Halozyme Therapeutics Q2 2026 Earnings Report

Halozyme Therapeutics EPS Results

• Actual EPS: $2.28
• Consensus EPS: $1.79
• Beat/Miss: Beat by +$0.49
• One Year Ago EPS: $1.54

Halozyme Therapeutics Revenue Results

• Actual Revenue: $481.00 million
• Expected Revenue: $402.28 million
• Beat/Miss: Beat by +$78.72 million
• YoY Revenue Growth: +47.70%

Halozyme Therapeutics Announcement Details

• Quarter: Q2 2026
• Date: 8/6/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 4:30PM ET

Halozyme Therapeutics (NASDAQ:HALO) is a biopharmaceutical company headquartered in San Diego, California, that specializes in the development and commercialization of novel drug-delivery technologies. Founded in 1998, Halozyme focuses on enabling subcutaneous administration of biologic therapies through its proprietary platforms. The company’s core mission is to improve patient access and convenience while maintaining efficacy and safety profiles comparable to or better than traditional routes of administration.

The company’s flagship technology, ENHANZE®, is based on recombinant human hyaluronidase PH20 (rHuPH20), an enzyme that transiently degrades hyaluronan in the extracellular matrix. This mechanism facilitates the dispersion and absorption of co-administered therapeutic agents, allowing high-volume subcutaneous injections that were previously limited to intravenous infusion. ENHANZE has been incorporated into multiple commercial partnerships, enabling pharmaceutical and biotechnology companies to develop subcutaneous formulations of existing and novel therapies.

In addition to its commercial collaborations, Halozyme maintains a pipeline of investigational products that leverage its enzyme technology. The company conducts research in oncology, immunology and inflammatory diseases, exploring novel combinations and applications of rHuPH20. Halozyme’s business model combines royalty revenues from established partner products with internal development programs to drive long-term growth and innovation.

Halozyme operates on a global scale, with collaborations spanning North America, Europe and Asia Pacific. The executive leadership team, led by President and Chief Executive Officer Helen I. Torley, brings extensive experience in biopharmaceutical development, regulatory affairs and commercial strategy. Through its technology platforms and strategic alliances, Halozyme continues to advance subcutaneous delivery solutions aimed at enhancing the patient experience and expanding therapeutic possibilities.

Halozyme Therapeutics Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record second-quarter performance: Total revenue rose 48% year over year to $481 million, while royalty revenue increased 50% to $307.7 million. Adjusted EBITDA reached $328.8 million and non-GAAP EPS was $2.28.
• Positive Sentiment: 2026 guidance was raised: Halozyme now expects total revenue of $1.835 billion-$1.91 billion, royalty revenue of $1.22 billion-$1.245 billion, adjusted EBITDA of $1.225 billion-$1.28 billion, and non-GAAP EPS of $8.65-$9.00.
• Positive Sentiment: ENHANZE product diversification accelerated: Royalties from newer launches—including OCREVUS ZUNOVO, Opdivo Qvantig, and RYBREVANT SC—increased approximately 80% sequentially, complementing continued growth from DARZALEX SC, VYVGART Hytrulo, and PHESGO.
• Positive Sentiment: Strong partnership momentum expanded the long-term pipeline: Halozyme signed five collaboration and licensing agreements across the quarter and July, including deals with GSK, Incyte, Vertex, and Oruka, generating $35.5 million in upfront revenue and expanding ENHANZE into ADCs and nucleic-acid therapies.
• Neutral Sentiment: Litigation remains an important uncertainty: Halozyme is pursuing injunctions against Merck in roughly eight countries and plans to appeal four U.S. patent-review decisions, although management expressed strong confidence it will ultimately prevail.

Presentation

[Operator]

Good afternoon. My name is Joel, and I will be your conference operator today. At this time, I would like to welcome everyone to Halozyme's second quarter 2026 financial and operating results conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Please note this event is being recorded. I will now turn the call over to Tram Bui, Halozyme's Vice President of Investor Relations. Please go ahead.

[Tram Bui, VP of Investor Relations and Corporate Communications at Halozyme]

Thank you, operator. Good afternoon and welcome to our second quarter 2026 financial and operating results conference call. In addition to the press release issued today after the market close, you can find a supplementary slide presentation that will be referenced during today's call in the investor relations section of our website. Leading the call will be Dr. Helen Torley, Halozyme's President and Chief Executive Officer, who will provide an update on our business, and Darren Snellgrove, our Chief Financial Officer, will review our financial results as well as our outlook. On today's call, we will be making forward-looking statements as outlined on slide two. I would also refer you to our SEC filings for a full list of risks and uncertainties. During the call, both GAAP and non-GAAP financial measures will be discussed.

[Tram Bui, VP of Investor Relations and Corporate Communications at Halozyme]

Certain non-GAAP or adjusted financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and slide presentation. I will now turn the call over to Dr. Helen Torley and we will start on slide three.

