Good afternoon. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to Halozyme's Third Quarter 2025 Financial and Operating Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I will now turn the call over to Tram Bui, Halozyme's Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you, operator. Good afternoon, and welcome to our third quarter 2025 financial and operating results conference call. In addition to the press release issued today after the market close, you could find a supplementary slide presentation that will be referenced during today's call in the Investor Relations section of our website. Leading the call will be Dr. Helen Torley, Halozyme's President and Chief Executive Officer, who will provide an update on our business; and Nicole LaBrosse, our Chief Financial Officer, will review our financial results as well as our outlook. On today's call, we will be making forward-looking statements as outlined on Slide 2. I would also refer you to our SEC filings for a full list of risks and uncertainties. During the call, both GAAP and non-GAAP financial measures will be discussed. Certain non-GAAP or adjusted financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and slide presentation. I will now turn the call over to Dr. Helen Torley.

Good afternoon, everyone, and thank you for joining us today. I will begin on Slide 3. I am very pleased to report another quarter of record royalty revenue of $236 million, representing a remarkable 52% increase year-over-year and resulting in total revenue of $354 million, representing 22% growth year-over-year. These results were driven by the continued momentum of our 3 established blockbuster subcutaneous therapies, DARZALEX subcutaneous, Phesgo, and VYVGART Hytrulo. Adjusted EBITDA growth exceeded top line growth, increasing 35% over prior year third quarter to $248 million, reflecting the strength inherent in our royalty-based business model. Our core ENHANZE drug delivery technology continues to drive the significant momentum in our business and reflects the powerful and growing opportunity for subcutaneous delivery to reshape the future of health care. ENHANZE can allow treatments that once required lengthy infusions in hospitals or infusion suites to be administered in minutes, more conveniently, including in the doctor's office and in the patient's home. For patients, it means less time spent traveling, fewer invasive procedures and greater independence, all while maintaining efficacy and safety. At the same time, it is reducing the burden on the health care systems, lowering total cost of care and freeing up capacity in hospitals and infusion centers. Turning now to Slide 4. Year-to-date, 13 of the 15 growth catalysts have been achieved, including new product approvals, expanded indications, reaching new regions and achieving key reimbursement milestones across major markets. These new growth catalysts support our near- and long-term revenue opportunity. This quarter, there were 2 notable indication approvals for our 2 leading growth drivers. Firstly, DARZALEX subcutaneous received European Commission approval for a new indication in smoldering multiple myeloma, providing another meaningful growth catalyst for the franchise. Smoldering multiple myeloma is a precursor condition to active multiple myeloma, expanding DARZALEX…

Thank you, Helen. Our strong third quarter performance continues to reflect the momentum of our core ENHANZE technology. Total quarterly revenues grew by approximately 22% to $354 million, with royalty revenue increasing 52% to $236 million. Adjusted EBITDA grew 35%, outpacing top line growth and showcasing the exceptional leverage of our high-margin royalty-driven model. Let me start on Slide 13. We continue to generate robust cash flow, which supports our balanced capital allocation priorities. Year-to-date, we repurchased $342 million of shares with $158 million remaining under the current authorized plan. Since 2019, we have returned approximately $1.9 billion to shareholders through repurchases, representing greater than 100% of cumulative free cash flow over that period. We have a strong balance sheet with cash, cash equivalents and marketable securities of $702 million on September 30, 2025, compared to $596.1 million on December 31, 2024. The increase was driven by an increase in cash generated from operations, primarily offset by share repurchases. Our net debt-to-EBITDA ratio was 0.9x at the end of the third quarter. As Helen mentioned, we announced our acquisition of Elektrofi in the third quarter, a transaction that strengthens our leadership in drug delivery and complements our strong organic growth opportunities. We are pleased that the acquisition is expected to have a minimal increase in our net leverage, estimated to be at approximately 2x net debt-to-EBITDA at closing. Our goal is to delever in the subsequent quarters, supported by our robust free cash flows. Let me now turn to our detailed third quarter results on Slide 14. Total revenue grew 22% to $354.3 million compared to $290.1 million in the prior year period. Royalty revenue of $236 million increased by 52% from $155.1 million in the prior year period. The commercial success of subcutaneous DARZALEX, Phesgo and VYVGART Hytrulo continue…

