Halozyme Therapeutics Inc (HALO) 2013 Q3 法說會逐字稿

Greetings, and welcome to the Halozyme Therapeutics third quarter 2013 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Schond Greenway, Executive Director, Strategy and Investor Relations at Halozyme Therapeutics. Thank you. Mr. Greenway, you may begin your conference.

Good morning everyone, and welcome to Halozyme's quarterly update conference call. Joining me on the call is Gregory Frost, President and Chief Executive Officer, and David Ramsay, Chief Financial Officer. This morning Halozyme released financial results for the third quarter of 2013. If you have not received the news release, or if you would like to be added to the Company's distribution list, please e-mail [Timory] Johnson at TJohnson@halozyme.com. A live webcast of this call can be found on our home page at www.halozyme.com, along with a replay that will be available on the Company's website for the next 14 days.

Before we begin, let me remind you that during this conference call we will be making forward-looking statements. All statements made during this call that are not statements of historical fact constitute forward-looking statements. The Company's actual results may differ materially from those expressed in, or indicated by such forward-looking statements. For a description of the risks that may affect our results, please refer to our 10-Q and 10-K filings with the Securities and Exchange Commission. With that, I would like to turn the call over to Greg Frost, Halozyme's President and CEO. Greg.

Thank you Schond. Good morning to everyone. We appreciate all of you joining us on Halozyme's third quarter 2013 earnings call.

I would like to provide you additional comments on the items in the news release issued earlier today, including updates on the status of our key clinical programs and partnership collaborations. David will then give a financial summary of the quarter, to go over the P&L and cash flows for you in more detail. 2013 continues to be a pivotal year for us at Halozyme, as the first products from nearly 15 years of R&D investment on our platform technology enter commercialization. While the next horizon of programs, such as PEGPH20 and Hylenex for insulin pumps enter key developmental inflection points. Additionally, as our new manufacturing facilities and scale come online in 2014, we can expect additional operational efficiencies.

Let's begin with our partnered programs. During the third quarter Halozyme's Herceptin program with Roche and Baxter's HyQvia achieved the important milestone of product introduction into Europe. Both of these products utilize Halozyme's proprietary recombinant human enzyme platform technology rHuPH20, which enables products previously available as intravenous formulations to become much easier to use subcutaneous versions. Halozyme is a company that is built on a hybrid revenue model. We receive royalty streams and milestones from partnered products, which we expect to blend well with future revenue from our own proprietary products in development.

This diversity of revenue marked by Roche and Baxter product introductions, as we work on studies to grow the Hylenex brand, show this blended strategy is coming together well. In September, the European Commission approved Herceptin SC in the EU for the treatment of HER2-positive breast cancer. Product launches in Germany, UK, Portugal and Chile shortly afterwards triggered the payment of a $10 million milestone by Roche to Halozyme. Herceptin SC is a simple fixed dose subcutaneous formulation that can be administered in two to five minutes, compared to the 30 to 90 minutes required for the intravenous formulation. This enhanced and more efficient treatment option also reduces pharmacy prep time, and studies have shown that the subcutaneous administration is preferred by nine out of ten patients. In addition, Roche has introduced a product into EU markets priced at parity to the IV formulation of Herceptin. We are pleased with everything we are seeing from the Herceptin SC introduction so far, and believe it is proceeding to plan.

With Herceptin SC now launching in multiple countries, we await approval for MabThera SE, our second development program with Roche, which is under review by European regulators for the treatment of non-Hodgkins lymphoma. This could transform the product from an IV infusion requiring up to several hours of chair time for the patient and caregivers, down to a more simplified administration that can be completed in just a few minutes. Roche filed the MAA for MabThera SC in December of 2012, and thus we might receive regulatory opinion by the end of the year. As you may have seen, new abstracts for MabThera SC are now available on the ASH website. Roche will be presenting data for two subQ MabThera studies at the meeting in early December. Additionally Baxter received marketing authorization from the European Medicines Agency in July for the use of HyQvia as a replacement therapy for adults with primary and secondary immunodeficiencies. HyQvia is a combination of immunoglobulin 10% and Halozyme's recombinant human hyaluronidase, rHuPH20, to facilitate the dispersion and absorption of the immunoglobulin subcutaneously.

