##### Table of Contents





UNITED
    STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, 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, 2009ORo

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-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  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




---



##### 





Table of
    Contents
   
 PagePART IItem 1.


Business


1Item 1A.


Risk Factors


10Item 1B.


Unresolved Staff Comments


21Item 2.


Properties


21Item 3.


Legal Proceedings


21Item 4.


Removed and Reserved


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


34Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


34Item 9A.


Controls and Procedures


34Item 9B.


Other Information


37PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


37Item 11.


Executive Compensation


39Item 12.


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


39Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


39Item 14.


Principal Accounting Fees and Services


39PART IVItem 15.


Exhibits and Financial Statement Schedules


40SIGNATURES


43EX-23.1EX-31.1EX-31.2EX-32




---



##### 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, continues,
    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
    Form S-3 No. 333-164215)
 1




---



##### Table of Contents



Form S-3 No. 333-155787)
  (858) 794-8889 e-mail info@halozyme.com
  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




---



##### Table of Contents



Products
    and Product Candidates
    
  Ultrafast
    Insulin Program
   3




---



##### Table of Contents



best-in-class and/or
  
    In November 2009, we announced results from our Phase 1 clinical
    study that demonstrated reduced intrasubject absorption
    variability for the combination of lispro
    (Humalog®),

    a mealtime analog insulin, plus rHuPH20 compared to subcutaneous
    injection of lispro alone. The results demonstrated that timing
    and degree of early insulin absorption between doses
    administered to the same subjects on different occasions were
    more consistent when combined with rHuPH20 than lispro
    administered alone. Intersubject variability for pharmacokinetic
    and glucodynamic measures in the study showed a favorable trend
    for the combination lispro with rHuPH20 compared to lispro
    alone. The study was not designed to test statistical
    significance for intersubject variability. Intrasubject
    variability for glucodynamic measures in the study also
    demonstrated favorable trends for the combination of lispro with
    rHuPH20 compared to lispro alone, and one endpoint measure, the
    percent of total glucose administered to keep glucose levels
    constant during the first four hours, reached statistical
    significance. Co-administration of rHuPH20 with both regular
    insulin
    (Humulin®

    R) and lispro was well tolerated. The study enrolled 22
    healthy subjects who received two doses of three different
    treatments: insulin lispro alone, regular insulin with rHuPH20,
    and insulin lispro with rHuPH20 in a euglycemic glucose clamp
    trial design. All subjects underwent six clamp procedures. We
    presented these study results at the Diabetes Technology Society
    meeting in San Francisco in November 2009.
    In November 2009, we also announced results from our Phase 1
    clinical study which investigated the optimal insulin/rHuPh20
    ratios. The results demonstrated faster insulin absorption and
    increased peak insulin concentrations after co-administration of
    rHuPH20 with insulin lispro and regular human insulin compared
    to insulin lispro and regular human insulin alone. The enhanced
    absorption effects were observed at clinically relevant insulin
    doses across a broad range of rHuPH20 concentrations. In
    addition, study results showed accelerated insulin action as
    measured by glucose infusion rates in this euglycemic glucose
    clamp study. Results of this study have been used to identify an
    optimal rHuPH20 dose for accelerating insulin absorption. We
    presented these study results at the Diabetes Technology Society
    meeting in San Francisco in November 2009. The initial
    study results were presented at the International Diabetes
    Federation Congress in Montreal in October 2009.
    In September 2009, we also announced results from our Phase 2
    clinical study in type 1 diabetic patients comparing lispro with
    and without rHuPH20 and regular insulin with and without
    rHuPH20. These results demonstrated faster insulin absorption
    and increased peak insulin concentrations after
    co-administration of rHuPH20 with lispro and rHuPH20 with
    regular insulin. Study results also showed a significant
    reduction in postprandial blood glucose levels following
    administration of a standardized test meal, with improvements in
    both peak and total hyperglycemic excursions compared to lispro
    and regular insulin alone. Mean glucose levels after the meal
    challenge remained within current treatment targets throughout
    the eight hour post meal observation period. We presented these
    results at the European Association for the Study of Diabetes in
    Vienna in September 2009. The preliminary results from the study
    of lispro with and without rHuPH20 were presented at the
    American Diabetes Association (ADA) 69th Scientific
    Sessions in New Orleans in June 2009.
    In September 2009, we initiated a Phase 1 clinical study that
    will assess the effects of three approved prandial insulin
    analogs administered with rHuPH20 compared to each of the
    analogs alone, each delivered at a 4




