Good afternoon and welcome to Halozyme Therapeutics Third Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] And as a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Jim Mazzola, Vice President of Investor Relations at Halozyme. Mr. Mazzola, you may begin your conference.

Thank you, Carrie, and good afternoon, everyone. Welcome to Halozyme’s third quarter 2016 financial results conference call. Following market close today, we issued a news release with the summary of our results and posted a short slide presentation to accompany this call. You will find both at the Investors page at halozyme.com. Leading our call today is Halozyme’s President and Chief Executive Officer, Dr. Helen Torley, who will provide an overview and update on our business. And then Laurie Stelzer, our Chief Financial Officer will review financial results for the September quarter followed by a Q&A period. Also with us for today’s call is Dr. Athena Countouriotis, our Chief Medical Officer. Before we begin, let me remind you that during this conference call, we will be make forward-looking statements. The Company’s actual results may differ materially from those expressed in or indicated by such forward-looking statements. For a description of risks, please refer to our quarterly and annual filings with the Securities and Exchange Commission. Now, let me turn the call over to Helen.

Good afternoon and thank you for joining us today. I'd like to begin the call with the key takeaways for the quarter. Firstly, we continue to execute well across our clinical development program for PEGPH20, highlights include continuing to initiate sites in countries around the globe and our phase 3 pancreatic cancer study HALO 301 progressing towards a dose expansion portion of our trial starting PEGPH20 with KEYTRUDA. And enhancing the selection of PEGPH20 for inclusion in the Pancreatic Cancer Action Network's groundbreaking Precision Promise Initiative. Secondly, the value of our currently marketed product on our ENHANZE platform continues to grow through increased conversion rate in launched countries and expansion into new geographies, indications and patient populations. We reported yet another quarter of record royalty revenues, as sales of Herceptin SC, MabThera SC and HyQvia drove an increase of 6% sequentially and 58% from the third quarter of 2015. We also announced last week that the FDA has accepted Genentech's biologics license application for subcutaneous formulation of rituximab using our ENHANZE technology in multiple blood cancer indications. This development represents a meaningful step towards bringing rituximab SC to patients in the United States. And thirdly, we continue to demonstrate our financial strength exiting the quarter with more than $200 million in cash and raising the lower end of our guidance ranges for both revenue and year-end cash. The ability to grow our topline as we invest for the future in oncology is a key differentiator in our business model and continues to distinguish the company in the third quarter. For additional details on our progress, I'll start with an overview of our strategy. As a diversified oncology biotech company, we operate our business and make investment decisions in two strategic pillars. The first pillar is our oncology pipeline with investigational…

Thank you, Helen. I will begin on slide 5 where you will see that revenue for the third quarter was $31.9 million compared to $20.8 million in the prior year period exhibiting strong growth of 53% year-on-year. During the third quarter, royalty revenue total $13 million, an increase of 6% sequentially from last quarter and 58% from the third quarter of 2015. This increase came largely from higher sales of Roche’s Herceptin SC during the second quarter of 2016. Bulk sales of rUpH20 totaled $9.6 million. Hylenex product sales totaled $3.7 million and other collaboration revenue total $5.5 million which included reimbursement from our partners for R&D services. Turning to slide 6 for more detailed breakdown of our P&L, cost of products sales was $9.1 million in the quarter compared to $6.2 million in the prior year period primarily due to an increase in the manufacturing of our rUpH20 enzyme for use by our partners. Research and development expenses for the third quarter were $33.9 million compared to $27.6 million for the third quarter of 2015. This planned increase was primarily due to a rampant spend associated with the HALO 301 study as well as manufacturing and clinical supply expenses that are reimbursed by our ENHANZE partners. Selling, general and administrative expenses were $11.6 million compared to $10.2 million for the third quarter of 2015. The increase was primarily due to personal expenses including stock-based compensation for the period. In total, our operating expenses increased by $10.6 million from the third quarter of 2015. Net loss for the quarter was $28.9 million or $0.23 per share compared to a net loss of $24.5 million or $0.19 per share in the third quarter of 2015, driven by lower R&D spend in the prior year period. Cash, cash equivalents and marketable securities were $221.1 million at September 30, 2016 compared to $230 million at June 30, 2016 and $123.7 million in the third quarter of last year. Finally, I would like to provide an update on our financial guidance for 2016 as shown on slide 7. For the full-year 2016, we are updating our prior guidance and now expect net revenue of $145 million to $150 million, raising the lower end of our prior range of $140 million to $150 million. Operating expenses of $240 million to $245 million from the prior range of $245 million to $260 million, driven by changes in our clinical program, examples of which include the early termination of the primal study, the temporary stoppage of enrollment in the KEYTRUDA study and the timing of biomarker related activities. Cash flow of $75 million to $85 million, raising the lower end of prior range of $65 million to $85 million and year-end cash balance of $180 million to $190 million, raising the lower end of our prior range of $170 million to $190 million. With that, let me turn the call back to Helen who will provide closing comments.

