Halozyme Therapeutics, Inc. (HALO) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong royalty revenue growth, optimistic long-term projections, and strategic acquisitions like Elektrofi. Despite a net income decline due to a one-time expense, adjusted EBITDA and non-GAAP EPS show positive trends. The Q&A section reveals strategic partnerships and technological advancements, enhancing future prospects. However, some management responses were unclear, slightly tempering enthusiasm. Overall, the raised guidance and robust financial performance outweigh the negatives, suggesting a positive market reaction.
Key Financial Performance
Total Revenue $1.4 billion, a 38% increase year-over-year. This growth was driven by sustained ENHANZE momentum and increased royalty revenue.
Royalty Revenue $867.8 million, a 52% increase year-over-year. This was driven by the uptake of ENHANZE-enabled products, particularly DARZALEX SC, VYVGART Hytrulo, and PHESGO.
DARZALEX SC Royalty Revenue $483 million, a 29% increase year-over-year. This growth was attributed to the strong performance of DARZALEX SC, which represents 97% of sales in the U.S.
PHESGO Royalty Revenue $105.6 million, a 51% increase year-over-year. Growth was driven by geographic expansion, reimbursement progress, and increased conversion from IV Perjeta to subcutaneous PHESGO.
VYVGART Hytrulo Royalty Revenue $157.2 million, a 444% increase year-over-year. This was due to expanded adoption and use for gMG and CIDP patients, as well as the launch of a prefilled syringe for at-home and in-clinic administration.
Net Income $316.9 million, a decrease from $444.1 million in 2024. The decline was due to a $285 million acquired IPR&D expense related to the Surf Bio acquisition.
Adjusted EBITDA $657.6 million, an increase from $632.2 million in 2024. This includes the impact of the $285 million acquired IPR&D expense.
GAAP Diluted EPS $2.56, a decrease from $3.43 in 2024. The decline was due to the unfavorable impact of approximately $2.30 per share from the Surf Bio acquired IPR&D expense.
Non-GAAP Diluted EPS $4.15, a slight decrease from $4.23 in 2024. However, excluding the IPR&D charge, there was a $2.22 improvement over 2024, representing 52% growth.
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Operating Highlights
Expansion of subcutaneous drug delivery technologies: Acquired Elektrofi's Hypercon technology and Surf Bio's hyperconcentration technology, broadening drug delivery capabilities and expanding collaboration opportunities.
ENHANZE-enabled products: DARZALEX FASPRO approved for smoldering multiple myeloma; RYBREVANT subcutaneous approved in the U.S., Japan, and China; Roche nominated a new ENHANZE target; argenx expanded its ARGX-121 Phase I study.
New collaborations: Signed 3 new ENHANZE collaboration and licensing agreements, expanding into obesity and inflammatory bowel disease.
Geographic expansion and reimbursement progress: PHESGO achieved geographic expansion and reimbursement progress in large international markets, driving conversion to subcutaneous formulations.
New approvals and market penetration: Johnson & Johnson's RYBREVANT subcutaneous achieved regulatory approvals in multiple countries, and Roche's OCREVUS ZUNOVO expanded its addressable market.
Revenue growth: Total revenue grew 38% to $1.4 billion in 2025, with royalty revenue increasing 52% to $868 million.
Product performance: DARZALEX subcutaneous sales grew 22% to $14.4 billion; PHESGO sales increased 48% to $3 billion; VYVGART Hytrulo sales grew 90% to $4.15 billion.
Financial strength: Issued $1.5 billion in convertible notes, extended maturities, and improved liquidity.
Pipeline expansion: Projected 6 new ENHANZE programs and 2 new Hypercon programs entering Phase I clinical studies in 2026.
New growth opportunities: Exploring ENHANZE applications for antibody drug conjugates and nucleic acids, with preclinical data showing potential benefits.
