Halozyme Lifts 2026 Guidance as Q3 Revenue Rises 39% to $493M

Halozyme Therapeutics (NASDAQ:HALO) raised its full-year 2026 guidance after third-quarter revenue rose 39% to $493 million from $354.3 million a year earlier, with royalty revenue up 44% to $341 million. Net income climbed 41% to $247 million, and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased 35% to $336.2 million. The quarter set records for both revenue and royalties, and management responded by lifting every major line of its 2026 outlook.

The royalty engine sits at the center of the story. Halozyme's ENHANZE technology enables subcutaneous delivery — an injection under the skin — of medicines that would otherwise require intravenous infusion. Partners including Johnson & Johnson, Roche, argenx and Bristol Myers Squibb pay royalties on products built on the platform.

Where did the royalty growth come from?

DARZALEX royalties rose 20% to $153.5 million, while VYVGART royalties surged 89% to $88.1 million. Phesgo royalties gained 23% to $34.3 million. Chief Financial Officer Darren Snellgrove said other royalties grew 92% to $65.1 million, helped by Ocrevus Zunovo, OPDIVO Qvantig, RYBREVANT FASPRO and TECENTRIQ HYBREZA.

GAAP diluted earnings per share rose to $2.01 from $1.43, and non-GAAP diluted EPS increased to $2.39 from $1.72. Conversion rates on newly launched subcutaneous products underscore the durability of those streams. President and CEO Helen Torley said Roche reported that global conversion from intravenous OCREVUS to Ocrevus Zunovo exceeded 20%. Bristol Myers Squibb reported roughly 17% conversion of its intravenous OPDIVO business to OPDIVO Qvantig, tracking toward the higher end of its ultimate 30% to 40% expectation.

What does the new guidance look like?

For 2026, Halozyme now expects:

• Total revenue of $1.86 billion to $1.925 billion, up $20 million at the midpoint from the prior outlook.
• Royalty revenue of $1.235 billion to $1.255 billion, up $12.5 million at the midpoint.
• Adjusted EBITDA of $1.24 billion to $1.29 billion, up $12.5 million at the midpoint.
• Non-GAAP diluted EPS of $8.75 to $9.05, up $0.08 at the midpoint.

Snellgrove said royalties were the main driver of the increase. The company also raised its product sales outlook to $525 million to $540 million and expects an adjusted EBITDA margin of approximately 67%.

The balance sheet carries both firepower and leverage. Halozyme ended the quarter with $1.08 billion in cash, equivalents and marketable securities against $3.3 billion in long-term debt. It completed $400 million in share repurchases in 2026 and a $1.5 billion convertible note offering, Snellgrove said. Management plans to issue 2027 guidance and an updated long-range outlook with fourth-quarter results in February.

How is the partner pipeline expanding?

Torley said three existing ENHANZE partners added four targets to their collaborations during and after the quarter. Argenx added two exclusive targets, bringing its total to eight. Incyte added a target to evaluate subcutaneous axatilimab, and Johnson & Johnson added an oncology target in October.

The clinical pipeline is set to grow from 12 to 13 ENHANZE-enabled programs by year-end. Pfizer, Incyte and argenx each advanced a program into phase 1 development, and GSK plans to begin a phase 1b study of subcutaneous belantamab with ENHANZE. Looking further out, Torley said up to 13 new products could launch between 2029 and approximately 2032 on typical development timelines, excluding new indications for existing products.

Halozyme is also developing Hypercon and Aerocon, technologies designed to produce more concentrated formulations of biologic drugs. The company has signed five Hypercon collaboration and licensing agreements covering more than 20 targets or drugs, and expects to complete clinical supplies for two partner products in the first quarter of 2027, supporting phase 1 trial starts in the first half of the year. Torley said the company's $1 billion Hypercon royalty opportunity projection assumes five to seven products in the clinic before the mid-2030s, the majority based on already launched products.

What did the Dutch court decide on KEYTRUDA QLEX?

A Dutch court rejected Merck's invalidity challenges to Halozyme's EP622 patent and found that KEYTRUDA QLEX infringed it. The ruling restricts certain activities involving the product in eight European countries; a separate preliminary injunction in Germany had already halted its launch and distribution there.

Torley said Halozyme believes the ruling affects the ability of Merck's marketing authorization holder and affiliates to supply KEYTRUDA QLEX from manufacturer BSP Pharmaceuticals in Italy, regardless of destination. She said Halozyme could not assess the potential impact on U.S. supply because it lacks full knowledge of Merck's supply chain, and confirmed Halozyme has sued BSP directly for infringement.

In the U.S., Torley acknowledged adverse validity decisions involving multiple Halozyme patents, which she said are distinct from EP622. Halozyme expects the appeal process to last until 2028 and believes it will prevail. She also said the company has not engaged in conversations with Merck.