Executive Summary / Key Takeaways

• Differentiated Technology Driving Growth: Halozyme Therapeutics ($HALO) is a leader in drug delivery, leveraging its proprietary ENHANZE technology for subcutaneous administration and strategically expanding into ultra-high concentration formulations with the acquisition of Elektrofi's Hypercon, positioning it as a partner of choice for biopharma.
• Record Financial Performance and Robust Outlook: The company reported record Q3 2025 royalty revenue of $236 million (up 52% YoY) and raised its full-year 2025 guidance, projecting total revenue of $1.3 billion to $1.375 billion and non-GAAP diluted EPS of $6.10 to $6.50, driven by blockbuster ENHANZE-enabled products.
• Expanding Commercial Footprint: Ten approved ENHANZE-enabled products, including DARZALEX SC, Phesgo, and VYVGART Hytrulo, are fueling current growth, with new indications and formulations (like VYVGART Hytrulo pre-filled syringe) significantly broadening patient access and market opportunities.
• Strategic M&A and Capital Allocation: The Elektrofi acquisition for $750 million upfront expands Halozyme's technological offerings and long-term growth horizon, complemented by a balanced capital allocation strategy that includes substantial share repurchases and a commitment to maintaining a healthy net leverage ratio.
• Long-Term Royalty Durability and Pipeline Potential: Halozyme anticipates sustained royalty contributions from its current portfolio through at least 2030, with several extending into the 2040s, further bolstered by a robust pipeline of new ENHANZE and auto-injector programs, and new deal opportunities.

Halozyme's Innovation Edge: Reshaping Drug Delivery

Halozyme Therapeutics is a biopharmaceutical company at the forefront of transforming drug administration, focusing on disruptive solutions that enhance patient experiences and outcomes. Its core business revolves around licensing its proprietary ENHANZE drug delivery technology, which utilizes the recombinant human hyaluronidase enzyme (rHuPH20) to enable rapid and high-volume subcutaneous (SC) delivery of injectable drugs. This foundational technology has established Halozyme as a critical partner for major pharmaceutical companies seeking to improve convenience, reduce treatment burden, and expand market access for their biologic therapies.

The company's overarching strategy is to achieve organic growth through the continued expansion of its ENHANZE platform and proprietary auto-injectors, complemented by serial acquisitions of other disruptive drug delivery technologies. This dual approach aims to generate long, durable revenue streams, primarily through royalties, and deliver sustained EBITDA growth well into the next decade. Halozyme's historical journey, marked by strategic collaborations with industry giants like Roche , Janssen , and Takeda , has solidified its position as a leader in patient-centric drug delivery.

Halozyme's competitive standing is primarily defined by its unique technological differentiation. The ENHANZE technology offers several tangible benefits over traditional intravenous (IV) administration and other subcutaneous methods. It facilitates the SC delivery of high-dose, high-volume biologics, such as monoclonal antibodies, by temporarily breaking down hyaluronan in the extracellular matrix. This allows for significantly shorter administration times—often minutes compared to multi-hour IV infusions—and can enable fixed-dose SC dosing, extended dosing intervals, and potentially lower infusion-related reactions. These advantages translate directly into improved patient convenience, greater independence (including potential for home administration), and reduced burden on healthcare systems by freeing up capacity in hospitals and infusion centers. The application of rHuPH20 has also been instrumental in securing additional exclusivity for certain co-formulated proprietary drugs, extending their patent life beyond the IV drug's expiry.

In a competitive landscape where companies like Regeneron Pharmaceuticals (REGN), Amgen (AMGN), Biogen (BIIB), and AbbVie (ABBV) focus on broad therapeutic pipelines, Halozyme carves out a specialized niche as a technology enabler. While these larger biopharma firms possess extensive R&D capabilities and diversified product portfolios, Halozyme's strength lies in its focused platform, which can enhance the marketability and patient appeal of its partners' existing and pipeline assets. For instance, in oncology, ENHANZE-enabled DARZALEX SC has achieved a remarkable 96% conversion rate in the U.S., demonstrating its ability to capture significant market share by offering superior delivery convenience. Similarly, VYVGART Hytrulo is the only ENHANZE-enabled product approved for chronic inflammatory demyelinating polyneuropathy (CIDP), giving Halozyme a unique competitive position in that indication.

The recent agreement to acquire Elektrofi, Inc. for $750 million upfront, with potential additional milestone payments, further strengthens Halozyme's technological moat. Elektrofi's Hypercon technology enables ultra-high concentration microparticle formulations, achieving concentrations of 400 to 500 milligrams per milliliter, which is 4 to 5 times higher than many conventional formulations. This breakthrough is designed to enable more drugs to be delivered at home via auto-injector, particularly for indications in inflammation and immunology, neurology, nephrology, and oncology. This acquisition is highly complementary to ENHANZE, as it targets different volume requirements for subcutaneous delivery, expanding Halozyme's total addressable market without cannibalizing existing opportunities. Two of Elektrofi's partners are projected to begin clinical development of Hypercon-formulated products by the end of 2026 or earlier, with these products already being blockbusters in their current formulations. This strategic move reinforces Halozyme's role as the partner of choice in patient-centered drug delivery, expanding its long-term growth horizon.