Thank you, Laurie. In summary, we continued to make progress across both pillars of our strategy during the third quarter. In the oncology pillar, we proceeded with global site initiations in our Phase 3 study towards our goal of having approximately 90% of sites ready to screen patients by year end. We made progress towards the dose expansion portion of our trial with KEYTRUDA and we announced our participation in the Precision Promise clinical trial initiative. In the ENHANZE pillar, we continued to drive value through growing royalty revenues and are encouraged by the steps our partners are taking to expand the use of currently marketed products. We remain confident that the investments we're making in both pillars will generate near and longer term value for our shareholders and partners. And as ever, I'd like to close by expressing my gratitude and appreciation to our talented Halozyme team for their continued hard work in advancing our programs and in support of our partners. We’re now ready to take your questions. Operator, please would you open the call?

[Operator Instructions] And our first question will be from Charles Duncan with Piper Jaffray.

Good afternoon, folks. First of all, congratulations on a good quarter of progress and thanks for taking my questions. So not sure if this is a question for Helen or Athena, but love to get both of your perspectives on the timing of the second cohort in the Phase 2 study. I'm wondering if the timelines to beta read are perhaps, we could read that is possibly efficacy and progression taking longer than anticipated or is it possible that there is maybe a fundamental shift in what we should expect out of the pancreatic cancer patient population and if you could remind us of what you're expecting out in the control arm in the ongoing Phase 3?

Well, Charles, let me start and I’ll just give you my perspective on it and really, I think the most important thing to remember is that we are blinded to the efficacy data for stage 2. So we really can't speculate on the timing or what the timing may mean for this. Athena, do you want to comment on the question on the control arm expectations perhaps referencing the ABRAXANE approval arm, just as a --

Yeah. Thanks for the question, Charles. I think your question was in relation to the Phase 3, so I just wanted to be careful on the way I answer in regards to what we said for the Phase 3 is the PFS hazard ratio of 0.59. It's not our standard practice to get more guidance than that in regards to our statistical plans. I think you can always look at the ABRAXANE Gemcitabine Phase 3 study and the median PFS and overall survival to potentially guide you, but we haven't given that specific level of detail.

Okay. And then the other question that I had is regarding that ongoing Phase 3, it looks like you're on track for site initiation, but do you anticipate being able to provide us any additional information in the near term or when you might give out data with regard to patient enrolment numbers?

Yeah. Thanks, Charles. What we’ve said is 2016 was really a year where we were going to be very focused in getting the site up and operational and as I mentioned in my prepared remarks, we're very pleased with the enthusiasm for the study and the progress we're seeing where we're seeing nice progress month-to-month in both screening and enrollment. We really do have to have more data under our belt to, I think, feel ready to make any comments on -- with regard to the enrollment and the study because we really are still learning exactly how that enrollment trajectory is going to be. So when we have more information on that, we may be in a position to discuss it then.

Okay. That's helpful. Thanks for the added color and congrats on a great quarter of financial progress.

Thank you. Our next question will be from Jessica Fye with JP Morgan.

