##### Table of Contents





UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number:
    001-32335
 Halozyme Therapeutics,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or other jurisdiction
    of
    incorporation or organization)

88-0488686(I.R.S. Employer
    Identification No.)11388 Sorrento Valley Road,
    San Diego, California(Address of principal
    executive offices)

92121(Zip
    Code)   (858)
    794-8889
 (Registrants telephone
    number, including area code)
  Securities registered under Section 12(b) of the Act:
    None
  Securities registered under Section 12(g) of the Act:
    Common Stock, Par Value $.001 (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  ,  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





Table of
    Contents
   
 PagePART IItem 1.


Business


1Item 1A.


Risk Factors


11Item 1B.


Unresolved Staff Comments


21Item 2.


Properties


21Item 3.


Legal Proceedings


21Item 4.


Submission of Matters to a Vote of Security
    Holders


21PART IIItem 5.


Market For Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


22Item 6.


Selected Financial Data


24Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


24Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


34Item 8.


Financial Statements and Supplementary Data


35Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


35Item 9A.


Controls and Procedures


35Item 9B.


Other Information


38PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


38Item 11.


Executive Compensation


39Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


40Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


40Item 14.


Principal Accounting Fees and Services


40PART IVItem 15.


Exhibits and Financial Statement Schedules


41SIGNATURES


44EX-23.1EX-31.1EX-31.2EX-32




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##### Table of Contents



PART I  Item 1.
    Business  This Annual Report on
    Form 10-K
    contains forward-looking statements regarding our business,
    financial condition, results of operations and prospects. Words
    such as expects, anticipates,
    intends, plans, believes,
    seeks, estimates, thinks,
    may, could, will,
    would, should, continue,
    potential, likely,
    opportunity and similar expressions or variations of
    such words are intended to identify forward-looking statements,
    but are not the exclusive means of identifying forward-looking
    statements in this Annual Report. Additionally, statements
    concerning future matters such as the development or regulatory
    approval of new products, enhancements of existing products or
    technologies, third party performance under key collaboration
    agreements, revenue and expense levels and other statements
    regarding matters that are not historical are forward-looking
    statements.
  Although forward-looking statements in this Annual Report
    reflect the good faith judgment of our management, such
    statements can only be based on facts and factors currently
    known by us. Consequently, forward-looking statements are
    inherently subject to risks and uncertainties and actual results
    and outcomes may differ materially from the results and outcomes
    discussed in or anticipated by the forward-looking statements.
    Factors that could cause or contribute to such differences in
    results and outcomes include without limitation those discussed
    under the heading Risk Factors below, as well as
    those discussed elsewhere in this Annual Report. Readers are
    urged not to place undue reliance on these forward-looking
    statements, which speak only as of the date of this Annual
    Report. We undertake no obligation to revise or update any
    forward-looking statements in order to reflect any event or
    circumstance that may arise after the date of this Annual
    Report. Readers are urged to carefully review and consider the
    various disclosures made in this Annual Report, which attempt to
    advise interested parties of the risks and factors that may
    affect our business, financial condition, results of operations
    and prospects.
  Overview
    tm tm ® in vitro
     1




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(858) 794-8889 e-mail
  Technology
    Strategy
      
    Develop our own proprietary products based on our PH20 enzyme
    and other new molecular entities;
    Seek partnerships for our Enhanze Technology drug delivery
    platform;
    Support product development and commercialization under our
    Roche Enhanze Technology collaboration;
    Support product development and commercialization under our
    Baxter Bioscience Enhanze Technology collaboration; and
    Support Baxters commercialization of HYLENEX. 2




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Products
    and Product Candidates
    
  Insulin-PH20
    ® ®
 3




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
    Significantly faster systemic absorption of each insulin,
    starting with the first observation time point of three minutes
    after injection
    Significantly faster and greater glucose lowering activity early
    after injection
    Significantly greater peak insulin levels for the same dose
    administered
    Significantly lower variability of key pharmacokinetic and
    glucodynamic variables across subjects
    rHuPH20 in combination with Humulin demonstrated statistically
    significant improvement across all parameters when compared to
    Humalog alone  Bisphosphonate-PH20
  and/or
    
    In rodent intradermal models, injection of bisphosphonates
    without rHuPH20 created injection site reactions characterized
    by erythema, induration and ulceration in a concentration
    dependent manner.
    In rodent intradermal models, the maximal concentration of
    bisphosphonates that could be administered without producing
    injection site reactions was increased 3- to 5-fold when
    co-administered in combination with rHuPH20.
    In porcine pharmacokinetic models, absolute bioavailability by
    subcutaneous injection with rHuPH20 was comparable to IV
    infusion. 4




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PEGPH20
      in vitro in vivo 3 30-40
    
    Prostate carcinoma cells assembled large pericellular coats
    in vitrothat collapsed in the presence of rHuPH20.
    Similar pericellular matrices containing HA were also assembled
    in vivofollowing inoculation of tumors around the bone
    in mice.
    PEGPH20 significantly reduced tumor IFP in a dose dependent
    fashion, achieving more than 85% reduction in IFP
    following IV administration. Peritumoral HA remained
    depleted over three days after a single dose of enzyme.
    Consistent with the histologic collapse of pericellular HA
    surrounding the tumor cells, tumor water content significantly
    decreased over three days, consistent with changes detected in
    the tumor by MRI and IFP monitoring.  post-dosing
    Chemophase
   5




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Enhanze
    Technology
      Roche
    Partnership
  scale-up
   6




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Baxter
    Gammagard Partnership
    HYLENEX
    Partnership
    Cumulase
  ex vivo
  Patents
    and Proprietary Rights
     7




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Research
    and Development Activities
      Manufacturing
    Sales and
    Marketing
  HYLENEX
   8




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Cumulase
    Competition
  HYLENEX
  ® tm tm
  Cumulase
    Government
    Regulations
    
    Animal pharmacology studies to obtain preliminary information on
    the safety and efficacy of a drug;
    Laboratory and preclinical evaluation in vitroand
    in vivoincluding extensive toxicology studies.   9




