Halozyme delivered a record second quarter, with total revenue up 48% year-over-year to $481 million led by royalty revenue of $307.7 million (+50%), driving adjusted EBITDA of $328.8 million at a >65% margin and non-GAAP EPS of $2.28 versus $1.54. Growth broadened across six ENHANZE products - DARZALEX royalties rose 27% and VYVGART Hytrulo royalties surged 143% - while a record five new collaboration and licensing agreements (three ENHANZE, two Hypercon) added $35.5 million in upfront revenue and pushed into new ADC and nucleic-acid modalities. Management raised full-year 2026 guidance across the board, lifting total revenue by $110 million at the midpoint to $1.835-$1.91 billion. Key overhangs remain the ongoing Merck/QLEX patent litigation and ~$60 million of planned Hypercon/Surf Bio investment weighing on margins.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.