Good afternoon and welcome to the Halozyme Therapeutics Fourth 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 our host, Jim Mazzola, Vice President and Investor Relations at Halozyme. Mr. Mazzola, you may now begin your conference.

Okay. Thank you, Carrie, and good afternoon, everyone. Welcome to Halozyme’s fourth quarter of 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 the call. You will find both of them on 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. Then Laurie Stelzer, our Chief Financial Officer will review the financial results for the September quarter followed by a Q&A period. And also with us today as always is Dr. Athena Countouriotis, our Chief Medical Officer. Before we begin, let me remind you that during this conference call, we will be making 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.

Thank you, Jim. Good afternoon everyone and thank you for joining us today. I’ll begin the call with the key takeaways for the quarter. Firstly, following the release of our positive Phase 2 HALO-202 data last month, we continue to see increased momentum in our clinical development program for PEGPH20. In the HALO-301 study our global study of PEGPH20 in pancreatic cancer patients, patient screenings have increased during the two months of the year and interest from opinion leaders and investigators in our science has never been higher. At the same time, we are making progress in the dose expansion portion of our KEYTRUDA study and waiting for the start of our collaborative studies with Genentech Tecentriq in multiple tumor types. Secondly, we are pleased with the recent progress and have strong confidence in the growth potential of our ENHANZE platform, which is a key differentiator for Halozyme. Data presented at ASH by Genentech and Janssen on their programs using ENHANZE reinforces that value creating potential that exist through our current partnerships. In addition, we foresee continued growth in royalty revenues from currently marketed products. Our team remains focused on delivering new ENHANZE partnerships, as we support existing partners to advance their program. And thirdly, our results again demonstrate the financial strength of our business models. We reported a 65% increase in royalty revenue and exited the year with more than $200 million in cash, the ability to generate revenue as we invest for the future in oncology is a key differentiator of our business model. And continue to distinguish of the company in the fourth quarter. For additional details on our progress, I will 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.…

Thank you, Helen. I will begin on Slide 11, where you will see that revenue for the fourth quarter was $39 million compared to $52.2 million in the prior year period. The decrease was expected due to the $25 million we recorded in the fourth quarter of 2015 with the signing of our global collaboration and licensing agreement with Lilly. Adjusting for this one-time revenue grew 43% in the fourth quarter, the largest contributor with royalty revenue which totaled $14.3 million increasing 10% sequentially from last quarter and 50% from the fourth quarter of 2015. This increase came from higher sales of our partners’ products during the third quarter of 2016. Bulk sales of bulk rHuPH20 totaled $9 million, Hylenex product sales totaled $4.4 million and other collaboration revenue totaled $11.3 million. Revenue for 2016 totaled $146.7 million, an increase of 9% from 2015. This included royalty revenue of $51 million, an increase of 65% from 2015. During 2016, we were reimbursed for expenses related to a new manufacturing facility for Roche API that resulted in nearly $20 million in sponsored research revenue and associated expenses, the majority of which will not repeat in 2017. Once this new facility is approved, it will become the primary source for Roche API. As a result, we anticipate Roche will deplete their existing inventory of rHuPH20 ahead of the transition to the new facility, which will result in lower bulk product sales during 2017 and 2018. This transition is fully reflected in our 2017 revenue guidance. Turning to Slide 12, for a more detailed breakdown of our P&L, cost of product sales was $8 million in the quarter nearly even with $8.4 million in the prior year period. Research and development expenses for the quarter were $41.3 million compared to $27.7 million for…

Thank you, Laurie. In summary, as you heard, we made strong progress across both pillars of our strategy during 2016 and as we have entered 2017. In the oncology pillar, we start 2017 with positive randomized Phase 2 data that continues to generate enthusiasm from opinion leaders and our Phase 3 investigators. With follows the progress, we made at the end of 2016 with the announcement of our clinical collaboration with Genentech and progression of our KEYTRUDA study into the expansion phase. The events we expect in 2017, includes presenting new preclinical data on the effects of PEGPH20 with immuno-oncology therapy. Presentation of the study 202 data in a scientific forum making strong progress on study 301 enrollment and enrolling and in generating data in HA high patients in our KEYTRUDA study. Similarly, our enhanced platform continues to generate value for the company with growing royalties and supportive data from our partners in their key programs. In 2017, key events include the potential approval of rituximab SC in the U.S. and advances in the daratumumab SC development program. In addition, it is my goal to sign a new ENHANZE collaboration and licensing agreement. These events also create our next inflection point in ENHANZE growth. At levels, we remain confident that the investments we are making in both pillars will generate near and long-term value for our shareholders and partners. And I’d like to close by expressing my gratitude and appreciation for our talented Halozyme team for their continued hard work to advance our programs and in support of our partners and patients. We are now ready to take your questions. Operator, please would you open the call?