---



##### Table of Contents



standardized dose. This randomized, six-way cross-over design,
    euglycemic clamp study will compare the postprandial
    pharmacokinetics and glucodynamics of the insulin analogs with
    and without rHuPH20.  
    In July 2009, we initiated a Phase 2 clinical study in patients
    with type 2 diabetes mellitus. This randomized cross-over design
    study was designed to compare the postprandial glycemic
    excursions following a standardized test meal for three
    treatment regimens: insulin lispro with rHuPH20, regular insulin
    with rHuPH20 and lispro alone, each delivered at an individually
    optimized dose. This randomized, double blind Phase 2 study will
    also investigate the pharmacokinetics of each treatment.
    In May 2009, we initiated a Phase 2 clinical trial to compare
    regular insulin with rHuPH20 to lispro alone. After a one-month
    observation period that includes dose optimization, patients
    were randomized to regular insulin with rHuPH20 or lispro and
    treated for three months. At the end of three months, patients
    were crossed over to the other study treatment for another three
    months. The study will evaluate safety and efficacy.  PEGPH20
  48-72 hours.
        Chemophase
     5




---



##### Table of Contents



Enhanze
    Technology
      Roche
    Partnership
    20-25%
  ®
      Baxter
    Gammagard Partnership
   6




---



##### Table of Contents



HYLENEX
    Partnership
    Cumulase
  ex vivo
  Patents
    and Proprietary Rights
     7




---



##### Table of Contents



Research
    and Development Activities
      Manufacturing
    Sales and
    Marketing
  HYLENEX
   8




---



##### Table of Contents



Cumulase
    Competition
  HYLENEX
  ® 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.      
    Phase 1 investigations are generally conducted in healthy
    subjects. In certain instances, subjects with a life-threatening
    disease, such as cancer, may participate in Phase 1 studies that
    determine the maximum tolerated dose and initial safety of the
    product;
    Phase 2 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 3 studies involve large, well-controlled investigations in
    diseased subjects and are aimed at verifying the safety and
    effectiveness of the drug.   9




---



##### Table of Contents



and/or
        Product
    Liability Insurance
    Executive
    Officers of the Registrant
  Part III-Item 10.
  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
 10




---



##### Table of Contents



If our
    contract manufacturers are unable to manufacture significant
    amounts of the API 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 and/or
  Our
    key partners are responsible for providing certain proprietary
    materials that are essential components of our partnered product
    candidates, and any failure to supply these materials could
    delay the development and commercialization efforts for these
    partnered product candidates
    and/or
    damage our collaborative partnerships.
  and/or
 11




---



##### Table of Contents



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.
    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 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.
     12




---



##### Table of Contents



If we
    have problems with third parties that either distribute API on
    our behalf or prepare, fill, finish and package our products and
    product candidates for distribution, our commercialization and
    development efforts for our products and product candidates
    could be delayed or stopped.
    Most
    of our current proprietary and partnered products and product
    candidates rely on the rHuPH20 enzyme.
    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; 13




---



##### Table of Contents




    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 key partners,
    our contract manufacturers or our raw material suppliers;
    the FDA may identify problems or other deficiencies in our
    existing manufacturing processes or facilities, or the existing
    processes or facilities of our key partners, our contract
    manufacturers or our 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
    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.
     14




---



##### Table of Contents




    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.  If
    proprietary or partnered product candidates are approved by
    regulatory bodies such as 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;
    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 approved product label;
    the effectiveness of our sales and marketing efforts and the
    effectiveness of the sales and marketing efforts of our partners;
    the introduction of generic competitors; and
    the extent to which reimbursement for our products and related
    treatments will be available from third party payors.  and/or
    Developing
    and marketing pharmaceutical products for human use involves
    product liability risks, for which we currently have limited
    insurance coverage.
   15




---



##### Table of Contents



Our
    inability to attract, hire and retain key management and
    scientific personnel could negatively affect our
    business.
        Our
    operations might be interrupted by the occurrence of a natural
    disaster or other catastrophic event.
    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.
   16




---



##### Table of Contents



Future
    acquisitions could disrupt our business and harm our financial
    condition.
    