[Helen Torley, President and CEO at Halozyme]

Thank you, Tram. Good afternoon, everyone. I am pleased to report our results from an exceptionally strong second quarter, led by ENHANZE royalty revenue growth and new deal momentum that resulted in meaningful upfront milestones. You've heard me say before that ENHANZE is a unique compounding platform engine. On this call, we will share multiple proof points demonstrating how ENHANZE is delivering on all of the attractive features of a compounding platform engine. I'm talking about the repeatability of success, the scalability and diversification, and the durability of revenues that result from this. The ENHANZE value proposition is attracting new partners and additional products from our current partners at a cracking pace.

[Helen Torley, President and CEO at Halozyme]

On top of this, Hypercon is already off and running as a second future combining platform engine for Halozyme, showing the same features and in fact doing so even earlier in the life cycle than ENHANZE as we apply the knowledge and learnings of the last decade. Let's look now at what's new in the quarter. I will start with the broadening diversification and record growth of our royalty revenue streams. We are reporting increasing contributions of our newer launch products, Opdivo SC, Ocrevus SC, and RYBREVANT SC, to our royalty revenues with 80% growth quarter-on-quarter. This is repeating and building on top of the success and continued growth and performance of DARZALEX SC, VYVGART Hytrulo, and PHESGO.

[Helen Torley, President and CEO at Halozyme]

What I love about this is that over the last years, we've moved from all focus being on DARZALEX SC performance to it then expanding to PHESGO and then to VYVGART Hytrulo as it was recognized just how much opportunity these products represented. Now we're expanding to six products to focus on. This is exactly what I meant by the compounding platform engine, multiple winners creating revenue diversification and durability. This broadened launch portfolio resulted in record total royalty revenue growth of 50% year-over-year to $308 million, providing strong support to and conviction for the 2026-2028 financial guidance and for the revenues in 2029 and beyond. Let me now move to the second highlight, the significant expansion in new partnerships for ENHANZE and Hypercon in the quarter.

[Helen Torley, President and CEO at Halozyme]

In the second quarter, we signed four new collaboration and licensing agreements, and we signed a fifth agreement in July. We have never had this pace of new collaboration agreements in the history of Halozyme. For those of you who asked, "Can they sign great new deals for ENHANZE?" The answer is a resounding, emphatic, and demonstrated yes, with three of these five agreements being for ENHANZE. This year, we have added new ENHANZE agreements with GSK, Incyte, and a third confidential partner. We added two new Hypercon agreements with Vertex and with Oruka. I will add, not only did we broadly expand the number of partners, we also expanded use areas to beyond monoclonal antibodies into two new expanding and leading-edge modality areas, ADCs and nucleic acids. This means brand-new growth opportunity for ENHANZE.

[Helen Torley, President and CEO at Halozyme]

The new CLAs contributed $35.5 million in upfront collaboration revenue in the quarter, approximately evenly split across ENHANZE and Hypercon. This was also an important contributor to record total revenue in the quarter. This is how we said we would and how we are bending the curve in the 2029+ period. The third area I want to highlight is development portfolio expansion and progress. In the second quarter, we advanced our pipeline of future potential royalty streams with two new phase I study starts. It is our goal to have 13 ENHANZE development programs in 2026, which is also bending the curve in the 2029+ period. Moving now to slide four, I'll highlight the second quarter financial results. For the second quarter, total revenue increased 48% year-over-year to $481 million.

[Helen Torley, President and CEO at Halozyme]

This was largely driven by robust royalty revenues of $308 million, a strong 50% year-over-year growth. The robust revenue performance resulted in adjusted EBITDA of $329 million, adjusted EBITDA margin of more than 65%, and non-GAAP earnings per share of $2.28, highlighting the strength of our diversified royalty portfolio and the operating leverage that's inherent in our differentiated business model. Moving now to slide five. Based on the strong second quarter, and in particular, the robust royalty revenue growth, we are pleased to raise full-year 2026 guidance. What I will highlight is the increase in total revenue guidance of $110 million at the midpoint. This is driven by the increased projected royalty revenues from established products and the new launch products that I discussed earlier, and also by the upfront milestones resulting from what has already been a record year for new collaboration and licensing agreements.

[Helen Torley, President and CEO at Halozyme]

Let me move now to slide six. I'll provide additional detail on the key business drivers in the quarter, beginning with the current ENHANZE portfolio. In the second quarter, the contribution from the more recently launched subcutaneous products with ENHANZE, including OCREVUS ZUNOVO, Opdivo Qvantig, and RYBREVANT SC, increased by approximately 80% quarter-over-quarter. OCREVUS ZUNOVO is demonstrating how ENHANZE-enabled subcutaneous delivery can compound the value for our partners' products by expanding the accessible patient population. On their second quarter call, Roche reported that the number of patients receiving the subcutaneous formulation increased to 44,000. Contrast that with the 17,500 patients at the end of the fourth quarter of 2025, and you can see just how many new patients have been added for this every six months subcutaneous treatment. ZUNOVO is now the fastest-growing anti-CD20 multiple sclerosis brand in the U.S.

