Good afternoon. My name is Joel and I will be your conference operator today. At this time, I would like to welcome everyone to Hallowzine's second quarter 2026 Financial and Operating Results conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Please note this event is being recorded. I will now turn the call over to Tram Bui, Haluzyme's Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon and welcome to our second quarter, 2026 Financial and Operating Results Conference Call. In addition to the press release issued today after the market closed, 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 would be Dr. Helen Torley, Haley's President and Chief Executive Officer, who will provide an update on our business, and Darren Snellgrove, 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 two. I would also refer you to our SEC filings for a full list of risk 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, and we will start on slide three.

Thank you, Trom, and good afternoon, everyone. I am pleased to report our results from an exceptionally strong second quarter, led by Enhance royalty revenue growth and new deal momentum that resulted in meaningful upfront milestones. You've heard me say before that Enhance is a unique compounding platform engine. On this call, we will share multiple proof points demonstrating how Enhance is delivering on all of the attractive features of a compounding platform engine. I'm talking about the repeatability of success, the scalability and diversification and the durability of revenues that result from this. The enhanced value proposition is attracting new partners and additional products from our current partners at a cracking pace. On top of this, Hypergon is already off and running as a second future combining platform engine for Halozyme, showing the same features and in fact doing so even earlier in the lifecycle than enhanced as we apply the knowledge and learnings of the last decade. Let's look now at what's new in the quarter. I will start with the broadening diversification and record growth of our royalty revenue streams. We are reporting increasing contributions of our newer launch products, Updivo SC, Ocrevus SC, and Ryprovan SC, to our royalty revenues, with 80% growth quarter on quarter. This is repeating and building on top of the success and continued growth and performance of Darthel XSC, Vivegar Hedrulo, and Fezgo. What I love about this is that over the last years, We've moved from all focus being on Darzl XIC performance to it then expanding to Fesco and then to Vivekart Hytrulo as it was recognized just how much opportunity these products represented. Now we're expanding to six products to focus on. This is exactly what I meant by the compounding platform engine. Multiple winners creating revenue diversification and durability. This broadened launch portfolio resulted in record total royalty revenue growth of 50% year-over-year to $308 million, providing strong support to and conviction for the 2026 to 2028 financial guidance and for the revenues in 2029 and beyond. Let me now move to the second highlight, the significant expansion in new partnerships for Nehans and Hypercon in the quarter. In the second quarter, we signed four new collaboration and licensing agreements, and we signed a fifth agreement in July. We have never had this pace of new collaboration agreements in the history of Halozyme. And for those of you who asked, can they sign great new deals for Enhance? The answer is a resounding, emphatic, and demonstrated yes, with three of these five agreements being for Enhance. This year, we have added new Enhance agreements with GSK, Insight, and a third confidential partner. And we added two new hypercon agreements with Vertex and with the RUCA. And I will add, not only did we broadly expand the number of partners, we also expanded use areas to beyond monoclonal antibodies into two new expanding and leading-edge modality areas, ADCs and nucleic acids. This means brand-new growth opportunity for Enhance. The new CLAs contributed $35.5 million in upfront collaboration revenue in the quarter, approximately evenly split across Enhance and Hypercon. This was also an important contributor to record total revenue in the quarter. This is how we said we would and how we are bending the curve in the 2029 plus period. The third area I want to highlight is development portfolio expansion and progress. In the second quarter, we advanced our pipeline of future potential royalty streams with two new phase one study starts. It is our goal to have 13 enhanced development programs in 2026, which is also bending the curve in the 2029 plus period. Moving now to slide four, I'll highlight the second quarter financial results. For the second quarter, total revenue increased 48% year over year to $481 million. This was largely driven by robust royalty revenues of $308 million, a strong 50% year-over-year growth. The robust revenue performance resulted in adjusted EBITDA of $329 million, adjusted EBITDA margin of more than 65%, and non-GAAP earnings per share of $2.28, sense, highlighting the strength of our diversified royalty portfolio and the operating leverage that's inherent in our differentiated business model. Moving now to slide five. Based on the strong second quarter, and in particular the robust royalty revenue growth, we are pleased to raise full year 2026 guidance. What I will highlight is the increase in total