Halozyme Therapeutics Reports 2007 First Quarter Financial Results

SAN DIEGO, May 10 /PRNewswire-FirstCall/ -- Halozyme Therapeutics, Inc. (NASDAQ: HALO) , a biopharmaceutical company developing and commercializing recombinant human enzymes, today reported financial results for the three months ended March 31, 2007.

"We have had a very exciting year so far with the announcements of our expanded Baxter collaboration, Baxter's staged launch of HYLENEX in ophthalmology, the proposed $32 million investment by an entity affiliated with Randal J. Kirk, our largest shareholder, and of course, the listing of our common stock today on Nasdaq. These are significant events for our company and we feel that they position us well to execute our strategy going forward," stated Jonathan Lim, MD, Halozyme's President and CEO.

  First Quarter 2007 and Subsequent Weeks' Highlights

  *  The completion of our expanded Baxter collaboration to include the use
     of HYLENEX recombinant with Baxter proprietary and non-proprietary
     small molecule drugs.  Under the terms of the agreements, Baxter paid
     Halozyme an initial upfront payment of $10 million and made a
     $20 million equity investment, representing approximately 3% of
     Halozyme's outstanding common stock.  Pending the successful completion
     of a series of regulatory and sales events, Baxter may make further
     milestone payments of up to $25 million to Halozyme.  Halozyme will
     also receive royalties on HYLENEX recombinant as a standalone product
     and on any kits and co-formulations of HYLENEX recombinant with Baxter
     or other non-proprietary small molecule drugs.  Baxter prepaid
     $1 million of these royalties in connection with the execution of the
     agreements and will be obligated to prepay $9 million of additional
     royalties on or prior to January 1, 2009.  The agreements do not
     include combinations of HYLENEX recombinant with cytostatic and
     cytotoxic chemotherapeutic agents or bisphosphonates, the rights to
     which have been retained by Halozyme.  In addition, Baxter will now
     assume all development, manufacturing, clinical, regulatory, sales and
     marketing costs.

  *  The introduction by Baxter of HYLENEX recombinant (hyaluronidase human
     injection) for the ophthalmology market for use in enhancing the
     absorption and dispersion of other injected drugs.  HYLENEX is the
     first and only FDA-approved human recombinant hyaluronidase therapeutic
     product and is available from Baxter in one milliliter single-dose
     vials containing 150 units of hyaluronidase.  The announcement was made
     at the American Society of Cataract and Refractive Surgery (ASCRS) and
     American Society of Ophthalmic Administrators (ASOA) joint Symposium
     held in San Diego, April 27 through May 2, 2007.  As HYLENEX is being
     introduced to the ophthalmology market, Baxter also continues to
     develop its INFUSE clinical program, in which HYLENEX with other fluids
     or drugs are administered subcutaneously to patients.  The INFUSE
     trials are evaluating the potential for HYLENEX to offer an alternative
     route of administration for patients with difficult venous access.

  *  The signing of a definitive stock purchase agreement with New River
     Management V, LP ("New River") for a $32.1 million private placement of
     newly issued shares of Halozyme common stock.  The financing is subject
     to customary closing conditions, including the receipt of anti-trust
     clearance, and is not subject to shareholder approval.  Upon the
     satisfaction of the closing conditions, Halozyme will issue 3,500,000
     shares of common stock to New River at a price of $9.17 per share.
     This sale price represents a $0.22 per share premium to the closing
     price of Halozyme common stock on the date that the parties executed
     the definitive stock purchase agreement relating to the sale of the
     shares.  New River is a private investment fund affiliated with
     Halozyme's largest shareholder, Randal J. Kirk.  Halozyme's Board of
     Directors specifically approved the sale of shares to New River, and
     the increase in Mr. Kirk's beneficial ownership is not expected to
     trigger the anti-takeover provisions of Halozyme's existing Stockholder
     Rights Plan.

  *  The completion of our first Enhanze(TM) Technology clinical trial,
     involving a representative commercially-available large protein
     molecule therapeutic (LPMT).  This clinical trial compared the
     pharmacokinetics, safety, and tolerability of an LPMT agent injected
     subcutaneously with and without Enhanze Technology (rHuPH20).  The data
     from this clinical trial support the study hypothesis that rHuPH20
     increases the relative bioavailability of the LPMT when given
     subcutaneously and serve to validate the Enhanze Technology drug
     delivery platform.  An abstract based on the trial findings was
     accepted for a podium presentation at the July 7-11, 2007, 34th annual
     meeting of the Controlled Release Society to be held in Long Beach,
     California.  Data to be presented at the meeting will include recently-
     completed modeled analyses that estimate the effect of rHuPH20 on the
     steady-state bioavailability over repeat dosing of the LPMT.

  *  The completion of our INFUSE-Morphine clinical trial.  Key results from
     analysis of the 12 evaluable hospice and palliative care patients in
     this double-blind, randomized, crossover, placebo-controlled trial
     included achieving a statistically significant acceleration in the
     average time to maximal plasma concentration (Tmax) of morphine.  Tmax
     was reduced from 13.8 minutes when injected subcutaneously with the
     saline placebo to 9.2 minutes when injected with HYLENEX recombinant, a
     33% reduction in the time to maximal plasma concentration (p<0.05).
     The subcutaneous injections of morphine with HYLENEX were
     well-tolerated and a comparison of the incidence of adverse events
     suggests an absence of any HYLENEX-related side effects.