[Helen Torley, President and CEO at Halozyme]

Roche noted that approximately 60% of the U.S. OCREVUS ZUNOVO starts are coming from community practices, demonstrating how an ENHANZE-enabled delivery can reach new sites of care, enabling access to Ocrevus for new patients. Reflecting this momentum, Roche reaffirmed its expectation for CHF 9 billion in peak Ocrevus IV and subcutaneous sales by 2029, including approximately CHF 2 billion in growth resulting from the expanded accessibility created by OCREVUS ZUNOVO. Moving now to Bristol Myers Squibb. Bristol's Opdivo Qvantig continued its strong launch trajectory, with subcutaneous conversion reported to have increased to 15%, well on track for BMS's targeted 30%-40% conversion rate. This resulted in global sales growth of more than 200% year-over-year to $261 million in the second quarter. Based on this, Opdivo Qvantig is projected to exceed $1 billion in annualized revenue.

[Helen Torley, President and CEO at Halozyme]

Johnson & Johnson's RYBREVANT FASPRO is another strong example of how ENHANZE creates value for our partners and for Halozyme. For the second quarter of 2026, J&J highlighted rapid uptake of RYBREVANT FASPRO, contributing to the strong 62% year-over-year growth. Supporting growth acceleration in the upcoming quarters, the permanent J-code was awarded on July 1st. This has been a contributor to broadening adoption and growth in multiple prior subcutaneous launches. J&J also commented that they have submitted a filing to the FDA for head and neck cancer. We're pleased to note that the FDA recently granted priority review to the filing, meaning an FDA review timeline of approximately six months. Upon approval, this new indication would expand the opportunity for RYBREVANT FASPRO beyond its existing lung cancer indications into this new area of high unmet need.

[Helen Torley, President and CEO at Halozyme]

It is certainly very exciting to see the growth and contribution of these three newer launch brands, where for these three brands alone, the total IV and subcutaneous opportunity based on total sales is projected to be $25 billion in 2028. This is resulting in a diversified set of six products contributing royalty revenues where the total opportunity now exceeds $55 billion. I'll move now to DARZALEX subcutaneous, VYVGART Hytrulo, and PHESGO, beginning with DARZALEX. DARZALEX continued to demonstrate robust revenue growth, increasing approximately 18% year-over-year to over $4 billion in the quarter, with virtually all global sales being for DARZALEX subcutaneous with ENHANZE. J&J attributed the strong performance to continued market growth and share gains across all lines of therapy, including nearly 11 percentage points of share gain in the frontline setting.

[Helen Torley, President and CEO at Halozyme]

It's also worth noting that following the FDA approval in March, the all-subcutaneous regimen of TECVAYLI plus DARZALEX FASPRO is bringing new hope to patients with relapse and refractory multiple myeloma. I'll move now to argenx. Total VYVGART sales grew 60% year-over-year to $1.5 billion in the second quarter, driven by continued strong adoption of the ENHANZE-enabled VYVGART Hytrulo pre-filled syringe, which I will refer to as the PFS. The PFS is expanding the prescriber base and bringing more patients into therapy, with approximately 80% of U.S. PFS patients in the quarter reported to be new to VYVGART. This demonstrates how ENHANZE, by supporting continued innovation and administration, can meaningfully broaden patient reach and support long-term product growth. Driving continued growth, recent regulatory and clinical milestones continue to expand the long-term opportunity for VYVGART Hytrulo.

[Helen Torley, President and CEO at Halozyme]

VYVGART is now the first and only therapy approved across all gMG serotypes, including seronegative patients. The U.S. approval in seronegative gMG in May expands the addressable opportunity by approximately 11,000 patients. Positive Phase III data in ocular myasthenia gravis further highlights the opportunity to expand the franchise and drive future growth upon approval. Moving now to PHESGO. PHESGO continues to demonstrate the value of ENHANZE-enabled subcutaneous delivery within Roche's HER2 franchise. During the first half of 2026, PHESGO delivered strong growth of 18%, with global conversion reaching 54% in the 85 launch countries. Roche reiterated its expectation for at least 60% conversion at peak and highlighted PHESGO is a key component of the franchise's long-term durability. I'll move now to slide seven.

[Helen Torley, President and CEO at Halozyme]

Looking beyond the current decade, our future launch portfolio represents a significant source of long-term value with the potential to expand and further diversify our royalty revenue streams and deliver durable revenue for many years to come. Beginning in the 2029-plus timeframe, we have three revenue engines. The first is our 10 currently approved ENHANZE products. The second are the multiple launches that are arising from our growing and robust ENHANZE development portfolio, and the third is Hypercon partner products. We project that by year-end of 2026, we will have up to 13 ENHANZE partner products in development, with potential approvals beginning in the 2029-plus timeframe. These programs represent the next generation of royalty-producing assets and extend our future opportunity beyond the currently approved portfolio. During the second quarter, two new ENHANZE targets initiated Phase I testing.

