In a merger between two subcutaneous drug delivery companies, Halozyme Therapeutics is paying $750 million in cash to acquire Elektrofi.
The deal will give Halozyme technology capable of turning drug substances into microparticles to enable under-the-skin injections at high concentrations. Called Hypercon, the Elektrofi technology has attracted the likes of argenx, Eli Lilly and Johnson & Johnson.
Aside from the $750 million upfront payment, the deal also includes milestone payments of $50 million each, contingent upon three separate product approvals.
“This acquisition marks a pivotal step in Halozyme’s evolution,” Halozyme CEO Helen Torley said in an Oct. 1 statement. “With Elektrofi’s Hypercon technology, we are expanding and diversifying our drug delivery technology offerings to the biopharma industry and positioning Halozyme for continued long-term revenue growth through Elektrofi’s licensing, royalty revenue business model.”
Biologic drugs are often limited by low concentrations, requiring large volumes to deliver effective doses, Torley said during an investor call on Wednesday. With Elektrofi’s technology, concentrations of 400 mg/mL to 500 mg/mL, or four to five times higher than standard industry options, can be achieved. This “can make all the difference to enabling more drugs to be able to be delivered in a small volume at home,” she said.
Halozyme has been touting the rationale for a strategic M&A deal in the past year or so, and “there could not be a better fit” than Elektrofi, Torley said.
Hypercon appears to be highly complementary to Halozyme’s own Enhanze subcutaneous drug delivery technology, which has been utilized in 10 approved products. While Enhanze is a great fit for high-volume products that can be given in a physician’s office or in some cases, in a patient’s home, Hypercon enables drugs to be given in lower volumes and opens up more products to be delivered in homes, Torley said.
Growing the number of products that are able to be delivered subcutaneously means more potential partnerships and hence revenues, the Halozyme chief said. Hypercon brings a suite of patents lasting into the 2040s, supporting long-term revenue growth, she noted.
By year-end 2026, Halozyme expects that two of Elektrofi’s partner products will have entered the clinic, with potential royalties flowing in as early as 2030. The development and commercial milestone payments to Elektrofi linked to those two products could be worth $275 million, according to Torley.
Citing confidentiality agreements, Torley declined to offer more details on the two products other than that they’re both de-risked mechanisms of actions being utilized in existing blockbusters.
As for Elektrofi, Halozyme’s knowledge on regulatory approvals for drug delivery technology—and its insights on development and manufacturing requirements—could help accelerate the acquired company's advancement in the future, Torley added.
In what Torley described as another “attractive avenue for commercialization,” Halozyme sees an opportunity to pair Hypercon with its own small-volume autoinjectors, especially in immunology, neurology and other chronic diseases, “where at-home administration is the future of care.”
The two companies also have the same business model, relying on licensing milestones and royalty payments without much need for large capital investments in manufacturing infrastructure, clinical development and commercialization.
“This capital-efficient approach will allow us to continue to concentrate resources on innovation and on partner success,” Torley said.
The two companies’ boards have unanimously approved the transaction, which is expected to close by the end of this year following antitrust reviews. As Torley said on the call, the entire Elektrofi team will join Halozyme post-closing.
Although the deal marks the combination of two subcutaneous drug delivery companies, Torley said Halozyme is “confident that this transaction will clear any regulatory review.”