Halozyme (HALO) Q2 EPS Jumps 69%

Halozyme Therapeutics (HALO 2.48%), a biotechnology company specializing in drug delivery innovations, released its second-quarter 2025 results on August 5, 2025. The quarter’s headline is outperformance: EPS came in at $1.54 (non-GAAP), surpassing the $1.24 non-GAAP consensus and EPS grew 69.2% year over year, rising from $0.91 in Q2 2024 to $1.54 (non-GAAP), surpassing the $1.24 consensus. Revenue (GAAP) was $325.7 million, exceeding analyst expectations by 13.9% for GAAP total revenue and up 41% year over year. The company also raised its financial guidance for FY2025, pointing to continued momentum in its royalty-driven model. Overall, the quarter was marked by strong growth in royalty streams, expanded partner adoption of key technologies, and increased management confidence about full-year prospects.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Recent Focus

Halozyme Therapeutics focuses on developing drug delivery solutions, most notably its ENHANZE technology. ENHANZE is built around a proprietary enzyme designed to enable quick and comfortable subcutaneous administration of drugs. Rather than launching drugs itself, Halozyme licenses its technology to large pharmaceutical companies, earning royalty and milestone payments whenever partners use ENHANZE to create injectable versions of their intravenous medicines.

The company’s key success factors include growing adoption of ENHANZE across more partner products, expanding its partner network, protecting its intellectual property, and reliably scaling manufacturing and supply. Halozyme’s strategy is rooted in leveraging these key partnerships and recurring royalties, with recent priorities including deepening collaborator relationships, broadening the reach of ENHANZE-powered therapies, and extending patent protection into future decades.

Q2 2025: Highlights and Key Developments

Royalty revenue fueled performance, rising 65% to $205.6 million. Growth was driven primarily by three ENHANZE-enabled therapies: DARZALEX SC (subcutaneous formulation for multiple myeloma), VYVGART Hytrulo (subcutaneous therapy for neuromuscular disorders), and Phesgo (subcutaneous breast cancer therapy). These products secured additional approvals and market launches, driving both royalty earnings and milestone revenues.

Product sales—a segment that captures revenue from manufacturing and supplying the proprietary enzyme used in ENHANZE—grew modestly by 3.3% year over year to $81.5 million. Collaborative agreements, such as upfront or milestone payments when partners achieve regulatory or commercial successes, contributed $38.6 million, up 40% year over year. These improvements in partner-driven revenue streams underscore Halozyme’s business model: as partners achieve success, Halozyme’s earnings ramp up with little added cost.

Profitability improved sharply, with net income rising 77% and adjusted EBITDA up 65%. A key reason is that Operating expenses such as cost of sales and general and administrative spending grew at a much slower pace than revenue. Management also highlighted efficiencies in research and development investment, which dropped year over year as operations optimized focus and labor allocation. Legal expenses, however, rose due to ongoing patent enforcement, especially litigation efforts regarding intellectual property related to subcutaneous delivery.

New partnership and product milestones were a focal point. Four new ENHANZE-powered product approvals arrived in the quarter, such as RYBREVANT SC for lung cancer in Europe and expanded indications for VYVGART Hytrulo. Each approval unlocks further milestones and expands addressable royalty bases. Halozyme’s ENHANZE platform is now approved for use in over 100 markets, and the company is expanding its device capabilities, launching both high-volume and small-volume auto-injector development agreements with partners. On the other hand, risks remain: ongoing litigation over patents (with Merck as a notable defendant) increased legal spend, and recurring revenue continues to rely heavily on the top three therapies, underscoring the need for more partner launches.

Looking Ahead: Guidance, Outlook, and Key Watch Areas

Management raised its fiscal 2025 outlook for all major financial metrics following the strong first half, increasing guidance for total revenue, royalty revenue, adjusted EBITDA, and non-GAAP diluted EPS. The new forecasts for FY2025 are as follows: total revenue is now expected between $1,275 million and $1,355 million (up from $1,200 million to $1,280 million), royalty revenue between $825 million and $860 million, adjusted EBITDA in the range of $865 million to $915 million, and non-GAAP diluted EPS projected at $6.00 to $6.40. All outlook figures reflect double-digit percentage growth for FY2025, with Royalty revenue midpoint guidance is up about 47.5% for full year 2025 compared to 2024. Leadership pointed to momentum in blockbuster therapies, robust product adoption, and a growing stream of new ENHANZE-powered products for these upgrades, as discussed in the Q1 2025 earnings call.

Looking forward, investors should monitor further diversification beyond the three primary royalty drivers, especially as new indications and therapies begin to contribute. The durability of the collaboration model, the expansion of ENHANZE into new platforms such as auto-injectors, and the outcome of key intellectual property litigation are all central to Halozyme’s trajectory. The company executed $303 million in share repurchases, reducing its share count and potentially increasing future earnings per share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.