[Helen Torley, President and CEO at Halozyme]

This is resulting in nine development products and keeps us well on track for the 13 development products by year-end. This broad and growing portfolio of future potential launches clearly demonstrates why we're so confident that ENHANZE will be a significant long-term revenue driver for Halozyme. I will now move to HyperCon, which we intend to make into a second compounding platform engine and recreate the amazing success of ENHANZE. HyperCon is designed to address growing demand for lower-volume subcutaneous administration, enabling highly concentrated formulations that can potentially support at-home and physician office administration. We made strong progress in the quarter, advancing preparations to provide clinical supply to support the first HyperCon clinical starts in the first half of 2027.

[Helen Torley, President and CEO at Halozyme]

Our projected first launch timing for these two new products is in the 2030, 2031 timeframe. We continue to expect HyperCon to launch multiple products and achieve approximately $1 billion in royalty revenue in the mid-2030s. Let me now turn to the new collaboration and licensing agreements, which are summarized in Slide eight. I mentioned at the start that this has been our most successful year ever with record performance for ENHANZE and for HyperCon. The pace of recent collaboration activity reflects the growing importance of subcutaneous delivery across the biopharmaceutical industry. Pharma and biotech companies are increasingly focused on improving the patient treatment experience, reducing treatment burden, expanding access across sites of care, and differentiating their products. In the second quarter, we announced a new ENHANZE agreement with GSK, which included the opportunity to use ENHANZE in a new use area with Antibody-Drug Conjugates.

[Helen Torley, President and CEO at Halozyme]

In July, we announced a second agreement with Incyte, working with Incyte on a subcutaneous formulation of its first-in-class mutant calreticulin-targeted monoclonal antibody. Today, we are pleased to announce a third new agreement signed in the second quarter with an undisclosed partner to explore the use of ENHANZE with a nucleic acid therapeutic. This is the first of what we hope will be several collaborations in this emerging area where ENHANZE brings the potential to enable subcutaneous delivery of large-volume nucleic acid conjugate formulations and LNPs while mitigating the inflammatory and immune response that can be otherwise generated from subcutaneous administration. We are excited to expand into these two new areas of ADCs and nucleic acids that represent brand-new growth market segments for ENHANZE, where we estimate that there are at least 100 commercial and development products that may benefit.

[Helen Torley, President and CEO at Halozyme]

Also in the second quarter, we signed two new HyperCon collaboration agreements, one with Vertex and one with Oruka. These agreements establish strategic platform relationships that have the potential to expand over time through additional targets and future development programs. When we combine the up to 13 ENHANZE development programs by year-end and this expanding opportunity that's created by the current and new ENHANZE and HyperCon agreements, we have created a substantial portfolio of new potential royalty opportunities extending well into the next decade. What you've heard me describe is the power of having an established compounding platform engine with ENHANZE. We're creating just the same for HyperCon. We have demonstrated time and again the repeatability and diversification with now six separate and growing royalty streams delivering record revenue. We've demonstrated scalability with multiple waves of new launches now extending well into the 2030s.

[Helen Torley, President and CEO at Halozyme]

The durability is clear, with 50% royalty revenue growth more than 12 years after our first launch. We're very proud that our partner products are clinical breakthroughs that we have helped create into multiple blockbuster subcutaneous products. Our priority in 2026 remains executing on these significant organic growth opportunities. We're also continuing to evaluate selective M&A opportunities that can expand our drug delivery technology offering and royalty duration. Any external opportunity must meet our criteria of a strong strategic fit, durable value creation, and attractive returns. With that, I'm pleased to turn the call over to Darren.

[Darren Snellgrove, CFO at Halozyme]

Thank you, Helen. I am thrilled to be joining Halozyme at such an exciting point in the company's evolution. Over the past few months, I've had the opportunity to dive deeper into the business and what has stood out to me is the strength of Halozyme's business model. It's rare to find a company that offers such outstanding current performance and future potential. Halozyme's combination of strong growth, exceptional profitability, and robust free cash flow, coupled with disciplined capital allocation, positions the company well as we continue to accelerate innovation and provide significant returns to shareholders. Having spent nearly three decades in the industry, I was familiar with the value Halozyme creates for partners, patients, and the healthcare system. After joining the company, I have an even greater appreciation for the opportunities ahead. One of the unique characteristics of the business is what I would call the Halo Effect.

[Darren Snellgrove, CFO at Halozyme]

Every successful ENHANZE enabled product does more than generate high margin, scalable royalty revenue. We enable our partners and improve products for patients. Our platforms reinforce the clinical and commercial value of subcutaneous delivery and create additional opportunities for target nominations, platform expansions, and new collaborations. This cycle continues to broaden our opportunities and increase the durability of our long-term diversified model. The strong second quarter results reinforce that view as the company delivered another record quarter, exceeding expectations for royalty revenue, driving strong EBITDA growth, and at the same time investing in our future growth platforms. Let me start on slide nine. Total revenue increased 48% to $481 million compared to $325.7 million in the prior year period. This performance was driven by robust royalty revenue growth and higher collaboration revenue, reflecting new deals signed during the quarter.