revenue guidance of $110 million at the midpoint. This is driven by the increased projected royalty revenues from established products and the new launch products that I discussed earlier, and also by the upfront milestones resulting from what has already been a record year for new collaboration and licensing agreements. Let me move now to slide six, and I'll provide additional detail on the key business drivers in the quarter, beginning with the current enhanced portfolio. In the second quarter, the contribution from the more recently launched subcutaneous products with Enhance, including Ocrevus Zenovo, Opdivo Cuvantage, and Ribrovant Subcutaneous increased by approximately 80% quarter on quarter. Ocrevus Zenovo is demonstrating how Enhance-enabled subcutaneous delivery can compound the value for our partner's products by expanding the accessible patient population. On their second quarter call, Roche reported that the number of patients receiving the subcutaneous formulation increased to 44,000. Contrast that with the 17,500 patients at the end of the fourth quarter of 2025, and you can see just how many new patients have been added for this every six months subcutaneous treatment. Zenovo is now the fastest growing anti-CD20 multiple sclerosis brand in the United States. Roche noted that approximately 60% of the U.S. Ocrevus Zenovo starts are coming from community practices, demonstrating how in a hands-enabled delivery can reach new sites of care, enabling access to Ocrevus for new patients. Reflecting this momentum, Roche reaffirmed its expectation for 9 billion Swiss francs in peak Ocrevus IV and subcutaneous sales by 2029, including approximately 2 billion Swiss francs of growth resulting from the expanded accessibility created by Ocrevus and Ovo. Moving now to Bristol-Myers Squibb, Bristol's Updiva QVantage continued its strong launch trajectory with subcutaneous conversion reported to have increased to 15% while on track for BMS's targeted 30 to 40% conversion rate. This resulted in global sales growth of more than 200% year-over-year to $261 million in the second quarter. Based on this, Updivacu Vantage is projected to exceed $1 billion in annualized revenue. Johnson & Johnson's Ribrovent Fastbro is another strong example of how Enhance creates value for our partners and for Halozyme. For the second quarter of 2026, J&J highlighted rapid uptake of Ribrovent Fastbro, contributing to the strong 62% year-over-year growth. Supporting growth acceleration in the upcoming quarters, the permanent J-code was awarded on July 1st. This has been a contributor to broadening adoption and growth in multiple prior subcutaneous launches. J&J also commented that they have submitted a filing to the FDA for head and neck cancer. We're pleased to note that the FDA recently granted priority review to the filing, meaning an FDA review timeline of approximately six months. Upon approval, this new indication would expand the opportunity for Ribrovent FastPro beyond its existing lung cancer indications into this new area of high unmet need. It is certainly very exciting to see the growth and contribution of these three newer launch brands, where for these three brands alone, the total IV and subcutaneous opportunity based on total sales is projected to be $25 billion in 2028. This is resulting in a diversified set of six products contributing royalty revenues where the total opportunity now exceeds $55 billion. I'll move now to Darzalex subcutaneous, Vyvgar Hachulo and Fezgo, beginning with Darzalex. Darzalex continued to demonstrate robust revenue growth, increasing approximately 18% year over year to over $4 billion in the quarter, with virtually all global sales being for Darzolex subcutaneous within hands. J&J attributed the strong performance to continued market growth and share grains across all lines of therapy, including nearly 11 percentage points of share gain in the frontline setting. It's also worth noting that following the FDA approval in March, the all-subcutaneous regimen of TechValue plus Darzolex FastPro is bringing new hope to patients with relapsed and refractory multiple myeloma. I'll move now to ergenics. Total ViveGuard sales grew 60% year over year to $1.5 billion in the second quarter, driven by continued strong adoption of the enhanced-enabled ViveGuard Hytrulo pre-filled syringe, which I will refer to as the PFS. The PFS is expanding the prescriber base and bringing more patients into therapy with approximately 80% of U.S. PFS patients in the quarter reported to be new to ViveGuard. This demonstrates how enhanced by supporting continued innovation and administration can meaningfully broaden patient reach and support long-term product growth. Driving continued growth, recent regulatory and clinical milestones continue to expand the long-term opportunity for ViveGuard Herthrulo. FiveGuard is now the first and only therapy approved across all GMG serotypes, including seronegative patients. The U.S. approval in seronegative GMG in May expands the addressable opportunity by approximately 11,000 patients. Positive phase 3 data in ocular myosinia gravis further highlights the opportunity to expand the franchise and drive future growth upon approval. Moving now to Fesco. Fesco continues to demonstrate the value of enhanced-enabled subcutaneous delivery within Roche's HER2 franchise. During the first half of 2026, Fesco delivered strong growth of 18%, with global conversion reaching 