HALO

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Halozyme delivered a powerful Q1 2026, with revenue up 42% to $377 million and royalty income rising 43%. Management reaffirmed full-year guidance and launched a major $1 billion share buyback program. The strategic highlight was a vigorous defense of the post-2029 outlook. Management revealed that 66% of projected royalties from current products like DARZALEX and VYVGART are still to be realized through 2032. To drive growth beyond 2029, Halozyme is banking on 13 pipeline products and new high-concentration technologies, Hypercon and Surf Bio. The company has already met its 2026 goal for new deals, signing partnerships with GSK, Vertex, and Oruka, expanding into ADCs and autoimmune markets. Despite a slight shift in Hypercon’s clinical start to 2027 to finalize manufacturing scaling, the company expects $1 billion in Hypercon royalties by the mid-2030s. With margins climbing toward 70% and a robust free cash flow, Halozyme is positioning itself as a diversified biopharma royalty powerhouse with multiple long-term value drivers beyond its original ENHANZE platform.

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Halozyme Therapeutics: A High-Yield Royalty Engine Wrapped in an Aggressive Debt Shell

Full Earnings Call Transcript — Q1 • 2026-05-11

Operator: At this time, I would like to welcome everyone to Halozyme's First Quarter 2026 Financial and Operating Results Conference Call. Please note, this event is being recorded. I will now turn the call over to Tram Bui, Halozyme's Vice President of Investor Relations and Corporate Communications. Please go ahead.
Tram Bui: Thank you, operator. Good afternoon, and welcome to our first quarter 2026 financial and operating results conference call. In addition to the press release issued today after the market closed 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 Dave Ramsay, our Interim 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 2. I would also refer you to our SEC filings for a whole 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 3.
Helen Torley: Thank you, Tram, and good afternoon, everyone. We started 2026 with exceptional momentum. The continued strong performance of our currently approved products gives us strong conviction in the 2026 to 2028 financial guidance. Our recent new deal momentum and new nominations by partners accompanied by the expanding number of new Phase I starts is bending the curve in the 2029 plus period. And the business momentum is resulting in strong free cash flow. We have clear priorities for capital allocation, reinvesting at compelling returns to create new value and returning value to our shareholders. Today, my presentation will address how our strategy will deliver durable value for investors during our current guidance period of 2026 to 2028 continue to combine value in the 2029 plus time frame and deploy robust free cash flow judiciously over the short and the long term. I'll begin with our 2026 to 2028 time frame, which is shown on Slide 4. The key drivers of revenue in the 2026 to 2028 time frame are our first 10 ENHANZE launch products, which includes DARZALEX subcutaneous, VYVGART Hytrulo and PHESGO our strong first quarter financial results reflect continued adoption of subcutaneous drug delivery enabled by ENHANZE, with royalty revenues, driven by our commercial enhanced portfolio, increasing 43% year-over-year to $241 million. 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. I'll move now to Slide 5. Based on these results, I am pleased to reaffirm our full year 2026 financial guidance and the 2026 to 2028 financial guidance. Two highlights I'll point out, for 2026, we continue to project ENHANZE royalties to exceed $1 billion for the first time, representing 30 to 35% gross over 2025. And during the 2026 to 2028 time frame, we project our adjusted EBITDA margin will be greater than 65% going to approximately 70%. Moving now to Slide 6. 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. Firstly, we will invest to maximize the value of our organic investments predominantly to support partner success with investments in ENHANZE, Hypercon and Surf Bio. Secondly, we are pleased to announce a new $1 billion share buyback authorization, with an expectation of buying back at least $400 million of our shares in 2026. Over the next years, we project we will achieve a 3% annual share buyback in yield. Our own equity is an asset we know best, and we're comfortable reinvesting against a compelling return plan. Thirdly, we plan to deleverage further by retiring the 2027 and 2028 remaining notes at their maturity. And fourthly, we will continue to evaluate drug delivery M&A opportunities with a continued focus on identifying high demand, large TAM drug delivery licensing technologies. I will say that based on our high bar and our assessment year-to-date, it is unlikely that we will identify a drug delivery opportunity that meet the criteria to transact on in 2026. And we do not foresee M&A outside of drug delivery. I move now to our second time frame, which is 2029 plus. Let me be very clear, we intend to bend the trend far more favorably beginning in 2029 than our skeptics here. Let me explain why I believe this to be the case on Slide 7. Our revenue in and post 2029 will come from four key sources. The first driver is the continued performance and contribution from our 10 current ENHANZE launch product. The second driver is up to 13 new launches in the 2029 plus time frame, arising from the current enhanced pipeline of 13 products that are projected to be in clinical development by the end of 2026. The third driver is the 2 Hypercon product launches in the 203031 time frame. And the fourth driver is the next wave of launches that will result from partners progressing additional targets and are already signed Hypercon and ENHANZE agreements and from new Hypercon and ENHANZE collaboration and licensing agreements. Turning now to Slide 8. I'll say a few words on each of these significant revenue opportunities beginning with the first driver, the current 10 ENHANZE products. As