[Darren Snellgrove, CFO at Halozyme]

Royalty revenue of $307.7 million increased 50% from $205.6 million in the prior year period and exceeded our expectations. These results reflect increasing contributions from more recently launched ENHANZE products, as well as the continued commercial success of DARZALEX SC and VYVGART Hytrulo. DARZALEX generated $4 billion in global sales for J&J in the second quarter, representing close to 18% operational growth, further demonstrating the strength, durability, and continued momentum of the franchise. These strong sales translated into $152.2 million of royalty revenue to Halozyme, representing an increase of 27% year-over-year. Halozyme's royalties from VYVGART Hytrulo increased 143% to $72.6 million in the second quarter. Total VYVGART brand sales for the second quarter reached $1.5 billion, up 60% versus prior year, reflecting strong demand for the ENHANZE enabled prefilled syringe, which continues to broaden the prescriber base and support adoption across gMG and CIDP.

[Darren Snellgrove, CFO at Halozyme]

Other royalty revenues grew 85% to $54.4 million, driven by increasing partner product sales of recently launched products OCREVUS SC, Opdivo Qvantig, RYBREVANT SC, and TECENTRIQ subQ. We are pleased with the early momentum and see a significant opportunity ahead, given that estimates for the total brand growth of these four products is approximately $30 billion in 2028. Moving to slide 10 for more detail on the quarterly results. Research and development expenses were $27.7 million compared to $17.5 million in the prior year period, reflecting the addition of Hypercon and Surf Bio and our continued investment in advancing these technologies. Selling, general and administrative expenses were $57 million in the quarter compared to $41.6 million in the prior year period. Net income increased 39% to $229.9 million from $165.2 million in the prior year period.

[Darren Snellgrove, CFO at Halozyme]

Adjusted EBITDA increased 46% to $328.8 million from $225.5 million in the prior year period, driven by continued strong royalty growth. GAAP diluted earnings per share was $1.90 compared to $1.33 in the prior year period. Non-GAAP diluted earnings per share was $2.28 compared to $1.54 in the second quarter of 2025. Moving to slide 11. We generate substantial free cash flow from our asset light model, and our strong financial position gives us the flexibility to execute a disciplined capital allocation strategy. Our priorities are straightforward: fund the highest return organic opportunities, maintain a strong balance sheet, and return excess capital to shareholders through a disciplined buyback program. We view share repurchases as an attractive use of capital when we believe the stock does not fully reflect the durability and growth of our royalty streams.

[Darren Snellgrove, CFO at Halozyme]

That is why we purchased $332.8 million worth of shares in the second quarter against our target of $400 million for the full year, while also investing in long-term growth and expanding the ENHANZE platform as more products launch and gain share. Turning now to Slide 12 and our updated 2026 outlook. As Helen mentioned earlier, we are pleased to raise the guidance for the remainder of the year. We now expect total revenue of $1.835 billion to $1.91 billion, representing year-over-year growth of 31%-37%, driven by an increase in royalty revenue projections and product sales from API. Royalty revenues of $1.22 billion to $1.245 billion, representing year-over-year growth of 41%-43%. We expect growing contributions from the recently launched ENHANZE products, while DARZALEX SC, VYVGART Hytrulo, and PHESGO remain the largest revenue contributors.

[Darren Snellgrove, CFO at Halozyme]

We expect adjusted EBITDA of between $1.225 billion and $1.28 billion, which includes approximately $60 million of planned investment in Hypercon and Surf Bio. Non-GAAP diluted EPS of $8.65 to $9. I will now turn the call back over to Helen.

[Helen Torley, President and CEO at Halozyme]

Thank you, Darren. In closing, let me highlight that our record second quarter results reinforce our confidence in both the strength of our business today and in the opportunities ahead. The growing contributions of our recently launched ENHANZE products and the continued strong performance of DARZALEX Subcutaneous and VYVGART give us confidence in the 2026 to 2028 financial guidance and beyond. In the quarter, we demonstrated meaningful progress to add to this and will bend the curve, including through multiple new ENHANZE and Hypercon collaboration and licensing agreements and multiple new clinical study starts. Thank you for your attention today, and operator, you can now open the line for questions.

[Operator]

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from Sean Laaman with Morgan Stanley. Your line is now open. Please go ahead.

[Analyst at Morgan Stanley]

Hi, this is Natasha on for Sean. Thank you for taking our question. Your raised royalty guide of $1.22 billion-$1.245 billion against the $548 million in the first half royalties implies around $336 million-$348 million per quarter in the back half, which is a step up from 2Q's $308 million. I just wanted to ask what's driving that implied acceleration from here. Is it primarily the newer launch cohort or the established products? Thank you.