    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.    Risks
    Related To Ownership of Our Common Stock
  Our
    stock price is subject to significant volatility.
  Form 10-K
  
    a dispute regarding our failure, or the failure of one of our
    third party partners, to comply with the terms of a
    collaboration agreement;
    the termination, for any reason, of any of our collaboration
    agreements; 17




---



##### Table of Contents




    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;
    the resignation, or other departure, of 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 regulatory 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;
    our failure, or the failure of our third party partners, to
    successfully commercialize products approved by applicable
    regulatory bodies such as 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;
    our failure to obtain financing on acceptable terms; or
    a restructuring of our operations.  Future
    sales of shares of our common stock pursuant to our universal
    shelf registration statement may negatively affect our stock
    price.
    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.
    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.
   18




---



##### Table of Contents



and/or
  direct-to-consumer
    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.       19




---



##### Table of Contents



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.
      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.
   20




---



##### Table of Contents



and/or
  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.
    Removed
    and Reserved 21




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    2009

2008High

Low

High

LowFirst Quarter

$
6.41


$
3.93


$
7.25


$
4.19Second Quarter

$
8.09


$
5.07


$
6.62


$
4.75Third Quarter

$
7.91


$
6.11


$
8.26


$
5.35Fourth Quarter

$
7.86


$
5.22


$
7.29


$
2.60     Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Number ofSharesNumber of





RemainingShares to be





Available forIssued upon


Weighted-Average


Future IssuanceExercise of


Exercise Price


Under EquityOutstanding


of Outstanding


CompensationOptions,


Options,


Plans (ExcludingWarrants and


Warrants and


Shares ReflectedRights


Rights


in Column (a))Plan Category

(a)


(b)


(c)Equity compensation plans approved by stockholders(1)


7,804,266


$
3.73



4,026,751Equity compensation plans not approved by stockholders










Total


7,804,266


$
3.73


$
     (1)
    
    Represents stock options under the 2008 Stock Plan, 2008 Outside
    Directors Stock Plan, 2006 Stock Plan, 2005 Outside
    Directors Stock Plan, 2004 Stock Plan and the 2001 Stock
    Plan. Options under the 2001 Stock Plan were assumed by Halozyme
    as part of the March 2004 merger between DeliaTroph
    Pharmaceuticals, Inc. (DeliaTroph) and Global Yacht
    Services, Inc. The 2001 Stock Plan was approved by the
    shareholders of DeliaTroph prior to the merger and the former
    shareholders of DeliaTroph held approximately 90% of the voting
    stock of Halozyme immediately following the merger. No
    additional options will be granted under the 2001 Stock Plan. 22




---



##### Table of Contents



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 of 1933, as amended, or the
    Exchange Act, except to the extent we specifically incorporate
    it by reference into such filing.
    COMPARISON
    OF 5-YEAR CUMULATIVE TOTAL RETURN*
    
  *
    $100 invested on 12/31/04 in stock or index, including
    reinvestment of dividends.
    Fiscal year ending December 31.  12/04



12/05



12/06



12/07



12/08



12/09Halozyme Therapeutics, Inc.


$
100.00



$
82.73



$
365.91



$
323.18



$
254.55



$
266.82NASDAQ Composite


$
100.00



$
101.33



$
114.01



$
123.71



$
73.11



$
105.61NASDAQ Biotechnology


$
100.00



$
117.54



$
117.37



$
121.37



$
113.41



$
124.58   Recent
    Sales of Unregistered Securities
   23




---



##### Table of Contents



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

2009

2008

2007

2006

2005Total revenues

$
13,671,305


$
8,764,139


$
3,799,521


$
981,746


$
127,209Net loss


(58,360,523
)


(48,654,199
)


(23,896,183
)


(14,751,986
)


(13,275,373
)Net loss per share, basic anddiluted

$
(0.67
)

$
(0.61
)

$
(0.32
)

$
(0.24
)

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


86,700,094



79,843,707



74,317,930



62,610,265



50,317,021   As of December 31,Balance Sheet Data:

2009

2008

2007

2006

2005Cash and cash equivalents

$
67,464,506


$
63,715,906


$
97,679,085


$
44,189,403


$
19,132,194Working capital


60,044,794



59,794,370



92,312,937



41,343,010



17,802,804Total assets


77,149,759



76,562,713



103,460,374



46,091,320



20,510,255Deferred revenues


60,482,192



49,448,456



39,269,491



19,981,537



254,138Total liabilities


70,246,370



61,182,717



45,692,450



23,010,085



2,303,368Stockholders equity


6,903,389



15,379,996



57,767,924



23,081,235



18,206,887   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




---



##### Table of Contents



tm tm ® in vitro
      Collaborative
    Partnerships
  Roche
    Partnership
    20-25%
  ®
 25