Thank you, Nicole. In closing, our third quarter results reflect the continued strength of our core ENHANZE business and the accelerating momentum across our partner portfolio. With 10 launch products, a robust pipeline of future royalty streams and the addition of the Hypercon technology, we are well positioned to deliver strong revenue and shareholder value for years to come. And let me just close with a few words on Nicole. While Nicole will be with us on our fourth quarter call in February, I did want to take this moment to thank Nicole for her many contributions to Halozyme. These have really helped us accomplish our growth strategy to date. Throughout this time, Nicole has helped design and lead multiple financing transactions that provided the capital that enabled the strong growth that you see today. Nicole will be transitioning to a new opportunity in 2026 when a new CFO is hired or by March 30, 2026. Operator, with that, we are now ready to open the call for questions.

[Operator Instructions] Your first question comes from the line of Sean Laaman with Morgan Stanley.

Yes, on capital allocation, you're 2x levered now. How do you think about paying down debt, getting even more conservative balance sheet and weighing that up against potential buybacks for next year and what opportunities -- the Elektrofi-like opportunities there might be out there? That's the second -- first question. And then the second part would be, how are investors going to be able to monitor the performance of Elektrofi going forward?

Yes. So I'll start by just saying with regard to opportunities like Elektrofi, we are continuing to look for those opportunities, Sean, because we do believe that we're in a great position to be the partner of choice for our pharma and biotech partners as they're looking to optimize the patient treatment experience. So keeping looking. And obviously, we will transact when we do find appropriate things. Let me ask though Nicole to comment on the capital allocation and the plan to delever.

Yes. Thanks, Sean. So we do have robust cash flows and cash growth in the coming quarters. And so while we will have a modest draw on our credit facility to fund the Elektrofi acquisition, we do expect to pay that down in the coming quarters and to delever very quickly. And so what you've seen us be able to do this year is have capital to fund share repurchases. We've done $342 million within the year and be able to fund the Elektrofi acquisition, and you'll see us continue to have that balanced approach going forward.

All right. And Sean, the last part of it, how to monitor the success of Elektrofi. I'm going to give you 3 metrics there. One is we are anticipating the potential for 2 partner first-in-human starts, both with already blockbuster products in their current formulation. That will happen by the end of 2026 or before. So that will be the first metric. I do think as we work through working with Elektrofi closely, we'll be finding opportunities to develop and be able to communicate a streamlined development plan approach, which we see as another benefit of bringing our 2 expertise together. And then the third one, we will continue to look for Elektrofi and support the advancement of Hypercon with the current partners potentially agreeing to move more products into the clinic from their open nomination slots or indeed signing new deals. And so we're very excited about the Elektrofi acquisition, still in the planning phase, obviously, at this point in time, but we see great opportunity for the business synergies that are going to come from being able to bring our 2 companies together.

Your next question comes from the line of Jason Butler with Citizens JMP.

Congrats on the quarter. Let me pass my congratulations on Nicole as well, been great work. So let me start on Elektrofi. Understanding that the deal hasn't closed yet, can you talk about what you think the awareness level of the company and the technology is with your current ENHANZE partners? And just any feedback you've gotten from partners on the company? And then second, on OCREVUS, can you talk a little bit about where market growth is coming from? Are they taking share from other therapies? Are they getting used earlier in treatment? Just how should we think about how that market opportunity is growing?