To illustrate the breadth of utility of our technology HyQvia enables the delivery of nearly half a liter of immunoglobulin, administered under the skin at a single site every three or four weeks, at a rate that is equal to or slightly faster than IV. Importantly for patients on HyQvia, immunoglobulin therapy is administered subcutaneously at the same dose and frequency as their previous intravenous administration. This may offer enhanced convenience over the currently available product choices for patients managing their primary immunodeficiency. The launch of HyQvia in the EU and the first commercial sale has triggered a $4 million milestone payment to Halozyme. Recall that the EU filing was a new marketing authorization application, not a line extension as in the case of Roche, so we expect this to take a bit longer to go through the establishment of pricing on a country by country basis.

With regard to the status of HyQvia in the US, Baxter articulated on their most recent earnings call in October, that they continued to believe the pre-clinical data they have prepared puts them on track for a BLA resubmission to FDA before year end. So with two product launches underway by Baxter and Roche, and potentially another one, MabThera SE, in the coming months, we are excited about these applications of our rHuPH20 technology entering a new and expanded commercial stage of its life cycle. Our manufacturing operations continue to be very active in the production of the hyaluronidase enzyme to support our partners in their global product rollouts.

Finally let me mention that we continue to make excellent progress in our collaboration with Pfizer, with a number of different program teams now working in parallel. In September, Pfizer elected a fourth exclusive target as part of our agreement. In addition on its most recent earnings call, Pfizer disclosed PCSK9 as one of the four exclusive targets we are working on with them.

Now let's move to the proprietary products and programs, beginning with PEGPH20. PEGPH20 represents a completely different approach to thinking about cancer, in that it has a direct effect on the tumor micro environment. Certain types of tumors cloak themselves with a unique hyaluronan, or HA rich matrix, which through its water absorbing properties, enables them to expand rapidly into surrounding tissue while evading systemic therapies and the immune system. Interestingly, developing data suggests that this HA rich matrix may also be an independent indicator for poor prognosis for a number of hard to treat solid tumor malignancies, such as pancreas cancer. PEGPH20 has been developed to deplete tumors of this matrix component, which rapidly alters the tumor micro environment. Normalizing tumor pressure, perfusion and hypoxia.

In doing so, we believe this completely novel approach may improve both chemotherapy and immunoeffecter function against tumors that accumulate this type of matrix. Evolving preclinical data also suggest that depletion of this coat from tumor cells with PEGPH20, may promote a number of differentiation pathways, that may explain why some tumors produce this matrix in the first place. Based on our clinical investigations to date, we found that PEGPH20 at the doses we are testing, can deplete this matrix target from tumors, and have observed a number of translational clinical markers supportive of our underlying hypothesis. The first type we are exploring is pancreatic cancer, because this tumor type produces large amounts of the specific matrix target for PEGPH20. And the clear unmet need for patients with this devastating disease is very clear.

Following an initial Phase I translational trial with PEGPH20, is a single agent in patients with multiple solid tumors. We tested this agent with gemcitabine and presented encouraging Phase Ib data at ASCO this past June. No new toxicities were observed relative to gemcitabine alone, or PEGPH20 as a single agent. Additionally, radiologic data from 24 patients in the intent to treat population in combination with gemcitabine showed a 42% overall response rate. While this was a single agent trial, it is notable that gemcitabine alone has historically demonstrated an ORR in the 5% to 10% range. More mature data from this study were presented at the European Cancer Congress in September with encouraging progression-free survival of 154 days in the intent to treat population. Further exploratory analysis from a sub-set of these patients with available biopsies, showed that high levels of tumor hyaluronan had more favorable progression-free survival, with 218 days in the HA high group, compared to 108 days for patients with low levels of tumor cell associated HA.

While these numbers are very small, and data are not yet mature, overall survival in the HA high group of 529 days, compared to 174 days for the low HA group, which is supportive of the underlying hypothesis. Based on these encouraging early results, we have initiated randomized Phase II trials in pancreatic cancer that combine PEGPH20 with the most advanced treatment regimens available to patients today. In April, we initiated a Phase II multi-center trial in 124 patients to receive nab-paclitaxel or Abraxane, with gemcitabine with and without PEGPH20 for the treatment of Stage IV pancreas cancer. The primary outcome measure is progression-free survival, with secondary endpoints including progression free survival by HA status using the companion diagnostic we are developing.