---



##### Table of Contents



Baxter
    Gammagard Partnership
    HYLENEX
    Partnership
    Revenues
       26




---



##### Table of Contents



Costs
    and Expenses
  Cost of Sales.
  Research and Development.
        Selling, General and Administrative.
  Critical
    Accounting Policies and Estimates
   27




---



##### Table of Contents



Revenue
    Recognition
  and/or
    Product
    Sales
      Revenues
    under Collaborative Agreements
    Share-Based
    Payments
   28




---



##### Table of Contents



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




---



##### Table of Contents



Inventory
  first-in,
    Results
    of Operations
  Comparison
    of Years Ended December 31, 2009 and 2008
  Revenues Under Collaborative
    Agreements
  Product Sales
  Cost of Sales
  Research and Development
  Selling, General and Administrative
  Share-Based Compensation
 30




---



##### Table of Contents



Interest Income
  Net Loss
  Comparison
    of Years Ended December 31, 2008 and 2007
  Revenues Under Collaborative
    Agreements
  Product Sales
  Cost of Sales
  Research and Development scale-up
  Selling, General and Administrative
  Share-Based Compensation
 31




---



##### Table of Contents



Interest Income
  Net Loss
  Liquidity
    and Capital Resources
    and/or
  Form S-3 No. 333-164215) Form S-3 No. 333-155787)
  and/or
  Operating
    Activities
     32




---



##### Table of Contents



Investing
    Activities
      Financing
    Activities
      Off-Balance Sheet Arrangements
  Contractual Obligations
  Payments Due by PeriodLess than








More thanContractual Obligations:

Total


1 Year


1-3 Years


4-5 Years


5 YearsOperating leases

$
6,733,297


$
2,148,743


$
4,495,328


$
89,226


$
License payments


1,580,000



305,000



610,000



610,000



55,000Purchase obligations(1)


11,940,181



10,533,931



1,312,500



93,750



Total

$
20,253,478


$
12,987,674


$
6,417,828


$
792,976


$
55,000     (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; 33




---



##### Table of Contents




    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    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.
 34




---



##### Table of Contents



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.        Form 10-K
 35




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                 
    36




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Executive
    Officers
  Jonathan E. Lim, M.D. (38), start-ups start-up; Editor-in-Chief
  Gregory I. Frost, Ph.D. (38),
  Kurt A. Gustafson (42)
 37




---



##### Table of Contents



Jonathan A. Leff, M.D. (52), ® ® ® ® ® ® ® ® ®
  Robert L. Little (60), 200-person ® ®
  William J. Fallon (53),
 38




---



##### Table of Contents



David A. Ramsay (45),
  Item 11.
    Executive
    Compensation    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   39




---



##### Table of Contents



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


F-1Consolidated Balance Sheets at December 31,
    2009 and 2008


F-2Consolidated Statements of Operations for Each of
    the Years Ended December 31, 2009, 2008 and 2007


F-3Consolidated Statements of Cash Flows for Each of
    the Years Ended December 31, 2009, 2008 and 2007


F-4Consolidated Statements of Stockholders
    Equity for Each of the Years Ended December 31, 2009, 2008
    and 2007


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(18)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(8)10
.3*

Commercial Supply Agreement with Avid Bioservices, Inc. and
    Registrant, dated February 16, 2005(6)10
.4*

First Amendment to the Commercial Supply Agreement between Avid
    Bioservices, Inc. and Registrant, dated December 15, 2006(13)10
.5*

Clinical Supply Agreement between Cook Pharmica, LLC and
    Registrant, dated August 15, 2008(22)10
.6#

DeliaTroph Pharmaceuticals, Inc. 2001 Amended and Restated Stock
    Plan and form of Stock Option Agreements for options assumed
    thereunder(5)10
.7#

2004 Stock Plan and Form of Option Agreement thereunder(4)10
.8#

Halozyme Therapeutics, Inc. 2005 Outside Directors Stock
    Plan(7)10
.9#

Form of Stock Option Agreement (2005 Outside Directors
    Stock Plan)(11)10
.10#

