Shares of Halozyme Therapeutics (NASDAQ: HALO), a small-cap biotech focused on creating products that help other drugs work more effectively, rose by 16% as of 10:45 a.m. EDT on Thursday. Investors can thank a trio of positive news announcements -- including two new deals with a couple of big pharma companies -- for today's big move.
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Here's a review of the three announcements that caused traders to cheer today.
First, Halozyme announced that it has licensed its proprietary Enhanze drug-delivery technology to Roche (NASDAQOTH: RHHBY) for exclusive development of an "undisclosed therapeutic target." The deal calls for Roche to provide Halozyme with a $30 million up-front payment and the ability to earn up to $160 million in additional payments plus royalties if all milestones outlined in the agreement are met.
Next, the company announced a new global collaboration and licensing agreement with Bristol-Myers Squibb (NYSE: BMY). The deal provides Bristol-Myers with access to the company's Enhanze technology on up to 11 new immuno-oncology drug targets. As part of the collaboration, Bristol-Myers will make an up-front payment of $105 million to Halozyme and allow the company to earn up to $160 million in additional payments plus royalties on each of the 11 collaboration targets. When taken together that represents about $1.76 billion in potential payments.
Finally, the partnership and financial news allow the company to substantially increase its financial guidance for the full-year 2017. Halozyme now expects revenue to land between $245 million to $260 million, which represents an increase of $130 million over its prior range. What's more, the company now expects to produce positive operating cash flow between $50 million to $60 million for the year. That's a welcome change from its prior guidance of $75 million to $85 million in operating cash burn. Lastly, the company's year-end cash balance guidance was raised by $135 million and is now expected to land between $380 million to $395 million.
Given all of the positive news, it is easy to understand why shares are rocketing higher today.
The news out of Halozyme over the last year and a half hasn't exactly been universally positive. In fact, over the last 18 months, investors have had to deal with setbacks like a discounted capital raise, discontinued development of a few partnership programs, and a major clinical setback. These factors have weighed heavily on Halozyme's stock, so today's updates should be seen as a breath of fresh air for the company's long-term bulls.
Thankfully, today's vote of confidence from both Roche and Bristol-Myers should go a long way toward reassuring investors that Halozyme's Enhanze technology is the real deal. Combined with a padded bank account and the potential to earn nearly $2 billion in additional milestone payments, I see plenty of reasons to remain bullish on this small-cap company's future.
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