Acquisitions and partnerships: Acquired Surf Bio and Elektrofi technologies; planning 1-3 new ENHANZE collaborations and 1-2 new Hypercon collaborations in 2026.
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Risk or Challenges
Litigation Expenses: Increased SG&A expenses were driven by litigation expenses, consulting and professional services, and transaction-related costs for acquisitions. This could impact profitability and financial flexibility.
Regulatory Approvals and Market Expansion: While there were multiple regulatory approvals and market expansions, the reliance on approvals and reimbursement progress in international markets poses risks if these are delayed or denied.
Supply Chain and Manufacturing Costs: Higher product volumes led to increased cost of sales, and there is a dependency on the successful advancement of high-yield manufacturing processes, which could pose operational risks.
Debt and Financial Leverage: The company issued $1.5 billion in convertible notes and increased its revolving credit facility, which, while improving liquidity, also increases financial leverage and refinancing risks.
R&D and Acquisition Costs: R&D expenses increased due to acquisitions and resource optimization. The company is also investing heavily in new technologies like Hypercon and Surf Bio, which may not yield expected returns.
Strategic Execution Risks: The company plans to add multiple new licensing agreements and acquisitions, which could strain resources and execution capabilities if not managed effectively.
Market Competition: The company faces competitive pressures in the biopharma industry, particularly in subcutaneous drug delivery technologies, which could impact market share and profitability.
Economic and Market Conditions: Economic uncertainties and market conditions could impact the adoption and sales of the company's products, particularly in international markets.
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Guidance & Outlook
Revenue Projections: Halozyme expects total revenue of $1.71 billion to $1.81 billion in 2026, representing year-over-year growth of 22% to 30%. Royalty revenues are projected to be $1.13 billion to $1.17 billion, reflecting growth of 30% to 35%.
Product Growth: DARZALEX SC, PHESGO, and VYVGART Hytrulo are expected to drive strong royalty revenue growth in 2026. DARZALEX sales are projected to exceed $18 billion by 2028, while PHESGO is expected to reach $3.6 billion in 2028.
Pipeline Development: In 2026, Halozyme plans to support 6 new ENHANZE programs and 2 new Hypercon programs entering Phase I clinical studies, bringing the total development portfolio to 15 products. The company also expects multiple Phase II and Phase III data readouts from existing partners.
New Collaborations: Halozyme plans to deliver at least 3 new licensing agreements in 2026, including 1-3 new ENHANZE collaborations and 1-2 new Hypercon collaborations.
Strategic Acquisitions: The company will pursue strategic acquisitions to strengthen its drug delivery portfolio and add assets with strong revenue and margin opportunities.
Hypercon Technology: Halozyme expects to advance 2 Hypercon programs into Phase I testing by the end of 2026, with first approvals projected in the 2030-2031 timeframe. The company projects approximately $1 billion in Hypercon royalty revenue within 5 years of the first launches in the mid-2030s.
Long-Term Growth: By 2028, Halozyme expects its combined commercial and development portfolio to nearly double from 19 products to 36, unlocking a new wave of royalty revenue. The company aims to maintain financial discipline while investing in long-term value creation.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you elaborate on the potential expansion of the DARZALEX collaboration with J&J and what happens after the expiry of the ENHANZE collaboration?
A:The licensing agreement with J&J ends in 2032. However, due to the importance of the DARZALEX brand and its reliance on ENHANZE, discussions to extend the agreement and supply of API are expected closer to the expiry date. J&J is unlikely to seek another source of API due to the strong reliability and safety track record of the current partnership.
Q:What is the regulatory path for converting approved therapies to subcutaneous (subcu) delivery using ENHANZE, and what are the treatment paradigm implications for approved ADCs?
A:For converting approved therapies to subcu, a traditional regulatory approach with PK non-inferiority studies is expected. For unapproved molecules, additional efficacy and safety trials are required. Regarding ADCs, subcu delivery can reduce infusion center time, especially as ADCs move to first-line therapy. Many ADCs are used in combination with subcu products, enabling IV-free regimens and reducing the need for infusion centers.