Thanks for taking my questions. I think you’ve previously said you completed enrolment for stage 2 in February. Just with this kind of timing update, can you elaborate on when in February you’re seeing about the last patient now having been in the study for what seems like 29 months and that's north of the median progression free survival you'd expect for at least the control arm? And so just trying to get a little more insight into the timing there and I realize that you guys are blinded, but I'm sure you're flexing some numbers on your end. So curious if you have any view on whether this means that you're seeing something unusual in the control arm as opposed to kind of dramatically better efficacy than you saw in stage 1 with PEGPH20?

Thanks, Jessica. We did enroll the last patient in February as we mentioned, I think it was in the first half of February. And I think speculation would be exactly that. We’re blinded to the efficacy and you’re right, you can come up with different scenarios, but that would be pure speculation and so we're relying on our Data Monitoring Committee statistician to give us guidance on when the data is mature and ready for analysis and obviously when we get that information, we'll move rapidly to get the data out, but meanwhile, I think we just have to wait for the data to mature and it could be any number of things. So I don't want to speculate on that.

Okay. Fair enough. Maybe just a follow up and clarify what exactly you heard from the statistician, did they tell you recently that as if, maybe some time last week or whenever it was that the data was not mature. With or without giving you some insight into, but we're getting close and it could be in the next couple of months, i.e., was this just a call that you thought you would be conservative and say it could slip into ’17 or was that kind of update to us based on something the statistician told you?

Thanks, Jessica. It was approximately [indiscernible] and the statistician simply said per the process we have in place, the data is not mature for analysis at this time and that's the only information we have. So with that, we use the language it may move into ’17 obviously, because we don't know now when the data is going to be mature. It still could be in ’16, but it may flip in to ’17 and the DMC statistician will continue to monitor and track the patients who are ongoing in the study and when and if they should happen to be having an event, he will determine has the data matured appropriately?

Okay. And maybe last follow-up from me, are they giving you regular updates, say every other week, every several weeks or is the next step that you hear from them sort of on a need to know and they're going to tell you when it’s mature.

It's fair to think with both mechanisms in place. There are regularly scheduled meetings, but because we're at this stage of assessing the readiness of the data for analysis that it’s on a need to know where we get an update from the statistician more frequently as needed.

Thank you. Our next question will be from Andrew Peters with Deutsche Bank.

Great. Thanks for taking my questions. So I guess maybe continuing along the lines of the stage 2 data, I just want to get a sense of, if you have an idea if the event rate has actually changed over time. And did you base your initial guidance on getting data by year end on a certain event rate and has that slowed and if slow or if it has slowed, can you remind us if there's anything different about the patients who are enrolled earlier in the trial versus later in the trial, maybe in terms of the prophylaxis protocol or anything like that?

Great. I’ll ask Athena to maybe address that. I think Athena I heard questions on the patient demographics early in the trial, and by that, Andrew, did you mean stage 1 to stage 2 or within stage 2?

Within stage 2, I mean if the event rate has slowed based on your kind of earlier data, do you have any idea as to what could be causing that?

All right. Thank you. Athena?

Hi, Andrew. Thanks for the question. I think I can answer it simply in that, by saying we are blinded to the efficacy data and that includes the PFS event number. So we have no sight into what the PFS event number was early versus towards the end. I wouldn't expect that there's been any difference and I think our estimate was based on, as Jessica mentioned earlier, we completed enrollment in February and we looked at potentially sensually Q4 as a possible projection, just looking at how long that would be from February until the end of the year timeframe.

Great, thanks. And then just a quick one on the lung cancer program, can you just remind us as to kind of what your internal kind of guidelines were in terms of deciding to move forward with the 2.2 dose, on the dose expansion side, is it purely based on safety or is there any sort of kind of minimal efficacy that you wanted to see first before deciding to move forward with the expansion cohort?

Thanks, Andrew. Again, first of all, we're excited to move into current expansion that was our goal prior to the end of the year. We've made great strides with our partner, Ventana to establish technical cutoffs for both the lung cancer population and the gastric cancer population. As Helen mentioned in her prepared remarks, we've just dosed the last patient in the 2.2 microgram per kilo dosing cohort and provided that that patient doesn't have a dose limiting toxicity, we're comfortable with this dose level based on the data that we've seen in dose escalation and as you know, most of dose escalation really is to establish a safe dose, especially given that we're looking at the all comer population. So now as you move into cohort expansion, we really will be evaluating the efficacy of the combination because we’ll be prospectively testing for HA.