Form of Restricted Stock Agreement (2005 Outside Directors
    Stock Plan)(11)10
.11#

Halozyme Therapeutics, Inc. 2006 Stock Plan(10)10
.12#

Form of Stock Option Agreement (2006 Stock Plan)(11)10
.13#

Form of Restricted Stock Agreement (2006 Stock Plan)(11) 40




---



##### Table of Contents



10
.14#

Halozyme Therapeutics, Inc. 2008 Stock Plan(19)10
.15#

Form of Stock Option Agreement (2008 Stock Plan)(25)10
.16#

Form of Restricted Stock Agreement (2008 Stock Plan)(25)10
.17#

Halozyme Therapeutics, Inc. 2008 Outside Directors Stock
    Plan(19)10
.18#

Form of Restricted Stock Agreement (2008 Outside Directors
    Stock Plan)(25)10
.19#

Form of Indemnity Agreement for Directors and Executive
    Officers(17)10
.20#

Outside Director Compensation Plan(21)10
.21#

2008 Senior Executive Incentive Structure(20)10
.22#

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

2010 Senior Executive Incentive Plan(26)10
.24#

Change in Control Policy(20)10
.25#

Severance Policy(21)10
.26*

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

Amended and Restated Development and Supply Agreement between
    Baxter Healthcare Corporation, Baxter Healthcare S.A. and
    Registrant, dated February 14, 2007(14)10
.28*

License and Collaboration Agreement between Baxter Healthcare
    Corporation, Baxter Healthcare S.A. and Registrant, dated
    February 14, 2007(14)10
.29*

Enhanze Technology License and Collaboration Agreement between
    Baxter Healthcare Corporation, Baxter Healthcare S.A. and
    Registrant, dated September 7, 2007(16)10
.30*

License and Collaboration Agreement between F.
    Hoffmann-La Roche Ltd, Hoffmann-La Roche Inc. and
    Registrant dated December 5, 2006(12)10
.31

Sublease Agreement (11404 Sorrento Valley Road), effective as of
    July 2, 2007(15)10
.32

Standard Industrial Net Lease (11388 Sorrento Valley Road),
    effective as of July 26, 2007(15)10
.33

Underwriting Agreement between Halozyme Therapeutics, Inc. and
    Jefferies & Company, Inc., dated June 23, 2009(24)21
.1

Subsidiaries of Registrant(9)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 Registration
    Statement on
    Form S-8
    filed with the Commission on October 26, 2004.(6)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed February 22, 2005.(7)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed July 6, 2005.(8)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed January 12, 2006. 41




---



##### Table of Contents



(9)
    
    Incorporated by reference to the Registrants Annual Report
    on
    Form 10-KSB/A,
    filed March 29, 2005.(10)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed March 24, 2006.(11)
    
    Incorporated by reference to the Registrants Quarterly
    Report on
    Form 10-Q,
    filed August 8, 2006.(12)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K/A,
    filed December 15, 2006.(13)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed December 21, 2006.(14)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K/A,
    filed February 20, 2007.(15)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed July 31, 2007.(16)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed September 12, 2007.(17)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed December 20, 2007.(18)
    
    Incorporated by reference to the Registrants Annual Report
    on
    Form 10-K,
    filed March 14, 2008.(19)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed March 19, 2008.(20)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed April 21, 2008.(21)
    
    Incorporated by reference to the Registrants Quarterly
    Report on
    Form 10-Q,
    filed May 9, 2008.(22)
    
    Incorporated by reference to the Registrants Quarterly
    Report on
    Form 10-Q,
    filed November 7, 2008.(23)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed February 9, 2009.(24)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed June 23, 2009.(25)
    
    Incorporated by reference to the Registrants Quarterly
    Report on
    Form 10-Q,
    filed August 7, 2009.(26)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K,
    filed February 8, 2010.*
    
    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.  (c) Financial
    Statement Schedules.  See Item 15(a)2 above.
 42




---



##### 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 12, 2010/s/  Kurt
    A. GustafsonKurt
    A. Gustafson

Vice President and Chief Financial Officer (Principal Financial
    and Accounting Officer)

March 12, 2010/s/  Gregory
    I. Frost, Ph.D.Gregory
    I. Frost, Ph.D.

