Halozyme(HALO) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Halozyme achieved strong Q2 2025 growth, raising full-year guidance and announcing a new share repurchase program, alongside key partner milestones Second Quarter 2025 Performance Overview Halozyme delivered strong Q2 2025 financial results with significant year-over-year growth across key metrics, leading to an updated full-year guidance and a new share repurchase program Second Quarter 2025 Key Financial Data | Metric | Q2 2025 (Millions USD) | YoY Growth | | :--- | :--- | :--- | | Total Revenue | $326 | 41% | | Royalty Revenue | $206 | 65% | | Net Income | $165 | 77% | | Adjusted EBITDA | $226 | 65% | | GAAP Diluted EPS | $1.33 | 85% | | Non-GAAP Diluted EPS | $1.54 | 69% | - Upward revision of 2025 full-year financial guidance: - Total Revenue: $1,275 - $1,355 million (26% - 33% YoY growth) - Adjusted EBITDA: $865 - $915 million (37% - 45% YoY growth) - Non-GAAP Diluted EPS: $6.00 - $6.40 (42% - 51% YoY growth)[1] - Announced the initiation of a $250 million third tranche of the stock repurchase program under the $750 million authorization[1] Second Quarter and Recent Corporate Highlights Halozyme completed significant share repurchases, initiated patent litigation against Merck, and saw multiple regulatory approvals and milestones for ENHANZE®-enabled drugs by its partners - The company completed $303 million in share repurchases during Q2, including the $250 million second tranche announced in May, and initiated the $250 million third tranche in June, repurchasing approximately 1 million shares for $53.5 million[3][6] - Halozyme filed a patent infringement lawsuit against Merck in April 2025, alleging the use of Halozyme's MDASE™ subcutaneous drug delivery technology in the development of SC Keytruda[6] - Multiple regulatory approvals and milestones for ENHANZE®-enabled partner products: - In July 2025, Janssen's DARZALEX SC received European approval for monotherapy in high-risk smoldering multiple myeloma (SMM)[2] - In June 2025, Takeda's HYQVIA SC was approved in Japan for chronic inflammatory demyelinating polyneuropathy (CIDP) and multifocal motor neuropathy[6] - In June 2025, argenx's VYVGART SC received European approval for generalized myasthenia gravis (gMG) and CIDP in adults[6] - In May 2025, Bristol Myers Squibb's Opdivo SC received European approval for various adult solid tumors, triggering a $12 million milestone payment[6] - In April 2025, argenx's VYVGART Hytrulo pre-filled syringe received FDA approval for gMG and CIDP in adults[8] - In April 2025, Janssen's RYBREVANT SC received European approval for first-line treatment of advanced non-small cell lung cancer (NSCLC), triggering a $10 million milestone payment[6] Financial Results Halozyme's Q2 2025 financial performance is detailed, covering revenue, expenses, profitability, and the updated full-year financial outlook Second Quarter 2025 Financial Highlights Halozyme's Q2 2025 total revenue grew 41% year-over-year, driven by royalty and milestone income, with increased operating expenses but decreased R&D, resulting in substantial net income and EPS growth Second Quarter 2025 Revenue Overview | Revenue Category | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Royalties | 205.6 | 124.9 | 65% | | Product Sales, Net | 81.5 | 78.9 | 3% | | Collaboration Revenue | 38.6 | 27.5 | 40% | | Total Revenue | 325.7 | 231.4 | 41% | Second Quarter 2025 Operating Expenses Overview | Expense Category | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | YoY Change (%) | Primary Drivers | | :--- | :--- | :--- | :--- | :--- | | Cost of Sales | 46.4 | 39.6 | 17% | Increased product sales and labor allocation | | Amortization of Intangible Assets | 17.8 | 17.8 | 0% | Remained consistent | | Research and Development | 17.5 | 21.0 | -17% | Lower compensation expenses, resource optimization, and ENHANZE® investment timing | | Selling, General and Administrative | 41.6 | 35.7 | 17% | Increased consulting and professional services (including $2.6 million in litigation fees) and higher compensation expenses | Second Quarter 2025 Profitability Metrics | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Income | 202.4 | 117.2 | 73% | | Net Income | 165.2 | 93.2 | 77% | | EBITDA | 222.9 | 137.0 | 63% | | Adjusted EBITDA | 225.5 | 137.0 | 65% | | GAAP Diluted EPS | $1.33 | $0.72 | 85% | | Non-GAAP Diluted EPS | $1.54 | $0.91 | 69% | - Cash, cash equivalents, and marketable securities totaled $548.2 million as of June 30, 2025, a decrease from $596.1 million as of December 31, 2024, primarily