Halozyme Therapeutics today disclosed collaboration and licensing agreements for its ENHANZE® drug-delivery technology with Bristol-Myers Squibb (BMS) and Roche—deals totaling up to a combined $2 billion-plus.

Halozyme and BMS have agreed to apply ENHANZE toward development of subcutaneously administered BMS immune-oncology treatments for a potential maximum of 11 targets. The companies said BMS has already designated “multiple” immuno-oncology targets including programmed cell death protein 1 (PD-1) and retains the option to select additional targets within five years from the effective date.

ENHANZE technology is based on rHuPH20, a proprietary recombinant human hyaluronidase enzyme that temporarily degrades hyaluronan, a glycosaminoglycan, or chain of natural sugars, that accumulates around certain tumors. Halozyme says the technology could potentially allow for faster subcutaneous delivery of large-volume injectable medications, such as those now delivered intravenously.

“Through this collaboration we are excited to explore the potential for ENHANZE to expand the number of cancer patients who may receive their therapies as a rapidly administered subcutaneous injection,” Halozyme president and CEO Helen Torley, MBChB, MRCP, said in a statement. “Bristol-Myers Squibb has one of the industry’s most advanced and extensive immuno-oncology portfolios with a clear commitment to patient-centered innovation.”

BMS’ immuno-oncology portfolio is anchored by marketed blockbuster drugs Opdivo® (nivolumab) and Yervoy® (ipilimumab). During the first half of 2017, BMS generated $2.322 billion in worldwide revenues from Opdivo, up 50% from $1.544 billion in January–June 2016, while Yervoy racked up $652 million, up 29% from $504 million a year earlier.

Yet BMS has weathered setbacks to its cancer immunotherapy franchise over the past year. Earlier this month, the FDA cited a risk/benefit analysis in placing a partial clinical hold on three trials investigating combination therapies based on Opdivo in patients with relapsed or refractory multiple myeloma. BMS said it would work with the agency to address concerns, but noted that its conclusion came from findings from non-Opdivo combination-therapy studies.

And in February, BMS placated activist investor Jana Partners by adding three directors to its board and buying back $2 billion of its stock, while not commenting on a report in The Wall Street Journal that Carl Icahn took a stake in the company. The emergence of activist investors followed the August 2016 disclosure that Opdivo failed a Phase III trial assessing its effectiveness as a monotherapy in patients with previously untreated advanced non-small-cell lung cancer (NSCLC). BMS rattled investors again on January 19 when it decided not to pursue an accelerated regulatory pathway for the combination of Opdivo plus Yervoy in first-line lung cancer in the U.S.

In the latest collaboration, BMS agreed to pay Halozyme an initial $105 million upfront to access ENHANZE technology, as well as up to $160 million in payments tied to achieving milestones for each of the nominated collaboration targets, or $1.76 billion if all 11 targets are developed. BMS also consented to pay Halozyme additional payments for combination products tied to achieving development, regulatory and sales-based milestones, and royalties on sales of products using the ENHANZE technology that were developed through the collaboration.

BMS says the deal is expected to lower non-generally accepted accounting principles (GAAP) earnings per share (EPS) in 2017 and 2018 by approximately $0.01, and by approximately $0.05 in 2019. On July 27, BMS raised the lower end of its EPS guidance to investors from $2.85 to $2.90, while keeping the high end at $3.00. However, BMS also lowered its GAAP EPS guidance range, from $2.72 to $2.87 to $2.66 to $2.76, citing a higher approximately 23% tax rate for GAAP compared with approximately 21% for non-GAAP.

Halozyme’s agreement with BMS is subject to customary antitrust clearance by the U.S. Justice Department and Federal Trade Commission pursuant to the Hart–Scott–Rodino Act.

Expanding Roche Collaboration

Separately, Halozyme also announced it has licensed ENHANZE to Roche for exclusive development of an undisclosed therapeutic target, in an expansion of a collaboration and licensing agreement for the technology first signed in 2006.

Since then, Roche has developed two subcutaneous formulations of cancer drugs for markets worldwide; while the companies last year agreed to study a combination of Halozyme's investigational oncology drug candidate PEGPH20 and Roche’s anti-programmed death-ligand 1 (PD-L1) monoclonal antibody Tecentriq® (atezolizumab) in up to eight tumor types.

On July 13, Halozyme announced the launch of a Phase Ib/II multiarm clinical trial evaluating PEGPH20 with Tecentriq in patients with previously treated metastatic pancreatic ductal adenocarcinoma. The trial is being funded by Roche’s Genentech subsidiary.

And in August, Halozyme also reported progress screening in enrolling patients in the dose expansion portion of a Phase Ib study assessing PEGPH20 with Merck & Co.’s Keytruda® (pembrolizumab), and in the Phase III HALO-301 trial assessing PEGPH20 with Celgene’s Abraxane® (nab-paclitaxel) and gemcitabine in first line metastatic pancreatic cancer patients with high levels of tumor hyaluronan.

However, in March, PEGPH20 failed the SWOG Phase Ib/II trial assessing the drug in metastatic pancreatic cancer when the study’s independent Data Monitoring Committee concluded, during a planned early futility analysis based on preliminary data, that adding PEGPH20 every two weeks to modified FOLFIRINOX was unlikely to show a statistically significant improvement in the primary endpoint of overall survival compared to modified FOLFIRINOX alone.

Roche has agreed to pay Halozyme an initial $30 million upfront, and potential additional payments of up to $160 million tied to achieving development, regulatory, and sales-based milestones. Roche also has agreed to pay Halozyme tiered, mid-single-digit royalties on sales of commercialized products.

“With each new licensing agreement, we see the potential for our global partners to advance their innovative therapies, reducing the treatment burden for patients, caregivers, and payers through shorter administration times or a less frequent dosing regimen,” Dr. Torley added.

Citing up-front payments in the Roche and BMS agreements, Halozyme today more than doubled its net revenue guidance to investors for 2017—from between $115 million to $130 million, to between $245 million to $260 million. The company now expects to finish this year with a year-end cash balance of $380 million to $395 million, an increase of $135 million from the previous range of $245 million to $260 million.

Halozyme also raised its cash flow guidance to a positive flow of $50 million to $60 million, compared with its previous cash burn range of $75 million to $85 million.

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