Yes, thanks. With regard to the knowledge level of our current partners for Elektrofi, I can say we're only aware of that really by the diligence we've done because we're still at a stage of -- we're not talking about Elektrofi and they're not talking about us, obviously, given that the HSR review hasn't closed. But I would say just based on our diligence and market research we did prior to the acquisition, there is a good awareness of the Hypercon technology. But obviously, one of the benefits of bringing our companies together is to elevate that awareness and broaden that awareness within each of the companies based on who we're each talking with. We've received small amounts of spontaneous feedback. Again, I think people are being thoughtful and cautious that the deal hasn't closed, but a number of our partners, particularly the ones who are working with both companies have provided feedback that I would say signals strong support for the additional opportunities that might exist of being able to work across both of our platforms. So definitely a resounding support from everything that we are hearing with regard to that. On OCREVUS, yes, based on the comments that Roche made on the last call, obviously, delighted to see that they grew 5,000 patients from the 7,500 patients on therapy that was the number in the second quarter. They are saying that in U.S. and Germany, in particular, 50% of the patients are new to brand. Jason, I didn't hear them say exactly where the -- those patients were coming from. So I don't know if it is brand new to treatment patients or it is switched from other therapies. We haven't been provided that level of granularity. But what I do obviously think is terrific to know is that this is expanding the market footprint for OCREVUS exactly as Roche had anticipated, now allowing patients to be treated in physician offices, community hospitals and opening up access that was a bit restricted before because of the capacity constraints in infusion suites. So sorry, I can't answer that specifically. If we do find out about that, we will make sure to update on the next call.

Your next question comes from the line of Michael DiFiore with Evercore ISI.

Congrats on the continued progress. Two for me. The first, I want to expand upon the M&A question that was asked before. Obviously, your press release said in no uncertain terms that the next chapter of growth will include M&A. And I guess my question is, how high are you willing to lever up for this transaction? I know you said that we could expect for you to delever in the next few quarters. And so I guess the ultimate question is, could we possibly expect another transaction towards the end of the year? And I have a follow-up.

Yes. Thanks for that. Mike, obviously, our focus at the moment is completing the Elektrofi acquisition. And so I think I can say that it's unlikely that there will be another acquisition this year. But we are actively looking because we do want to be able to continue to add to our growth and our momentum that is so strong at this point in time. Nicole, will you comment on the approach we're taking to leverage?

Yes. As Helen noted, while we will evaluate targets, I can say from a firepower perspective, we do have the capacity. We're willing to go up to 3x net leverage. We mentioned with this transaction at close, we expect to be at about 2x, but that will quickly come down. And so there will be capacity. And again, we'll just be patient and find the right next opportunity.

Yes. And I think just to kind of emphasize what Nicole said, you've seen us demonstrate a lot of patience in terms of finding the right asset, doing the appropriate diligence and seeking to only transact and make a formal offer to the company once we have completed all of that. So we will take that same very thoughtful approach. We are in a great growth position. We're excited about the growth that's going to come from Elektrofi. So don't think of this as something we're rushing into. We're just going to continue to execute the strategy we've had in place for the last several years. And because of our strong cash flow, we're in a position to contemplate that in 2026, but only if we find it meets our criteria and is the right next move for Halozyme.

Excellent. And my follow-up question is, again, I know it's super early regarding Elektrofi and -- but on the prior call, I think I asked about the potential to combine ENHANZE with Hypercon. And I think you had said that feasibility studies regarding the combinability still need to be done. When might we see such studies be conducted? And yes, I'll just leave it there.

Yes. Thanks, Mike. Yes, it is something, obviously, that we are interested in, and it is one of the work streams that will be one of the early conversations that we're going to have between the technical experts on both -- from both companies to determine what the path would be for that. But I think my more important message each company has its own pipeline of ongoing conversations for a great fit for each of our technologies to different partner products. And so that is where the initial focus is going to be just based on the fact that for those people who are seeking a more high-volume rapid delivery, ENHANZE is the way to go if they are wanting a potential for an auto-injector in the patient's home, perhaps the Elektrofi technology and Hypercon is going to be a better one. You will see the initial focus most assuredly being on pursuing those 2 successful strategies to date. We're interested to see can they come together, but we don't have to wait for that data. The strategy will be to pursue each of them separately as we know there's opportunity for them individually.

Your next question comes from the line of Jessica Fye with JPMorgan.

This is Adam on for Jess. I really just had 2. Can you share your latest thoughts on potential for new ENHANZE deals near term? I think you mentioned one in the prepared remarks, but any details around that? And second, which product or products contributed the most to the guidance upside this time around?