In October, SWOG initiated a second randomized Phase 1b2 protocol, but this time testing modified folfirinox with and without PEGPH20 in 140 patients with Stage IV metastatic pancreas cancer. The initial Phase Ib run-in arm of the trial is designed to confirm the optimal dose of PEGPH20 with modified folfirinox for the Phase II portion of the trial. The primary endpoint from the Phase II is overall survival of patients receiving modified folfirinox in combination with PEGPH20 compared to those receiving modified folfirinox alone. Secondary endpoints include progression free survival, objective tumor response, as well as the frequency, severity and tolerability of adverse events.

Now let's talk about Hylenex and our insulin pump studies. Our first FDA approved product Hylenex is approved for the dispersion and absorption of other injected drugs, which targets a current market in the US of roughly 25 million. With just a small internal sales force, we have now achieved 60% market share. With respect to the potential application of Hylenex for the insulin pump market, we have conducted extensive market analysis of patients' needs, in addition to the clinical pharmacology studies completed to date. Studies have shown that patients who receive their insulin with a pump require dosing about 20 minutes before a meal to achieve optimal post-meal control.

An additional challenge that we and others have reported in clinical studies is an inconsistency of insulin absorption over the three day life of the infusion set that people use to pump their insulin, further complicating diabetes management. In our two previously completed pump studies, pre administration of the single does of hyaluronidase at each infusion site change was found to significantly increase insulin absorption at meals, provided a more consistent pharmacokinetic profile over three days of infusion set use, leading to lower post-meal sugars without increasing hypoglycemia risks. These data suggest that Hylenex might provide people living with Type 1 diabetes an additional tool to better manage their insulin use from a pump. To test the use of Hylenex in a take home setting, we initiated consistent one, evaluating the safety and feasibility of Hylenex use in over 400 adults with Type 1 diabetes. The primary endpoints of this study are metabolic and safety outcomes at four months.

This study is designed to evaluate the effect of Hylenex pre administration in conjunction with all rapid acting analog insulins for adults with Type 1 diabetes on insulin pump therapy. No safety signals have been observed to date, and we await top line results for the four month primary endpoint in the first quarter of 2014, and continue to evaluate strategies to maximize availability for patients that can benefit. We are also excited that Hylenex is being studied under IND in people with diabetes for use in an artificial pancreas closed-loop study, being conducted by researchers at Yale, with independent funding from JDRF.

Approximately 20 subjects with Type 1 diabetes will receive treatment over 3.5 consecutive days in random sequence with one of the following. Analog insulin alone. A co-formulation of insulin Lispro and rHuPH20, or pretreatment with 150 units of Hylenex administered through the subcutaneous insulin infusion set, followed by the analog insulin alone. The study will measure blood glucose control during meal challenge for each of the three different treatment regimens. The hypothesis is that the more rapid and predictable absorption of insulin with hyaluronidase may better enable a closed-loop system to more tightly control glucose, and we look forward to seeing the results from this very exciting study.

Finally, our HTI-501 program in aesthetic dermatology. HTI-501 a recombinant human proteinase that targets collagen is being explored as a potential treatment for both aesthetic and other connective tissue disorders. A Phase 1/2 clinical trial evaluating HTI-501 fully enrolled to achieve 34 evaluable patients for the primary 28-day observation endpoints. The HTI-501 enzyme and its formulation have been well-tolerated so far in clinical studies at all doses and formulations tested, with no serious or severe adverse events.

We previously reported interim results in 12 patients indicating pharmacologic activity at the primary 28-day observation endpoint of physician assessment, as well as secondary analytical measurements. We have now completed the 28-day blinded independent expert panel review, and will be sharing these data along with a three and six month follow-up images with prospective partners. With that, I will now turn the call over to David Ramsay, who can provide more detail on our financial results released this morning.

Thanks Greg. The net loss for the third quarter of 2013 was $19.3 million, or $0.17 per share. Compared with a net loss for the third quarter of 2012 of $20 million, or $0.18 per share.