a reminder, all of our signed contracts have long durations. What you may not know is that the majority of the royalty revenue from these 10 products is still to come. Yes, let me repeat that, the majority of the royalty revenue is still to come. Let me dimensionalize that comment. By the end of 2025, we estimate that our 10 approved products generated about 25% of their projected potential royalties. We estimate that we have about 66% of the additional projected royalty revenue still to come in the next 6 years between 2026 and 2032. With the remaining 9% in the years beyond that. In some industries, they call our 66% royalty revenue still to come in the next 6 years, with more after that, our conducted revenue backlog, which I'm sure sounds familiar to many of our shareholders. I'll move now to the second driver, the current ENHANZE pipeline products with first launches projected in the 2029 plus time frame. We project to have up to 13 additional enhance partner products potentially approved in the 2029 plus time frame. These have arisen from new collaboration and licensing agreements and from current partners nominating and adding additional targets. The new revenue from these projected launches will add to and our revenues. In the first quarter, I'm pleased to report that 2 ENHANZE partners initiated Phase I studies of new targets in alignment with our expectations for 6 new ENHANZE targets to initiate Phase I testing in 2026. It adds to the 7 products that are already in development. argenx initiated a Phase I study with ARGX-124, making this the fifth product in the argenx collaboration to advance to the clinic. And the second ENHANZE partner who for competitive reasons, does not wish us to provide detailed information initiated and completed their Phase I testing in the quarter. In parallel, we continue to build the ENHANZE pipeline by supporting our current partners to identify and advance new targets to be nominated. These actions also add to this new wave of launches in the 2029 plus period. I am pleased that in the first quarter, Pfizer nominated a new undisclosed nonexclusive target to be studied with ENHANZE, which will add to the already impressive 13 enhanced product pipeline with the potential to launch in the 2029 plus time frame. I will now move to the third driver, Hypercon. We intend to make Hypercon the next in hands-like success story. To achieve this goal, we plan to invest in manufacturing capacity that will allow Halozyme to offer end-to-end services to our Hypercon partners. We foresee offering manufacturing from drug systems to commercial fill finish or Hypercon products. As part of this plan, we are currently finalizing the clinical supply manufacturing as we ramp up our manufacturing efforts. And we now predict that the first 2 Phase I clinic starts will occur in the first half of 2027. The launch timing for these two products continues to be 2030, 2031. As I've said in the past, we continue to see the opportunity for Hypercon to be a very large, achieving approximately $1 billion in royalty revenues by the mid-2030s. Turning now to Slide 9 and our fourth 2029 plus driver. The next wave of launches that will result from partners progressing additional targets and are already signed Hypercon and ENHANZE agreements. And from new Hypercon and ENHANZE collaboration and licensing agreements. Under our current ENHANZE and Hypercon agreement, there remains opportunities for partners to nominate additional targets. As an example, they are up to another 15 Hypercon targets available in all redesigned CLAs and tens of targets for ENHANZE. We're seeing heightened interest and expansion of targets, consistent with the interest in new CLAs. Turning now to new agreements. We are delighted to have signed 3 new collaboration and licensing agreements in 2026, already meeting our goal for 2026 to execute 3 new deals this year. And we're not stopping here. Let me say that we have line of sight to additional agreements in 2026 based on the status of our ongoing discussions. We are delighted that with these agreements, we receive upfront mudstones and have the potential to earn milestones and up to mid-single-digit royalties, royalties being the most important recurring and the largest revenue stream for each product. Each of these deals include one or more targets that represent multibillion dollar total sales potential. In May, we entered a new enhanced collaboration agreement with GSK for multiple promising oncology targets, including with antibody drug conjugates. This collaboration with GSK expands our ENHANZE footprint with another global pharmaceutical leader and marks our first ENHANZE collaboration for antibody drug conjugates, extending our ENHANZE technology into one of the fastest-growing and largest TAM areas of oncology. We believe enhances the potential to meaningfully improve the benefit risk profile of these therapies by enabling subcutaneous administration and reducing the treatment burden for patients. We look forward to the initiation of the first clinical trial under this agreement. In early April, we announced a new Hypercon collaboration with Vertex Pharmaceuticals enabling the use of our hyperconcentration technology was up to 3 Vertex targets. Hypercon addresses real-world delivery challenges by reducing injection volume and enabling at home or office-based low-volume administration. Vertex is a recognized leader in developing transformative medicines, and this agreement demonstrates growing demand for next-generation delivery solutions that extend beyond ENHANZE. In May, we announced a second Hypercon collaboration and licensing agreement, this time with the Oruka for the use of Hypercon with ORKA-001 in development for psoriasis and related inflammatory diseases and for up to one additional target. ORKA-001 recently presented Phase II data showing best-in-class efficacy making this an exciting future potential entrant into what is already a $20 billion to $25 billion global moderate to severe psoriasis market. These collaborations further validate Hypercon as a differentiated rearing durable revenue duration