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
    Phase I investigations are generally conducted in healthy
    subjects. In certain instances, subjects with a
    life-threatening
    disease, such as cancer, may participate in Phase I studies that
    determine the maximum tolerated dose and initial safety of the
    product;
    Phase II studies are conducted in limited numbers of
    subjects with the disease or condition to be treated and are
    aimed at determining the most effective dose and schedule of
    administration, evaluating both safety and whether the product
    demonstrates therapeutic effectiveness against the
    disease; and
    Phase III studies involve large, well-controlled
    investigations in diseased subjects and are aimed at verifying
    the safety and effectiveness of the drug.  and/or
        Product
    Liability Insurance
    Executive
    Officers of the Registrant
  Part III-Item 10.
 10




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Employees
    Item 1A.
    Risk
    Factors  Risks
    Related To Our Business
  We
    have generated only minimal revenue from product sales to date;
    we have a history of net losses and negative cash flow, and we
    may never achieve or maintain profitability.
  and/or
  If any
    party to a key collaboration agreement, including us, fails to
    perform material obligations under such agreement, or if a key
    collaboration agreement is terminated for any reason, our
    business would significantly suffer.
    If our
    contract manufacturers are unable to manufacture significant
    amounts of the active pharmaceutical ingredient used in our
    products and product candidates, our product development and
    commercialization efforts could be delayed or stopped and our
    collaborative partnerships could be damaged.
  and/or
 11




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If we
    are unable to sufficiently develop our sales, marketing and
    distribution capabilities or enter into successful agreements
    with third parties to perform these functions, we will not be
    able to fully commercialize our products.
        If we
    have problems with third parties that prepare, fill, finish and
    package our products and product candidates for distribution,
    our product commercialization and development efforts for these
    products and product candidates could be delayed or
    stopped.
   12




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If our
    proprietary and partnered product candidates do not receive and
    maintain regulatory approvals, they will not be commercialized,
    and this failure would substantially impair our ability to
    generate revenues.
      Our
    proprietary and partnered product candidates may not receive
    regulatory approvals for a variety of reasons, including
    unsuccessful clinical trials.
    
    FDA review may not find a product candidate safe or effective
    enough to merit either continued testing or final approval;
    FDA review may not find that the data from preclinical testing
    and clinical trials justifies approval, or they may require
    additional studies that would make it commercially unattractive
    to continue pursuit of approval;
    the FDA may reject our trial data or disagree with our
    interpretations of either clinical trial data or applicable
    regulations;
    the cost of a clinical trial may be greater than what we
    originally anticipate, and we may decide to not pursue FDA
    approval for such a trial;
    the FDA may not approve our manufacturing processes or
    facilities, or the processes or facilities of our contract
    manufacturers or raw material suppliers;
    the FDA may change its formal or informal approval requirements
    and policies, act contrary to previous guidance, or adopt new
    regulations; or
    the FDA may approve a product candidate for indications that are
    narrow or under conditions that place the product at a
    competitive disadvantage, which may limit our sales and
    marketing activities or otherwise adversely impact the
    commercial potential of a product.  and/or
   13




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If we
    or our partners fail to comply with regulatory requirements,
    regulatory agencies may take action against us or them, which
    could significantly harm our business.
        
    restrictions on our products or manufacturing processes;
    warning letters;
    withdrawal of the products from the market;
    voluntary or mandatory recall;
    fines;
    suspension or withdrawal of regulatory approvals;
    suspension or termination of any of our ongoing clinical trials;
    refusal to permit the import or export of our products;
    refusal to approve pending applications or supplements to
    approved applications that we submit;
    product seizure; or
    injunctions or the imposition of civil or criminal penalties.  Future
    acquisitions could disrupt our business and harm our financial
    condition.
   14




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
    we may have to issue convertible debt or equity securities to
    complete an acquisition, which would dilute our stockholders and
    could adversely affect the market price of our common stock;
    an acquisition may negatively impact our results of operations
    because it may require us to amortize or write down amounts
    related to goodwill and other intangible assets, or incur or
    assume substantial debt or liabilities, or it may cause adverse
    tax consequences, substantial depreciation or deferred
    compensation charges;
    we may encounter difficulties in assimilating and integrating
    the business, products, technologies, personnel or operations of
    companies that we acquire;
    certain acquisitions may impact our relationship with existing
    or potential partners who are competitive with the acquired
    business, products or technologies;
    acquisitions may require significant capital infusions and the
    acquired businesses, products or technologies may not generate
    sufficient value to justify acquisition costs;
    an acquisition may disrupt our ongoing business, divert
    resources, increase our expenses and distract our management;
    acquisitions may involve the entry into a geographic or business
    market in which we have little or no prior experience; and
    key personnel of an acquired company may decide not to work for
    us.    We may
    wish to raise funds in the next twelve months, and there can be
    no assurance that such funds will be available.
  and/or
    If
    proprietary or partnered product candidates are approved by the
    FDA but do not gain market acceptance, our business may suffer
    and we may not be able to fund future operations.
    
    the price of products relative to other therapies for the same
    or similar treatments; 15




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
    the perception by patients, physicians and other members of the
    health care community of the effectiveness and safety of these
    products for their prescribed treatments;
    our ability to fund our sales and marketing efforts and the
    ability and willingness of our partners to fund sales and
    marketing efforts;
    the degree to which the use of these products is restricted by
    the product label approved by the FDA;
    the effectiveness of our sales and marketing efforts and the
    effectiveness of the sales and marketing efforts of our
    partners; and
    the introduction of generic competitors.  and/or
    Developing
    and marketing pharmaceutical products for human use involves
    product liability risks, for which we currently have limited
    insurance coverage.
    Our
    inability to attract, hire and retain key management and
    scientific personnel could negatively affect our
    business.
       16