Q:How might the outcome of the IPR filed against Alteogen influence the Merck District Court litigation, and what is the potential ENHANZE royalty opportunity for Merus' petosemtamab?
A:The IPR against Alteogen is separate from the Merck District Court litigation. The court case involves Merck infringing Halozyme's patents, with further proceedings expected in June. For Merus' petosemtamab, its potential utility is expanding beyond head and neck cancer to other indications. The shift to subcu regimens, including PD-1s, is expected to benefit patients and increase ENHANZE royalty opportunities.
Q:What progress is being made towards clinical testing with Hypercon products, and what updates can be expected?
A:Two partners are advancing Hypercon products to Phase I clinical testing in 2026. Current steps include clinical scale-up batches and regulatory filings. Updates will depend on the partners, but clinicaltrials.gov may provide visibility into Phase I study designs. The development pathway will likely include Phase I dose identification and Phase III non-inferiority studies.
Q:Are the two Phase I Hypercon starts existing ENHANZE products, and what clinical benefits are expected from Hypercon compared to ENHANZE?
A:The targets for the two Phase I Hypercon starts are confidential but involve established blockbuster drugs. Hypercon aims to enable smaller volume injections, allowing treatments to be administered at home or in a doctor's office, enhancing patient convenience and autonomy. This evolution focuses on patient-centered care and reducing treatment burden.
Q:What are the expectations for new partnerships and reporting of sales for the high-volume auto-injector?
A:The high-volume auto-injector, capable of delivering 3-10 mL in 30 seconds, is advancing with current and potential new partners. Progress is expected this year. Sales will be reported as product sales for devices and royalties for licensed products, similar to ENHANZE.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details about the targets for the two Phase I Hypercon starts, citing confidentiality. They also did not elaborate on the full development pathway for Hypercon products, leaving some aspects unclear.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ADCs ENHANZE
ENHANZE approval
ENHANZE product
ENHANZE subcu
Halozyme
OPDIVO
PHESGO
PK
RYBREVANT
SC
Surf Bio
acquisition
antibody drug
asset
benefit risk
blood concentration
delivery ADCs
delivery ENHANZE
delivery technology
development portfolio
drug conjugate
experiment
injection site
licensing agreement
mids
payload
peak blood
portion
potential
product ENHANZE
program Phase
risk profile
subcu delivery
tolerability
use ENHANZE
value
HALO Transcript
Halozyme Therapeutics, Inc. (HALO) Q4 2025 Earnings Call Transcript
Positive2-17
The earnings call highlights strong royalty revenue growth, optimistic long-term projections, and strategic acquisitions like Elektrofi. Despite a net income decline due to a one-time expense, adjusted EBITDA and non-GAAP EPS show positive trends. The Q&A section reveals strategic partnerships and technological advancements, enhancing future prospects. However, some management responses were unclear, slightly tempering enthusiasm. Overall, the raised guidance and robust financial performance outweigh the negatives, suggesting a positive market reaction.
Halozyme Therapeutics, Inc. (HALO) Presents at Evercore 8th Annual Healthcare Conference Transcript
Neutral12-2
Halozyme Therapeutics, Inc. (HALO) Q3 2025 Earnings Call Transcript
Positive11-3
The earnings call summary reflects strong financial guidance, optimistic product development projections, and a strategic shareholder return plan. Despite some uncertainties in the Q&A, such as unclear patient growth sources for OCREVUS and lack of updates on certain products, the overall sentiment remains positive due to increased guidance, strong royalty contributions, and potential new partnerships. The stock is likely to experience a positive movement, with the potential for further upside if new deals materialize.
Halozyme Therapeutics, Inc. (HALO) Discusses To Acquire Elektrofi Conference Call (Transcript)
Neutral10-1
HALO Slides
HALO Report
Frequently Asked Questions
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