Revenues for the third quarter of 2013 were $16 million compared to $5.3 million for the same period last year. Our reported revenue for the third quarter included $7.9 million in product sales of PH20 API for use in Herceptin SC manufacturing, as well as $3.7 million in research services reimbursements, and a $1.5 million license fee from Pfizer for the fourth exclusive target. As a reminder, there are no royalties on sales of HyQvia and Herceptin SC for this quarter, as we will book royalties on a one quarter lag. The $4 million launch milestone from Baxter, and the $10 million launch milestone from Roche will be deferred and recognized over the life of the remaining patent term for these agreements. While we received the cash for these milestones, the revenue will be recognized over the next 14 years. About $1 million a year going forward.

Research & Development expenses for the third quarter of 2013, $25.7 million compared with $19.5 million for the third quarter of 2012. Similar to R&D expenses for the first two quarters of this year, a significant portion of it is going toward the manufacture of launch inventory for our partners. Selling, General & Administrative expenses for the third quarter of 2013 were $8.1 million compared to $5.6 million for the third quarter of 2012. Cash, cash equivalents, and marketable securities were $65.3 million at September 30, 2013, compared with $99.5 million at December 31, 2012.

Net cash used in the third quarter of 2013 was approximately $10.7 million, and the cash balance for Q3 does not include the $10 million milestone payment from Roche as this was received in October. Financial guidance for 2013 remains unchanged and we expect net cash burn to be between $45 million and $50 million for the year. I will now turn the call back over to Greg, who will provide some additional comments.

Thanks David. Before the close of this part of today's call, I want to say that I am very excited by the progress we are making at Halozyme and our partner programs with HyQvia and Herceptin SC commercialization underway, and the potential for a MabThera SC decision this year, this is a truly important and exciting transitional for the Company. Important data are expected for PEGPH20 in pancreas cancer, our insulin pump investigations with Hylenex, and HCI-501 in aesthetic dermatology. Our blended business strategy of royalty and milestone revenue, combined with the potential for products on the proprietary side of the business has never been stronger.

Operator, could you please open the line for questions.

Thank you. (Operator Instructions). Our first question comes from the line of Matthew Roden with UBS. Please proceed with your question.

Hi guys, this is Andrew Peters in for Matt. Congratulations on all of the progress this quarter. Just a couple of questions. I guess the first is, when you think about the launch for Herceptin sub Q and HyQvia, how should we think about disclosures around sales and royalties, will you be reporting actual sales, or just royalty revenue, and leave the math up to us?

And secondly,for the PCSK9 program, I know you are limited on what you can say specifically, but when you think about the class categorically and the technology, do you think injection volume is a potential differentiator, or is this more about getting the program on the same level as competing programs from Amgen and Sanofi, given that they are already subQ?

Thanks. Let me go through and let David answer the first question, and I will try and cover the second.

Hi Andrew. So we get royalty reports from the partners, and it will just outline the royalties to us. So that is what we will be reporting in our financial results going forward. We don't know if our partners will break out subcutaneous sales of their products going forward. We don't know if our partners will break out sales of subcutaneous sales of their products going forward. So that is something they may or may not choose to do in future periods. And with the one quarter lag obviously that would make it more difficult to tie it in, but we plan to at least disclose the royalty piece of it now by partner.

Andrew, from the perspective of the Pfizer collaboration with PCSK9, while this is something we can't really go into any detail on besides what has been stated publicly, obviously rHuPH20 and subcutaneous formulations has a number of attributes that it can provide. One of which is facilitating volume of administration. The second is approving absorption or bioavailability. Think of it, if you had to put in for example 10 milliliters of a 100-milligram per milliliter solution of antibody, the increased absorption could allow you to use a lower volume. Any of these components can lead to either reduced volume of administration, reduced amount of antibody that must be delivered, dosing frequency, as well as some other factors. So I can't specifically speak to the strategic direction, this is obviously something that is Pfizer's program, but I can tell you that strategically the way that they are thinking about this, I believe is very smart from both the differentiation standpoint, as well as the overarching strategy.

Great. Thanks. Very helpful, and congratulations again on the progress.

Thanks.

Our next question comes from the line of Jim Birchenough with BMO Capital Market. Please proceed with your question.