technology. That supports our expectation that Hypercon will drive a separate and additional royalty income projected to achieve an estimated $1 billion in royalty revenue in the mid-2030s. To date, Hypercon has signed CLAs with 5 companies for a total of 17 potential targets, and we project to continue to add to this already impressive number of CLAs and potential targets for Hypercon GIST as we are building for ENHANZE and soon for Surf Bio to result in commercial product launches throughout the 2030s. I trust that you will agree that our four drivers of revenue strategy will deliver durable long-term value to our shareholders. Let me now provide some details on product progress or reinforcing the durable growth story. Moving to Slide 10. Our 10 launch products, including DARZALEX subcutaneous, VYVGART Hytrulo and PHESGO continues to demonstrate strong revenue growth which will be further fueled by expanding indication approvals. Let me start with DARZALEX, which is the gold standard in multiple myeloma and remains Johnson & Johnson's #1 product. In the first quarter of 2026, DARZALEX generated approximately $4 billion in global sales, representing nearly 18% operational growth. The sustained double-digit growth is remarkable and a testament to the product and to change its development and commercial strategy. This strong performance translated into $129 million in royalty revenue for Halozyme during the quarter, reflecting a 26% year-over-year increase and underscoring the strength and durability of this important product. As you noticed from the higher royalty revenue growth rate achieved in the first quarter, the royalty rate step-up was achieved faster during the first quarter of 2026 than in prior years. For a patient with multiple myeloma, what the ENHANZE-enabled subcutaneous delivery of DARZALEX has meant easy treatment time, which is reduced from multiple hours to just minutes and a threefold lower terms of experiencing a potentially life-threatening side effect called infusion-related reactions. Think of what the time back can mean to a patient who is fighting cancer. Additional growth is projected to come from new indications. In the first quarter, the FDA approved DARZALEX FASPRO in its fifth frontline approval and also approved TECVAYLI plus DARZALEX FASPRO for as early as second line treatment for patients with relapsed or refractory multiple myeloma. I'll turn now to argenx' VYVGART Hytrulo with ENHANZE. In the first quarter of 2026, VYVGART generated approximately $1.3 billion on global sales, representing nearly 63% growth. VYVGART Hytrulo continued to be a growing and meaningful convertor to the royalty revenue during the quarter, increasing 119% to $46.3 million resulting from growing demand and uptick. The introduction of the prefilled syringe for VYVGART Hytrulo with ENHANZE has driven an acceleration in subcutaneous update reflected by the subcutaneous growth and stripping total growth through its strong profile to reduce the administration burden and increase flexibility for patients with generalized myasthenia gravis and CIDP allowing work and travel where this may not have been possible before. In CIDP, which remains earlier in its launch, organics continued to see steady progress, supported by increasing prescriber familiarity, expanding payer coverage and the convenience of the subcutaneous formulation. Looking ahead, in addition to continued penetration and adoption of the two currently approved subcutaneous indications, we see meaningful growth opportunities driven by label expansions in myasthenia gravis. Last Friday, argenx announced VYVGART and VYVGART Hytrulo received FDA approval as the first and only treatment approved for all serotypes of adult patients with generalized myasthenia gravis. argenx has also reported positive Phase III data in ocular myasthenia gravis, estimated by argenx to affect approximately 7,000 patients in the U.S. alone. These populations when both approved would double the potential addressable myasthenia gravis patient base from launch, doubling the Halozyme opportunity, too. Moving on to PHESGO. Roche reported that PHESGO continues to deliver strong growth, increasing 27% year-over-year to CHF 686 million or approximately USD 877 million. This performance generated $30.2 million in royalty revenue for Halozyme, representing 25% year-over-year growth. The small difference between reported sales and Halozyme royalties was a result of currency. Roche reiterated its expectation to reach at least 60% conversion and emphasize that PHESGO is expected to maintain a strong and durable revenue tail. I'll move now to Slide 11 and highlight how the growth of the more recently launched partner products with the continuous growth of DARZALEX FASPRO, VYVGART Hytrulo and PHESGO will deliver strong revenues in 2029 plus. We have all recently launched products, this subcutaneous formulations of OCREVUS, OPDIVO, TECENTRIQ and RYBREVANT with ENHANZE. Each of these products represent a significant blockbuster opportunity for subcutaneous use collectively addressing an estimated $30 billion total IV and subcu market opportunity in 2028 based on analyst estimates. I'll share two recent highlights, one for OCREVUS ZUNOVO and one for RYBREVANT subcu, which have been reported by our partners, which underscore the continued momentum across this portfolio. Or OCREVUS ZUNOVO, Roche highlighted strong and accelerating uptake of the ENHANZE-enabled subcutaneous formulation, which continues to meaningfully expand access to OCREVUS across multiple sclerosis care settings. Roche reported that there are now approximately 24,000 patients globally receiving subcutaneous OCREVUS, representing an increase of roughly [ 7,000 ] patients versus the prior quarter and acceleration relative to the fourth quarter trend. Of note, Roche emphasize that approximately 60% of U.S. OCREVUS ZUNOVO starts are now coming from community practices and around half of the new subcutaneous OCREVUS patients are naive to brand. This underscores ZUNOVO's ability to expand the addressable market by reducing infusion burden and enabling treatment