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

Hi, Helen and team, congrats on a great quarter of progress and thanks for taking my questions. Just two quick questions on PEGPH20, first of all kind of looking backwards at the Stage 2, Phase 2 data. I’m wondering if you would characterize any impact on patient interest and/or investigator interest any feedback from investigators on that data and then one would you anticipate being able to present that, could that be at the upcoming ASCO meeting?

Thanks Charles and thanks for the feedback of the quarter. Athena, do you want to address Charles’s question?

Yes, hi, Charles. Thank you for the question. As Helen mentioned in her prepared remarks, we’ve seen a continued increase interest in regards to not only the screening that we are seeing in the Phase 3 that also just in active dialogue with a very positive ASCO GI meeting, we had an advisory board meeting, specifically just to talk about our new study with Tecentriq but also again just continued interest in the Stage 2 data, what we have said is that we do plan on updating the 202 data in terms of providing additional information at a medical form in terms – in 2017 and as you can appreciate we’ve just committed our abstract pillar this month at ASCO.

Sure. And then my last question or other question regarding PEGPH20 in the pancreatic cancer program. I’m wondering if you could provide us any color on kind of this screen failure rate in terms of HA high percentage and if the protocol for establishing HA high is fairly well established, do you see any risk of operator across geographies. And then finally is there any chance that you'll give us the number of events that would trigger PSS interim or at least a percentage expected.

Hi, Charles, well, obviously its our practice whereby detailed statistical assumption. So we will be providing the number of PSS events that we would trigger the interim analysis. But I will ask Athena to comment on the screen failure rate and also our approach to measuring HA high which I think you'll hear the approach that limits the possibility of enter observer?

Hi, Charles, so in regards to what we've known from the randomized Phase 2 data in pancreatic cancer we've shown a prevalence of approximately 35% to 40% of patients are HA high and that's consistent with what we are seeing in the Phase 3 study, we are seeing a screen failure rate of approximately 60% based on HA level. As Helen mentioned remember as you establish the companion diagnostic and as we have with our partner Ventana, we had to go through quite a bit of additional steps to have IDE approval for the diagnostic specifically inter-rater and intra-rater variability which passed with a very high precision rate. And so we have not seen any changes in regards to geography, we now as Helen mentioned have all 22 countries with approval of the protocol and many countries are obviously submitting biopsies to Ventana for evaluation. Just to ask the screen failure point that I made that the number I gave in terms of 60% to 65% predominantly due to HA and then obviously you lose a few patients due to other inclusion and exclusion criteria.

Okay, thanks for the added color.

Thanks Charles. Next question, please?

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

Hi, thanks for taking my questions and let me add my congrats on the progress as well.

Thanks Andrew.

Question on the Tecentriq combinations, kind of going back to the initial press release it seemed like you described the ability to go from Phase 1b studies to scale to registration studies. I guess I wanted to understand a bit more exactly kind of what striving that confidence is it because the studies are targeting a specific sub-population and how should we think about those specific comments as it relates to the ongoing pembro study.

All right, Athena is working closely with the Roche team, so I will ask her to comment on that.

Hi, Andrew, in regards to the collaboration with Genentech, as Helen mentioned there are two studies that we will be doing in the collaboration, the first is our own study in both gallbladder and biliary tract tumors where we’ll be testing all patients for HA upfront prospectively. And then Genentech most recently and Roche in last Investor presentation, they had a very nice slide that showed the design of their unique in immuno-oncology study called MORPHEUS, which really is a platform study. I think they showed nicely, how they will have multiple arms within an umbrella study that potentially could progress right from Phase 1 into a Phase 3. And so I would guide you towards their presentation because from what I remember it was very well outlined in one slide.

I guess maybe the questions more, is that a possibility then as you think about your own study with KEYTRUDA?

I think it's always an option to try to advance, as fast as possible when you have a strong signal and then as you've seen that pembrolizumab have initially got approval on the Phase 1 study in lung cancer. So I think we've learned a lot from Genentech already and how we've also designed our study and that's one of the key points, I think we will update later this year is more details in regards to both of those study designs.

