Dear Fellow Shareholders:

2019 was a defining year for Halozyme. As I reflect back, I am very grateful for the tremendous energy and focus of our Halozyme team. Our key goals for the year were to deliver strong revenue growth and clinical progress in our ENHANZEÒ business and conclude our HALO-301 PEGPH20 clinical trial, with plans to submit for regulatory review assuming positive data. While the negative results of HALO-301 were disappointing, the closing of the oncology program opens a new, bright chapter for Halozyme, with ENHANZEÒ as our foundation.

In this year’s letter I want to tell the story of the planning and execution by the Halozyme team and the Board of Directors that resulted in us being ready to take decisive action no matter the outcome of HALO-301.

The key goals aligned with our two-pillar strategy, which we established in 2014 based on the promise of rHuPH20, our proprietary enzyme. rHuPH20 provided us with multiple avenues for value creation at that time, and we chose to focus our efforts on our investigational new drug PEGPH20 and the ENHANZEÒ drug delivery technology. We believed these two assets had the highest potential to meaningfully impact patients’ lives and to create long-term value for our shareholders, while also moving us toward our long-term vision of building a leading biotechnology company.

Pursuing a new drug for pancreas cancer is not for the faint of heart as the odds of success are low, but we knew our scientific rationale for doing so was strong. Informed by the promising Phase 2 data for PEGPH20, we initiated the definitive test for the drug with the Phase 3 HALO-301 study in 2016.

At the same time, the ENHANZEÒ drug delivery technology was gaining momentum with multiple new collaboration agreements and more products in clinical testing. The highly leverageable ENHANZEÒ business model, with its increasing projected revenues, provided a clear path to sustained company profitability as a stand-alone business.

Our strategy was clear. We communicated to investors that in the event we were not successful with PEGPH20, we would restructure the company, halt oncology drug development, and focus on our ENHANZEÒ business. In parallel, and consistent with our Core Value to “Respect and Value the Team”, we communicated the same strategy to employees, with this open communication occurring frequently at our All Hands meetings throughout 2018 and 2019.

I want to take a moment and acknowledge our amazing Halozyme employees and their extraordinary commitment during this time. With an incredible passion for our science and the desire to impact pancreas cancer, they maintained a laser-like focus on execution, even as they knew of the possibility of a company restructuring and potential loss of employment.

Our cross-functional PEGPH20 team was fully prepared to execute the plan to get PEGPH20 to patients as quickly as possible. The HALO-301 study database was locked in September and analyzed in industry-leading time and to the very highest standards. Most sections of the Biologics License Application (BLA) were already completed and ready for submission at that time. The plans for US and EU launches were also finalized and ready to execute.

While we were planning for a positive data scenario, prudent business planning called for us to be fully ready for action in the event of negative data. A small, dedicated group of leaders began meeting in 2019 to determine the structure needed for an ENHANZEÒ-only business and the communication plans we would act on immediately if the data was negative.

Throughout the year, the management team and Board of Directors met to discuss the scenarios and tested and updated the communications plans. The Board supported a commitment to pay out the employee performance bonus, prorated for the number of months worked, and a communication to employees to alleviate that concern given the expectation of data before year-end. An additional committee was formed to discuss and provide feedback on management’s recommendation to implement a capital return plan if we found ourselves in a negative data scenario.

In the end, we did receive negative data and faced the hard task of restructuring the company. As a result of our detailed and careful planning, and our transparent and proactive communication, we were able to execute the restructuring immediately. This allowed us to provide clarity to our investors and our employees on the day of the data announcement. While the news was incredibly disappointing for our employees, many expressed appreciation for the transparency of the strategy, the speed at which their employment status was communicated and for the individualized letters, that provided those affected a summary of their severance, benefits and the outplacement services that would be available to them.

I am very proud of the entire Halozyme organization.

I have always been an advocate of scenario planning and transparent communication with all stakeholders. The experience of the last year has reinforced this belief; with more people under the tent, aware and engaged in planning, a successful outcome is more likely. For the management team and I this experience only reinforces the importance of our Values as we continue to build Halozyme. In particular:

  • We Respect and Value the Team; we will continue our commitment to openness, respect, and trust.
  • We Focus on Patients/We Innovate; we will continue to make decisions with the patient at the forefront, as we did with the decision to restructure, with the goal of expanding the reach of ENHANZEÒ and impacting more patients’ lives.
  • We are all Empowered and Accountable; we will continue to scenario plan and demonstrate flexibility and team work to be prepared for and seize opportunities and overcome unforeseen events.

With the restructuring complete and the oncology operations now closed, we are fully focused on ENHANZEÒ, having transformed into a technology platform company providing innovative and disruptive solutions with the goal of improving patient experience and outcomes.

I would like to share in more detail just a few highlights from the last year in our ENHANZEÒ business.