  First Quarter 2007 Financial Results

  *  Net loss for the first quarter of 2007 was $3.4 million, or $0.05 per
     share, compared with a net loss for the first quarter of 2006 of
     $3.5 million, or $0.06 per share.

  *  Revenues for the first quarter of 2007 were $810,000, compared with
     $73,000 for the first quarter of 2006.  Cumulase product sales for the
     first quarter of 2007 were $171,000, compared with $73,000 for the
     first quarter of 2006.  Revenues under collaborative agreements were
     $623,000 for the three months ended March 31, 2007.  Revenues under
     collaborative agreements primarily consist of the amortization of
     upfront fees received from Baxter and Roche of $367,000 and research
     and development payments from Baxter and Roche of $256,000.

  *  Research and development expenses for the first quarter of 2007 were
     $2.8 million, compared with $2.2 million for the first quarter of 2006,
     reflecting increased compensation expenses, share-based compensation
     expenses, and clinical trial expenses associated with the Company's
     Enhanze Technology and Chemophase clinical trials.

  *  Selling, general and administrative expenses for the first quarter of
     2007 were $2.0 million, compared with $1.5 million for the first
     quarter of 2006, reflecting increases in compensation expenses,
     share-based compensation expenses, and audit, consulting and marketing
     expenses compared with the prior year quarter.

  *  Cash and cash equivalents were $71.0 million as of March 31, 2007,
     compared with $44.2 as of December 31, 2006.


  Conference Call

Halozyme management will host an investment community conference call tomorrow, May 11, to discuss these topics beginning at 8:00 a.m. PDT (11:00 a.m. EDT). To participate via telephone, please call 888-463-4487 for domestic callers, or 706-679-5355 for international callers. A telephone replay will be available for 48 hours by dialing 800-642-1687 from the U.S., or 706-645-9291 for international callers, and entering reservation number 7672259. The conference call will be broadcast live over the Internet at http://www.halozyme.com/ and will be available for 30 days.

About HYLENEX

HYLENEX recombinant (hyaluronidase human injection) is indicated as an adjuvant to increase the absorption and dispersion of other injected drugs, as an adjuvant for subcutaneous fluid administration (hypodermoclysis), and as an adjunct in subcutaneous urography for improving resorption of radiopaque agents. Hyaluronidase is contraindicated in patients with hypersensitivity to hyaluronidase enzyme or any other ingredients in the formulation. Hyaluronidase should not be used to enhance the absorption and dispersion of dopamine and/or alpha agonist drugs. Discontinue HYLENEX recombinant if sensitization occurs. Hyaluronidase should not be applied directly to the cornea, and should not be injected around infected or acutely inflamed areas, nor used to reduce the swelling of bites or stings. Hyaluronidase should not be used for intravenous injections because the enzyme is rapidly inactivated. Furosemide, the benzodiazepines, and phenytoin are incompatible with hyaluronidase. Please see accompanying package insert for full Prescribing Information.

About Halozyme Therapeutics, Inc.

Halozyme is a biopharmaceutical company developing and commercializing recombinant human enzymes for the drug delivery, palliative care, oncology, and infertility markets. The company's portfolio of products is based on intellectual property covering the family of human enzymes known as hyaluronidases. The company's Enhanze(TM) Technology is a novel drug delivery platform designed to increase the absorption and dispersion of biologics. In addition, the company has received FDA approval for two products: Cumulase(R) and Hylenex, for use as an adjuvant to increase the absorption and dispersion of other injected drugs and fluids. The Company also has a number of different enzymes in its portfolio that are targeting significant areas of unmet need.

Safe Harbor Statement

In addition to historical information, the statements set forth above include forward-looking statements (including, without limitation, (i) statements concerning the company's ability to execute on its strategy, (ii) statements concerning the proposed equity financing, (iii) statements concerning future license or milestone payments under partnerships and collaborations, (iv) clinical trial results and the conclusions drawn from such trials and (v) future products and/or partnerships) that involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. The forward-looking statements are also identified through use of the words "believe," "enable," "may," "will," "could," "intends," "estimate," "anticipate," "plan," "predict," "probable," "potential," "possible," "should," "continue," and other words of similar meaning. Actual results could differ materially from the expectations contained in forward-looking statements as a result of several factors, including regulatory approval requirements and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the company's reports on Forms 10-K, 10-Q, and other filings with the Securities and Exchange Commission.

  Halozyme Contact                  Investor Relations Contact
  David A. Ramsay                   Don Markley
  Chief Financial Officer           Lippert/Heilshorn & Associates
  (858) 794-8881                    (310) 691-7100
  dramsay@halozyme.com              dmarkley@lhai.com


                            [Table to Follow]



                         HALOZYME THERAPEUTICS, INC.
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
              FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

                                                    Three Months Ended
                                                         March 31
                                                    2007           2006
  REVENUES:
  Product sales                                   $187,086        $73,281
  Revenue under collaborative agreements           623,129             --
  Total Revenues                                   810,215         73,281

  EXPENSES:
  Cost of sales                                     76,228         22,959
  Research and development                       2,829,364      2,192,070
  Selling, general and administrative            1,985,034      1,531,292

  Total Expenses                                 4,890,626      3,746,321

  LOSS FROM OPERATIONS                          (4,080,411)    (3,673,040)

  Interest income                                  723,107        182,846

  NET LOSS                                     $(3,357,304)   $(3,490,194)


  Net loss per share, basic and diluted             $(0.05)        $(0.06)

  Shares used in computing net loss per share,
   basic and diluted                            69,984,931     60,456,462