Okay. Thanks and then just quickly you mentioned that it seems like in enrollment in the 301 study may have been positively impacted by the 202 data. That means the enrollments ahead of kind of your initial assumptions on timelines when you first design the study or had you kind of taken into consideration the possibility that – on post data. I just want to get a sense of kind of how enrollments going in, how you think about kind of timelines relative to your initial assumptions?

Thanks Andrew. I will take that one. With regard to enrollment, we are very much tracking in line with how we expected it to happen. And what I mentioned was that we have seen an uptick in screening in the beginning of this year and a number of factors I think are obviously impacting that including the positive data. But we've also been through out 2016 adding countries and centers and we did have a number of centers come on board just in the fourth quarter. So we're very much tracking to our original timeline and expectations with regard to enrollment and do we expect to see as I mentioned in my prepared remarks, as making very strong progress towards our enrollment goals in 2017. But it's still premature to give an update as I mentioned, we're still adding centers as of the fourth quarter.

Okay. Thank you.

Thank you. Our next question will be from Jason Butler with JMP Securities.

Hi, this is Harry on for Jason. Congrats on the progress.

Thanks, Harry.

Just have two questions. One on the PEGPH20 driven process, can you talk a bit about the other clinical trials that are enrolling that patients and the landscape there?

All right. Harry, just to say are there competing pancreatic cancer study to our HALO-301.

Right, exactly.

Okay. Thank you. Athena, do you want to address that?

Yes, sure. Hi, Harry. If you looked at clinical trial stock, I think what you would see in regards to offline metastatic patient physically in the stage in Phase 3 there really is only one, that's just recently started enrolling in the United States. We are also aware of the ongoing Phase 2/3 pancreatic study with ibrutinib that both of those studies would be slightly different and that they're not using a biomarker driven asset, they are clearly not using a companion diagnostic and so we do believe that we still are unique trial and much of our conversations our investigators are always try to screen patients for our study first. And then if they are not eligible for the study based on being HALO then to potentially offer one of the other two. I mean obviously additionally, there are also other earlier Phase 1 studies as well.

Okay. Great, thanks. And on daratumumab progress what sort of I guess considerations are being made you think regarding the trial design for the upcoming Phase3?

Harry. This is one of these areas obviously where Janssen has not provided any details updates on that, so we are not in a position to add any color other than to say we certainly were excited to see the Phase 1 data that was prevented at ASH that does suggest that there is a dose that the company is considering taking into their Phase 3 study. But no additional details are available at this point in time.

Okay. Understood. And then final question just on the PEGPH20 collaboration programs, are there any chance you could sorry, if I missed this earlier provide any color on the time for data from the KEYTRUDA and Halaven studies?

Let me ask Anthena to comment.

Hi, Harry. So we are furthest along in our study with pembrolizumab, as Helen mentioned in both relapsed non-small cell lung cancer and gastric cancer patients, we moved into the dose expansion phase toward the end of last year. So we are still early in terms of enrollment. I think the based on where we are at enrollment, data generation really will depend – be dependent on when we achieve significant number of patients enrolled as well as substantial follow up. The Eisai collaboration remains in the dose escalation phase. So we've yet to determine an NCD. So it is premature to speculate where that data will be shown.

Great. Thank you very much.

Thanks, Athena.

Next question, please

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

Hi, thanks for taking the question. First question is on the biomarker task that's needed for the Phase 3 study, with a three to five day delay in getting those results back. Could you give any feedback from the sites and how the three to five day way effects the interest in involvement in your stud?

Yes, Let Athena address that.

Hi Joel. I have actually wouldn't characterize it as a delay as much as it's one of the many screening tests that have to be performed for a patient enrol into a clinical trial. So remember patients undergo CT scans as well as laboratory evaluations. So the biopsy is sent during a window that typically between 21 and 28 days. I think from what we heard initially from investigators up to five days was very tolerable and this is obviously a global trial. We haven't heard necessarily negative feedback or in any way that it is a delay. Again it is just part of many one of the many screening procedures that done for the eligibility being confirmed.

Okay. Thank you. that’s helpful. And one other question, the royalties your referred, could you provide a sense of the breakout and how they compare between different products?

Let me ask Laurie just to address that. But I will say we don't break down our royalty basically at the request of our partners, but we can maybe discuss some general color.

Yes. That's a great question and we typically don't break that down. But to reiterate we did see royalties grow 65% year-over-year. We do anticipate strong growth in 2017 as well and it's been reflected in our guidance.

Okay. Great. Thank you.

Thank you. Our next question will be from with Douglas Tsao with Barclays.