[Helen Torley, President and CEO at Halozyme]

Yeah. Thanks, Natasha. I'll turn that over to Darren.

[Darren Snellgrove, CFO at Halozyme]

Yeah. Thanks for the question. As you noted, royalties were an important component of the beat in the first half. I would say that we do expect royalty revenue to grow sequentially through the second half. Probably won't have quite the same amount of royalty step-ups that were part of the Q1 to Q2 growth, we do expect that to continue to ramp up in the second half. A lot of it is driven by some of the new product launches that you've seen. Things like RYBREVANT SC, which has started to pick up a little bit, and some of the other new products.

[Analyst at Morgan Stanley]

Thank you.

[Operator]

Your next question is from Michael DiFiore with Evercore ISI. Your line is now open. Please go ahead.

[Yue Yue, Analyst at Evercore ISI]

Hi, this is Yue Yue on for Mike. Congrats on the strong quarter. Thank you for taking our question. We'd like to ask a question on target exclusivity. You've talked about partners who work with other providers often approach Halozyme first, where target was already exclusively licensed. As we look forward to 2029, how should we think about the way target exclusivity works as the base patents roll off? Then does that open up targets you couldn't take on before?

[Helen Torley, President and CEO at Halozyme]

Yeah, thanks for the question. In terms of the exclusivity, it's often very much driven by the partner company. If they request exclusivity and they are willing to pay the enhanced economics that are associated with that, historically, in the past, we have agreed to that, and we also would still agree to that today. I will note, however, that as you've probably seen in the latest series of agreements we've done, there are now a lot of companies who are very comfortable with gaining a non-exclusive license. So you're going to see a mix of the two as you go forward. I will also say, if you think about exclusivity is also done in different ways. It can be exclusivity to an entire target, as an example, like we did with PD-1.

[Helen Torley, President and CEO at Halozyme]

In other cases, there can be exclusivity to a specific molecule that uses a target or perhaps a target that is part of a combination. So, we are being able to be a lot more, if you like, creative and broad in what we're able to license, both on an exclusive and a non-exclusive basis as we go forward. That really is reflected in the five recent deals across those and the additional deals we anticipate signing this year and next.

[Yue Yue, Analyst at Evercore ISI]

Thank you.

[Operator]

Your next question is from Brendan Smith with TD Cowen. Your line is now open. Please go ahead.

[Brendan Smith, Analyst at TD Cowen]

Great. Thanks for taking the question, and congrats on the great quarter. Maybe first, actually, on HyperCon. I know we'll get confirmation of the first two assets by early next year. Just wondering if you can give us a little bit more of a sense of timing for subsequent assets in that pipeline and just roughly when the next wave might be. If there are others that could reach phase I next year, is that more of a 2028 event? I guess kind of related, wanted to ask actually about that $1 billion in incremental HyperCon royalties by 2035 you've spoken to. I guess, how many different assets are you assuming would contribute to that by 2035? I guess, are your assumptions largely just based on the current partnerships, or are you assuming any additional ones? Thanks, guys.

[Helen Torley, President and CEO at Halozyme]

Yes, thanks. With regard to HyperCon and timing, there absolutely could be additional study starts in the second half of 2027, Brendan, based on the progress we're seeing with companies advancing through the preparatory stages before they're ready to advance to the clinic. This, if you recall, while we've got 5 agreements, those partners have taken up to 20 targets. Some of the companies are advancing more than 1 target at this point in time, and that is already creating a very nice pipeline of future clinical studies for 2027 and for 2028. That's the great thing about the model we have with this ability to access multiple targets in 1 agreement. As we projected the $1 billion in the mid-2030s, we had assumed between 5 and 7 launches by that time period.

[Helen Torley, President and CEO at Halozyme]

I think a number of those will come from the already signed agreements, but it is also possible that agreements in the next 1 to 2 years could also be contributing to that based on what we estimate the development timeline to be. I commented on the call about it's very exciting to see HyperCon turning into another compounding platform engine for us, but able to do so faster and quicker, in part because the market is just more receptive to sub-Q delivery. We're also able to bring a lot of our learnings from how we've been able to commercialize and grow ENHANZE®.

[Brendan Smith, Analyst at TD Cowen]

That's great. Thanks, Helen. Thanks, guys.

[Operator]

Your next question is from Mitchell Kapoor with H.C. Wainwright. Your line is now open. Please go ahead.

[Mitchell Kapoor, Analyst at H.C. Wainwright]

This is Mitchell. Congrats on a strong quarter, thank you for taking our questions. I guess for both or all platform cadence, how are you thinking about the mix of new partner wins and follow-on nominations from existing partners, how would that shape the future deal cadence? On the ADC and nucleic acid therapeutics, there is a lot of excitement about that. I was just wondering, how are you thinking about that broader opportunity, how are you prioritizing these modalities as you pursue additional deals? Thank you.