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If we
    or our partners do not achieve projected development goals in
    the timeframes we publicly announce or otherwise expect, the
    commercialization of our products and the development of our
    product candidates may be delayed and, as a result, our stock
    price may decline.
    Risks
    Related To Ownership of Our Common Stock
  Future
    sales of shares of our common stock upon the exercise of
    currently outstanding securities or pursuant to our universal
    shelf registration statement may negatively affect our stock
    price.
      Our
    stock price is subject to significant volatility.
  Form 10-K
  
    our failure, or the failure of one of our third party partners,
    to comply with the terms of our collaboration agreements;
    the termination, for any reason, of any of our collaboration
    agreements;
    the sale of common stock by any significant stockholder,
    including, but not limited to, direct or indirect sales by
    members of management or our Board of Directors;
    general negative conditions in the healthcare industry;
    general negative conditions in the financial markets;
    the failure, for any reason, to obtain FDA approval for any of
    our proprietary or partnered product candidates;
    the failure, for any reason, to secure or defend our
    intellectual property position;
    for those products that are approved by the FDA, the failure of
    the FDA to approve such products in a timely manner consistent
    with the FDAs historical approval process;
    the suspension of any clinical trial due to safety or patient
    tolerability issues;
    the suspension of any clinical trial due to market
    and/or
    competitive conditions; 17




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
    our failure, or the failure of our third party partners, to
    successfully commercialize products approved by the FDA;
    our failure, or the failure of our third party partners, to
    generate product revenues anticipated by investors;
    problems with an API contract manufacturer or a fill and finish
    manufacturer for any product or product candidate;
    the sale of additional debt
    and/or
    equity securities by us; and
    the departure of key personnel.  Trading
    in our stock has historically been limited, so investors may not
    be able to sell as much stock as they want to at prevailing
    market prices.
    The
    exercise of outstanding warrants may drive down the market price
    of our stock.
    Risks
    Related To Our Industry
  Compliance
    with the extensive government regulations to which we are
    subject is expensive and time consuming and may result in the
    delay or cancellation of product sales, introductions or
    modifications.
  and/or
  direct-to-consumer
   18




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We may
    be required to initiate or defend against legal proceedings
    related to intellectual property rights, which may result in
    substantial expense, delay and/or cessation of the development
    and commercialization of our products.
    
    our patents and pending patent applications cover products
    and/or
    technology that we invented first;
    we were the first to file patent applications for these
    inventions;
    others will not independently develop similar or alternative
    technologies or duplicate our technologies;
    any of our pending patent applications will result in issued
    patents; and
    any of our issued patents, or patent pending applications that
    result in issued patents, will be held valid and infringed in
    the event the patents are asserted against others.        Patent
    protection for protein-based therapeutic products and other
    biotechnology inventions is subject to a great deal of
    uncertainty, and if patent laws or the interpretation of patent
    laws change, our competitors may be able to develop and
    commercialize products based on our discoveries.
   19




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If
    third party reimbursement and customer contracts are not
    available, our products may not be accepted in the
    market.
        The
    rising cost of healthcare and related pharmaceutical product
    pricing has led to cost containment pressures that could cause
    us to sell our products at lower prices, resulting in less
    revenue to us.
  and/or
 20




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We
    face intense competition and rapid technological change that
    could result in the development of products by others that are
    superior to our proprietary and partnered products under
    development.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   21




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    2008


2007High


Low


High


LowFirst Quarter

$
7.25


$
4.19


$
9.70


$
6.75Second Quarter

$
6.62


$
4.75


$
11.00


$
8.00Third Quarter

$
8.26


$
5.35


$
10.50


$
7.49Fourth Quarter

$
7.29


$
2.60


$
9.46


$
6.00    22




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Stock
    Performance Graph and Cumulative Total Return
  Notwithstanding any statement to the contrary in any of our
    previous or future filings with the SEC, the following
    information relating to the price performance of our common
    stock shall not be deemed to be filed with the SEC
    or to be soliciting material under the Securities
    Exchange Act of 1934, as amended, or the Exchange Act, and it
    shall not be deemed to be incorporated by reference into any of
    our filings under the Securities Act or the Exchange Act, except
    to the extent we specifically incorporate it by reference into
    such filing.
  57-month
  COMPARISON
    OF 57 MONTH CUMULATIVE TOTAL RETURN*
    
  *
    $100 invested on March 12, 2004 in stock or on
    February 29, 2004 in index-including reinvestment of
    dividends.
    Fiscal year ending December 31.  3/04


12/04


12/05


12/06


12/07


12/08Halozyme Therapeutics, Inc.


$
100.00



$
53.01



$
43.86



$
193.98



$
171.33



$
134.94NASDAQ Composite


$
100.00



$
107.97



$
110.72



$
124.09



$
135.48



$
78.93NASDAQ Biotechnology


$
100.00



$
103.56



$
120.50



$
120.06



$
122.08



$
112.72   Recent
    Sales of Unregistered Securities
   23




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Item 6.
    Selected
    Financial Data    Summary
    Financial Information
  Years Ended December 31,Statement of Operations Data:

2008


2007


2006


2005


2004Total revenues

$
8,764,139


$
3,799,521


$
981,746


$
127,209


$
Net loss


(48,654,199
)


(23,896,183
)


(14,751,986
)


(13,275,373
)


(9,091,376
)Net loss per share, basic and diluted

$
(0.61
)

$
(0.32
)

$
(0.24
)

$
(0.26
)

$
(0.26
)Shares used in computing net loss per share, basic and diluted


79,843,707



74,317,930



62,610,265



50,317,021



35,411,127   As of December 31,Balance Sheet Data:

2008


2007


2006


2005


2004Cash and cash equivalents

$
63,715,906


$
97,679,085


$
44,189,403


$
19,132,194


$
16,007,714Working capital


59,794,370



92,312,937



41,343,010



17,802,804



14,566,209Total assets


76,562,713



103,460,374



46,091,320



20,510,255



16,403,671Deferred revenues


49,448,456



39,269,491



19,981,537



254,138



Total liabilities


61,182,717



45,692,450



23,010,085



2,303,368



1,579,413Stockholders equity


15,379,996



57,767,924



23,081,235



18,206,887



14,824,258   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation  In addition to historical information, the following
    discussion contains forward-looking statements that are subject
    to risks and uncertainties. Actual results may differ
    substantially from those referred to herein due to a number of
    factors, including but not limited to risks described in the
    Part I, Item 1A Risks Factors and
    elsewhere in this Annual Report.
  Overview
   24