outside of the traditional infusion centers. Roche reiterated its peak brand sales expectation of CHF 9 billion by 2029, which includes a brand expense and of approximately CHF 2 billion of sales as a result of additional new opportunity created by the easier-to-use subcutaneous formulation. Let me now highlight the new momentum with RYBREVANT, which has been driven by the launch of the ENHANZE SC formulation. In the first quarter, Johnson & Johnson reported sales of $257 million for RYBREVANT plus [ Lecluse ], representing an 80% year-over-year growth, which has been driven by launch uptake and share gains across regions. Increasing contribution from RYBREVANT FASPRO, the subcutaneous formulation of ENHANZE is supporting adoption and helping reinforce RYBREVANT's positioning as a new standard of care in EGFR-mutated non-small cell lung cancer. Looking ahead, J&J has identified RYBREVANT as an important longer-term growth driver with their projections that this will be a $5 billion brand. I'll move now to Slide 12. In closing my section, I want to make several important comments. Firstly, today, we announced a new $1 billion share repurchase program, signaling our confidence and conviction in our business. Secondly, we're pleased to reaffirm our full year 2026 guidance and reiterate our 2026 to 2028 financial guidance. And thirdly, we have four drivers for revenue growth in the 2029 plus time period. The continued performance of our 10 approved ENHANZE product a pipeline by the end of 2026 of 13 additional ENHANZE products with potential for launches beginning in 2029, 2 Hypercon launches predicted in the 2030, 2031 time frame and multiple additional loss that will arise from new nominations that are currently signed contracts and from new collaboration and licensing agreements. By owning a share of Halozyme, you're owning a broad swath of the biopharma industry. Let me now introduce you to David Ramsey and welcome him back as our Interim Chief Financial Officer. David's deep knowledge of Halozyme, strong capital markets and investor expertise has enabled a seamless transition and immediate impact. David?
David Ramsay: Thank you, Helen. Let me start by saying how excited I am to be back at Halozyme and to step into this role at such a strong point in the company's evolution. I was pleasantly surprised to learn about our deal pipeline and how we are still in the early stages of realizing the full potential of our enhanced royalties. Halozyme is operating from a position of strength, and my focus is on maintaining the disciplined framework and execution already in place, supporting our partners, investing in our core business and working to ensure the long-term growth and durability of our royalty businesses. We delivered a strong start to the year with results consistent with expectations and robust year-over-year royalty growth. Adjusted EBITDA grew meaningfully even as we continue to invest in Hypercon and Surf Bio, which is a clear demonstration of the opportunity we have to invest in our core businesses while maintaining the operating leverage inherent in our high-margin royalty driven business model. Let me now turn to our detailed first quarter results on Slide 13. The revenue increased approximately 42% to $376.7 million compared to $264.9 million in the prior year period. This performance was driven by broad-based strength across the business, including strong growth in royalty revenue and higher product sales to partners. Royalty revenue of $240.7 million increased approximately 43% from $168.2 million in the prior year period, reflecting the continued commercial success of key enhanced partnered products including subcutaneous DARZALEX, VYVGART Hytrulo and PHESGO as well as the continued ramp from recently launched FC therapies, OCREVUS, OPDIVO, TECENTRIQ and VYVGART brand. Research and development expenses were $25.6 million compared to $14.8 million in the prior year period as we integrate our Hypercon and Surf Bio acquisitions. Selling, general and administrative expenses were $57.9 million in the quarter compared to $42.4 million in the prior year period. Adjusted EBITDA increased 42% to $229.5 million from $162 million in the prior year period, driven by continued strong royalty growth. GAAP diluted earnings per share was $1.22 compared to $0.93 in the prior year period, and non-GAAP diluted earnings per share was $1.60 compared to $1.11 in the first quarter of 2025. We ended the quarter with net leverage of approximately 2.5x, reflecting the acquisitions of Hypercon and Surf Bio. Following our announced plan to buy back at least $400 million in shares this year, we project our net leverage will be approximately 1.2x by the end of 2026, supported by our strong cash generation. Turning to our 2026 outlook. As Helen briefly touched upon, we are reiterating the strong financial items the company provided earlier this year. As shown on Slide 14, we continue to expect total revenue of $1.71 billion to $1.81 billion, representing year-over-year growth of 22% to 30% driven by royalty revenues and product sales from API. Royalty revenues of $1.13 billion to $1.17 billion, representing year-over-year growth of 30% to 35%. We continue to expect DARZALEX SC, VYVGART Hytrulo and PHESGO to drive these strong expectations, with a growing contribution from recently launched ENHANZE products. We expect adjusted EBITDA of between $1.125 billion and $1.205 billion, which includes approximately $6 million of planned investment in Hypercon and Surf Bio. And non-GAAP diluted EPS of $7.75 to $8.25, which does not assume the impact of any potential future share repurchases. I am pleased with the continued strength of our business as reflected in our strong first quarter performance and the team's execution. We are still in the early stages of realizing the value from our enhanced business, and we are investing in Hypercon and Surf Bio to drive the next blockbuster royalty business. Our business model positions us well to sustain long-term value creation, and I look forward to contributing to that progress. With that, I'll turn the call back to Helen.