Vice President and Chief Scientific Officer, Director

March 12, 2010/s/  Kenneth
    J. KelleyKenneth
    J. Kelley

Chairman of the Board of Directors

March 12, 2010/s/  Robert
    L. Engler, M.D.Robert
    L. Engler, M.D.

Director

March 12, 2010/s/  Kathryn
    E. FalbergKathryn
    E. Falberg

Director

March 12, 2010 43




---



##### Table of Contents



Signature

Title

Date/s/  Randal
    J. KirkRandal
    J. Kirk

Director

March 12, 2010/s/  Connie
    L. MatsuiConnie
    L. Matsui

Director

March 12, 2010/s/  John
    S. Patton, Ph.D.John
    S. Patton, Ph.D.

Director

March 12, 2010  44




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm             
    F-1




---



##### Table of Contents



HALOZYME
    THERAPEUTICS, INC.
  CONSOLIDATED BALANCE SHEETS
  December 31,2009


2008ASSETSCurrent assets:Cash and cash equivalents

$
67,464,506


$
63,715,906Accounts receivable


4,243,909



7,264,410Inventory


1,159,551



441,323Prepaid expenses and other assets


1,573,777



2,591,149Total current assets


74,441,743



74,012,788Property and equipment, net


2,708,016



2,549,925Total Assets

$
77,149,759


$
76,562,713LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
2,820,491


$
6,668,791Accrued expenses


6,083,854



3,995,897Deferred revenue


5,492,604



3,553,730Total current liabilities


14,396,949



14,218,418Deferred revenue, net of current portion


54,989,588



45,894,726Deferred rent, net of current portion


859,833



1,069,573Commitments 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; 91,681,756 and
    81,553,654 shares issued and outstanding at
    December 31, 2009 and 2008, respectively


91,682



81,554Additional paid-in capital


178,821,852



128,948,064Accumulated deficit


(172,010,145
)


(113,649,622
)Total stockholders equity


6,903,389



15,379,996Total Liabilities and Stockholders Equity

$
77,149,759


$
76,562,713    F-2




---



##### Table of Contents



HALOZYME
    THERAPEUTICS, INC.
  CONSOLIDATED STATEMENTS OF
    OPERATIONS
  Years Ended December 31,2009


2008


2007REVENUES:Revenues under collaborative agreements

$
12,700,458


$
8,052,202


$
3,159,931Product sales


970,847



711,937



639,590Total revenues


13,671,305



8,764,139



3,799,521OPERATING EXPENSES:Cost of product sales


311,891



332,324



240,429Research and development


56,614,266



44,232,936



20,554,105Selling, general and administrative


15,203,408



14,633,581



11,155,194Total operating expenses


72,129,565



59,198,841



31,949,728OPERATING LOSS


(58,458,260
)


(50,434,702
)


(28,150,207
)Interest income


97,737



1,717,503



4,254,024NET LOSS BEFORE INCOME TAXES


(58,360,523
)


(48,717,199
)


(23,896,183
)Income tax benefit






(63,000
)


NET LOSS

$
(58,360,523
)

$
(48,654,199
)

$
(23,896,183
)Basic and diluted net loss per share

$
(0.67
)

$
(0.61
)

$
(0.32
)Shares used in computing basic and diluted net loss per share


86,700,094



79,843,707



74,317,930    F-3




---



##### Table of Contents



HALOZYME
    THERAPEUTICS, INC.
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Years Ended December 31,2009


2008


2007OPERATING ACTIVITIES:Net loss

$
(58,360,523
)

$
(48,654,199
)

$
(23,896,183
)Adjustments to reconcile net loss to net cash used in operating
    activities:Share-based compensation


4,526,030



3,695,842



2,580,204Depreciation and amortization


1,443,738



1,047,878



576,491Loss on disposal of equipment


2,685



4,729



3,289Changes in operating assets and liabilities:Accounts receivable


3,020,501



(6,484,585
)


(416,260
)Inventory


(718,228
)


262,145



(260,976
)Prepaid expenses and other assets


1,017,372



(576,469
)


(1,416,590
)Accounts payable and accrued expenses


(2,000,233
)


4,788,346



2,529,348Deferred rent


(113,343
)


363,484



865,063Deferred revenue


11,033,736



10,178,965



19,287,954Net cash used in operating activities


(40,148,265
)


(35,373,864
)