Hi, thanks for taking my questions. It’s [indiscernible] on for Doug Tsao. I just want to follow maybe a little bit of color on the new partnership with Genentech regarding to Tecentriq, whose mainly funding the trial to get any color on that, maybe on what specific type of tumor type and – are there any of these new indications for Tecentriq and maybe timeline?

Yes. Maybe Athena, you can just walk through just how it’s structured and the initial areas of focus.

Sure. So the initial focus is that we will run one study using Tecentriq with PEGPH20 and chemotherapy in the first line non-previously treated gallbladder cancer as well as biliary tract cancers. This is a small Phase 1b study where Genentech will be providing drugs to us and the cost of the trial will be at our expense. In contrast to Genentech study, as I mentioned previously, is part of a much larger umbrella study, where they'll be using PEGPH20 with a specific focus initially in gastrointestinal malignancies, predominately pancreatic cancer and gastric cancer initially, but they have the option to go up to six tumor types total. And I think in regards to where Tecentriq is currently approved yet, these are obviously areas where they do not currently have an approved label.

Great, thank you very much. And I just have one more follow-up on the facility that recently built there that Genentech is partially funding. Can you give any details on what other products that will be able to be manufactured there as you're going to support anything else in the business? Any additional color, that would be great.

Yes. Let me ask Laurie to just give a bit color on that.

Yes. So just to clarify it is a new facility at one of our contract manufacturers. It is dedicated to Roche AG material. So won't be shared, but it is flexible manufacturing, so our contract manufacturers will be managing that line. And it was just about $20 million in expenses that were reimbursed fully by Roche in 2016.

Thanks very much. Thanks for taking my question.

Our next question will be from Jessica Fye with JPMorgan.

Hi guys, this is Ryan on for Jessica. Thanks for taking our question. Helen, I know you've been talking about trying to sign a new enhanced collaboration during the year, but maybe for existing partnerships that you have, it sounds like there's a lot of products in that pipeline. So is there any color you can kind of give us on targets that may be coming that we could see in the near future?

Yes. Thanks, Ryan. Well, as I mentioned in the prepared remarks, that we do have some four targets have been selected by our current partners, where we're working with them, but they have not declared those targets yet. And as we're working on them, we’re obviously working to make progress towards identifying the path to get those to the clinic. So those are always our potential that sometime in 2017 you may hear something from our partners about one of those products. In addition, now our partners have targets available for them to select that they have not selected yet, and our team continue to work with them to identify if anything in their portfolio, it may benefits from PEGPH20 and again that is something we would obviously provide an update on Eisai and if and do elected to do that. And so with our current partners you're absolutely right, there are several ways where we can expect them to be able to select and make progress of new products towards and into the clinic.

Great. Thank you.

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

Hi, thanks for taking the question. This is Yanan Zhu on for Jim. First question is looking ahead for the Herceptin SC in the U.S. Would you expect a similar pattern for adoption in the U.S. compared with MabThera in EU? And along that line, what is the highest percentage for market penetration in EU in the select EU market?

Yes, thanks for question. So we've obviously been very pleased with the reaction to Herceptin SC in the ex-U.S. markets. And if we step back and ask why that is, it really relates to two things. I think the first thing is the added convenience for patients and caregivers to have the shorter duration of infusion is obviously benefit and with that come healthcare system cost saving. I think both of those will be factors that will be important in the U.S. adoption and I do expect strong adoption in the United States as well. Recently Roche has not provided a detail update as to by country what the highest market penetration is, but what we said in our prepared remarks, is that a overall SC represents over 30% all of the sales volume suggesting it is a very nice volume and certainly in some market is above 70% to get to that average. But we don't have any additional details we can share as Roche hasn't provided that publicly.

Got it. The last question from is us that is going to for the gallbladder study, the Tecentriq combination. I'm just curious, down the line do you anticipate a comparative study with against Tecentriq low arm to kind of satisfy the combination rule by the agency.

Athena will address that.

Yes. What I can say is that, we are continuing to work with Genentech very closely, on the design we have joint development committees now in place. And again without getting too many details to the protocols, now been finalized CLO has been selected and we're sending it to the FDA for feedback. But this trial does have multiple arms, that we will give more information after we've received the FDA feedback on design later this year.

Great. Thank you for taking the questions.

Great. Operator, do we’ve any other questions?

I’m showing no further questions in the queue at this time. [Operator Instructions]

All right. Well, if there are no further questions, I'd just like to thank everyone for joining us today. We look forward to speaking with you at our next call and providing an update then. Have a great evening. Thank you.

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