Yes. Let me take the first one, and then Nicole will talk about the guidance. Adam, with regard to new deals, I did say in my prepared remarks, we're very confident to have a new deal this year. That confidence comes from proximity to completion of discussions. We have several discussions that are ongoing. And so it isn't our practice to preannounce anything, but all I can say is that we are excited with the continued interest in ENHANZE and whichever of these conversations, we cross the finish line first, we're very excited and think it represents a great opportunity for patients, but also for Halozyme. Nicole, would you talk about the guidance?

Yes. So our guidance is driven by the strength of our royalties, and we continue to see royalties being very strong in our main royalty drivers, which are VYVGART Hytrulo, Phesgo and DARZALEX. And I'll also point out, just recall that DARZALEX and VYVGART Hytrulo both had new indications launching this year. As you can are aware, first year launch estimates are notoriously hard to project exactly, and that's where we're seeing the upside and reflecting that now given that latest data trend in the full year projections.

Your next question comes from the line of Mitchell Kapoor with H.C.W.

I wanted to ask about forward guidance, of course, recognizing that you only formally update the 5-year guidance once a year, we're getting close to 2026. So wondering with the strong momentum that we have been seeing quarter-to-quarter and the subsequent guidance raises for this year, how you're thinking about maintaining that growth into the next few quarters in 2026? Does the current trajectory suggest that the previous 2026 ranges might already be tracking towards the upper end of what was outlined earlier this year?

Yes. Thanks, Mitchell. So we will be able to provide more details on that in early in 2026 when we are able to really collect all of our trends and input from our partners comes in towards the end of the year. So more details to come, but we are tracking, as you can see, to exceed 2025 original expectations, but we will be able to reflect the latest information when we give full year guidance and update in the new year.

Okay. Great. And then the second one is just on how you're doing -- conducting outreach for prospective partners between ENHANZE and Hypercon. Are these parallel tracks? Or how do you kind of discuss those with prospective partners?

Yes. Thanks, Mitch. At the moment, until the HSR view period is completed, our 2 businesses are operating separately. We can have conversations about planning as to how we're going to operate together, but we do not share any information with regard to partners each of us is talking to or anything like that. So I would expect upon completion and the close, which we do expect to happen in the fourth quarter, will be in a position to have conversations and identify who's talking to them. But at this point in time, that's not something we are aware of or want to share. We're each pursuing our own separate conversations and targeted outreach. Again, each of the products works in a slightly different space. All of them are for subcu delivery. ENHANZE is more focused towards the larger volume, which is often in the doctor's office or occasionally at home, whereas the opportunity with Elektrofi is a bit more focused at that at-home potentially auto-injector delivery because the volumes can be potentially reduced to as low as 2 ml. So I would expect we may have -- we're talking to the same companies, but probably not talking on exactly the same products, which is why this is such an attractive deal expanding our TAM because each of them is going to have a different best use case. And that's what I expect to see when we're able to talk in more detail.

Congrats on an impressive quarter.

Your next question comes from the line of Brendan Smith with TD Cowen.

Congrats on the quarter as well. Maybe just a couple of quick ones from us. First, actually on the auto-injector business. Can you maybe just remind us what the development path there is looking like and how we should think about the economics and timing of that over the next couple of years? If you think that would be compatible with Hypercon or that would require something different with separate validation? And then just maybe quickly on the earlier pipeline. Can you remind us when we can expect updates from the ViiV and Acumen products? And if you disclosed anything about those economics that we should make sure that we flag as we try to think about royalties for the next wave of the [indiscernible] drugs?