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tm tm ® in vitro
      Collaborative
    Partnerships
  Roche
    Partnership
  scale-up
    Baxter
    Gammagard Partnership
   25




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HYLENEX
    Partnership
    Revenues
        Costs
    and Expenses
  Cost of Sales.
  Research and Development.
   26




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Selling, General and Administrative.
  Critical
    Accounting Policies and Estimates
    Revenue
    Recognition
  and/or
  Revenue Recognition, No. 00-21, Revenue Arrangements with Multiple Deliverables
  Product
    Sales
   27




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Revenues
    under Collaborative Agreements
    Share-Based
    Payments
  Share-Based Payment
   28




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Research
    and Development Expenses
      time-and-material and/or
  Inventory
   29




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Fair
    Value Measurements
  Fair Value Measurements No. FAS 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset is Not Active No. FAS 157-3 No. FAS 157-3
    Level 1

Quoted prices (unadjusted) in active markets for identical
    assets or liabilities;Level 2

Inputs other than quoted prices included within Level 1
    that are either directly or indirectly observable; andLevel 3

Unobservable inputs in which little or no market activity
    exists, therefore requiring an entity to develop its own
    assumptions about the assumptions that market participants would
    use in pricing.
     The Fair Value Option for Financial
    Assets and Financial Liabilities contract-by-contract
    Results
    of Operations
  Comparison
    of Years Ended December 31, 2008 and 2007
  Revenues Under Collaborative
    Agreements
  Product Sales
 30




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Cost of Sales
  Research and Development scale-up
  Selling, General and Administrative
  Share-Based Compensation
  Interest Income
  Net Loss
  Comparison
    of Years Ended December 31, 2007 and 2006
  Revenues Under Collaborative
    Agreements
  Product Sales
 31




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Cost of Sales
  Research and Development scale-up
  Selling, General and Administrative
  Share-Based Compensation
  Interest Income
  Net Loss
  Liquidity
    and Capital Resources
     32




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and/or
  Form S-3 No. 333-155787)
  Operating
    Activities
      Investing
    Activities
      Financing
    Activities
      Off-Balance Sheet Arrangements
 33




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Contractual Obligations
  Payments Due by PeriodLess than








More thanContractual Obligations:

Total


1 Year


1-3 Years


4-5 Years


5 YearsOperating leases

$
9,945,275


$
2,350,130


$
4,936,207


$
2,658,938


$
License payments


2,435,000



480,000



610,000



610,000



735,000Purchase obligations(1)


15,352,737



15,352,737











Total

$
27,733,012


$
18,182,867


$
5,546,207


$
3,268,938


$
735,000     (1)
    
    Purchase obligations include outstanding purchase orders for
    outsourced research and development services for our various
    preclinical and clinical programs, for the manufacturing of our
    products for clinical and commercial use and other recurring
    purchases and services made in the normal course of business.      
    the rate of progress and cost of research and development
    activities;
    the number and scope of our research activities;
    the costs of filing, prosecuting, defending and enforcing any
    patent claims and other intellectual property rights;
    our ability to establish and maintain product discovery and
    development collaborations;
    the effect of competing technological and market developments;
    the terms and timing of any collaborative, licensing and other
    arrangements that we may establish; and
    the extent to which we acquire or in-license new products,
    technologies or businesses.  Recent
    Accounting Pronouncements
  Summary of Significant Accounting
    Policies  Pending Adoption of Recent Accounting
    Pronouncements
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk   34




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Item 8.
    Financial
    Statements and Supplementary Data  page F-1.
  Item 9.
    Changes
    In and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Rule 13a-15(e) Form 10-K.
  Changes
    in Internal Control Over Financial Reporting
    Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f) Rule 15d-15(f)
  
    Pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of our assets;
    Provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures are being made only in accordance
    with authorizations of our management and directors; and
    Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of our
    assets that could have a material effect on our financial
    statements. 35




---



##### Table of Contents



Form 10-K
 36




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                 
    37




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Executive
    Officers
  Jonathan E. Lim, M.D. (37), start-ups start-up; Editor-in-Chief
  Gregory I. Frost, Ph.D. (37),
  David A. Ramsay, MBA (44),
 38




---



##### Table of Contents



Robert L. Little (59), 200-person ® ®
  William J. Fallon (52),
  Item 11.
    Executive
    Compensation   39




---



##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   40




---



##### 



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  (a) Documents
    filed as part of this report.
    
 PageReport of Independent Registered Public
    Accounting Firm  Ernst & Young LLP


F-1Consolidated Balance Sheets at December 31,
    2008 and 2007


F-2Consolidated Statements of Operations for Each of
    the Years Ended December 31, 2008, 2007 and 2006


F-3Consolidated Statements of Cash Flows for Each of
    the Years Ended December 31, 2008, 2007 and 2006


F-4Consolidated Statements of Stockholders
    Equity for Each of the Years Ended December 31, 2008, 2007
    and 2006


F-5Notes to the Consolidated Financial Statements


F-6      Regulation S-K.
  (b) Exhibits:
  2
.1

Agreement and Plan of Merger, dated November 14, 2007, by
    and between the Registrant and the Registrants predecessor
    Nevada corporation(1)3
.1

Amended and Restated Certificate of Incorporation, as filed with
    the Delaware Secretary of State on October 7, 2007(2)3
.2

Certificate of Designation, Preferences and Rights of the terms
    of the Series A Preferred Stock(1)3
.3

Bylaws(2)4
.1

Amended Rights Agreement between Corporate Stock Transfer, as
    rights agent, and Registrant, dated November 12, 2007(20)10
.1

License Agreement between University of Connecticut and
    Registrant, dated November 15, 2002(3)10
.2