54% in the 85 launch countries. Roche reiterated its expectation for at least 60% conversion at peak and highlighted Fesco is a key component of the franchise's long-term durability. I'll move now to slide seven. Looking beyond the current decade, our future launch portfolio represents a significant source of long-term value with the potential to expand and further diversify our royalty revenue streams and deliver durable revenue for many years to come. Beginning in the 2029 plus timeframe, we have three revenue engines. The first is our 10 currently approved enhanced products. The second are the multiple launches that are arising from our growing and robust enhanced development portfolio. And the third is HyperCon partner products. We project that by year end of 2026, we will have up to 13 enhanced partner products in development, with potential approvals beginning in the 2029 plus timeframe. These programs represent the next generation of royalty-producing assets and extend our future opportunity beyond the currently approved portfolio. During the second quarter, two new Enhance targets initiated Phase 1 testing. This is resulting in nine development products and keeps us well on track for the 13 development products by year-end. This broad and growing portfolio of future potential launches clearly demonstrates why we're so confident that Enhance will be a significant long-term revenue driver for Halozyme. I will now move to HyperCon, which we intend to make into a second compounding platform engine and recreate the amazing success of Enhance. HyperCon is designed to address growing demand for lower-volume subcutaneous administration, enabling highly concentrated formulations that can potentially support at-home and physician office administration. We made strong progress in the quarter, advancing preparations to provide clinical supply to support the first HyperCon clinical starts in the first half of 2027. Our projected first launch timing for these two new products is in the 2030-2031 timeframe, and we continue to expect HyperCon to launch multiple products and achieve approximately $1 billion in royalty revenue in the mid-2030s. Let me now turn to the new collaboration and licensing agreements which are summarized in slide eight. I mentioned at the start that this has been our most successful year ever with record performance for Enhance and for HyperCon. The pace of recent collaboration activity reflects the growing importance of subcutaneous delivery across the biopharmaceutical industry. Pharma and biotech companies are increasingly focused on improving the patient treatment experience, reducing treatment burden, expanding access across sites of care, and differentiating their products. In the second quarter, we announced a new enhanced agreement with GSK, which included the opportunity to use enhanced in a new use area with antibody drug conjugates. In July, we announced a second agreement with Insight, working with Insight on a subcutaneous formulation of its first-in-class mutant calrectilin-targeted monoclonal antibody. Today, we are pleased to announce a third new agreement signed in the second quarter with an undisclosed partner to explore the use of Enhance with a nucleic acid therapeutic. This is the first of what we hope will be several collaborations in this emerging area where Enhance brings the potential to enable subcutaneous delivery of large volume nucleic acid conjugate formulations and LNPs while mitigating the inflammatory and immune response that can be otherwise generated from subcutaneous administration. We are excited to expand into these two new series of ADCs and nucleic acids that represent brand new growth market segments for Enhance, and where we estimate that there are at least 100 commercial and development products that may benefit. Also in the second quarter, we signed two new HyperCon collaboration agreements, one with Vertex and one with Uruka. These agreements establish strategic platform relationships that have the potential to expand over time through additional targets and future development programs when we combine the up to 13 enhanced development programs by year-end and this expanding opportunity was created by the current and new enhanced and hypercon agreements we have created a substantial portfolio of new potential royalty opportunities extending well into the next decade what you've heard me describe is the power of having an established compounding platform engine within hands and we're creating just the same for Hypercon. We have demonstrated time and again the repeatability and diversification with now six separate and growing royalty streams delivering record revenue. We've demonstrated scalability with multiple waves of new launches now extending well into the 2030s. The durability is clear with 50% royalty revenue growth more than 12 years after our first launch. And we're very proud that our partner products are clinical breakthroughs that we have helped create into multiple blockbusters subcutaneous products. Our priority in 2026 remains executing on these significant organic growth opportunities. We're also continuing to evaluate selective M&A opportunities that can expand our drug delivery technology offering and royalty duration. But any external opportunity must meet our criteria of a strong strategic fit, durable value creation, and attractive returns. With that, I'm pleased to turn the call over to Darren.

