Halozyme Therapeutics, Inc. HALO announced that it has entered into a global collaboration and license agreement with AbbVie Inc. ABBV for the development and commercialization of therapies by combining the former’s ENHANZE technology platform with the latter’s proprietary compounds.
Terms of the Deal
Per the terms of the agreement, Halozyme is entitled to receive $23 million initially. Subsequently, upon the achievement of certain development, regulatory and sales-based milestones by AbbVie, Halozyme will receive milestone payments for each of up to nine collaboration targets summing up to approximately $130 million. In addition, Halozyme is entitled to receive tiered royalties from AbbVie upon the commercialization of products under the collaboration.
We note that Halozyme already has partnerships with several big health care companies like Roche Holding AG RHHBY among others for its ENHANZE technology. These collaborations not only validate the company’s proprietary technology, but also help it maintain top-line growth through milestone payments, license fees, reimbursements and royalties.
We believe Halozyme’s collaboration with AbbVie should benefit the company strategically as well financially. With this deal, Halozyme gained a strong partner in AbbVie, which has a marked presence in the market for novel therapies. Halozyme’s shares gained 8.8% reflecting investor’s reaction to the news.
Several companies in the health care sector have been caught in the recent deal-making frenzy aimed at stepping up development of their pipelines. Last month BioNTech AG inked a deal with Genmab A/S GNMSF to jointly research, develop and commercialize antibodies for cancer immunotherapy using BioNTech’s proprietary immunomodulatory antibodies and Genmab’s DuoBody technology platform.
Halozyme carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Actelion Ltd. ALIOF, carrying a Zacks Rank #1 (Strong Buy).
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