Congratulations on all of the progress. First on the PEGPH20 program and the randomized Phase II studies, any insights into how enrollment is going there, and whether you are seeing HA distributions in terms of patients with increased HA that are consistent with what we saw in the prior Gemzar study, and then the second question on the API that Roche is paying you for, how often do we see that payment coming through? I am just trying to get a sense of the $7.9 million, what amount of API does that represent, and is that going to be something we should expect to see every year, or every quarter? Thanks.

Well, I will go in and let me try and answer the first question on PEGPH20, and then I will have David answer the question regarding API and accounting. So with regards to PEGPH20 in pancreas cancer from the gem-PEG Abraxane trial, what I told folks was that we would give an estimate by year end of when we think enrollment will wrap up. I am very pleased by how the rate is going to date, and I think we have seen all of the sites very enthusiastic, so things are going very well. But I will go through, and officially we will wait until year end to give our target of when in 2014 we believe enrollment will complete.

With regards to the HA status, obviously the data from the patients both from a biopsy standpoint, as well as the rest of the components of the trial are blinded, so that is not data that I have available. We have obviously with regard to the question about distribution, we have seen with normal patient biopsies that are available without long-term follow-up data that distribution is quite high in pancreas cancer, both with the primaries as well as the metastases. We feel very good about number one, trial enrollment, and we certainly feed good that the evolving data is going in the right direction for us. David, want to cover on the basis of the manufacturing side?

Jim, to answer your question, we do anticipate, and we do ship API to Roche quarterly so we do anticipate that to continue going forward. The level that we have seen in 2013 obviously is taking into account building launch inventory, so that level for the last few quarters has been pretty high. But going forward we will be shipping material quarterly.

Alright. How is that priced out? Is that just at cost?

It is fully burdened cost plus a markup, and that is the way to think about it. In future periods, you will see that revenue number in product sales and then you will see a corresponding cost of goods sold. That number in 2013 was in R&D expenses, because we expensed it prior to approval. And now that Herceptin SC is approved that material is being flown through inventory, and it flows through COGS going forward. So you will see a COGS associated with that product sales going forward, and you will see a markup on that. So there will be a difference.

Great. Thanks guys.

Sure.

Our next question comes from the line of Jason Butler with JMP Securities. Please proceed with your question.

Hi guys. Thanks for taking the question. Just on the Baxter HyQ NDA resubmission. Can you talk about what you have seen in the preclinical data that has been generated, or at least talk to us about what you were asked by FDA to show, and what your level of comfort is, given that Baxter are intending to refile the NDA soon?

Obviously we could go into extensive detail as far as the studies, which would be out of the scope of most folks from the technical side. What I can tell you that the studies that have been performed really expose from cradle to grave if you will, from animal safety studies, as well as laboratory investigations with detailed characterization, looking at exposure to characterize the safety of anti-drug antibodies that were observed in the trial with the HyQvia product, and certainly from the standpoint of the depth of data, it is a very large massive studies that have been performed, and what I can only conclude is that the safety analysis that has been performed to date on all of the findings have been unremarkable. In other words, no findings. But happy to go into it offline if you have specific questions beyond that.

Okay great, thanks. And then just wanted to follow-up on the PEGPH20 Phase IIb enrollment question. Could you maybe just say whether you still think it is possible or likely that you will have [PFS] data from that trial in 2014?

I think that certainly from the model where we have seen the control versus treatment arm, obviously you need both arms to get out by their median for the readout there, and this is a study which because of the label design does not have any interim reads in it of maintaining the integrity of the design. I wish there were pieces along the way where we could look at that, but from a data integrity perspective we cannot. So I cannot give an expectation on that as far as the exact timing. The best thing that I can do will be by year end is to tell you when we think it will complete enrollment. Obviously we had a run-in phase that was performed from a safety check. We have evaluated those data, and from the context of additional datasets we are looking at some additional trials that will be kicking off next year.

Okay, great. Thanks for taking the questions.

Sure.

Our next question comes from the line of Ying Huang with Barclays.

Good morning guys. Thanks for taking my questions as well. The first question is on HyQ. Baxter said they will submit some new data to FDA around this time. Compared to the data they submitted to EMA for the HyQvia approval, any difference here between the two data packages? And then also for PEGPH20 trial, are you stratifying patients based on the level of hyaluronan here in this trial?