(147,660
)INVESTING ACTIVITIES:Purchases of property and equipment


(1,461,021
)


(1,159,744
)


(2,365,326
)Net cash used in investing activities


(1,461,021
)


(1,159,744
)


(2,365,326
)FINANCING ACTIVITIES:Proceeds from issuance of common stock, net


38,174,371







51,989,488Proceeds from exercise of warrants, net


6,165,158



1,726,713



2,305,843Proceeds from exercise of stock options, net


1,018,357



843,716



1,707,337Net cash provided by financing activities


45,357,886



2,570,429



56,002,668NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


3,748,600



(33,963,179
)


53,489,682CASH AND CASH EQUIVALENTS at beginning of period


63,715,906



97,679,085



44,189,403CASH AND CASH EQUIVALENTS at end of period

$
67,464,506


$
63,715,906


$
97,679,085Supplemental disclosure of non-cash investing and financing
    activities:Accounts payable for purchases of property and equipment

$
143,493


$
159,472


$
    F-4




---



##### Table of Contents



HALOZYME
    THERAPEUTICS, INC.
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
 Years
    Ended December 31, 2009, 2008 and 2007
  Additional





TotalCommon Stock


Paid-In


Accumulated


StockholdersShares


Amount


Capital


Deficit


EquityBALANCE AT JANUARY 1, 2007


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
)


15,379,996Share-based compensation expense










4,526,030







4,526,030Issuance of common stock for cash, net


6,150,000



6,150



38,168,221







38,174,371Issuance of common stock pursuant to exercise of warrants, net


3,140,780



3,141



6,162,017







6,165,158Issuance of common stock pursuant to exercise of stock options


717,322



717



1,017,447







1,018,164Issuance of restricted stock awards


120,000



120



73







193Net loss














(58,360,523
)


(58,360,523
)BALANCE AT DECEMBER 31, 2009


91,681,756


$
91,682


$
178,821,852


$
(172,010,145
)

$
6,903,389    F-5




---



##### 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




---



##### 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
    Fair
    Value of Financial Instruments
  Fair Value Measurements
  Fair
    Value Measurements
   F-7




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    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.
     Deferred
    Rent
    Revenue
    Recognition
  and/or
    Product Sales
    Collaborative Agreements
 F-8




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Cost
    of Sales
    Research
    and Development Expenses
        Clinical
    Trial Expenses
  and/or
  Share-Based
    Payments
   F-9




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Years Ended December 31,2009


2008


2007Research and development

$
2,441,907


$
1,541,003


$
662,690Selling, general and administrative


2,084,123



2,154,839



1,917,514Share-based compensation expense before taxes


4,526,030



3,695,842



2,580,204Related income tax benefits










Share-based compensation expense

$
4,526,030


$
3,695,842


$
2,580,204Net share-based compensation expense, per basic and diluted share

$
0.05


$
0.05


$
0.03Share-based compensation expense from:Stock options

$
3,648,174


$
2,691,571


$
1,857,249Restricted stock awards


877,856



1,004,271



722,955$
4,526,030


$
3,695,842


$
2,580,204       Income
    Taxes
   F-10




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Net
    Loss Per Share
    2009


2008


2007Stock options and awards


7,924,266



7,447,285



7,914,979Warrants






3,230,656



4,859,0307,924,266



10,677,941



12,774,009   Segment
    Information
    Adoption
    of Recent Accounting Pronouncements
  The FASB Accounting Standards
    Codification
 F-11




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
              Pending
    Adoption of Recent Accounting Pronouncement
  No. 2009-13, Multiple-Deliverable Revenue
    Arrangements No. 2009-13 No. 2009-13 relative-selling-price 605-25. No. 2009-13 No. 2009-13
 F-12




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   3.
    Inventory    2009


2008Raw materials

$
1,159,551


$
435,386Finished goods






5,937$
1,159,551


$
441,323     4.
    Property
    and Equipment  Property and equipment consists of the following as of
    December 31, 2009 and 2008:   2009


2008Research equipment

$
3,838,307


$
2,699,706Computer and office equipment


1,333,924



1,079,034Leasehold improvements


981,140



814,0676,153,371



4,592,807Accumulated depreciation and amortization


(3,445,355
)


