Shares of the actively traded, smid-cap Halozyme Therapeutics, Inc. (NASDAQ: HALO) were slipping Monday in reaction to an adverse clinical readout.
Oncology Program Shuts Down
Halozyme announced Monday that a late-stage study dubbed HALO-301 that evaluated its lead pipeline candidate PEGPH20 as a first-line therapy for metastatic pancreatic cancer failed to reach the primary endpoint of overall survival.
The treatment arm, which evaluated PEGPH20 in combination with chemotherapy drugs gemcitabine and nab–paclitaxel, did not show an improvement in median overall survival compared to the chemotherapy drugs alone, the company said.
Citing the lack of benefit over the standard-of-care, the company said it is discontinuing the development of PEGPH20 and scrapping its oncology operations altogether.
Focus Shifts To ENHANZE Tech Platform
With the PEGPH20 program shelved, Halozyme announced strategic actions to reposition as a company focusing solely on its ENHANZE drug delivery technology.
“Our mission now is to transition our strategy to focus on our high-growth, high-margin ENHANZE drug delivery technology platform,” CEO Dr. Helen Torley said in a statement.
“As a result, Halozyme now has a clear path to near-term, sustainable profitability with strong cash flows and high growth prospects.”
Job Cuts, Buybacks Planned
As part of the restructuring plan, Halozyme announced plans to reduce its workforce by 55%, or about 160 positions. The company said it expects to complete 80% of the job cuts by early January.
The restructuring, along with other cost saving efforts, will result in savings of $130 million to $140 million in 2020, according to Halozyme.
Following the completion of the restructuring and after the booking of all one-time charges, Halozyme said it expects to be sustainably profitable beginning in the second quarter of 2020.
The company said it will give details of the separation and contract termination fees when it releases its third quarter results Tuesday, Nov. 12. These charges are expected to be booked in the fourth quarter of 2019.
Halozyme also said its board has initiated capital returns with a share repurchase program amounting to $350 million over three years.
The stock was down 3.54% at $15 at the time of publication.
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