Halozyme is also actively developing its proprietary auto-injector technologies. The company announced its first development agreement for a high-volume auto-injector with a current ENHANZE partner in Q1 2025, with human factor studies projected by mid-2026. Additionally, a small-volume auto-injector is progressing to a Phase 1 study with another current partner. These initiatives aim to further enable at-home delivery of biologics, a growing priority for both pharmaceutical companies and patients. The company's R&D efforts in this area are focused on creating clinic-ready prototypes and securing exclusive supply for key components, such as a high-volume primary container, to derisk development for partners.

Financial Momentum and Strategic Execution

Halozyme's financial performance in 2025 underscores the accelerating momentum of its core business. For the third quarter ended September 30, 2025, the company reported record royalty revenue of $236.0 million, a remarkable 52% increase year-over-year. Total revenue for the quarter reached $354.3 million, growing 22% year-over-year. This robust top-line growth translated into strong profitability, with adjusted EBITDA increasing 35% to $248.2 million and non-GAAP diluted earnings per share rising 35% to $1.72. For the nine months ended September 30, 2025, royalty revenue was $609.9 million (up 52% YoY), and total revenue was $944.8 million (up 32% YoY). Net income for the nine-month period was $458.5 million, a 49% increase from the prior year.

The primary drivers of this royalty growth are the continued strong sales uptake of three established blockbuster subcutaneous therapies: DARZALEX SC (Janssen ), Phesgo (Roche ), and VYVGART Hytrulo (argenx ). These products collectively contributed approximately $71.2 million to the year-over-year royalty increase in Q3 2025 alone. While earlier-launched products like Herceptin and MabThera experienced modest price erosion, the growth from newer blockbusters significantly outweighed this, demonstrating the strength and diversification of Halozyme's royalty streams.

Product sales, net, also contributed to revenue, reaching $94.2 million in Q3 2025 (up 9% YoY). This was primarily driven by a 31% year-over-year increase in proprietary product sales, particularly XYOSTED, and a 3% increase in bulk rHuPH20 sales due to partner demand. Device partnered product sales, however, saw a 38% decrease in the quarter, reflecting fluctuations in partner needs. Revenues under collaborative agreements decreased by 50% year-over-year to $24.0 million in Q3 2025, primarily due to the timing of milestone achievements, which are inherently variable.
Halozyme maintains a strong balance sheet, with cash, cash equivalents, and marketable securities totaling $702 million as of September 30, 2025, an increase from $596.1 million at the end of 2024.

This increase was primarily driven by robust cash flow from operations, which provided $432.5 million in the nine months ended September 30, 2025. The company's net debt-to-EBITDA ratio stood at a healthy 0.9x at the end of Q3 2025, providing significant financial flexibility.

Management has a clear capital allocation strategy, balancing strategic M&A with substantial shareholder returns. Halozyme has repurchased $342.4 million in shares year-to-date Q3 2025, with $158 million remaining under its current authorized plan. Since 2019, the company has returned over $1.85 billion to shareholders through buybacks, representing 117% of cumulative free cash flow over that period. The acquisition of Elektrofi is expected to result in a minimal increase in net leverage, estimated at approximately 2x net debt-to-EBITDA at closing, with a clear plan to delever quickly in subsequent quarters due to strong free cash flows.

Outlook and Growth Catalysts

Halozyme has raised its full-year 2025 guidance, reflecting strong year-to-date performance and confidence in its growth trajectory. The company now projects total revenue of $1.3 billion to $1.375 billion, representing 28% to 35% growth over 2024. Royalty revenue is expected to grow 49% to 54%, reaching $850 million to $880 million for the full year. Adjusted EBITDA is anticipated to be between $885 million and $935 million, representing 40% to 48% year-over-year growth, and non-GAAP diluted EPS is projected at $6.10 to $6.50, reflecting 44% to 54% growth. This guidance underscores the high-margin nature of Halozyme's royalty-driven model and its operational efficiency.

The company's growth is supported by a multitude of catalysts. Year-to-date Q3 2025, 13 of 15 projected growth catalysts have been achieved, including new product approvals, expanded indications, and key reimbursement milestones. Recent notable approvals include Janssen's (JNJ) DARZALEX SC receiving European Commission approval in July 2025 for high-risk smoldering multiple myeloma, expanding its reach into an earlier disease stage. In September 2025, argenx's (ARGX) VYVDURA prefilled syringe with ENHANZE was approved in Japan for self-injection in generalized myasthenia gravis (gMG) and CIDP, simplifying administration and enhancing patient adherence. The U.S. is also anticipating potential approvals for DARZALEX SC in smoldering multiple myeloma and RYBREVANT SC in EGFR-mutated non-small cell lung cancer.

