Halozyme Therapeutics, Inc. HALO announced that it has entered into a global collaboration and license agreement with Eli Lilly and Company LLY for the development and commercialization of therapies that will combine the latter’s compounds with Halozyme's Enhanze platform.
Terms of the Deal
Per the terms of the agreement, Eli Lilly will pay Halozyme an initial payment of $25 million. Halozyme is also entitled to milestone payments of up to $160 million for each of up to five collaboration targets, valued at a maximum of $800 million, depending on the achievement of milestones. Additionally, Lilly will pay mid single-digit royalties to Halozyme if products under the collaboration are commercialized.
We note that Halozyme’s proprietary drug delivery platform, Enhanze, is based on its patented recombinant human hyaluronidase enzyme (rHuPH20). This enzyme temporarily degrades hyaluronan, a chain of natural sugars in the body, which in turn enables dispersion and absorption of injected therapeutic drugs. Hence, the collaboration will allow faster delivery of Eli Lilly’s injectable drugs through subcutaneous delivery.
Halozyme gained a strong partner in Eli Lilly given the latter’s impressive position in the healthcare sector. We note that Halozyme had inked a similar agreement with AbbVie ABBV in Jun 2015 for the development and commercialization of therapies by combining its Enhanze technology platform with AbbVie’s proprietary compounds.
In the past, Halozyme has collaborated with several other large pharma companies for its Enhanze technology. These collaborations fetch revenues for the company in the form of milestone payments, license fees, reimbursements and royalties.
Halozyme carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Baxalta, Inc. BXLT, which currently sports a Zacks Rank #1 (Strong Buy).
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