Helen Torley: Thank you, David. In conclusion, let me just close by reiterating what makes Halozyme such a compelling investment. We demonstrated our conviction today with our new $1 billion share repurchase program. The continued strong performance of our currently approved products and the increasing number of indications gives us strong confidence in the 2026 to 2028 financial guidance. And we plan to stand skeptics and bend the curve in the 2029 plus period, building on top of the durable substantial revenue of our 10 approved product, where we have realized only 25% of the revenue to date and project to receive 66% of the total projected royalties between 2026 and 2032. That's 2.5x still to come. On top of this strong base of revenue, our four drivers of revenue: the continued contribution of our currently launched 10 products, the potential launches of up to 13 additional ENHANZE beginning in 2029, the 2 projected Hypercon launches in 2030 and 2031, and the additional launches arising from currently signed agreement new nominations and new CLAs for ENHANZE, Hypercon and Surf Bio, all add long-term durable revenue streams. The business momentum is resulting in strong free cash flow. I shared that we have clear priorities for disciplined capital allocations, and we're deploying this great new value and return value to our shareholders. Thank you very much for your attention today. And operator, you can now open the line for questions.
Operator: [Operator Instructions] Your first question comes from the line of Jason Butler with Citizens JMP.
Jason Butler: Congrats on the quarter. First one, He, when you think about the 2029 and after ENHANZE product profile, what do you expect to be the biggest products in that portfolio? And then -- and when are they coming to essentially peak in your model? And then secondly, the Hypercon transactions or discussions that are ongoing today, including the transactions you announced. How many of those conversations were ongoing before you acquired the company? And how many new conversations are you having or relationships that you're bringing to the conversation?
Helen Torley: Yes. Thanks so much, Jason. Yes, we're very excited today to share additional color. What gives us so much conviction on the trajectory we're going to have post-2029. I think what we shared was, and I think it was probably a surprise to many of our investors that we still have 66% of the revenue from our current launch products coming between 2026 and 2032. There are multiple large contributors within that, Jason. We haven't broken it down on an individual basis. But when you think about products like OCREVUS, like RYBREVANT, like VYVGART. I mean really, I can name multiple ones like DARZALEX, of course, we are continuing to expect to see substantial revenues from each and every one of those contributing. And that's not talk about the additional launches we're going to start seeing from the current ENHANZE pipeline. So a very bright future for sure. Turning now to Hypercon. In terms of the discussions, I would say, one was ongoing beforehand. One was new and the company does continue in with multiple other groups, including some early feasibility testing, which is a step before the companies will then make a decision to move to a CLA. It doesn't always work that. Some go straight to CLA. But also there's some additional targets that are now in development testing. So to find the formulation before going into clinical. And so I can say there's been really a remarkable progress the acquisition, both from targets and collaborations that are already underway as well as this broadening of interest, which is just part of a secular trend I've talked a lot about SC and SC delivery at home is really the target product profile now for so many disease conditions.
Operator: Your next call comes from the line of Brendan Smith with Cowen.
Brendan Smith: Congrats on the quarter. Maybe just first for the two Phase I clinical starts with Hypercon assets, I think, now going to be in the first half of next year. Can you help us understand, I guess, what's left to finish up there on Halozyme's side from just a manufacturing standpoint, get those ready to go? And can you just maybe confirm that timing to hear what those two programs are will still be whenever they start that Phase I?