[Helen Torley, President and CEO at Halozyme]

Yeah, thank you. I will start with the ADCs and the nucleic acids. Yes, very excited now to have signed a deal, one each for both of those, opening up a brand-new growth opportunity for ENHANZE®. We have previously said that there is 50 ADCs we think could benefit from ENHANZE®, we said there are about 50 nucleic acid-based therapies that we think can benefit from ENHANZE®. This really is an exciting opportunity, I would say our business development team are agnostic to whether it is a monoclonal antibody, an ADC, or a nucleic acid. What it has done is broaden the number of companies that we are speaking to and approaching with ideas as to how the ENHANZE® technology can help improve their risk-benefit profile or their competitive profile.

[Helen Torley, President and CEO at Halozyme]

It just has dramatically increased the number of conversations we are having, that is exciting in terms of what that can mean for long-term growth and expansion of the ENHANZE® number of agreements. You make a good point, it is something I think that is often under-recognized, is that signing new deals is a source of growth for us. The number of targets that we already have under license that has not yet been nominated is a second separate source of growth. In the first half of this year, I will say we have had one current partner nominate a product, actually I am expecting more in the second half. It is going to be a mix of both, really, in terms of what is going to cause the continued growth and expansion of our pipeline. We expect to have 13 development products in the clinic this year.

[Helen Torley, President and CEO at Halozyme]

That's going to continue both from these current deals we're signing, adding more nominations and moving into the clinic. Even our existing partners who've still got slots left. Falling into the same mindset, I think, as many of the companies today of recognizing that sub-Q delivery means competitive differentiation, and they are advancing new nominations at a pace also that we've not necessarily seen in a long, long time. It's an exciting time with both of those avenues for growth, as well as growth coming from the ADCs and the nucleic acid new opportunity.

[Mitchell Kapoor, Analyst at H.C. Wainwright]

Thank you.

[Operator]

Your next question is from Mohit Bansal with Wells Fargo. Your line is now open. Please go ahead.

[Will Zang, Analyst at Wells Fargo]

Hi, this is Will Zang on for Mohit. Congrats on the recent deals in the quarter. I guess we just want to understand now that some of the smaller companies are also partnering with you on ENHANZE, is the deal structure for these smaller companies any different from your prior deals? I guess, what conversations are you currently having with newer, smaller partners?

[Helen Torley, President and CEO at Halozyme]

Yeah, we're excited to be continuing to be discussing ENHANZE with all size ranges of companies. If you think about just the last few months, we have GSK that certainly is a very large company. We've got Incyte that is a large company, and as you point out, some smaller companies as well. I would say what is more a driver of exactly what the deal structure will be is based much more on exclusivity versus non-exclusivity. That is where there is some difference in the economics that's really driven by that the deal structure is shaped around exclusivity, not company size.

[Will Zang, Analyst at Wells Fargo]

Great. Thanks.

[Operator]

As a reminder, if you would like to ask a question, please press star one to raise your hand. To withdraw the question, simply press star one again. The next question is from David Risinger with Leerink Partners. Your line is now open. Please go ahead.

[David Risinger, Analyst at Leerink Partners]

Thanks very much, congrats on the financial upside and Darren, congrats on your new role. I have a few questions, please. First, could you provide an update on the Merck litigation prospects? That's the first question. Second, how you see Alteogen as a competitor today, then, third, your view on the acquisition landscape. Thank you.

[Helen Torley, President and CEO at Halozyme]

All right. I'll take the first two, and I'll turn the acquisition landscape over to Darren. With regard to the Merck litigation, let me start outside the U.S. We are currently actively pursuing injunctions in approximately 8 countries outside the U.S. with the goal of stopping Merck infringing the use of our MDx technology. This includes the launch in countries as well as manufacturing, distribution, and supply of QLEX for worldwide use. These cases are moving forward rapidly. You may have seen we did have a preliminary injunction in Germany in December. We do expect important decisions broadly impacting Merck's launches of sales in QLEX in Europe before the end of this year, so very active in Europe. With regard to the United States, we're working through the U.S. Patent Office proceedings that were brought by Merck with regard to the PGRs.

[Helen Torley, President and CEO at Halozyme]

We expect to have more clarity once we're through all of those steps on when the U.S. District Court case is going to move forward, once the final decisions are reached in those proceedings later this year. Now, I will say that it's very active on the PGRs as well. We're going to be appealing the 4 initial written decisions that we received earlier this year, and we expect to hear the PTAB's decision on the remaining 10 sometime this fall.

[Helen Torley, President and CEO at Halozyme]

Lots still happening in the U.S. case as well, David, with some more clarity with regard to the PGRs at the end of this year, clarity on the timing of the district court case, but certainly, our conviction and our confidence is absolutely unwavering that we will prevail in this case and we will be appealing, certainly the first 4 PGRs based on our very strong conviction that the Alteogen product is infringing. The Merck product using the Alteogen technology, I should probably say better, is infringing. With regard to Alteogen, it still continues to be the case that from what is publicly available, it would appear that the people who are assigning deals at the moment with Alteogen are for targets that Halozyme has exclusively licensed.