due to share repurchase activities partially offset by cash generated from operations[8] Financial Outlook for 2025 Halozyme raised its 2025 full-year financial guidance for the second time, projecting significant growth in total revenue, royalty revenue, adjusted EBITDA, and non-GAAP diluted EPS 2025 Financial Guidance Update | Metric | Previous Guidance Range (Millions USD) | New Guidance Range (Millions USD) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $1,200 - $1,280 | $1,275 - $1,355 | 26% - 33% | | Royalty Revenue | $750 - $785 | $825 - $860 | 44% - 51% | | Adjusted EBITDA | $790 - $840 | $865 - $915 | 37% - 45% | | Non-GAAP Diluted EPS | $5.30 - $5.70 | $6.00 - $6.40 | 42% - 51% | Company Information This section outlines Halozyme's business, ENHANZE® technology, and clarifies the use of non-GAAP financial measures and forward-looking statements About Halozyme Halozyme is a biopharmaceutical company focused on improving patient experience and treatment outcomes through its ENHANZE® drug delivery technology, which is licensed to leading pharmaceutical companies - Halozyme is a biopharmaceutical company focused on improving patient experience and treatment outcomes through its ENHANZE® drug delivery technology, which utilizes a proprietary enzyme rHuPH20 to facilitate subcutaneous drug administration and reduce treatment burden[11] - The ENHANZE® technology is licensed to leading pharmaceutical and biotechnology companies, including Roche, Takeda, Pfizer, and Janssen, and is incorporated into ten commercialized products benefiting over one million patients in over 100 markets globally[11] - The company also develops, manufactures, and commercializes its own products, Hylenex® and XYOSTED®, as well as commercial products and development programs in collaboration with Teva Pharmaceuticals and McDermott Laboratories Limited (an affiliate of Viatris Inc)[11][13] Note Regarding Use of Non-GAAP Financial Measures This section explains Halozyme's use of non-GAAP financial measures, such as EBITDA and non-GAAP diluted EPS, to provide a clearer view of core operational performance by excluding specific non-recurring or non-cash items - The company reports non-GAAP financial measures such as EBITDA, Adjusted EBITDA, and non-GAAP diluted EPS as supplemental information to, and not as a substitute for, GAAP financial measures[14] - Non-GAAP diluted EPS excludes stock-based compensation expense, debt discount amortization, amortization of intangible assets, one-time items (such as changes in contingent consideration, inventory adjustments, impairment charges, and intellectual property litigation expenses), and certain income tax adjustments[14] - Adjusted EBITDA excludes one-time items such as changes in contingent consideration, inventory adjustments, impairment charges, business combination transaction costs, and intellectual property litigation expenses[14] - The company believes these non-GAAP measures provide a useful method for evaluating its operating performance by excluding factors that do not directly impact core operations and unusual events, aiding investors and analysts in comparisons and trend assessment[16] Safe Harbor Statement The Safe Harbor Statement clarifies that the press release contains forward-looking statements, and actual results may differ significantly due to various risks and uncertainties, with no obligation to update - This press release contains "forward-looking statements" regarding the company's financial performance, future growth, profitability, stock repurchase plans, platform expansion, and ENHANZE® drug delivery technology[18] - Actual results may differ materially from those projected in forward-looking statements due to various factors, including unexpected levels of revenue, expenses, and costs, unexpected delays in stock repurchase plans or platform expansion, unexpected outcomes or delays in business growth or product development, regulatory review or commercialization, regulatory approval requirements, tariffs, trade and drug pricing policies, tax legislation uncertainties, unexpected adverse events or patient outcomes, and competitive conditions[18] - The company undertakes no obligation to update any forward-looking statements to reflect events after the date of this release, except as required by law[18] Financial Statements This section presents Halozyme's unaudited condensed consolidated statements of operations, balance sheets, and GAAP to non-GAAP reconciliations for specified periods Condensed Consolidated Statements of Operations This section provides unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024, detailing revenue, operating expenses, and net income Condensed Consolidated Statements of Operations (Unaudited) | (In Thousands USD, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue: | | | | | | Royalties | $205,639 | $124,918 | $373,831 | $245,511 | | Product sales, net | 81,510 | 78,886 | 159,551 | 137,469 | | Collaboration revenue | 38,570 | 27,549 | 57,198 | 44,252 | | Total revenue | 325,719 | 231,353 | 590,580 | 427,232 | | Operating expenses: | | | | | | Cost of sales | 46,359 | 39,607 | 94,762 | 67,936 | | Amortization of intangible assets | 17,762 | 17,762 | 35,524 | 35,525 | | Research and development | 17,543 | 21,038 | 32,342 | 40,149 | | Selling, general and administrative | 41,614 | 35,711 | 83,976 | 70,845 | | Total operating expenses | 123,278 | 114,118 | 246,604 | 214,455 | | Operating income | 202,441 | 117,235 | 343,976 | 212,777 | | Other income (expense): | | | | | | Investment and other income, net | 6,891 | 5,032 | 13,709 | 10,025 | | Interest expense | (4,394) | (4,524) | (8,919) | (9,031) | | Income before income taxes | 204,938 | 117,743 | 348,766 | 213,771 | | Income tax expense | 39,778 | 24,498 | 65,511 | 43,703 | | Net income | $165,160 | $93,245 | $283,255 | $170,068 | | Earnings per share: | | | | | | Basic | $1.36 | $0.73 | $2.32 | $1.34 | | Diluted | $1.33 | $0.72 | $2.26 | $1.32 | | Weighted-average common shares outstanding: | | | | | | Basic | 121,343 | 127,116 | 122,274 | 127,029 | | Diluted | 124,158 | 129,222 | 125,452 | 129,097 | Condensed Consolidated Balance Sheets This section presents unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, outlining the company's assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (Unaudited) | (In Thousands USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Current assets: | | | | Cash and cash equivalents | $61,861 | $115,850 | | Available-for-sale marketable securities | 486,316 | 480,224 | | Accounts receivable, net and contract assets | 316,339 | 308,455 | | Inventories | 181,505 | 141,860 | | Prepaid expenses and other current assets | 76,652 | 38,951 | | Total current assets | 1,122,673 | 1,085,340 | | Property and equipment, net | 71,520 | 75,035 | | Prepaid expenses and other assets | 56,371 | 80,596 | | Goodwill | 416,821 | 416,821 | | Intangible assets, net | 366,306 | 401,830 | | Deferred income tax assets, net | 20,208 | 3,855 | | Total assets | $2,053,899 | $2,063,477 | | Liabilities and Stockholders’ Equity | | | | Current liabilities: | | | | Accounts payable | $18,691 | $10,249 | | Accrued expenses | 115,591 | 128,851 | | Total current liabilities | 134,282 | 139,100 | | Long-term debt, net | 1,509,100 | 1,505,798 | | Other long-term liabilities | 77,769 | 54,758 | | Total liabilities | 1,721,151 | 1,699,656 | | Stockholders’ equity: | | | | Common stock | 118 | 123 | | Additional paid-in capital | — | — | | Accumulated other comprehensive income (loss) | (28,403) | 3,829 | | Retained earnings | 361,033 | 359,869 | | Total stockholders’ equity | 332,748 | 363,821 | | Total liabilities and stockholders’ equity | $2,053,899 | $2,063,477 | GAAP to Non-GAAP Reconciliations This section provides reconciliation tables for GAAP net income to EBITDA and adjusted EBITDA, and GAAP diluted EPS to non-GAAP diluted EPS, for the three months ended June 30, 2025 and 2024 GAAP to Non-GAAP EBITDA Reconciliation (Unaudited) | (In Thousands USD) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | GAAP net income | $165,160 | $93,245 | | Adjustments: | | | | Investment and other income, net | (6,891) | (5,568) | | Interest expense | 4,394 | 4,524 | | Income tax expense | 39,778 | 24,498 | | Depreciation and amortization | 20,502 | 20,331 | | EBITDA | 222,943 | 137,030 | | Adjustments: | | | | (1) Intellectual property litigation expenses | 2,561 | — | | Adjusted EBITDA | $225,504 | $137,030 | GAAP to Non-GAAP Diluted EPS Reconciliation (Unaudited) | (In Thousands USD, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | GAAP diluted EPS | $1.33 | $0.72 | | Adjustments: | | | | Stock-based compensation | 0.10 | 0.07 | | Debt discount amortization | 0.01 | 0.01 | | Amortization of intangible assets | 0.14 | 0.14 | | (1) Intellectual property litigation expenses | 0.02 | — | | (2) Income tax impact of above adjustments | (0.07) | (0.04) | | Non-GAAP diluted EPS | $1.54 | $0.91 | | GAAP diluted shares | 124,158 | 129,222 | | Adjustments: | | | | (3) Dilutive impact of 2028 Senior Convertible Notes | (199) | — | | Non-GAAP diluted shares | 123,959 | 129,222 |