First Amendment to the License Agreement between University of
    Connecticut and Registrant, dated January 9, 2006(9)10
.3*

Commercial Supply Agreement with Avid Bioservices, Inc. and
    Registrant, dated February 16, 2005(7)10
.4*

First Amendment to the Commercial Supply Agreement between Avid
    Bioservices, Inc. and Registrant, dated December 15,
    2006(14)10
.5*

Clinical Supply Agreement between Cook Pharmica, LLC and
    Registrant, dated August 15, 2008(24)10
.6

Form of Common Stock Purchase Warrant(5)10
.7#

DeliaTroph Pharmaceuticals, Inc. 2001 Amended and Restated Stock
    Plan and form of Stock Option Agreements for options assumed
    thereunder(6)10
.8

Nonstatutory Stock Option Agreement With Andrew Kim(6)10
.9#

2004 Stock Plan and Form of Option Agreement thereunder(4)10
.10#

Halozyme Therapeutics, Inc. 2005 Outside Directors Stock
    Plan(8)10
.11#

Form of Stock Option Agreement (2005 Outside Directors
    Stock Plan)(12)10
.12#

Form of Restricted Stock Agreement (2005 Outside Directors
    Stock Plan)(12)10
.13#

Halozyme Therapeutics, Inc. 2006 Stock Plan(11)10
.14#

Form of Stock Option Agreement (2006 Stock Plan)(12)10
.15#

Form of Restricted Stock Agreement (2006 Stock Plan)(12)10
.16#

Halozyme Therapeutics, Inc. 2008 Stock Plan(21) 41




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##### Table of Contents



10
.17#

Halozyme Therapeutics, Inc. 2008 Outside Directors Stock
    Plan(21)10
.18#

Form of Indemnity Agreement for Directors and Executive
    Officers(19)10
.19#

Outside Director Compensation Plan(23)10
.20#

2007 Senior Executive Incentive Plan(23)10
.21#

2008 Senior Executive Incentive Structure(22)10
.22#

2009 Senior Executive Incentive Plan(25)10
.23#

Change in Control Policy(22)10
.24#

Severance Policy(23)10
.25*

Amended and Restated Exclusive Distribution Agreement between
    Baxter Healthcare Corporation, Baxter Healthcare S.A. and
    Registrant, dated February 14, 2007(15)10
.26*

Amended and Restated Development and Supply Agreement between
    Baxter Healthcare Corporation, Baxter Healthcare S.A. and
    Registrant, dated February 14, 2007(15)10
.27*

License and Collaboration Agreement between Baxter Healthcare
    Corporation, Baxter Healthcare S.A. and Registrant, dated
    February 14, 2007(15)10
.28*

Enhanze Technology License and Collaboration Agreement between
    Baxter Healthcare Corporation, Baxter Healthcare S.A. and
    Registrant, dated September 7, 2007(18)10
.29*

License and Collaboration Agreement between F.
    Hoffmann-La Roche Ltd, Hoffmann-La Roche Inc. and
    Registrant dated December 5, 2006(13)10
.30

Stock Purchase Agreement between New River Management V, LP
    and Registrant, dated April 23, 2007(16)10
.31

Sublease Agreement (11404 Sorrento Valley Road), effective as of
    July 2, 2007(17)10
.32

Sublease Agreement (11388 Sorrento Valley Road), effective as of
    July 2, 2007(17)10
.33

Standard Industrial Net Lease (11388 Sorrento Valley Road),
    effective as of July 26, 2007(17)21
.1

Subsidiaries of Registrant(10)23
.1

Consent of Independent Registered Public Accounting Firm31
.1

Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a)
    and 15d-14(a) of the Securities Exchange Act of 1934, as amended31
.2

Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)
    and 15d-14(a) of the Securities Exchange Act of 1934, as amended32


Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     (1)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed November 20, 2007.(2)
    
    Incorporated by reference to the Registrants definitive
    proxy statement filed with the SEC on Form DEF14A on
    October 11, 2007.(3)
    
    Incorporated by reference to the Registrants Registration
    Statement on
    Form SB-2
    filed with the Commission on April 23, 2004.(4)
    
    Incorporated by reference to the Registrants amendment
    number two to the Registration Statement on
    Form SB-2
    filed with the Commission on July 23, 2004.(5)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed October 15, 2004.(6)
    
    Incorporated by reference to the Registrants Registration
    Statement on
    Form S-8
    filed with the Commission on October 26, 2004.(7)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed February 22, 2005.(8)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed July 6, 2005.(9)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed January 12, 2006.(10)
    
    Incorporated by reference to the Registrants Annual Report
    on
    Form 10-KSB/A,
    filed March 29, 2005.(11)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed March 24, 2006. 42




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##### Table of Contents



(12)
    
    Incorporated by reference to the Registrants Quarterly
    Report on
    Form 10-Q,
    filed August 8, 2006.(13)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K/A,
    filed December 15, 2006.(14)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed December 21, 2006.(15)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K/A,
    filed February 20, 2007.(16)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed April 24, 2007.(17)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed July 31, 2007.(18)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed September 12, 2007.(19)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed December 20, 2007.(20)
    
    Incorporated by reference to the Registrants Annual Report
    on
    Form 10-K,
    filed March 14, 2008.(21)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed March 19, 2008.(22)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed April 21, 2008.(23)
    
    Incorporated by reference to the Registrants Quarterly
    Report on
    Form 10-Q,
    filed May 9, 2008.(24)
    
    Incorporated by reference to the Registrants Quarterly
    Report on
    Form 10-Q,
    filed November 7, 2008.(25)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed February 9, 2009.*
    
    Confidential treatment has been requested for certain portions
    of this exhibit. These portions have been omitted from this
    agreement and have been filed separately with the Securities and
    Exchange Commission.#
    
    Indicates management contract or compensatory plan or
    arrangement.   43




---



##### Table of Contents



SIGNATURES    
  By:
    /s/  Jonathan
    E. Lim, M.D.       POWER OF
    ATTORNEY
      Signature

Title

Date/s/  Jonathan
    E. Lim, M.D.Jonathan
    E. Lim, M.D.