Thank you, Helen. I am thrilled to be joining Halozyme at such an exciting point in the company's evolution. Over the past few months, I've had the opportunity to dive deeper into the business, and what has stood out to me is the strength of Halozyme's business model. It's rare to find a company that offers such outstanding current performance and future potential. Halozyme's combination of strong growth, exceptional profitability, and robust free cash flow, coupled with disciplined capital allocation, positions the company well as we continue to accelerate innovation and provide significant returns to shareholders. Having spent nearly three decades in the industry, I was familiar with the value Halozyme creates for partners, patients, and the healthcare system. After joining the company, I have an even greater appreciation for the opportunities ahead. One of the unique characteristics of the business is what I would call the halo effect. Every successful enhanced-enabled product does more than generate high-margin, scalable royalty revenue. We enable our partners and improve products for patients. Our platforms reinforce the clinical and commercial value of subcutaneous delivery and create additional opportunities for target nominations, platform expansions, and new collaborations. This cycle continues to broaden our opportunities and increase the durability of our long-term diversified model. The strong second quarter results reinforce that view as the company delivered another record quarter, exceeding expectations for royalty revenue, driving strong EBITDA growth, and at the same time investing in our future growth platforms. Let me start on slide 9. Total revenue increased 48% to $481 million, compared to $325.7 million in the prior year period. This performance was driven by robust royalty revenue growth and higher collaboration revenue, reflecting new deals signed during the quarter. Royalty revenue of $307.7 million increased 50% from $205.6 million in the prior year period and exceeded our expectations. These results reflect increasing contributions from more recently launched enhanced products, as well as the continued commercial success of Darzilex Sub-Q and Vivgard Hytrulo. Starzilex generated $4 billion in global sales for J&J in the second quarter, representing close to 18% operational growth, further demonstrating the strength, durability, and continued momentum of the franchise. These strong sales translated into $152.2 million of royalty revenue to Halozyme, representing an increase of 27% year-over-year. Halozyme's royalties from VivGuard Hytrula increased 143% to $72.6 million in the second quarter. Total VivGuard brand sales for the second quarter reached $1.5 billion, up 60% versus prior year, reflecting strong demand for the enhanced-enabled pre-filled syringe, which continues to broaden the prescriber base and support adoption across GMG and CIDP. Other royalty revenues grew 85% to $54.4 million, driven by increasing partner product sales of recently launched products, Ocrevus SubQ, Opdivo QVantage, Ribrovant SubQ, and Ticentric SubQ. We are pleased with the early momentum and see a significant opportunity ahead given that estimates for the total brand growth of these four products is approximately 30 billion dollars in 2028 moving to slide 10 for more detail on the quarterly results research and development expenses were 27.7 million dollars compared to 17.5 million dollars in the prior year period reflecting the addition of hypercon and surf bio and our continued investment in advancing these technologies. Selling general and administrative expenses were $57 million in the quarter, compared to $41.6 million in the prior year period. Net income increased 39% to $229.9 million from $165.2 million in the prior year period. Adjusted EBITDA increased 46% to $328.8 million from $225.5 million in the prior year period, driven by continued strong royalty growth. Gap diluted earnings per share was $1.90 compared to $1.33 in the prior year period. A non-gap to looted earnings per share was $2.28 compared to $1.54 in the second quarter of 2025. Moving to slide 11. We generate substantial free cash flow from our asset-like model, and our strong financial position gives us the flexibility to execute a disciplined capital allocation strategy. Our priorities are straightforward. fund the highest return organic opportunities, maintain a strong balance sheet, and return excess capital to shareholders through a disciplined buyback program. We view share repurchases as an attractive use of capital when we believe the stock does not fully reflect the durability and growth of our royalty streams. That is why we purchased $332.8 million worth of shares in the second quarter, against our target of $400 million for the full year, while also investing in long-term growth and expanding the enhanced platform as more products launch and gain share. Turning now to slide 12 and our updated 2026 outlook. As Helen mentioned earlier, we are pleased to raise the guidance for the remainder of the year. We now expect total revenue of $1.835 billion to $1.91 billion, representing year-over-year growth of 31% to 37%, driven by an increase in royalty revenue projections and product sales from API. Royalty revenues of $1.22 billion to $1.245 billion, representing year-over-year growth of 41% to 43%. We expect growing contributions from the recently launched Enhanced products, while DAZLEC, SubQ, Vivgard, Hytrula, and Fesco remain the largest revenue contributors. We expect adjusted EBITDA of between $1.225 billion and $1.28 billion, which includes approximately $60 million of planned investment in HyperCon and SurfBio. A non-GAAP diluted EPS of $8.65 to $9. I will now turn the call back over to Helen.

