Halozyme grew total revenue 42% to $376.7 million, driven by royalty revenue up about 43% to $240.7 million on DARZALEX SC, VYVGART Hytrulo, and Phesgo plus newer-product ramps, lifting adjusted EBITDA 42% and non-GAAP EPS to $1.60 from $1.11. The company already met its full-year goal of three new collaboration deals, including its first ENHANZE ADC agreement with GSK, and authorized a new $1 billion buyback. Management reiterated full-year guidance, with the main negatives being a push of the first two Hypercon phase I starts to early 2027 and limited near-term M&A prospects.
Thank you, operator. Good afternoon, welcome to our first quarter 2026 financial and operating results conference call. In addition to the press release issued today after the market close, you can 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, David Ramsay, our Interim 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 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. We will start on slide three.
Thank you, Tram, and good afternoon, everyone. We started 2026 with exceptional momentum. The continued strong performance of our currently approved products gives us strong conviction in the 2026-2028 financial guidance. Our recent new deal momentum and new nominations by partners, accompanied by the expanding number of new phase I starts, is bending the curve in the 2029 plus period. The business momentum is resulting in strong free cash flow. We have clear priorities for capital allocation, reinvesting at compelling returns to create new value and returning value to our shareholders. Today, my presentation will address how our strategy will deliver durable value for investors during our current guidance period of 2026-2028, continue to compound value in the 2029 plus timeframe, and deploy robust free cash flow judiciously over the short and the long term.
I'll begin with our 2026 to 2028 timeframe, which is shown on slide 4. The key drivers of revenue in the 2026 to 2028 timeframe are our first 10 ENHANZE launch products, which includes DARZALEX subcutaneous, VYVGART Hytrulo, and PHESGO. Our strong 1st quarter financial results reflect continued adoption of subcutaneous drug delivery enabled by ENHANZE, with royalty revenues driven by our commercial ENHANZE portfolio increasing 43% year-over-year to $241 million. Total revenue for the quarter increased 42% year-over-year to $377 million, reflecting the strength of our commercial royalty portfolio. This revenue growth translated into adjusted EBITDA of $230 million and non-GAAP earnings per share of $1.60, representing a greater than 40% increase year-over-year. I'll move now to slide five.
Based on these results, I am pleased to reaffirm our full year 2026 financial guidance and the 2026 to 2028 financial guidance. Two highlights I'll point out. For 2026, we continue to project ENHANZE royalties to exceed $1 billion for the first time, representing 30%-35% growth over 2025. During the 2026 to 2028 timeframe, we project our adjusted EBITDA margin will be greater than 65%, growing to approximately 70%. Moving now to slide six. As you know, our business converts revenue to free cash flow very efficiently, which provides us with the capital to deliver durable, long-term value for our shareholders. During 2026 to 2028, we plan to deploy our capital predominantly in four key areas.
Firstly, we will invest to maximize the value of our organic investments, predominantly to support partner success with investments in ENHANZE, Hypercon, and SurfBio. Secondly, we are pleased to announce a new $1 billion share buyback authorization with an expectation of buying back at least $400 million of our shares in 2026. Over the next years, we project we will achieve a 3% annual share buyback yield. Our own equity is an asset we know best, and we're comfortable reinvesting against a compelling return plan. Thirdly, we plan to deleverage further by retiring the 2027 and 2028 remaining notes at their maturity. Fourthly, we will continue to evaluate drug delivery M&A opportunities with a continued focus on identifying high-demand, large-TAM drug delivery licensing technologies.
I will say that based on our high bar and our assessment year to date, it is unlikely that we will identify a drug delivery opportunity that meets our criteria to transact on in 2026, and we do not foresee M&A outside of drug delivery. I'll move now to our second timeframe, which is 2029 plus. Let me be very clear, we intend to bend the trend far more favorably beginning in 2029 than our skeptics fear. Let me explain why I believe this to be the case on slide seven. Our revenue in and post-2029 will come from four key sources. The first driver is the continued performance and contribution from our 10 current ENHANZE-launched products.