Yes. Thanks, Brandan. With regard to the auto-injector business, so the small volume auto-injectors are obviously for products that are 2.25 mls or less. And there is an immediate applicability and use with the Hypercon products if a partner is developing that. So those are basically -- there's some customization that's possible. But for a partner who wants to integrate it into their development, that's pretty straightforward. With the high-volume auto-injector, we have progressed to having very strong clinic-ready prototypes that are able to be integrated into development plans now. And so for a company who is wanting to use those, that is also going to be pretty straightforward for them to put into whatever clinical trial they're going to do to test it and start doing the development. The actual separate development you need for a device can all happen in parallel to the clinical development. You've got to do stability studies. It's usually human factor studies, but that is usually all happening in parallel to what's the traditional clinical pathway and integrated into a single filing. So I would say we're in a great position for partners who want to use Hypercon to be using either small volume or high-volume auto-injectors and integrating them immediately as soon as they want to be able to do them. On the economics, if you recall for the auto-injectors, this is much more of a business model where for the small volume auto-injector, it is generally a cost model where there's a certain charge per device. For the high-volume auto-injector, it will, because of the size of injection need to be used with ENHANZE. So we think of those as being associated with royalties because of the need to have ENHANZE used with them, but they will also come with a cost per device adding additional revenue there. Brendan, did that answer your question on that, and I can move to the pipeline?

It is. Yes, that would be great.

Okay. So with regards to the earlier pipeline, there haven't been any public updates from ViiV or from Acumen in the last couple of quarters. And so we're not in a position of being able to share any additional information. The last update from Acumen, as you probably are aware, was that they had finished their Phase I testing. And so that was great to see, and they reported the results actually publicly. But we're awaiting being able to provide any updates beyond that. On the economics, in the -- when the deals were announced in the press releases insofar as what was permitted to be made public, it does include some high-level description of the milestones and royalty structure of these agreements, Brandan. So I would recommend if you could maybe just go back and look at those, you'll get a bit of color, not granular, but a bit of color that might be helpful.

[Operator Instructions] Your next question comes from the line of Corinne Johnson with Goldman Sachs.

Maybe following up on some of the BD commentary earlier. I guess, how do you think about whether you currently have the partnerships you need to drive revenue growth kind of into the next decade, particularly as some of the key products like DARZALEX contracts terminate in that early 2030 period and given there's a 5-year development time line for new partner products?

Yes. Thanks, Corinne. Let me start by saying for each of the products that are in our development, we kind of group them into 3 groups. Now we've got the current blockbusters. And I think what's the first thing to note about those is those products, and Nicole commented on it, VYVGART and DARZALEX are having new indications every year at this point in time, which is super in terms of driving their continued growth for a period of time. We talked about DARZALEX with smoldering multiple myeloma with first line, which is why despite that being a product that's been in the market now for many, many years, it's still putting up 19%, 20% year-over-year growth. And we do are excited to see that continue to grow for years to come. VYVGART is a very interesting one. That's very early in its life cycle. And obviously, all the growth we're seeing today are driven by gMG and CIDP. But next year, as you're aware, there's going to be readouts in thyroid eye disease, ocular myasthenia gravis, myositis and Phase II data in systemic sclerosis, so we think of VYVGART where we get royalties out to the 2040s as being an incredibly valuable growth engine for multiple years to come. And then if we go to the second block, which are the most recently launched ones, so OCREVUS and OPDIVO and Tecentriq and amivantamab, those are also just at the beginning of their growth trajectory where we expect growth for many years to come given they are just at the start. And in many of those cases, we've got royalties going out certainly well into the 2030s and in some instances, into the 2040s. So that's another set of sustainable royalty revenue streams. And then behind that, let's look to our development pipeline. The products that are in Phase I, II and III, so they're going to have different timings for of them potentially launching before 2028, other ones shortly after 2028. So again, another set of new royalty streams adding in, in that. And your point of the 5 years really does say that for any new deals we sign now, which we're very actively working on and have new products starting next year, those have the potential to be launching in the early 2030s, adding once again, new royalty revenue streams. So we continue to be very excited by these not just waves, which are a very important part of it. But within each -- several of our products, they are being developed in a way that is having them grow and grow beyond probably what we all thought initially because of the value of the new indications and the investments in the companies are making to have these become truly mega blockbuster drugs. So that's the way we think about it, and that's what we work towards just a wave upon wave of new royalty revenue.

Ladies and gentlemen, this concludes Halozyme's Third Quarter 2025 Financial and Operating Results Conference Call. Thank you all for joining. You may now disconnect.