(2,042,882
)$
2,708,016


$
2,549,925     5.
    Accrued
    Expenses    2009


2008Accrued compensation and payroll taxes

$
2,945,498


$
2,060,866Accrued outsourced research and clinical trial expenses


2,609,819



1,543,321Accrued expenses


528,537



391,710$
6,083,854


$
3,995,897   6.
    Deferred
    Revenue    2009


2008Collaborative agreements

$
50,390,400


$
44,905,031Product sales


10,091,792



4,543,425Total deferred revenue


60,482,192



49,448,456Less current portion


5,492,604



3,553,730Deferred revenue, net of current portion

$
54,989,588


$
45,894,726  F-13




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  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)
          Warrants
    8.
    Equity
    Incentive Plans      Stock Options.
 F-15




---



##### 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, 2007


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


$
3.02Granted


1,519,405


$
6.41Exercised


(717,322
)

$
1.42Cancelled/forfeited


(252,602
)

$
6.11Outstanding at December 31, 2009


7,804,266


$
3.73



6.4


$
19.7 millionVested and expected to vest at December 31, 2009


7,526,580


$
3.63



6.3


$
19.7 millionExercisable at December 31, 2009


5,202,944


$
2.48



5.2


$
19.0 million       Years Ended December 31,2009


2008


2007Expected volatility


65.0
%


65.0
%


70.0
%Average expected term (in years)


5.5



5.5



5.0Risk-free interest rate


1.65-2.73
%


1.26-3.14
%


3.5-4.7
%Expected dividend yield


0
%


0
%


0
%  F-16




---



##### 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$0.39


2,209,720



3.9


$
0.39



2,209,720


$
0.39$0.40 - $2.83


1,671,072



5.4


$
2.17



1,595,395


$
2.15$2.84 - $5.81


1,380,079



7.5


$
4.85



746,853


$
4.55$5.82 - $10.37


2,543,395



8.6


$
7.05



650,976


$
8.017,804,266



6.4


$
3.73



5,202,944


$
2.48   Restricted stock awards.
      Weighted AverageNumber of

Grant DateShares

Fair ValueUnvested at January 1, 2007


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


$
4.94Granted


120,000


$
5.81Vested


(192,500
)

$
4.94Forfeited





$
Unvested at December 31, 2009


120,000


$
5.81  F-17




---



##### 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-18




---



##### Table of Contents



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

Leases2010

$
1,858,0002011


1,920,0002012


1,992,0002013


77,000Total minimum lease payments

$
5,847,000   Material Agreements
     F-19




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Legal Contingencies
  10.
    Income
    Taxes    2009


2008Deferred tax assets:Net operating loss carryforwards

$
42,253,000


$
25,466,000Deferred revenue


18,370,000



14,566,000Research and development credits


12,175,000



7,775,000Share-based compensation


1,171,000



929,000Depreciation


327,000



80,000Other, net


789,000



743,000Total deferred tax assets


75,085,000



49,559,000Valuation allowance for deferred tax assets


(75,085,000
)


(49,559,000
)Net deferred tax assets

$



$
  F-20




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2009


2008


2007Federal income tax rate of 34%

$
(19,843,000
)

$
(16,544,000
)

$
(8,125,000
)State income tax, net of federal benefit


(3,405,000
)


(2,839,000
)


(1,394,000
)Research and development credits


(4,464,000
)


(3,099,000
)


(2,133,000
)Tax effect on non-deductible expenses and other


2,186,000



2,445,000



857,000Increase in valuation allowance


25,526,000



20,037,000



10,795,000Benefit due to refundable R&D credit






(63,000
)


$



$
(63,000
)

$
         and/or
    11.
    Employee
    Savings Plan    12.
    Related
    Party Transactions   F-21




---



##### Table of Contents



Halozyme
    Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        13.
    Summary
    of Unaudited Quarterly Financial Information  Form 10-Q:
  Quarters Ended2009 (Unaudited):

March 31,


June 30,


September 30,


December 31,Total revenues

$
2,772,371


$
1,426,156


$
3,028,885


$
6,443,893Total operating expenses

$
17,531,113


$
18,509,876


$
16,968,485


$
19,120,091Net loss

$
(14,725,364
)

$
(17,060,025
)

$
(13,910,282
)

$
(12,664,852
)Net loss per share, basic and diluted

$
(0.18
)

$
(0.21
)

$
(0.16
)

$
(0.14
)Shares used in computing net loss per share, basic and diluted


82,429,868



82,990,107



89,570,540



91,488,388   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  F-22