President and Chief Executive Officer (Principal Executive
    Officer), Director

March 13, 2009/s/  David
    A. RamsayDavid
    A. Ramsay

Secretary and Chief Financial Officer (Principal Financial and
    Accounting Officer)

March 13, 2009/s/  Gregory
    I. Frost, Ph.D.Gregory
    I. Frost, Ph.D.

Vice President and Chief Scientific Officer, Director

March 13, 2009/s/  Kenneth
    J. KelleyKenneth
    J. Kelley

Chairman of the Board of Directors

March 13, 2009/s/  Kathryn
    E. FalbergKathryn
    E. Falberg

Director

March 13, 2009/s/  Randal
    J. KirkRandal
    J. Kirk

Director

March 13, 2009 44




---



##### Table of Contents



Signature

Title

Date/s/  Connie
    L. MatsuiConnie
    L. Matsui

Director

March 13, 2009/s/  John
    S. Patton, Ph.D.John
    S. Patton, Ph.D.

Director

March 13, 2009/s/  Steven
    T. ThorntonSteven
    T. Thornton

Director

March 13, 2009  45




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm             
    F-1




---



##### Table of Contents



HALOZYME
    THERAPEUTICS, INC.
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
63,715,906


$
97,679,085Accounts receivable


7,264,410



779,825Inventory


441,323



703,468Prepaid expenses and other assets


2,591,149



2,014,680Total current assets


74,012,788



101,177,058Property and equipment, net


2,549,925



2,283,316Total Assets

$
76,562,713


$
103,460,374LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
6,668,791


$
3,055,637Accrued expenses


3,995,897



2,502,259Deferred revenue


3,553,730



3,306,225Total current liabilities


14,218,418



8,864,121Deferred revenue, net of current portion


45,894,726



35,963,266Deferred rent, net of current portion


1,069,573



865,063Commitments and contingencies (Note 9)Stockholders equity:Preferred stock  $0.001 par value;
    20,000,000 shares authorized; no shares issued and
    outstanding






Common stock  $0.001 par value;
    150,000,000 shares authorized; 81,553,654 and
    77,903,944 shares issued and outstanding at
    December 31, 2008 and 2007, respectively


81,554



77,904Additional paid-in capital


128,948,064



122,685,443Accumulated deficit


(113,649,622
)


(64,995,423
)Total stockholders equity


15,379,996



57,767,924Total Liabilities and Stockholders Equity

$
76,562,713


$
103,460,374    F-2




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##### Table of Contents



HALOZYME
    THERAPEUTICS, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2008


2007


2006REVENUES:Revenues under collaboration agreements

$
8,052,202


$
3,159,931


$
311,121Product sales


711,937



639,590



670,625Total revenues


8,764,139



3,799,521



981,746OPERATING EXPENSES:Cost of product sales


332,324



240,429



436,990Research and development


44,232,936



20,554,105



9,214,759Selling, general and administrative


14,633,581



11,155,194



6,912,853Total operating expenses


59,198,841



31,949,728



16,564,602OPERATING LOSS


(50,434,702
)


(28,150,207
)


(15,582,856
)Interest income


1,717,503



4,254,024



830,870NET LOSS BEFORE INCOME TAXES


(48,717,199
)


(23,896,183
)


(14,751,986
)Income tax benefit


(63,000
)






NET LOSS

$
(48,654,199
)

$
(23,896,183
)

$
(14,751,986
)Basic and diluted net loss per share

$
(0.61
)

$
(0.32
)

$
(0.24
)Shares used in computing basic and diluted net loss per share


79,843,707



74,317,930



62,610,265    F-3




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##### Table of Contents



HALOZYME
    THERAPEUTICS, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2008


2007


2006OPERATING ACTIVITIES:Net loss

$
(48,654,199
)

$
(23,896,183
)

$
(14,751,986
)Adjustments to reconcile net loss to net cash (used in) provided
    by operating activities:Share-based compensation


3,695,842



2,580,204



1,274,567Depreciation and amortization


1,047,878



576,491



243,999Loss on disposal of equipment


4,729



3,289



4,278Issuance of stock options for services










9,322Changes in operating assets and liabilities:Accounts receivable


(6,484,585
)


(416,260
)


13,802Inventory


262,145



(260,976
)


(163,534
)Prepaid expenses and other assets


(576,469
)


(1,416,590
)


(257,602
)Accounts payable and accrued expenses


4,788,346



2,529,348



979,318Deferred rent


363,484



865,063



Deferred revenue


10,178,965



19,287,954



19,727,399Net cash (used in) provided by operating activities


(35,373,864
)


(147,660
)


7,079,563INVESTING ACTIVITIES:Purchases of property and equipment


(1,159,744
)


(2,365,326
)


(364,799
)Net cash used in investing activities


(1,159,744
)


(2,365,326
)


(364,799
)FINANCING ACTIVITIES:Proceeds from exercise of warrants, net


1,726,713



2,305,843



7,142,469Proceeds from exercise of stock options, net


843,716



1,707,337



156,114Proceeds from issuance of common stock, net






51,989,488



11,043,862Net cash provided by financing activities


2,570,429



56,002,668



18,342,445NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(33,963,179
)


53,489,682



25,057,209CASH AND CASH EQUIVALENTS at beginning of period


97,679,085



44,189,403



19,132,194CASH AND CASH EQUIVALENTS at end of period

$
63,715,906


$
97,679,085


$
44,189,403Supplemental disclosure of non-cash investing and financing
    activities:Accounts payable for purchases of property and equipment

$
159,472


$



$
    F-4




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##### Table of Contents



HALOZYME
    THERAPEUTICS, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
 Years
    Ended December 31, 2008, 2007 and 2006
  Additional





TotalCommon Stock


Paid-In


Accumulated


StockholdersShares


Amount


Capital


Deficit


EquityBALANCE AT JANUARY 1, 2006


60,246,997


$
60,247


$
44,493,894


$
(26,347,254
)