Good morning Ying. Let me cover first with the HyQvia program, first what I would say is that the differences between the packages between those which were provided in the HyQvia submission to Europe versus the US, the first point I just want to note is there are significant differences in review cycles and just processes by which questions can be answered in Europe versus the US. So rather than a defined PDUFA date and information response process, data to the Food and Drug Administration for that file essentially was as of I think May or June of last year. So that regard there is a large amount of data which was available to Europe, which was not available to the US, but there are additional studies with longer term follow-up which was available that Baxter has been providing. These are additional safety studies in animals from the different life cycles that were looked at, and all of those data have come back unremarkable as I noted. With regard to the PEGPH20, could you repeat that question for me?

Are you stratifying the patients in this trial based on their hyaluronan level?

We are not. The reason for that is the turnaround time, you would have challenges for patients currently based upon the central laboratory of getting core biopsies in, and getting that readout, you need to get patients into therapy quickly. That is something which we will have the efficiency to do in the future very readily, but for now that is not something that we wanted to compromise.

And then run follow-up on subQ MabThera. The application was submitted end of last year. Any color on what kind of questions or the nature of questions Roche is being asked in this application compared to subQ Herceptin?

I am not aware of any questions that Roche has been asked with regard to MabThera from the time cycle. This is in the regular review cycle that one would have from the perspective of response, and certainly from the standpoint of the timing for it, about 12 months is not unusual from the sort of time cycle that one would expect. So this is something that we might expect by year end is certainly reasonable. I am not aware of any questions or holdups that we have been informed of.

Great. That was helpful. Thank you Greg.

Sure.

Our next question from the line of Charles Duncan with Piper Jaffrey. Proceed with your question. Your line is live. Perhaps you have yourself on mute?

Good morning, Charles.

Sorry about that.

No problem.

Thanks for taking my question and congratulations on a good quarter of progress. Greg, I had a couple of questions. You mentioned in your prepared remarks around Hylenex strategies that you are evaluating for patients to benefit from data. I know we have yet to see the data but I am assuming it is going to be good out of consistent one, and I am wondering if you could share with us some additional color on the strategies that you might consider?

I would go through from the perspective, there is a lot of work that the teams are doing. We are making really good progress on all fronts, and certainly look forward to reviewing the data once it is available in Q1. And this will be the key driver in helping us position the product. But we will provide more of that in Q1. There is a lot of work folks are doing on manufacturing scale-up, on devices, as well as on the clinical study in support of market research. I don't want to get ahead of ourselves for 2014, but we will certainly go and weave all of this together nicely I think, from the standpoint as we look at the data, we are excited to go through and turn over that card and see how it looks.

And then hopping over to PEGPH20, I know that you are not stratifying the study for HA levels, but could you see a companion diagnostic strategy emerge from data you are collecting from that study?

Certainly. It is a secondary endpoint of the trial, Charles to evaluate PFS by HA status. To that regard, the endpoints and the method itself, just to give you a color about how this is being done, the patient biopsies go into a GOP laboratory, whereby the methods then are stained in batch, and scored by independent pathologist. Those data will be very important, both from the clinical validation of the control arm, as well as in the treatment arm. And so effectively I can go into details maybe offline, as to basically a cox linear correlation analysis of them. We do believe that from the investments that we made in the CDx it is certainly as compatible on traditional pathology read systems. It is a recombinant reagent that our folks manufacture. There is obviously a lot of technical details around it that we can't go into. But we do believe that this could be a very good diagnostic strategy, but we have to really wait and look at the data. But we are continuing to do that of looking over broad sets of different cancers, and seeing what that clinical correlation looks like.

Okay. That is helpful. And then my final question is regarding the Herceptin subQ launch in Europe. I am wondering if you have any early market experience feedback, in terms of is the product performing as designed, and then I know it was a line extension, but has it been a is easy to get folks to start to adopt the product as perhaps you anticipated?