Helen Torley: Yes. Thank you, Brandon. Yes, I would say that, that is most likely from a partner perspective that they will be comfortable revealing what those targets are when they have to post them on clinical trials at do. So very close to when the Phase I clinical study starts. With regard to what's still to be done, we are really working on the clinical manufacturing at this point in time. As you heard in my prepared remarks, we are investing in the manufacturing capacity that's going to be able to allow Halozyme to provide the end-to-end service to Hypercon partners and become an invaluable partner for everybody just as we do today. And so you will see us continuing with that investment, finishing off the clinical supply manufacturing, and that is exactly what will enable Phase I starts in the first half of 2027.
Brendan Smith: Great. And then just maybe quickly, I wanted to make sure I didn't miss it. But the conversation about 13 additional launches in 2029 plus. I guess, can you give us a sense over what time frame you might expect those to kind of launch it fully appreciate subject to change, but is it like 13 between 2029 and 2032 or 2035 or just kind of helping -- help us kind of contextualize that 13 number, if you can.
Helen Torley: Yes. I think it gives -- Brandon, is that it has taken between 4 and 5 years. for ENHANZE products to get to approval or when they entered Phase I clinical testing. And so as we're looking towards the end of the full 13 to be in development, I'd be looking towards the 2031, '32 for the latest of these with it beginning in '29 and occur over that '29 to '32 time frame.
Operator: Your next question comes from the line of Mohit Bansal with Wells Fargo.
Mohit Bansal: Congrats on all the deal making progress here. So Helen, one question I have is, I mean, there is a question we get a lot from investors is that how comfortable are we with the scalability of the Hypercon technology given that such a unique technology and Elektrofi. Elektrofi did not enter into the clinics with that technology, you are taking it forward. So wondering how -- what work you have done to help understand the side and what your know-how with enhanced capabilities could actually be useful in terms of making it more scalable for the clinical as well as commercial use.
Helen Torley: Yes. Thanks, Mohit. And thanks for the comments on the deal making. As you're seeing, our organic opportunities really are attractive, and we can deliver such value to our shareholders that we are very focused on resourcing them fully. And that does include our plan to invest in manufacturing capacity. So we offer an end-to-end service from the making of the drug substance to commercial fill and finish. Hypercon got off to a very good start of this collaborating with a strong CDMO called Thermo Fisher Patheon. And they are the ones who do the engineering batches and are working to be able to complete the clinical batches in the first half of 2027. And so we are obviously very engaged working with the Hypercon experts on the full plan not to take this into clinical and then into commercial manufacturing. So feeling good about the progress that we're making, Mohit, but we are at the clinical stage now. And that's why we're excited to invest and select the CDO which we are going to take us to the next level, expanding now into commercial manufacturing tool.
Operator: Your next question comes from the line of Dave Risinger with Leerink Partners.
David Risinger: Yes. And congrats, Helen you and your team on all the great fundamental momentum in the business and new contract signings. So I have a few questions. First, could you just help us understand a few of the financial items for 2026. So what milestones are in guidance for the year? And what milestones are not in guidance because you signed some recent deals, but you didn't update your revenue guidance. And then next, a similar question for EPS guidance. When you gave the EPS guidance in February, what amount of buyback was reflected in that guidance, and how much of the $400 million that you disclosed today for 2026 is in the unchanged EPS guidance for the year. So I guess those are the financial questions. And then with respect to Hypercon versus Surf Bio, I think it would be helpful if you just compare and contrast the manufacturing scale up for both. Obviously, you're getting questions on the Hypercon scale-up. But if you could compare and contrast them, I think that would be helpful.
Helen Torley: All right, David, thank you so much. If we begin with how much the milestone revenue was included in this year's guidance. We always based on partner communications will put whatever Phase I, Phase II or any commercial milestones that are projected for the year. So all of those that we anticipated were included. If you recall at last year, I also said that based on the 3 deals we signed in December, I was very confident in signing multiple additional new deals in 2026. And so we do have a very nice number in our 2026 guidance. for new milestones coming from new collaborations. And so we put that in because we obviously wanted our guidance to reflect our true view of how the year was going to perform. So we have included all of the predictable milestones for the year, including a certain amount of money for new deal milestones at this time. Let me ask David just to summarize the buyback impact on our EPS guidance.
David Ramsay: Yes, David. So in our earlier guidance this year, obviously, we did not make any assumptions for levels of buyback and also today in the guidance that we are reiterating does not include any potential impact from the share repurchases that we will do this year. So we'll update that as the year progresses, obviously.