We began 2019 with a new global collaboration and license agreement with argenx SE - our first agreement with a development stage biotechnology company. This achievement was followed by additional successes, including:

  • Janssen’s announcement of positive data from its Phase 3 COLUMBA study, which investigated subcutaneously administered DARZALEXÒ (daratumumab) in comparison to intravenous DARZALEXÒ in patients with relapsed and refractory multiple myeloma;
  • Janssen’s subsequent US and EU regulatory submissions for the subcutaneous delivery of DARZALEXÒ based on this data and other clinical studies;
  • argenx’s first clinical dosing for ARGX-113 (efgartigimod), which occurred just five months after the signing of our global collaboration and license agreement;
  • Roche announcement of positive data from its global phase III FeDeriCa study, which investigated a fixed-dose combination of pertuzumab (Perjeta®) and trastuzumab (Herceptin®) for subcutaneous administration using ENHANZEÒ in combination with intravenous chemotherapy, which was subsequently presented at the San Antonio Breast Cancer Symposium; and
  • The initiation of Phase 1 studies with four new ENHANZEÒ co-formulated products:
  • argenx's efgartigimod
  • Roche’s (ocrelizumab) Ocrevus®
  • Bristol-Myers Squibb’s relatlimab
  • One undisclosed program with an existing, unnamed partner

ENHANZEÒ continues to be the go-to technology for converting intravenously-administered therapeutics to therapeutics that can be delivered subcutaneously. We are seeing more of our partners begin to use this technology much earlier in their drug development processes as they realize its potential for reduced treatment burden and healthcare costs and, increasingly, the benefits it may offer for competitive differentiation. Among these new potential differentiating benefits are:

  • The potential for a lower rate of infusion-related reactions as was observed with DARZALEXÒ SC in the COLUMBA Phase 3 study when compared to the rate observed with DARZALEXÒ
  • The potential for new pricing approaches, for example, for those combining two biologics with ENHANZEÒ.
  • The ability to facilitate the administration of treatment in lower cost settings such as the physician office or the community setting. Janssen, as an example, has stated DARZALEXÒ SC supports their strategy to seek to expand treatment into the community setting.
  • The ability to simplify administration by moving from a fixed dose versus weight-based dosing. This has been demonstrated with Rituxan HycelaÒ (rituximab / hyaluronidase human) and has been observed with DARZALEXÒ SC too.

We project a bright future for ENHANZEÒ. Our operating model is lean, scalable, and leverageable. We project sustainable profitability beginning in 2020 and strong growth in revenue in the coming years.

We also anticipate a number of value-driving events in 2020 across our ENHANZEÒ partners, resulting from our expanding portfolio. With three commercial-stage products utilizing our ENHANZEÒ drug delivery technology today, we have an additional two products pending approval and launch this year: Janssen’s DARZALEXÒ SC and Roche’s fixed-dose subcutaneous combination of PerjetaÒ and HerceptinÒ. Another 14 products are expected to be in Phase I, II, or III of development by the end of 2020.

  • DARZALEXÒ SC is a promising treatment for patients suffering from multiple myeloma that offers a strong value proposition—reducing injection time from 4-6 hours with intravenous administration to just 5 minutes with subcutaneous administration utilizing ENHANZEÒ. We anticipate Janssen will receive feedback and potential approvals from the US Food Drug Administration (FDA) and European Medicines Agency (EMA) this year and will mobilize a strong effort to launch the drug following approvals.
  • Roche’s fixed-dose combination of PerjetaÒ and HerceptinÒ is the first such combination of two therapeutic antibodies as a fixed-dose subcutaneous formulation utilizing ENHANZEÒ in a single injection, thereby providing patients with HER2-positive breast cancer the possibility of a faster treatment option. Regulatory filings are completed in the US and EU and we anticipate the potential for FDA approval and launch by Roche in 2020.

I am energized and inspired about the future that lies ahead for Halozyme with our ENHANZEÒ business.

We remain confident that our high-growth, high-margin ENHANZEÒ business model will lead to new partnership agreements over time and will also provide us with a strong foundation for potential future platform acquisition consistent with our mission to provide innovative and disruptive solutions with the goal of impact patients experience and outcomes.

Our scenario planning and transparency enabled us to rapidly and strategically shift the company’s focus following the disappointing HALO-301 trial results. This decisive action led to value creation for our shareholders and built trust across all stakeholders.

None of this would have been possible without the strength of our core technology, the dedication and commitment of the entire Halozyme team, the Board of Directors and our strong shareholder base.

In closing, I want to express my deepest gratitude to every member of our Halozyme team and the Board for their tireless work in 2019.

I also want to offer my appreciation to our shareholders for their continued trust, patience, and support as we move forward with a growing and sustainably profitable company.

Best regards,



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