Halozyme Therapeutics, Inc. Q1 2026 results
Snapshot
Halozyme Therapeutics, Inc. reported $377M of revenue in Q1 2026, up 42.2% year over year, with diluted EPS of $1.22 and an operating margin of 49.0%.
- Revenue
- $377M
- YoY growth
- +42.2%
- Diluted EPS
- $1.22
- Operating margin
- 49.0%
What management said
- •Helen Torley, Halozyme's President and Chief Executive Officer, who will provide an update on our business, David Ramsay, our Interim Chief Financial Officer, will review our financial results as well as our outlook.
- •Certain non-GAAP or adjusted financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and slide presentation.
- •The continued strong performance of our currently approved products gives us strong conviction in the 2026-2028 financial guidance.
- •We have clear priorities for capital allocation, reinvesting at compelling returns to create new value and returning value to our shareholders.
- •The key drivers of revenue in the 2026 to 2028 timeframe are our first 10 ENHANZE launch products, which includes DARZALEX subcutaneous, VYVGART Hytrulo, and PHESGO.
- •Total revenue for the quarter increased 42% year-over-year to $377 million, reflecting the strength of our commercial royalty portfolio.
- •This revenue growth translated into adjusted EBITDA of $230 million and non-GAAP earnings per share of $1.60, representing a greater than 40% increase year-over-year.
- •Based on these results, I am pleased to reaffirm our full year 2026 financial guidance and the 2026 to 2028 financial guidance.
- •For 2026, we continue to project ENHANZE royalties to exceed $1 billion for the first time, representing 30%-35% growth over 2025.
- •During the 2026 to 2028 timeframe, we project our adjusted EBITDA margin will be greater than 65%, growing to approximately 70%.
- •As you know, our business converts revenue to free cash flow very efficiently, which provides us with the capital to deliver durable, long-term value for our shareholders.
- •During 2026 to 2028, we plan to deploy our capital predominantly in four key areas.
What went well
- •Total revenue increased 42% year-over-year to $376.7 million, driven by broad-based strength including royalty growth and higher product sales to partners.
- •Royalty revenue grew approximately 43% year-over-year to $240.7 million, reflecting continued commercial success of DARZALEX SC, VYVGART Hytrulo, and Phesgo plus the ramp of OCREVUS, Opdivo, TECENTRIQ, and RYBREVANT.
- •Adjusted EBITDA increased 42% to $229.5 million and non-GAAP diluted EPS rose to $1.60 from $1.11, a greater than 40% year-over-year increase.
- •The company signed three new collaboration and licensing agreements in 2026, already meeting its full-year goal, including a new ENHANZE collaboration with GSK covering multiple oncology targets and marking its first ENHANZE deal for antibody drug conjugates.
- •Two ENHANZE partners initiated phase I studies of new targets in the quarter, including argenx with ARGX-124, and Pfizer nominated a new undisclosed non-exclusive ENHANZE target.
- •The company announced a new $1 billion share buyback authorization with plans to repurchase at least $400 million of shares in 2026.
What went wrong
- •Management said it is unlikely to identify a drug delivery M&A opportunity meeting its criteria to transact on in 2026, and does not foresee M&A outside of drug delivery.
