Halozyme Therapeutics: A 20% CAGR Growth Story Powered by ENHANZE, Litigation Upside, and Undervalued M&A Potential

Halozyme Therapeutics (NASDAQ:HALO) is positioned to deliver a 20% compound annual growth rate (CAGR) in revenue through 2028, driven by its proprietary ENHANZE drug delivery platform, a robust pipeline of partnered products, and litigation-driven valuation catalysts. With recent financial guidance raises, expanding partnerships, and a favorable valuation, HALO presents a compelling buy opportunity for investors seeking high-growth biotech exposure. Here's why:

The ENHANZE Platform: The Engine of Growth

Halozyme's ENHANZE platform is a game-changer in drug delivery, allowing rapid, large-volume subcutaneous injections of therapies that previously required IV infusions. This technology is embedded in 10 approved products, including blockbuster treatments like DARZALEX SC (multiple myeloma), Phesgo (breast cancer), and VYVGART Hytrulo (autoimmune diseases). The platform's dominance is underscored by its 95% U.S. subcutaneous market share for DARZALEX SC and $7 billion sales target by 2028 for VYVGART alone.

The platform's scalability is evident in 2025 revenue guidance, which has been raised to $1.2–1.28 billion, representing 18%–26% YoY growth. By 2028, Halozyme projects revenue to double from 2024 levels, reaching $1.7–1.86 billion, fueled by new product launches such as OCREVUS ZUNOVO (multiple sclerosis) and TECENTRIQ Hybreza (cancer).

Pipeline Expansion and Strategic Partnerships

Halozyme's growth isn't confined to existing products. The company is leveraging its ENHANZE platform to secure new partnerships and pipeline additions:
- New Clinical Trials: Three new ENHANZE-enabled therapies entered clinical trials in 2025, with five more targets nominated by partners.
- Auto-Injector Deals: A recent high-volume auto-injector partnership expands ENHANZE's reach into self-administered therapies, a growing trend in patient-centric care.
- M&A Potential: Halozyme's $399 million free cash flow (2024) and a $250 million 2025 share repurchase program position it to pursue $1.55 billion in total shareholder returns since 2019. This financial flexibility supports opportunistic acquisitions of complementary drug delivery technologies, which could accelerate growth beyond organic means.

Litigation and Royalty Upside: The 2030s and Beyond

Halozyme's legal battle against Merck over patent infringement for its KEYTRUDA subcutaneous formulation is a critical wildcard. A favorable outcome could secure mid-single-digit royalties on Merck's $16 billion+ Keytruda sales, extending cash flows into the 2030s.

Additionally, co-formulation patents—already secured for DARZALEX and Amivantamab—delay expected royalty rate declines by up to three years. This “patent thicket” strategy protects Halozyme's revenue streams long after core patents expire.

Financial Strength and Undervalued Metrics

Halozyme's recent Q1 2025 results underscore its financial resilience:
- Revenue rose 35% YoY to $265 million, with adjusted EBITDA up 40% to $162 million.
- Net income surged 54% to $118 million, while non-GAAP EPS reached $1.11, beating estimates.

Despite this momentum, Halozyme trades at a P/E of 12.2x (vs. a 3-year average of 23.7x) and an EV/EBIT of 10.2x, well below peers like Supernus Pharmaceuticals. Analysts project $8.25–8.85 in non-GAAP EPS by 2028, yet the stock's current price implies 13.9% upside to the average $65.7 analyst target.

Risks and Considerations

• Regulatory Delays: Partners' product approvals (e.g., OPDIVO Qvantig) could lag, impacting timelines.
• Litigation Uncertainty: The Merck case remains unresolved, though Halozyme's patent history suggests strong positioning.
• Reimbursement Challenges: Payer pushback on drug pricing could pressure margins.

Investment Thesis: Buy HALO for 20% CAGR Growth and Patent-Driven Upside

Halozyme checks all the boxes for a high-growth biotech investment:
1. Dominant Technology: ENHANZE's subcutaneous delivery leadership is unmatched.
2. Pipeline Depth: New products and partnerships ensure scalability through 2028+.
3. Litigation Catalyst: Merck litigation and patent extensions add multiyear cash flow visibility.
4. Undervalued Valuation: Current metrics lag growth prospects, offering a margin of safety.

With a 20% revenue CAGR on track and a $250 million buyback program boosting EPS, Halozyme is primed to outperform. Investors should consider accumulating HALO now, particularly ahead of 2025's Q2 earnings report and potential Merck litigation updates.

Recommendation: Buy HALO at current levels, with a 12–18 month target of $65–$70.
Risk-averse investors may wait for post-earnings clarity, but the long-term thesis remains overwhelmingly bullish.