$
18,206,887Share-based compensation expense










1,274,567







1,274,567Issuance of common stock for cash, net


3,385,000



3,385



11,040,477







11,043,862Issuance of common stock pursuant to exercise of warrants, net


4,818,846



4,819



7,137,650







7,142,469Issuance of common stock pursuant to exercise of stock options


196,150



196



155,918







156,114Issuance of restricted stock awards


90,000



90



(90
)






Issuance of stock options to consultants for services










9,322







9,322Net loss














(14,751,986
)


(14,751,986
)BALANCE AT DECEMBER 31, 2006


68,736,993



68,737



64,111,738



(41,099,240
)


23,081,235Share-based compensation expense










2,580,204







2,580,204Issuance of common stock for cash, net


5,570,394



5,570



51,983,918







51,989,488Issuance of common stock pursuant to exercise of warrants, net


1,783,852



1,784



2,304,059







2,305,843Issuance of common stock pursuant to exercise of stock options


1,707,705



1,708



1,705,629







1,707,337Issuance of restricted stock awards


105,000



105



(105
)






Net loss














(23,896,183
)


(23,896,183
)BALANCE AT DECEMBER 31, 2007


77,903,944



77,904



122,685,443



(64,995,423
)


57,767,924Share-based compensation expense










3,695,842







3,695,842Issuance of common stock pursuant to exercise of warrants, net


1,628,374



1,628



1,725,085







1,726,713Issuance of common stock pursuant to exercise of stock options


1,828,836



1,829



841,887







843,716Issuance of restricted stock awards


192,500



193



(193
)






Net loss














(48,654,199
)


(48,654,199
)BALANCE AT DECEMBER 31, 2008


81,553,654


$
81,554


$
128,948,064


$
(113,649,622
)

$
15,379,996    F-5




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##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes
    to Consolidated Financial Statements
  1.
    Organization
    and Business    tm tm ® in vitro
  2.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    Use of
    Estimates
    Cash
    and Cash Equivalents
      Concentrations
     F-6




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##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Accounts
    Receivable
    Inventory
  first-in,
  Property
    and Equipment
    Impairment
    of Long-Lived Assets
  Accounting for the Impairment or Disposal of Long-Lived
    Assets
  Fair
    Value of Financial Instruments
  Fair Value Measurements
  Fair
    Value Measurements
  Fair Value Measurements No. FAS 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset is Not Active. No. FAS 157-3
 F-7




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##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  No. FAS 157-3
    Level 1

Quoted prices (unadjusted) in active markets for identical
    assets or liabilities;Level 2

Inputs other than quoted prices included within Level 1
    that are either directly or indirectly observable; andLevel 3

Unobservable inputs in which little or no market activity
    exists, therefore requiring an entity to develop its own
    assumptions about the assumptions that market participants would
    use in pricing.
     The Fair Value Option for Financial
    Assets and Financial Liabilities contract-by-contract
  Revenue
    Recognition
  and/or
  Revenue Recognition, No. 00-21, Revenue Arrangements with Multiple Deliverables
  Product Sales
   F-8




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##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Collaborative Agreements
  Cost
    of Sales
    Research
    and Development Expenses
  No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or
    Services Received for Use in Future Research and Development
    Activities No. 07-3 No. 07-3
       F-9




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##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Clinical
    Trial Expenses
  and/or
  Share-Based
    Payments
  Share-Based Payment and/or
  share-based
    Years Ended December 31,2008


2007


2006Research and development

$
1,541,003


$
662,690


$
424,305Selling, general and administrative


2,154,839



1,917,514



850,262Share-based compensation expense before taxes


3,695,842



2,580,204



1,274,567Related income tax benefits










Share-based compensation expense

$
3,695,842


$
2,580,204


$
1,274,567Net share-based compensation expense, per basic and diluted share

$
0.05


$
0.03


$
0.02Share-based compensation expense from:Stock options

$
2,691,571


$
1,857,249


$
1,136,530Restricted stock awards


1,004,271



722,955



138,037$
3,695,842


$
2,580,204


$
1,274,567  F-10




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##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    No. 96-18, Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services No. 96-18,
  Income
    Taxes
    Accounting for Uncertainty in Income Taxes  An
    Interpretation of FASB Statement No. 109
  Net
    Loss Per Share
  Earnings Per
    Share
 F-11




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##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2008


2007


2006Stock options and awards


7,447,285



7,914,979



8,727,322Warrants


3,230,656



4,859,030



6,714,40310,677,941



12,774,009



15,441,725   Segment
    Information
    Pending
    Adoption of Recent Accounting Pronouncements
  No. 07-01, Accounting for Collaboration Arrangements No. 07-01 No. 07-01
  Business Combinations
  Hierarchy of Generally Accepted Accounting Principles The Meaning of Present Fairly in Conformity
    with Generally Accepted Accounting Principles
  No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities No. EITF 03-6-1 No. EITF 03-6-1 EITF 03-6-1
  No. 07-5, Determining Whether an Instrument (or an Embedded Feature) Is
    Indexed to an Entitys Own Stock No. 07-5
 F-12




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##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  No. 07-5 No. 07-5
  3.
    Inventory    2008


2007Raw materials

$
435,386


$
578,397Finished goods


5,937



78,677Work in process






46,394$
441,323


$
703,468     4.
    Property
    and Equipment    2008


2007Research equipment

$
2,699,706


$
1,892,658Computer and office equipment


1,079,034



789,851Leasehold improvements


814,067



633,9964,592,807



3,316,505Accumulated depreciation and amortization


(2,042,882
)


(1,033,189
)$
2,549,925


$
2,283,316     5.
    Accrued
    Expenses    2008


2007Accrued compensation and payroll taxes

$
2,060,866


$
1,418,313Accrued outsourced research and clinical trial expenses


1,329,954



424,385Accrued expenses


605,077



659,561$
3,995,897


$
2,502,259  F-13




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  6.
    Deferred
    Revenue    2008