Halozyme's current portfolio of 10 launched products is well-positioned to deliver over $1 billion in annual royalty revenue by 2027, a target that management is confident in achieving and potentially exceeding. Analysts project DARZALEX total sales to exceed $18 billion by 2028, with Halozyme earning royalties through 2032. VYVGART total sales in gMG and CIDP are projected to reach $7.7 billion by 2028, with royalties extending into the early 2040s. Roche (RHHBY) anticipates OCREVUS SC to represent an incremental $2 billion opportunity, contributing to a projected $10 billion total OCREVUS brand opportunity by 2028, with Halozyme earning royalties until at least 2034. Tecentriq Hybreza and Opdivo Qvantig are also expected to contribute significantly, with royalties extending into the 2040s and 2030s, respectively.

Beyond these launched products, Halozyme has a robust pipeline of 8 programs in various stages of clinical development, with 2 additional programs anticipated. Bristol-Myers Squibb's (BMY) subcutaneous nivolumab with relatlimab and Takeda's (TAK) TAK-881 are in Phase III development, representing potential new royalty growth opportunities not yet reflected in current forecasts. Halozyme is also confident in signing at least one new ENHANZE agreement in 2025, driven by strong interest from biopharma companies seeking competitive differentiation. The Elektrofi acquisition is expected to bring two blockbuster products into clinical development with Hypercon by the end of 2026 or earlier, further expanding future royalty streams.

Competitive Dynamics and Risk Factors

Halozyme operates in a dynamic and competitive environment. Its primary competitive advantage, the ENHANZE technology, is a significant differentiator, enabling faster, more convenient subcutaneous drug delivery. This allows Halozyme to partner with major biopharmaceutical companies, enhancing their product portfolios. For instance, DARZALEX SC's market dominance in multiple myeloma, holding over 50% market share across all lines of therapy, is a testament to the value ENHANZE brings. Similarly, VYVGART Hytrulo's exclusivity in CIDP highlights a strong competitive position. However, Halozyme's business model is inherently tied to the success of its partners' products and their ability to meet development and commercial milestones. This dependence on external partnerships introduces a degree of revenue variability and potential vulnerability if partners shift strategic priorities.

The competitive landscape also includes other drug delivery technologies and biosimilar competition. While Halozyme's ENHANZE is a market leader with a validated safety database (over 1 million patients treated), other companies like Alteogen (ALT) are also developing hyaluronidase-based technologies. Halozyme acknowledges that companies pursuing deals with Alteogen have often first explored targets with Halozyme that were already licensed. This indicates that while competition exists, ENHANZE remains a preferred choice.

Intellectual property (IP) litigation is a notable risk. Halozyme is actively engaged in a patent infringement lawsuit against Merck Sharp Dohme Corp. (MRK) regarding its MDASE subcutaneous drug delivery technology. While management expresses confidence in prevailing and emphasizes that the MDASE patents are distinct from ENHANZE and will not impact the core ENHANZE business or guidance, such litigation can be costly and time-consuming, diverting resources. The company is also addressing patent challenges (PGRs) filed by Merck, with initial decisions expected in June 2026.

Regulatory and reimbursement policies, particularly the Inflation Reduction Act (IRA), pose potential challenges. While CMS's final guidance for 2028 price controls did not change the fixed combination drug policy for that year, the ongoing evaluation for future years (starting 2029) creates some uncertainty. Halozyme has actively engaged with regulatory bodies, presenting compelling arguments for its combination therapies. The "One Big Beautiful Bill Act" (OBBBA) could potentially exclude DARZALEX IV from IRA inclusion due to its orphan drug designations, which would be a favorable outcome. Furthermore, rising healthcare costs and consolidation among private payers could lead to increased pricing pressure and demand for higher discounts. Halozyme's royalty revenues are not expected to be materially impacted by pharma tariffs for products imported into the U.S., and its own manufacturing has limited tariff exposure.

Operational risks include reliance on third-party manufacturers for proprietary products and bulk rHuPH20, as well as the need to secure new collaborative agreements and nominations to sustain long-term growth. The recent Complete Response Letter for ATRS-1902, citing observations related to a third-party manufacturing site, highlights the importance of robust supply chain and manufacturing oversight.

Conclusion

Halozyme Therapeutics stands as a compelling investment opportunity, driven by its innovative drug delivery platforms and a robust, royalty-centric business model. The company's ENHANZE technology continues to redefine patient care by enabling convenient subcutaneous administration of blockbuster biologics, translating directly into record financial performance and a strong growth trajectory. The strategic acquisition of Elektrofi's Hypercon technology further solidifies Halozyme's leadership in patient-centric drug delivery, expanding its addressable market and extending its growth horizon well into the 2040s.

With a portfolio of ten launched products, a pipeline of future royalty streams, and a clear strategy for organic expansion and disciplined M&A, Halozyme is poised for sustained revenue and earnings growth. While intellectual property litigation and evolving reimbursement policies present inherent risks, the company's proactive defense of its patents and engagement with regulatory bodies, coupled with its strong financial position and commitment to shareholder returns, underscore a resilient and forward-looking enterprise. Halozyme's technological leadership and strategic execution position it to capture significant value in the evolving biopharmaceutical landscape, making it a durable player for discerning investors.