- •The first two Hypercon phase I clinical starts were pushed to the first half of 2027 as the company continues to finalize clinical supply manufacturing.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Total revenue | FY2026 | — | $1.71B-$1.81B (22%-30% YoY growth) | Reiterated |
| Royalty revenue | FY2026 | — | $1.13B-$1.17B (30%-35% YoY growth) | Reiterated |
| Adjusted EBITDA | FY2026 | — | $1.125B-$1.205B (includes ~$60M Hypercon/SurfBio investment) | Reiterated |
| Non-GAAP diluted EPS | FY2026 | — | $7.75-$8.25 (excludes any future share repurchase impact) | Reiterated |
| ENHANZE royalties | FY2026 | — | Exceed $1 billion for the first time, 30%-35% growth over 2025 | Reaffirmed |
| Adjusted EBITDA margin | 2026-2028 | — | Greater than 65%, growing to approximately 70% | Reaffirmed |
| Net leverage | End of 2026 | ~2.5x (current) | Approximately 1.2x | Projected reduction |
| Share buyback yield | Multi-year | — | Approximately 3% annual share buyback yield | New target |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total revenue | +42% to $376.7M (from $264.9M) | Broad-based strength across the business including strong royalty growth and higher product sales to partners. |
| Royalty revenue | +43% to $240.7M (from $168.2M) | Continued commercial success of DARZALEX SC, VYVGART Hytrulo, and Phesgo, plus the continued ramp of recently launched OCREVUS, Opdivo, TECENTRIQ, and RYBREVANT. |
| Adjusted EBITDA | +42% to $229.5M (from $162M) | Driven by continued strong royalty growth while still investing in Hypercon and SurfBio. |
| Non-GAAP diluted EPS | Up to $1.60 (from $1.11) | Strong royalty revenue growth and operating leverage of the high-margin royalty model. |
| R&D expenses | Up to $25.6M (from $14.8M) | Integration of the Hypercon and SurfBio acquisitions. |
| SG&A expenses | Up to $57.9M (from $42.4M) | Higher operating costs in the quarter versus the prior year period. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| ENHANZE royalty backlog and durability | — | Only ~25% of projected royalties from the 10 approved products realized by end-2025, with ~66% still to come between 2026 and 2032 and 9% beyond. | rising |
| Hypercon as the next ENHANZE-like platform | — | Five agreements covering up to 17 targets; first two phase I starts now in 1H2027, launches in 2030-2031, targeting ~$1 billion royalties by mid-2030s. | rising |
| New collaboration and licensing deal momentum | — | Three new CLAs signed in 2026 meeting the full-year goal, with line of sight to additional agreements this year. | rising |
| Capital allocation and shareholder returns | — | New $1 billion buyback authorization, at least $400M repurchases in 2026, deleveraging by retiring 2027 and 2028 notes at maturity. | rising |
| 2029-plus revenue drivers | — | Four drivers: 10 current products, up to 13 new ENHANZE launches, two Hypercon launches, and additional targets under signed and new agreements. | rising |
| Antibody drug conjugate expansion | — | First ENHANZE ADC collaboration signed with GSK; engaged with several pharma/biotech companies on a product-by-product basis, with nucleic acid discussions also in parallel. | rising |
Q&A summary
Which 2029-plus ENHANZE products will be the biggest, and how many of the ongoing Hypercon discussions predated the acquisition?
Management cited OCREVUS, RYBREVANT, VYVGART, and DARZALEX as multiple large contributors among the 66% of royalty revenue still to come, without breaking them out individually. On Hypercon, of the recent deals one discussion was ongoing before the acquisition and one was new, with multiple other groups in discussion including early feasibility testing.
What is left to finish before the two Hypercon phase I clinical starts, and over what timeframe will the 13 additional ENHANZE launches occur?
Management said it is working on clinical supply manufacturing and investing in end-to-end manufacturing capacity to enable the phase I starts in the first half of 2027. The 13 launches are expected over 2029 to 2032, based on the four-to-five-year heuristic from phase I entry to approval.
How comfortable is management with the scalability of the Hypercon technology, which did not previously enter the clinic?
Management said it is investing in manufacturing capacity to offer an end-to-end service. Hypercon started with CDMO Thermo Fisher Patheon, which did the engineering batches and is working to complete clinical batches in the first half of 2027, and the company is selecting CDMOs to expand into commercial manufacturing.
What milestones and buyback assumptions are reflected in the unchanged 2026 revenue and EPS guidance?
Guidance includes all projectable phase I, phase III, and commercial milestones plus a certain amount for new-deal milestones from new collaborations. The CFO confirmed the EPS guidance does not assume any level of share repurchases, and will be updated as the year progresses.
What royalty rates and IP protection apply to the 13 future ENHANZE products, and how do competing hyaluronidases factor in?
Management expects mid-single-digit royalties, with some newer contracts starting single-digit and escalating with sales. Base composition-of-matter patents expire in 2029 in the US and Europe, but co-formulation patents extend royalty terms by at least two years up to a 20-year-from-filing term, often maintaining the original rate. On Sanofi, management declined to comment, noting partners come to Halozyme first as the gold standard with over 1.3 million patients treated.
How have the economics of new licensing deals evolved as the platform is validated?
Hypercon deal terms have been consistent across five agreements covering up to 17 targets, with upfront and development milestones plus mid-single-digit sales royalties, reminiscent of early ENHANZE. For ENHANZE, exclusive versus non-exclusive agreements give different peak milestone and royalty numbers, with potential to reach mid-single-digit royalties as sales escalate.