This Inning's Still On for Halozyme

I'm on record as being wary that the market is probably in the late innings of its latest leg up. But I'm also on record pointing out that a lot of runs can still be made at the end of a ballgame. Until my own individual positions start breaking down, acting on top-down warning signs is premature.

That thinking is what kept me fully invested when I made the late-inning utterance back on Nov. 30, and it's what keeps me fully invested as of this writing. The market certainly has rewarded me for my perseverance; I've seen some of the best performance in more than a year and a half from my analysis during the week following that "last innings" column.

A major contributor to that fab performance was Halozyme Therapeutics (HTI - commentary - Cramer's Take). This biotech, which I featured Nov. 27, made a company-transforming announcement with Swiss pharmaceuticals giant Roche Holdings on Dec. 6 -- and shot up 125% in the days that followed. And I believe it still has more room to run.

Let's Make a Deal

Halozyme is a biopharmaceutical company that is attempting to commercialize recombinant human enzymes for use in drug delivery, palliative care, oncology and infertility markets.

The agreement allows Roche to use Halozyme's Enhanze Technology as a new delivery regimen to attack up to 13 targets with drugs it has commercialized and is developing. The targets and drugs in question are not being disclosed for competitive reasons.

Enhanze is Halozyme's proprietary drug-delivery technology based on its recombinant human hyaluronidase (rHuPH20). This analogue of a human enzyme temporarily clears space in the matrix of tissues such as skin, an effect that promises to improve the delivery of the drugs it is used with.

Roche made a $20 million upfront payment for the rights, and future milestone payments in the coming several years could amount to as much as $581 million if efficacy is proven and regulatory approvals are given. Roche further invested $11 million in Halozyme, amounting to 5% of the firm. By my calculation, that means Roche bought about 3.25 million new shares of HTI for approximately $3.38 each.

---

At the time of publication, Moreland was long Halozyme Therapeutics, although holdings can change at any time.

Jonathan Moreland is director of research and publisher of the weekly publication InsiderInsights, founder of the Web site InsiderInsights.com and the director of research at Insider Asset Management LLC. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, Moreland appreciates your feedback; click here to send him an email.