Helen Torley: Yes. And then the third question just is on what are the differences in the manufacturing between Hypercon and Surf Bio. First difference would be Surf Bio is 18 to 24 months earlier development than Hypercon. So we are working very hard at the moment in advancing our nonclinical existing qualification beginning to prefer our GMP manufacturing and our spray dry readiness. Now in terms of the types of manufacturing, both are novel processes. Surf Bio relies on spread drying, which is actually a very commonly used type of manufacturing. And for Hypercon, it is a novel process that relies on dehydration to result in innovative microparticles that can then be injected with help of being in a solvent. And so different processes, different stages of development, but we're very excited, particularly the degree of interest we're getting from potential partners for the hyperconcentration technologies, to have made substantial progress as well as Hypercon in the quarter, and we look forward to providing further updates throughout the year as we are advancing both of these innovative hyperconcentration technologies.
Operator: Your next question comes from the line of Sean Laaman with Morgan Stanley.
Sean Laaman: Helen, on the 13 ENHANZE products due for launch a bit later, what royalty rates can you -- can we expect and or even just a ballpark and just to walk us through the IP position at that point would be super helpful. And then any comment that you can provide us on competing hyaluronidase technologies out there, Sanofi and Dupixent.
Helen Torley: Okay. Let me start with the 13 products that have the potential to be launching in 2029 plus. If you recall with our contracts, we have historically been in the mid-single-digit range. And I'm very pleased to say that for the current contract, we also are in that potential for a mid-single-digit royalty with some of the newer contracts starting at a single-digit royalty, but escalating with increasing sales into that mid-single-digit royalties. So we still feel very great about the strength of the royalties for these multiple new royalty streams, all of which have the potential to be getting into that mid-single-digit royalty place. With regard to IP at that point, for all of these products, they will retain the potential to be able to get co-formulation IP. The base composition of matter patents will expire in 2029 in the U.S. and in Europe. However, the power of our business model that is sometimes underestimated is the part of getting co-formulation patents. And the reason that is so important is in the majority of our content track, that will extend our royalty term from what is comment on all of our contracts to be a minimum of 10 years. Two, additional years up to and including for the full royalty term of the co-form patent, which is 20 years from filing. So think of these co-form patents as keeping our royalties progressing for many years after that, initial 10 years in a number of cases and accompanying that in a number of these cases, the royalties can also be maintained at the original royalty rate. And so the IP position in summary, Sean, is strong. it's strong because of our unique co-formulation patent business model, leading to that revenue durability and, in many cases, maintaining the royalty rate at the original level. With regard to complementary hyaluronidase and specifically asking about Sanofi. We really can't comment, we're not 100% aware of exactly what Sanofi is doing with regard to complementary. I can say, in general, that for all of the partners who are companies who have chosen to work with [ Altigen ] as an example, they have come to us first. We have got an exclusive license already in place, unfortunately, that precludes us from being able to work with them. And you might say, why do all these companies still come to Halozyme first? It is because of our -- we are the gold standard. ENHANZE has got now more than 1.3 million patients treated. And very importantly, our expertise is so acknowledged now in the community in terms of our understanding how to get partners into the clinic quickly. through development quickly because of all the expertise that we have gained. And so we continue to expect to, as we've demonstrated, so ably in the last 5 months or so with the of four new ENHANZE deals continue to expect more ENHANZE deals this year just based on the strong interest and our leadership position in this space.
Operator: Your next question comes from the line of Corinne Johnson with Goldman Sachs.
Corinne Jenkins: Maybe you could just kind of spend some time walking us through the development time lines. after you get into Phase I with Hypercon,I guess, early next year now? And sort of how do you kind of get to the potential approval in a 3- to 4-year time line from there.
Helen Torley: Yes. Thanks, Corinne. It's our expectation that because many of our partners are considering an already subcu drop moving to a lower volume subcu drug that the pathway will be based on comparability over the PK between the two subcu formulations. And I'll start with that as that is a very common approach partners are using. We are seeing that with our ENHANZE experience with recent examples, the FDA expectations for the endpoints of those studies as well as the duration and size of those studies is shrinking. And that, I think, is in part largely due to the comfort level with the great safety database that now is available for ENHANZE. And it is really that a direct experience we have from ENHANZE as to how studies are being done now to may go faster and have less patient exposure Corinne is what gives us a lot of confidence in the 3 to 4 years. And that's further informed with some early conversations that partners that are having with the FDA who to be very much in support that type of thinking.
Corinne Jenkins: Great thing. And it does seem like you've had a lot of early success in terms of getting new partnerships for Hypercon. Maybe you could just kind of talk about where your -- or what's resonating as you bring that profile to potential partners.
