Halozyme (HALO) Q2 FY26 earnings call: guidance and Q&A

What is driving the implied sequential step-up in royalty revenue from Q2's $308 million to $336-$348 million per quarter in the back half, as per the raised full-year guidance? Is it primarily newer launches or established products?

Management expects royalty revenue to grow sequentially through H2, driven largely by newer product launches like RYBREVANT subcu, which are starting to pick up. While Q1 to Q2 had significant step-ups, the ramp-up will continue.

“Yes. Thanks for the question. And as you noted, royalties were an important component of the beat in the first half. And 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. But we do expect that to continue to ramp up in the second half. And a lot of it is driven by some of the new product launches that you've seen, so things like RYBREVANT subcu, which has started to pick up a little bit in some of the other new products.”

asked by Natasha on for Sean Laaman, Morgan Stanley · answered by Darren Snellgrove

How will target exclusivity work as base patents flow out towards 2029, potentially opening up previously unavailable targets?

Exclusivity is partner-driven and associated with enhanced economics. While some partners still request exclusivity (e.g., for an entire target or specific molecule), many are now comfortable with non-exclusive licenses. Halozyme is becoming more creative in licensing, offering a mix of exclusive and non-exclusive deals, which is reflected in recent agreements.

“Yes. Thanks for the question. In terms of the exclusivity, it's often very much driven by the partner company. And 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 agreements we've done, there are now a lot of companies who are very comfortable with gaining a nonexclusive license.”

asked by [indiscernible] on for Michael DiFiore, Evercore ISI · answered by Helen Torley

What is the timing for subsequent Hypercon assets beyond the first two, and when might the next wave reach Phase 1? How many assets are assumed to contribute to the $1 billion royalty target by 2035, and is this based on current partnerships or additional ones?

Additional Hypercon study starts are expected in H2 2027, with some partners advancing multiple targets from the existing 5 agreements (up to 20 targets). The $1 billion royalty target by mid-2030s assumes 5 to 7 launches, which could come from current agreements or new ones signed in the next 1-2 years. Hypercon is expected to accelerate faster than ENHANZE due to market receptivity and Halozyme's learnings.

“Yes. Thanks. With regard to Hypercon and timing, there are absolutely be additional study starts in the second half of 2027, Brandan, based on the progress we're seeing with companies advancing through the preparatory before they're ready to advance to the clinic. And this -- if you recall, while we've got 5 agreements, those partners have taken up to 20 targets. And so some of the companies are advancing more than one target at this point in time, and that is already creating a very nice pipeline, all future clinical studies for 2027 and for 2028.”

asked by Benjamin Paluch on for Brendan Smith, TD Cowen · answered by Helen Torley

How does Halozyme balance new partner wins with follow-on nominations from existing partners? How is the company prioritizing and pursuing deals in the exciting ADC and nucleic acid modalities?

The company is agnostic to modality (monoclonal antibody, ADC, nucleic acid) but the new modalities have broadened the number of companies Halozyme engages with, increasing growth opportunities for ENHANZE. Both new deals and follow-on nominations from existing partners (who are advancing nominations faster) contribute to pipeline growth. The 50 ADCs and 50 nucleic acid therapies represent significant new opportunities.

“And I would say our business development are agnostic to whether it's a monoclonal antibody, an ADC or a nucleic acid. But 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 benefit profile or their competitive profile. And so it just has dramatically increased the number of conversations we're having, and that's exciting in terms of what that can mean for long-term growth and expansion, all of the enhanced number of agreements.”

asked by Amit on for Mitchell Kapoor, H.C. Wainwright · answered by Helen Torley

Are deal structures for smaller companies partnering on ENHANZE different from prior deals, and what conversations are happening with new/smaller partners?

Halozyme discusses ENHANZE with companies of all sizes. The primary driver of deal structure and economics is exclusivity vs. non-exclusivity, not company size.

“I would say what is more a driver of exactly what the deal structure will be is based much more on exclusivity versus nonexclusivity. And so 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.”

asked by [indiscernible] on for Mohit Bansal, Wells Fargo · answered by Helen Torley

Update on Merck litigation prospects, view on Alteogen as a competitor, and outlook on the acquisition landscape.

(Litigation) Actively pursuing injunctions in 8 countries outside the U.S. against Merck, with important decisions expected in Europe by year-end. In the U.S., appealing initial PTAB decisions and awaiting clarity on remaining 10 PTAB decisions this fall, which will determine U.S. District Court timing. Halozyme is confident in prevailing. (Alteogen) Not seen as a direct competitor; Alteogen's deals are often for targets exclusively licensed by Halozyme. Halozyme's competitive moat (track record, safety data, supply reliability, expertise) attracts partners. (M&A) M&A remains an important part of capital allocation for differentiated technologies, but 2026 focus is on organic growth, making M&A unlikely this year. Flexibility exists due to strong portfolio and cash flows.

“With regard to the Merck litigation, let me start outside the U.S. We are currently actively pursuing injunctions in 8 countries outside the U.S. with the goal of stopping the Merck infringing use of our MDAs technology. This includes the launch in countries as well as manufacturing, distribution and supply of [indiscernible] for worldwide use. These cases are moving forward rapidly. You may have seen we did have a preliminary injunction in Germany in December. And we do expect important decisions broadly impacting Merck launches of sales in [indiscernible] in Europe before the end of this year.”

asked by David Risinger, Leerink Partners · answered by Helen Torley

How should investors think about potential revenue beyond royalties and incremental investment for Hypercon manufacturing within 2026-2028 margins? Also, regarding the 13 ENHANZE programs by year-end 2026 and launches starting in 2029, is potential attrition built into assumptions?

(Hypercon manufacturing) Halozyme is investing in Hypercon manufacturing to accelerate its success and maximize its potential as a compounding platform. Details on investment and business model are not finalized but will be shared later. (ENHANZE pipeline) The 13 development products are expected to launch sequentially between 2029 and 2033, not all in 2029. The pipeline includes a mix of commercial and new mechanisms of action, primarily antibodies, giving confidence in success. Attrition is implicitly considered in the long-term outlook, but the current pipeline is robust.

“Yes. 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 invest in the manufacturing. As you're already hearing, we've got 5 deals products are advancing. And 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.”

asked by Amit on for Mitchell Kapoor, H.C. Wainwright · answered by Helen Torley