Thank you, Darren. In closing, let me highlight that our record second quarter results reinforce our confidence in both the strength of our business today and in the opportunities ahead. The growing contributions of our recently launched enhanced products and the continued strong performance of DARSLX Subcutaneous and FiveGuard gave us confidence in the 2026 to 28 financial guidance and beyond. In the quarter, we demonstrated meaningful progress to add to this and will bend the curve, including through multiple new enhanced and hypercon collaboration and licensing agreements and multiple new clinical study starts. Thank you for your attention today. And operator, you can now open the line for questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from Sean Lehman with Morgan Stanley. Your line is now open. Please go ahead.

This is Natasha on for Sean. Thank you for taking our question. So your raised royalty guide of $1.22 to $1.245 billion against the $548 million in the first half royalties implies around $336 to $348 per quarter in the back half, which is a step up from 2Q's $308 million. I just wanted to ask what's driving that implied acceleration from here. Is it primarily the newer launch cohort or the established products?

Thanks, Mathias. I'll turn that over to Darren.

Yeah, thanks for the question. And as you noted, royalties were an important component of the beat in the first half. And I would say that we do expect royalty revenue to grow sequentially through the second half. probably won't have quite the same amount of royalty step-ups that were part of the Q1 to Q2 growth, but we do expect that to continue to ramp up in the second half. And a lot of it is driven by some of the new product launches that you've seen, so things like Ribavance, SubQ, which has started to pick up a little bit, and some of the other new products.

Thank you.

Your next question is from Michael DeFiore with Evercore ISI. Your line is now open. Please go ahead.

Hi, this is Yuan Yuan on for Mike. Congrats on the strong quarter, and thank you for taking our question. We'd like to ask a question on target exclusivity. So you've talked about partners who work with other providers and often approach HaloZone first, where target was already exclusively licensed. So as we look forward to 2029, How should we think about the way target exclusivity works as the base patterns throw off? And then does that open up targets you couldn't take on the floor?

Yeah, thanks for the question. In terms of the exclusivity, it's often very much driven by the partner company. And if they request exclusivity and they are willing to pay the enhanced economics that are associated with that, historically in the past we have agreed to that and we also would still agree to that today. I will note, however, that as you've probably seen in the latest series of agreements we've done, there are now a lot of companies who are very comfortable with gaining a non-exclusive license. And so you're going to see a mix of the two as you go forward. And I will also say, if you think about exclusivity, exclusivity is also done in different ways. It can be exclusivity to an entire target, as an example, like we did with PD-1. But in other cases, there can be exclusivity to a specific molecule that uses a target or perhaps a target that is part of a combination. And so we are being able to be a lot more, if you like, creative and broad in what we're able to license both on an exclusive and a non-exclusive basis as we go forward. And that really is reflected in the five recent deals across those and the additional deals we anticipate signing this year and next. Thank you.

Your next question is from Brendan Smith with TD Cowan. Your line is now open. Please go ahead.

Thanks for taking the question and congrats on the great quarter. Maybe first, actually, on HyperCon, I know we'll get confirmation of the first two assets by early next year. I'm just wondering if you can give us a little bit more of a sense of timing for kind of subsequent assets in that pipeline and just roughly when the next wave might be. If there are others that could reach phase one next year, is that more of a 28 event? And I guess kind of related, I wanted to ask actually about that $1 billion in incremental HyperCon royalties by 2035 you've spoken to. I guess how many different assets are you assuming would contribute to that by 2035? And I guess are your assumptions largely just based on the current partnerships or are you assuming any additional ones?

Yes, thanks. With regard to HyperCon and timing, there absolutely could be additional study starts in the second half of 2027, Brandon, based on the progress we're seeing with companies advancing through the preparatory stages before they're ready to advance to the clinic. And if you recall, while we've got five agreements, those partners have taken up to 20 targets. And so some of the companies are advancing more than one target at this point in time, and that is already creating a very nice pipeline of future clinical studies for 2027 and for 2028. So that's the great thing about the model we have with this ability to access multiple targets in one agreement. As we projected the $1 billion in the mid-2030s, we had assumed between five and seven launches by that time period. And I think a number of those will come from the already signed agreements, but it is also possible that agreements in the next one to two years could also be contributing to that based on what we estimate the development timeline to be. So I commented on the call about it's very exciting to see Hypercon turning into another compounding platform engine for us, but able to do so faster and quicker in part because the market is just more receptive to sub-Q delivery, but we're also able to bring a lot of our learnings from how we've been able to commercialize and grow in hands.