Helen Torley: Yes. We talked about this when we did the acquisition. Companies have an idea in their head of what they think is going to be the most competitive target product profile for their product. If they are coming into an area, as an example, like psoriasis, they recognize that extended dosing is just the norm now. And to be competitive, they're going to have to get extended dosing. Now there might be -- and I will also add that extended dosing ideally should be able to be delivered by the patient themselves because that's where the standard of care is. And so because companies have that mindset and know what is going to be the most competitive profile, that is what is bringing them to us. And I've always said it's areas like inflammation and immunology, nephrology cardiovascular, the area where there is a lot of patient freedom, a lot of desire by the patients to be able to treat themselves, we are a terrific fit for that, because we're able to hyper concentrate many antibodies down into these 2 mls, allowing it to be given by a simple off-the-shelf auto-injector. And so we're just a great fit a perfect fit, actually, with Hypercon and Surf Bio for where the market is going for those types of conditions so that the products can be competitive and so that the companies can meet the patient expectations for care.
Operator: Your next question comes from the line of Jessica Fye with JPMorgan.
Jessica Fye: I had a few more on Hypercon. So you mentioned that some companies conduct early feasibility testing prior to signing Hypercon deals. Can you say whether Vertex or Oruka, who you recently signed deals with, did they conduct any early feasibility testing? Second, as Hypercon deals roll in, how should we think about the time line from when a Hypercon deal is announced to when the product with that partner could enter the clinic? And then last one, just curious on how you think about like how big a deal or like how big a derisking event would you view IND clearance for a Hypercon product relative to, say, Phase I data.
Helen Torley: Thanks, Jess, for that. We aren't able to go into more detail on individual collaborations and whether or not the visibility testing that would be considered are confidential, so I can't talk about that. I would say though, the trend we have now is the partners are going straight into the agreement based on the data that they are seeing and their confidence in moving forward. So as you might expect with the maturing of the technology, that's a very nice trend that we are certainly seeing. In terms of the timing from when a Hypercon deal is announced to be in the clinic, that is something that is going to get shorter and shorter as we, again, have been evolving the technology, developing the technology. And so it's a little premature for me to give a specific number of months at the moment, but I know that, that is something that is going to be a big focus for us to be able to rapidly support partners in getting into the clinic in a matter of months based on just the process that is evolving from even the time when we did the acquisition, just a couple of quarters ago. I would say the -- I'm looking forward to the Phase I data. We've got some of the preclinical data that obviously gave us a lot conviction in the acquisition. But I would say that the Phase I data is what I'm excited to see for each of these new partners.
Operator: [Operator Instructions] Your next question comes from the line of [ Ahmed Mahmud ] with H.C. Wainright.
Unknown Analyst: This is Ahmed on Mitchell Kapoor at H.C. I was wondering, as continues to have partnerships and accumulate additional approvals, validating the ENHANZE platform. how the economics of the new licensing deals evolved? Are you seeing more leverage? Should we expect to tend towards the higher end of the single-digit range?
Helen Torley: Yes. Ahmed, let me talk about the Hypercon types of deals, which obviously is an exciting new technology. The deal terms have been very consistent across what are now agreements, which cover up to 17 targets. Those are upfront milestones, milestones for progress in development and with sales and mid-single-digit royalties. And that has been very consistent, it's very reminiscent of ENHANZE as we were establishing that technology. And obviously, what is resulting in the very attractive performance we have today at Halozyme. For ENHANZE, we see a trend -- a different trend with exclusive and nonexclusive agreements just as a little bit of a range as it relates to that, that gives different numbers for the peak milestones and also the royalty rates. But as I mentioned earlier, in all of our enhanced agreements as well we see the potential based on escalating sales to get to the mid-single-digit royalty in each of those as well.
Operator: [Operator Instructions] Your next question comes from the line of Michael DiFiore with Evercore ICI -- ISI.
Michael DiFiore: Congrats on all the continued progress. Two questions for me. Regarding your antibody drug conjugate, your ADC IP names a broad set of specific drug that seems from across pharma pipelines. Is that package itself driving partner engagement? Or are the discussions still largely target specific? And my follow-up is regarding nucleic acids. I mean you mentioned ADCs in detail, but in terms of nucleic acids, is partner interest there at a similar stage -- or is just ADC the more advanced near-term modality?
Helen Torley: Yes. Thanks, Mike. With regard to the EDCs, I would say that we are engaged with pharma biotech companies, and it is based on a specific set of products have in development or have commercialized. So it's very much on a company-by-company brand-by-brand basis. What's driving the interest is the potential to optimize the target product profile to get an improved benefit risk profile. And obviously, we have filed for a number of patents, which, of course, is covered in the discussions with the partners as well. But it really is this idea to get the optimal profile that is driving this on a product-by-product basis. The nucleic acid discussions are actually occurring in parallel. Again, we have generated a compelling nonclinical data that is being discussed across several companies at this point in time. And I look forward to those progressing and sometime in the next months and quarters being able to announce the deal there as well. ADCs got out of the gate faster, but that doesn't mean to say that nucleic acids aren't coming at some time in the next quarter too.
Operator: We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.