that data be part of the package for a potential partnership?

That's right.

Okay, thank you for taking my questions.

Sure.

Your next question is from Eun Yang.

Thanks. CSL recently received FDA approval of the [subcutaneous immunoglobulin]. Can you comment on how you compare Baxter's to the CSL product?

If you look at it in the context of 20% products going through of what is out there today and the recent launch of the CSL product, this is obviously an advancement because it can cut down the volume a little bit. Unfortunately there's still tight volume restrictions from each sight and so you still have to run multiple injections per administration and weekly dosing. In the simplistic way of looking at it, it has made things perhaps 50% better, as far as the overall process going through, but you still have a weekly administration and the multiple injection sites, which the two components combined also with bio-availability, make it something that we are not terribly concerned about.

All right. Thank you.

Thank you.

(Operator Instructions) At this time there are no questions.

Halozyme accomplished an impressive list of milestones in 2009. Our Ultra-Fast Insulin Program is in Phase II, and additional studies continue to build value for the program. Roche's Phase III registration trial for a subcutaneous formulation of Herceptin with PH20 is well underway, along with the Phase One clinical trial for subcu MabThera. Baxter's Phase III registration study for subcutaneous GAMMAGARD with PH20 is expected to be completed during the fourth quarter of 2010 followed by a BLA filing in 2011. And the launch of Hylenex for use in pediatric rehydration is underway, with a substantial marketing and promotional commitment by Baxter.

So we expect the momentum for many of our activities will continue through 2010, resulting in the achievement of a number of key milestones. We expect to present the results of three Ultra-Fast Insulin clinical trials at medical meetings this year, and these studies are the type two meal study, the comparison study of three analog insulins with and without PH20, and the three times per day treatment study in Type One diabetes patients.

We expect additional clinical progress for the Roche alliance, although we can't predict the exact timing for when an announcement will occur. And some initial results from our PEGPH20 clinical program should be available during the second half of the year, along with additional insight into the next clinical steps for the direction of this program.

We look forward to updating you again soon on our progress, and we'll be participating in the Roth Growth Stock Conference on March 16 in Laguna Niguel. And we'll also be presenting two posters on PEGPH20 pre-clinical investigations at the American Association of Cancer Research, or AACR, to be held on April 17 to April 21 in Washington, D.C.

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

Thank you for participating in today's teleconference. You may now disconnect.