That's great. Thanks, Helen. Okay. Your next question is from Mitchell Kapoor with H.C. Wainwright. Your line is now open. Please go ahead.

This is Ahmed on for Mitch. Congrats on a strong quarter, and thank you for taking our questions. I guess for both or all platform cadence, I guess, how are you thinking about the mix of new partner wins and follow-on nominations from existing partners, and how would that shape the future deal cadence. And on the ADC and nucleic acid therapeutics, there's a lot of excitement about that. And I was just wondering, how are you thinking about that broader opportunity and how are you prioritizing these modalities as you pursue additional deals?

Yeah, thank you. With regard to the, I'll start with the ADCs and the nucleic acids, yes, very excited now to have signed a deal, one each for both of those, opening up a brand new growth opportunity for Enhance. We have previously said that there's 50 ADCs we think could benefit from Enhance and we said there are about 50 nucleic acid-based therapies that we think can benefit from Enhance and so this really is an exciting opportunity and I would say our business development team are agnostic to whether it's a monoclonal antibody, an ADC, or a nucleic acid. But what it has done is broaden the number of companies that we are speaking to and approaching with ideas as to how the enhanced technology can help improve their risk-benefit profile or their competitive profile. And so it just has dramatically increased the number of conversations we're having. And that's exciting in terms of what that can mean for long-term growth and expansion of the enhanced number of agreements. You make a good point, and it's something I think that's often under-recognized, is that signing new deals is a source of growth for us. But the number of targets that we already have under license that has not yet been nominated is a second separate source of growth. And in the first half of this year, I will say we've had one current partner nominate a product, and I actually am expecting more in the second half. And so it's going to be a mix of both, really, in terms of what's going to cause the continued growth and expansion of our pipeline. We expect to have 13 development products in the clinic this year. That's going to continue both from these current deals we're signing, adding more nominations and moving into the clinic, but even our existing partners who've still got slots left. Now, falling into the same mindset, I think, as many of the companies today of recognizing that sub-Q delivery means competitive differentiation, and they are advancing new nominations at a pace also that we've not necessarily seen in a long, long time. So it's an exciting time with both of those avenues for growth, as well as growth coming from the ADCs and the nucleic acid new opportunity.

Thank you.

Your next question is from Mohit Banzal with Wells Fargo. Your line is now open. Please go ahead.

Hi, this is Will Zhang on from Mohit. Congrats on the recent deals in the quarter. But I guess I just want to understand now that some of the smaller companies are also partnering with you on Enhance, like is the deal structure for these smaller companies any different from your prior deals? And I guess like what conversations are you currently having with newer, smaller partners?

Yeah, we're excited to be continuing to be discussing Enhance with all size ranges of companies. If you think about just the last few months, we have GSK that certainly is a very large company. We've got Insight that is a large company, and as you point out, some smaller companies as well. I would say what is more a driver of exactly what the deal structure will be is based much more on exclusivity versus non-exclusivity. And so that is where there is some difference in the economics that's really driven by that the deal structure is shaped around the exclusivity, not company size.

Great. Thanks.

As a reminder, if you would like to ask a question, please press star one to raise your hand. To withdraw the question, simply press star one again. The next question is from Dave Reisinger with Leerink Partners. Your line is now open. Please go ahead.

Thanks very much. And congrats on the financial upside. And Darren, congrats on your new role. So I have a few questions, please. First, could you provide an update on the Merck litigation prospects? That's the first question. Second, how you see Alteogen as a competitor today? And then third, your view on the acquisition landscape. Thank you.

