San Diego’s Halozyme Injects New Life into Old Drugs

Smart companies are cautious about fiddling with successful products. So I was intrigued to learn that Roche was reformulating its blockbuster breast cancer drug trastuzumab to include an enzyme from San Diego-based Halozyme Therapeutics (NASDAQ: HALO). Last week I caught up with Halozyme CFO Kurt Gustafson, who offered some insight into why companies like Roche are interested in the product.

First some background: Halozyme’s enzyme is a genetically-engineered copy of human hyaluronidase, which breaks down a gel-like substance found in cartilage and skin. This activity can speed the absorption of injectible drugs into the bloodstream or the lymph system.

Hyaluronidase from cattle or sheep has been used for decades to speed the absorption of anesthetics during cataract surgery. Roche is using Halozyme’s human hyaluronidase to develop an injectible form of trastuzumab, which is currently available only as an intravenous drug that takes about an hour to administer, often in a hospital.

Halozyme CFO Kurt Gustafson

Roche has solid business reasons for wanting to modify trastuzumab, which had global sales of nearly $5 billion in 2009. Gustafson explained that trastuzumab may soon face competition from generic knockoffs, particularly in Europe. (Currently, there is no clear path to approval for biologic generics in the U.S.) By offering trastuzumab shots that patients can use at home, Roche can eliminate the cost of administering the drug in a hospital infusion ward. This will help Roche compete against intravenous generic drugs, which carry added infusion costs.

The reformulated drug is in late-stage trials that Roche expects to complete by the end of this year.

This deal is part of Halozyme’s broader strategy for the enzyme, dubbed PH20. “We are leveraging PH20 in two ways,” Gustafson told me. “First we are licensing it to others to use with their drugs. And second, we are taking it and combining it with other drugs that have lost patents or might be losing their exclusivity.”

This allows Halozyme to make a new drug from an old one. For example, Halozyme is experimenting with adding the enzyme to regular insulin, which is available as a generic, and some fast-acting insulin brands that will soon lose patent protection. The company wants to see if the enzyme will speed the absorption of both types of insulin.

Halozyme was founded in 1998 by a group of scientists led by Gregory I. Frost, who is currently the company’s chief scientific officer. Frost became interested in hyaluronidase as a young researcher at UC San Francisco, where he earned a doctorate in pathology. The company believed there was room for recombinant hyaluronidase, which would lack the foreign proteins and other impurities inherent in enzymes derived from slaughterhouse animals.

Halozyme went public in 2004 through a reverse merger with Global Yacht Services, a struggling company that ran corporate charters out of San Diego. Halozyme’s recombinant hyaluronidase received FDA approval in 2005. Deals followed.

Baxter International markets Halozyme’s hyaluronidase under the name Hylenex as an adjuvant to increase the absorption and dispersion of injectible drugs, such as anesthetics, or fluids. Gustafson said subcutaneous hydration is a useful option in small children, whose little veins make it difficult to start an IV.