Well, I would say that the base level what I would say, is this appears to be proceeding as to plan. We are very pleased with the rollout. We are pleased with certainly you take a look at certain countries like the UK, which normally are very challenging for introduction, and because of the line extension and the price parity on this, we were just remarkably impressed with the time frame by which the National Health Service endorsed Herceptin subQ, within two weeks of approval by the European Commission. So to date what I have heard is that the product rollout appears to be going very well. I am very happy with the strength behind which Roche is putting for this product in Europe, and it is certainly early days, but I think that it is rolling out as to plan. So that is the sorts of things that I personally like to see.

Thanks Greg for the added color.

Sure.

Our next question comes from the line of Chris [Gestin] with UBS. Please proceed with your question.

Good morning.

Good morning Chris.

Two questions on the diabetes front if I may. The first one assuming that the 28-day first quarter data that we get on the pump side is clean positive, whatever you were looking for occurs there, is there any reason we shouldn't or wouldn't expect that the next step would be your rollout, your commercial launch? Has that been determined?

No. Essentially, Chris, I don't want us to kind of get ahead of ourselves. For the four month data set, there is an integrated summary that we will need to do of all of the data putting that together, and doing the analysis. We have obviously activities that are from manufacturing scale-up that are being done, we have infusion sets and components of adaptors that are coming together, as well as the study. So what I would say is that we will go through and give you good details when we get the topline data, and we will move from there. We are certainly excited about it. We think that the potential for patients is significant.

Understood. So I guess the follow-up is, have you formally announced or would you say formally that you are going this alone, and that it will not be a partnered program?

These are sorts of things that from the opportunity, we look at every opportunity of the relative value in our hands versus a partner's hands, and so that is a disciplined process you always have to take. What I personally like is strategic options where you are very well-positioned either way, where there is no asymmetry in the foot print. That is about all I would say from that side.

Fair enough. Lastly on let's call it the co-formulation front, which has obviously taken less of a front seat, given all of your other successes. Is there any clear next steps, or I guess tangible measurable announcements in areas that would make you decide what to do with that? Are there some revised goals perhaps that you haven't stated in the past?

No, we will go and give our general forecast for 2014 at JPMorgan, as well as how we are looking from the standpoint of our other projections. What I would tell you is right now we are really laser focused on between PEG pumps and our partners, and from that perspective even HGI-501, which is a very exciting asset for us as something which we may go through and strategically look for partnering opportunity there. But from the standpoint of really maximizing our success towards the things that are of highest value to us has been our focus.

Fair enough. Thanks, and by the way given the hour you got up, knock off early like 5.30, 6.00 tonight. Alright?

Thanks, Chris.

Thanks, Chris.

Our next question is a follow-up question from Jim with BMO Capital Markets. Please proceed with your question.

Thanks for taking the follow-up. Two questions. One, are there any usability studies that you need to do to show that patients can work with the new adaptors to start on that side of things? And then also just wondering if you have any insights into whether Roche will seek approval for Herceptin subQ and other subQ antibodies in the US, or where they are at in their thought process in US filings for the subQ antibodies? Thanks.

Sure. First one as far as handling studies, There is, I think it is about an 80 patient study that I haven't seen the final. It is still underway of putting it all together. It is in fact a handling study looking at the different infusion sets, and instructions for use on the pump side, Jim. That is absolutely something that it has been going on in the background, we just haven't been talking about it. I don't have the complete data on that. To date what I have seen is I think it has gone well from the perspective of usability. From the perspective of some of the Roche programs in the US between Herceptin subQ and MabThera subQ, l don't have any additional color for those, all I can say is that with the strategy and regulatory design that Roche developed for Herceptin and MabThera subQ were really focused first around the regulatory endpoints needed for market introduction, in places where they had patent expiries happening the most rapidly, and obviously the US is further out. So those designs, the trials I think were specifically suited to support those. As far as additional data from those trials as they mature, and the suitability for use in the US is something that I don't have any updates on, but that is effectively data from pathologic complete response, moving to PFS for example on the HANNAH trial. Those sorts of the data would presumably need to mature before they could have those discussions.

Thanks Greg.

Sure.

Dr. Frost, we have no further questions at this time. I would now like to turn the floor back over to you for closing comments.

I would like to thank everyone for listening to our call today, and of course if you have any questions or need additional information, please feel free to contact me or David Ramsay. Have a great day. Or Schond Greenway. Thanks so much.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.