I'll take the first two and I'll turn the acquisition landscape over to Darren. With regard to the Merck litigation, let me start outside the U.S. We are currently actively pursuing injunctions in approximately eight countries outside the U.S. with the goal of stopping Merck infringing the use of our MDays technology. This includes the launch in countries as well as manufacturing, distribution and supply of QLEX for worldwide use. These cases are moving forward rapidly. You may have seen we did have a preliminary injunction in Germany in December, and we do expect important decisions broadly impacting Merck's launches of sales and QLEX in Europe before the end of this year. So, very active in Europe. With regard to the United States, we're working through the U.S. Patent Office proceedings that were brought by Merck with regard to the PGRs. And we expect to have more clarity once that we're through all of those steps on when the U.S. District Court case is going to move forward once the final decisions are reached in those proceedings later this year. Now, I will say that it's a very active on the PGRs as well. We're going to be appealing the four initial written decisions that we received earlier this year. And we expect to hear the PTAB's decision on the remaining 10 sometime this fall. And so a lot still happening in the U.S. case as well, David, with some more clarity with regard to the PGRs at the end of this year. clarity on the timing of the district court case, but certainly our conviction and our confidence is absolutely wavering that we will prevail in this case and we will be appealing certainly the first four PGRs based on our very strong conviction that the LTAGIN product is infringing. The Merck product using the LTAGIN technology, I should probably say better, is infringing. With regard to LTAGIN, And, you know, it still continues to be the case that from what is publicly available, it would appear that the people who are assigning deals at the moment with Alteagen are for targets that Halozyme has exclusively licensed. And I can say many of those companies have directly come to us and we've had to unfortunately say we're unable to work with them. And so in light of that, obviously, well, we're not finding that the performance of Altagen is directly competing with us. And I will also share that when companies come to us, what they say is they want to work with Halosyne because of our track record of success, because our product's been used and we've got a safety database and over 1.3 million patients with 15 years history of reliability of supply and our team have got the expertise to support very rapidly getting the partners into the clinic, innovative trial designs and a faster path to approval. And so the entire package that Halozyme brings is what has, if you think about just in the last seven or eight months, six new enhanced deals. We are definitely performing incredibly well in the market and And it comes from that competitive moat that we've created from all of our years of expertise and performance. Let me turn it to Darren for acquisition landscape.

Yes, thanks. And hi, David. With regards to M&A, we definitely continue to see M&A as an important part of our capital allocation strategy. I would say particularly when we can add differentiated technologies, new capabilities, or create future growth platforms. But at the same time, I think you've heard the company say this before, we're very disciplined. We indicated last quarter that for a 26, we're going to really focus on organic growth and M&A is unlikely. But what I would say, the good news is given the strength of our portfolio, the growing cash flows that we have and our improving leverage profile, we really do have flexibility. But again, we remain focused on really on long term shareholder value.

Great. Thank you. Your next question is from Mitchell Kapoor with H.C. Wainwright. Your line is now open. Please go ahead.

This is Ahmed again. Thank you for taking our second round of questions. But I was wondering, as you build out Hypercon Manufacturing, how should we think about potential revenue beyond royalties and any incremental investment within the 20, 26, 20, 28 margins? and you show that you got to 13 enhanced programs in development by end of 2026 and 13 launches in 2029. I'm just wondering how are you thinking about any potential attrition or is that kind of built into your assumptions? Thank you.

Yeah, let me talk about the manufacturing first and maybe I'll begin by sharing why we think it's such an exciting opportunity for us to invest in the manufacturing. As you're already hearing, we've got five deals, multiple products are advancing, and we believe that Hypergon is going to become rapidly the same type of compounding platform engine that we have from Enhance. To speed that up and to maximize the success of that, here as I'm investing to advanced manufacturing is just the right thing to do. We'll be able to drive that, control that at our pace and with our expertise. We have not finalized the exact planning around that, so I can't share any details on the investment dump required or the exact business model. But what I can say is that this is going to be very exciting as we contemplate just how much more quickly Hypercon is going to grow to be that billion-dollar opportunity compared to Enhance. So more to come on that as we finalize our plans. With regard to the additional launches, just to clarify one thing, we anticipate having 13 products in the clinic by the end of this year. In terms of the 2029 number, what we said was we will begin the launches in 2029, And those will be occurring between 29 and 2033, as an example. So there is a series of – they're occurring over a period of time. Our development timelines generally are four to five years just to help with that. So not all 13 in 2029, but after that. In terms of the mix of products that we have in that 13 products, some very exciting products in their mechanisms of action, that some of the products are already commercial, which represent a very high probability of success based on our track record. Other products are new mechanisms of action, but the majority are antibodies. And we have just got tremendous experience with antibodies, which, again, from many aspects gives us confidence in the fact that Enhanza is going to be very successful in making them into successful subcutaneous products. So a broad range of products in there. Hard to give you specifics on them, but as a body, this ability to have up to 13 additional launches beginning in 2029 is clearly a very exciting additional growth driver that will layer on top of the already launched product.

Thank you.

We have reached the end of the Q&A portion, which concludes today's call. Thank you so much for attending. You may now disconnect.