2007Collaborative agreements

$
49,273,306


$
39,079,524Product sales


175,150



189,967Total deferred revenue


49,448,456



39,269,491Less current portion


3,553,730



3,306,225Deferred revenue, net of current portion

$
45,894,726


$
35,963,266   Roche Partnership
    Baxter Partnerships
      7.
    Stockholders
    Equity  Issuance of Common Stock
 F-14




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
              Issuance of Common Stock Options for Services
  Warrants
   F-15




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      8.
    Equity
    Incentive Plans      Stock Options.
 F-16




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Shares


Weighted


Weighted


AggregateUnderlying


Average Exercise


Average Remaining


IntrinsicStock Options


Price per Share


Contractual Term (yrs)


ValueOutstanding at January 1, 2006


8,535,751


$
1.01Granted


577,682


$
2.64Exercised


(196,150
)

$
0.80Cancelled/forfeited


(279,961
)

$
1.20Outstanding at December 31, 2006


8,637,322


$
1.12Granted


1,029,881


$
8.08Exercised


(1,732,567
)

$
1.11Cancelled/forfeited


(124,657
)

$
1.81Outstanding at December 31, 2007


7,809,979


$
2.03Granted


1,513,650


$
5.76Exercised


(1,857,478
)

$
0.55Cancelled/forfeited


(211,366
)

$
7.60Outstanding at December 31, 2008


7,254,785


$
3.02



6.5


$
21.5 millionVested and expected to vest at December 31, 2008


6,969,104


$
2.90



6.4


$
21.4 millionExercisable at December 31, 2008


5,043,244


$
1.80



5.5


$
20.2 million       Years Ended December 31,2008


2007


2006Expected volatility


65.0
%


70.0
%


75.0
%Average expected term (in years)


5.5



5.0



4.0Risk-free interest rate


1.26-3.14
%


3.5-4.7
%


4.6-5.1
%Expected dividend yield


0
%


0
%


0
%  F-17




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Options Outstanding


Options ExercisableWeighted Average


Weighted





WeightedRemaining


Average


Number


AverageNumber


Contractual


Exercise


Vested and


ExerciseExercise Price

Outstanding


Life in Years


Price


Exercisable


Price$0.06 - $ 0.39


2,499,027



4.8


$
0.39



2,499,027


$
0.39$0.40 - $ 2.05


1,608,080



5.4


$
1.95



1,540,695


$
1.94$2.06 - $ 5.60


1,872,082



8.0


$
4.22



630,582


$
3.16$5.61 - $10.37


1,275,596



8.8


$
7.78



372,940


$
8.407,254,785



6.5


$
3.02



5,043,244


$
1.80   Restricted stock awards.
      Weighted AverageNumber of


Grant DateShares


Fair ValueUnvested at January 1, 2006





$
Granted


90,000


$
2.72Vested





$
Forfeited





$
Unvested at December 31, 2006


90,000


$
2.72Granted


105,000


$
10.37Vested


(90,000
)

$
2.72Forfeited





$
Unvested at December 31, 2007


105,000


$
10.37Granted


192,500


$
4.94Vested


(105,000
)

$
10.37Forfeited





$
Unvested at December 31, 2008


192,500


$
4.94  F-18




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    9.
    Commitments
    and Contingencies  Operating Leases
      sub-sublease Sub-Sublease) Sub-Sublease
   F-19




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    OperatingYear:

Leases2009

$
1,490,0002010


1,615,0002011


1,665,0002012


1,729,0002013


67,000Thereafter


Total minimum lease payments

$
6,566,000   Material Agreements
       F-20




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  scale-up
      Legal Contingencies
  10.
    Income
    Taxes    2008


2007Deferred tax assets:Net operating loss carryforwards

$
25,466,000


$
15,303,000Deferred revenue


14,566,000



7,639,000Research and development credits


7,775,000



4,321,000Share-based compensation


929,000



696,000Depreciation


80,000



95,000Other, net


743,000



505,000Total deferred tax assets


49,559,000



28,559,000Valuation allowance for deferred tax assets


(49,559,000
)


(28,559,000
)Net deferred tax assets

$



$
  F-21




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2008


2007


2006Federal income tax rate of 34%

$
(16,544,000
)

$
(8,125,000
)

$
(5,016,000
)State income tax, net of federal benefit


(2,839,000
)


(1,394,000
)


(861,000
)Research and development credits


(3,099,000
)


(2,133,000
)


(615,000
)Tax effect on non-deductible expenses and other


2,445,000



857,000



286,000Increase in valuation allowance


20,037,000



10,795,000



6,206,000Benefit due to refundable R&D credit


(63,000
)






$
(63,000
)

$



$
           and/or
    11.
    Related
    Party Transactions   F-22




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      12.
    Summary
    of Unaudited Quarterly Financial Information  Form 10-Q:
  Quarters Ended2008 (Unaudited):

March 31,


June 30,


September 30,


December 31,Total revenues

$
1,805,518


$
1,434,219


$
2,462,226


$
3,062,176Total operating expenses

$
12,638,984


$
12,808,789


$
13,661,945


$
20,089,123Net loss

$
(9,953,997
)

$
(11,002,390
)

$
(10,872,158
)

$
(16,825,654
)Net loss per share, basic and diluted

$
(0.13
)

$
(0.14
)

$
(0.14
)

$
(0.21
)Shares used in computing net loss per share, basic and diluted


78,300,319



79,454,496



80,293,800



81,213,985   Quarters Ended2007 (Unaudited):

March 31,


June 30,


September 30,


December 31,Total revenues

$
810,215


$
708,516


$
942,881


$
1,337,909Total operating expenses

$
4,890,626


$
6,542,830


$
9,252,533


$
11,263,739Net loss

$
(3,357,304
)

$
(4,801,707
)

$
(7,028,781
)

$
(8,708,391
)Net loss per share, basic and diluted

$
(0.05
)

$
(0.07
)

$
(0.09
)

$
(0.11
)Shares used in computing net loss per share, basic and diluted


69,984,931



73,217,967



76,502,867



77,459,803  F-23