[Helen Torley, President and CEO at Halozyme]

I can say many of those companies have directly come to us, and we've had to unfortunately say we're unable to work with them. In light of that, obviously, we're not finding that the performance of Alteogen is directly competing with us. I will also share that when companies come to us, what they say is they want to work with Halozyme because of our track record of success. Because our product's been used and we've got a safety database in over 1.3 million patients with 15 years' history of reliability of supply. Our team have got the expertise to support very rapidly getting the partners into the clinic, innovative trial designs, and a faster path to approval. So the entire package that Halozyme brings is what has, if you think about just in the last 7 or 8 months, 6 new ENHANZE deals.

[Helen Torley, President and CEO at Halozyme]

We are definitely performing incredibly well in the market. It comes from that competitive moat that we've created from all of our years of expertise and performance. Let me turn it to Darren for acquisition landscape.

[Darren Snellgrove, CFO at Halozyme]

Yes, thanks, and hi, David. With regards to M&A, we definitely continue to see M&A as an important part of our capital allocation strategy. I would say particularly when we can add differentiated technologies, new capabilities or create future growth platforms. At the same time, I think you've heard the company say this before, we're very disciplined.

[Darren Snellgrove, CFO at Halozyme]

We indicated last quarter that for 2026, we're going to really focus on organic growth and M&A is unlikely. What I would say the good news is, given the strength of our portfolio, the growing cash flows that we have, and our improving leverage profile, we really do have flexibility. Again, we remain focused on long-term shareholder value.

[David Risinger, Analyst at Leerink Partners]

Great. Thank you.

[Operator]

Your next question is from Mitchell Kapoor with H.C. Wainwright. Your line is now open. Please go ahead.

[Mitchell Kapoor, Analyst at H.C. Wainwright]

Hi, this is Mitchell again. Thank you for taking our second round of questions. I was wondering, as you build out Hypercon manufacturing, how should we think about potential revenue beyond royalties and any incremental investment within the 2026, 2028 margins? You showed that you got to 13 ENHANZE programs in development by end of 2026 and 13 launches in 2029. I'm just wondering, how are you thinking about any potential attrition or is that built into your assumptions? Thank you.

[Helen Torley, President and CEO at Halozyme]

Yeah. Let me talk about the manufacturing first, and maybe I'll begin by sharing why we think it's such an exciting opportunity for us to invest in the manufacturing. As you're already hearing, we've got five deals, multiple products are advancing. We believe that Hypercon is going to become rapidly the same type of compounding platform engine that we have from ENHANZE. To speed that up, and to maximize the success of that, Halozyme investing to advance manufacturing is just the right thing to do. We'll be able to drive that, control that at our pace and with our expertise. We have not finalized the exact planning around that, so I can't share any details on the investment required or the exact business model.

[Helen Torley, President and CEO at Halozyme]

What I can say is that this is going to be very exciting as we contemplate just how much more quickly Hypercon is going to grow to be that billion-dollar opportunity, compared to ENHANZE. More to come on that as we finalize our plans. With regard to the additional launches, just to clarify one thing, we anticipate having 13 products in the clinic by the end of this year. In terms of the 2029 number, what we said was we will begin the launches in 2029, and those will be occurring between 2029 and 2033, as an example. They're occurring over a period of time. Our development timelines generally are four to five years just to help with that. Not all 13 in 2029, but after that.

[Helen Torley, President and CEO at Halozyme]

In terms of the mix of products that we have in that 13 products, some very exciting products in their mechanisms of action. Some of the products are already commercial, which represent a very high probability of success based on our track record. Other products are new or mechanisms of action, but the majority are antibodies, and we have just got tremendous experience with antibodies, which again, from many aspects, gives us confidence in the fact that ENHANZE is going to be very successful in making them into successful subcutaneous products. A broad range of products in there. Hard to give you specifics on them, but as a body, this ability to have up to 13 additional launches beginning in 2029 is clearly a very exciting additional growth driver that will layer on top of the already launched products.

[Mitchell Kapoor, Analyst at H.C. Wainwright]

Thank you.

[Operator]

We have reached the end of the Q&A portion, which concludes today's call. Thank you so much for attending. You may now disconnect.

Participants

Executives

• Helen Torley, President and CEO

Analysts

• Tram Bui, VP of Investor Relations and Corporate Communications at Halozyme
• Darren Snellgrove, CFO at Halozyme
• Analyst at Morgan Stanley
• Yue Yue, Analyst at Evercore ISI
• Brendan Smith, Analyst at TD Cowen
• Mitchell Kapoor, Analyst at H.C. Wainwright
• Will Zang, Analyst at Wells Fargo
• David Risinger, Analyst at Leerink Partners