Thank you. Our next question will be from Jim Birchenough with Wells Fargo Securities.

Hi. Thanks for taking our questions. This is Yanan in for Jim. First question, perhaps this has been answered. I’m wondering what is the assumption based on regarding the original, in the PFS event assumption for the 202 study, have you talked about that.

I think Athena did answer that earlier, but let me get her to just give a little bit more color there.

Yeah. I think if your question is in regards to what was our target number of events, that's not a level of detail we have provided, but what I can say is we enrolled the last patient in stage 2 in February of this year and we have projected, if you take about 9 months from there to get to the end of the year that that would be a time frame where we might be able to report out the top line results. As Helen mentioned, we've just recently informed that the data is not yet mature. So we will wait until the PFS data is mature prior to doing the analysis and the reporting.

In terms of -- what is the assumption that supports the nine months timeline, is there something that you can share?

That’s based off of the median PFS from stage 1, which was 9.2 months in the PEGPH20 arm

Got it. And the second question is on the Daratumumab efficacy, we saw some interesting information regarding this molecule from ASH abstract, we’re wondering if you could talk about the differences between the [indiscernible] the duration of infusion and whether it’s used in the healthcare setting or in home, in terms of the differentiation or difference between on these properties compared with the Herceptin and MabThera, and why if there is a difference, is this molecule specific to the Daratumumab molecule? Thank you.

Yeah. I think it’s fair to say that we see each of our partners developing their programs a little bit differently. In this phase 1 study which was, you’re referencing which is in the ASH abstract, the goal was to identify the dose to go subcutaneous. So this was basically a Phase 1 pharmacokinetic study and what the company Janssen did was, has the range of doses, looking at infusion times over approximately 20 to 30 minutes depending on the dose that they were testing. And so what the reports are in this abstract is the fact that they were able to see supportive pharmacokinetic with also well tolerated and based on similar response rate data to what they saw with the IV. And so that is really the successful study in terms of what they are articulating in this abstract for any more detail on the clinical development program, we’re going to have to wait for Janssen to provide more information.

So I guess the final format of the injection regimen, the format hasn't been determined and what we see in abstract is a kind of an intermediate format for PK studies only?

Yes. I think it's a phase 1 PK study. The abstract does say that additional data from the phase 1 study will be presented at the ASH meeting and the only other comment I can make is that Janssen has said that they plan to move into Phase 3 in the middle of 2017 and I think then we’ll learn a lot more about the dose -- the planned infusion time and other information with regard to the patient population they plan to study.

Thank you. Our next question will be from Joel Beatty with Citi.

Thanks for taking the questions. So for the phase 2 pancreatic cancer study, can you tell us more about the directions to the DMC in assessing whether or not data is mature and, for example, are they just looking at the number of event or are they also considering other dose of separation indicators?

Hi, Joel. It’s Athena. What we've discussed with the DMC, obviously, we have a very good relationship with them. We have frequent meetings on the safety side and we have plans to evaluate the efficacy with them prior to us being on blinded. Specifically, we're working closely with the statistician and he is evaluating not only the number of PFS events, but the patients who remain on treatment and whether they impact the data in a larger way or a limited way and that could be the median and/or the hazard ratio based on the fact again we estimate that this is going to be a relatively small sample size based on our initial estimates from stage 1 of 35% to 40% of patients being HA high.

Thank you. Our next question will be from [indiscernible]

Hey, operator, move into our next question and put Laurus back in queue if he gets back on.

Sir, I’m showing no further questions in the queue.

All right. Thank you very much. If there are no further questions, I'd just like to thank everyone for joining us today. I think as we discussed, we’re seeing strong progress across both of our pillars and we look forward to speaking with you on our next call and providing more details. Thank you so much.

Thank you. Ladies and gentleman, this concludes today’s teleconference. You may now disconnect.