Halozyme Therapeutics, Inc. HALO

The business

Halozyme licenses ENHANZE, a recombinant human hyaluronidase (rHuPH20) that lets partner pharma companies reformulate intravenous biologics for subcutaneous injection. A 30-to-90 minute IV infusion becomes a 3-to-5 minute SC shot. Patients prefer it, infusion centers free up chairs, and the partner extends the franchise's life by switching patients to the SC version before generic IV biosimilars arrive. Halozyme takes a royalty, typically mid-single-digits on partner net sales, plus milestones and API supply revenue. The business has 350 employees and partners with Roche, J&J, BMS, Pfizer, AbbVie, Lilly, argenx, and others. The engine is royalties: in FY25, royalty revenue was about $725M of the $1.40B total (≈52%), and royalties carry the gross margin (close to 100% on the royalty line) that drives the consolidated 78% gross. DARZALEX FASPRO (J&J multiple myeloma) is the single largest contributor, roughly 50–55% of royalty revenue on its own; Phesgo (Roche, Perjeta+Herceptin SC), Vyvgart Hytrulo (argenx), and OCREVUS ZUNOVO (Roche MS) are the next three. Royalties are the engine: ≈52% of revenue and a much larger share of gross profit and operating income.

The fact the financials don't show is the patent fight. The original ENHANZE patents covering rHuPH20 begin expiring in March 2027 in the US, with Europe staggered through 2028. Halozyme has been litigating and filing continuation patents (the MDASE family) to extend protection on specific formulations and dosing methods; some of these claims have been granted, some are in re-examination, and the J&J/Merck biosimilar challenges to DARZALEX FASPRO's SC formulation are the immediate test case. What changed in the last two quarters: FY25 revenue jumped 38% YoY ($1.015B → $1.397B), driven by DARZALEX FASPRO's continued conversion of IV myeloma patients to SC and the OCREVUS ZUNOVO US launch (September 2025, unverified). GAAP net income fell ($444M → $317M, EPS $3.43 → $2.56 diluted) because FY25 carried a $349M non-operating charge tied to a litigation reserve and a milestone payment. Operating income on the underlying business actually rose to $816M from $551M. The market is reading the GAAP EPS decline and pricing the patent cliff; the underlying royalty book accelerated.