Halozyme concern: US patent challenges, future royalty step-downs post-'29 despite pipeline offsets

 

Halozyme projects CMS Medicare Drug Price Negotiation Program rule will have zero to minimal impact on ENHANZE royalties through at least 2035

• Company expects CMS rule will not affect its ability to sign new ENHANZE partnerships.
• Approval of Johnson & Johnson's RYBREVANT FASPRO expands its indications and increases Halozyme's potential ENHANZE royalty base.
• Q3 2026 EPS $2.39 and revenue $493M, both beating estimates.
• Q3 revenue grew 39% YoY to $493M, driven by 44% royalty revenue growth.
• Adjusted EBITDA rose 35% to $336M with a 68% margin, underscoring strong operating leverage.
• 2026 revenue guidance raised to $1.86–$1.925B; royalty outlook increased, margins unchanged near 67%.
• 2026 EPS guidance raised to $8.75–$9.05 on revenue of $1.86–$1.93B, per updated outlook.
• Newer launches OCREVUS ZUNOVO, OPDIVO Qvantig and RYBREVANT FASPRO drove 92% growth in “other” royalties.
• Core products DARZALEX, VYVGART and PHESGO delivered double‑digit royalty growth, reinforcing franchise durability into 2030s–2040s.
• European courts upheld key EP‑622 patent and blocked Keytruda Qlex in major EU markets.
• Hypercon on track for first Phase I starts in 1H27; $1B long‑term royalty potential reiterated.
• Company completed $1.5B convertible offering, repurchased $400M of stock; net leverage at 2.4x with $1.08B cash.
• Main concern: ongoing U.S. patent challenges and future royalty step-downs post-2029 despite promising pipeline offsets.
• Strong quarter, driven by accelerating royalty growth, platform expansion and a higher 2026 financial outlook.

https://finviz.com/stock?t=HALO&p=d