The second driver is up to 13 new launches in the 2029 plus timeframe, arising from the current ENHANZE pipeline of 13 products that are projected to be in clinical development by the end of 2026. The third driver is the two Hypercon product launches in the 2030-2031 timeframe. The fourth driver is the next wave of launches that will result from partners progressing additional targets under already signed Hypercon and ENHANZE agreements and from new Hypercon and ENHANZE collaboration and licensing agreements. Turning now to slide eight, I'll say a few words on each of these significant revenue opportunities, beginning with the first driver, the current 10 ENHANZE products. As a reminder, all of our signed contracts have long durations. What you may not know is that the majority of the royalty revenue from these 10 products is still to come.
Yes, let me repeat that. The majority of the royalty revenue is still to come. Let me dimensionalize that comment. By the end of 2025, we estimate that our 10 approved products generated about 25% of their projected potential royalties. We estimate that we have about 66% of the additional projected royalty revenue still to come in the next six years between 2026 and 2032, with the remaining 9% in the years beyond that. In some industries, they call our 66% royalty revenue still to come in the next six years, with more after that, our contracted revenue backlog, which I'm sure sounds familiar to many of our shareholders. I'll move now to the second driver, the current ENHANZE pipeline products with first launches projected in the 2029 plus timeframe.
We project to have up to 13 additional ENHANZE partner products potentially approved in the 2029 plus timeframe. These have arisen from new collaboration and licensing agreements and from current partners nominating and adding additional targets. The new revenue from these projected launches will add to and buoy our revenues. In the first quarter, I'm pleased to report that two ENHANZE partners initiated phase I studies of new targets in alignment with our expectation for six new ENHANZE targets to initiate phase I testing in 2026. This adds to the seven products that are already in development. argenx initiated a phase I study with ARGX-124, making this the 5th product in the argenx collaboration to advance to the clinic.
A second ENHANZE partner, who for competitive reasons does not wish us to provide detailed information, initiated and completed their phase I testing in the quarter. In parallel, we continue to build the ENHANZE pipeline by supporting our current partners to identify and advance new targets to be nominated. These actions also add to this new wave of launches in the 2029 plus period. I am pleased that in the first quarter, Pfizer nominated a new, undisclosed, non-exclusive target to be studied with ENHANZE, which will add to the already impressive 13 ENHANZE product pipeline with the potential to launch in the 2029 plus timeframe. I will now move to the third driver, Hypercon. We intend to make Hypercon the next ENHANZE-like success story. To achieve this goal, we plan to invest in manufacturing capacity that will allow Halozyme to offer end-to-end services to our Hypercon partners.
We foresee offering manufacturing from drug substance to commercial fill finish for Hypercon products. As part of this plan, we are currently finalizing the clinical supply manufacturing as we ramp up our manufacturing efforts, and we now project that the first two phase I clinical starts will occur in the first half of 2027. The launch timing for these two products continues to be 2030, 2031. As I've said in the past, we continue to see the opportunity for Hypercon to be a very large, achieving approximately $1 billion in royalty revenues by the mid-2030s. Turning now to slide nine and our fourth 2029 plus driver, the next waves of launches that will result from partners progressing additional targets under already signed Hypercon and ENHANZE agreements and from new Hypercon and ENHANZE collaboration and licensing agreements.
Under our current ENHANZE and Hypercon agreements, there remains opportunities for partners to nominate additional targets. As an example, there are up to another 15 Hypercon targets available in already signed CLAs and tens of targets for ENHANZE. We're seeing heightened interest in expansion of targets consistent with the interest in new CLAs. Turning now to the new agreements. We are delighted to have signed three new collaboration and licensing agreements in 2026, already meeting our goal for 2026 to execute three new deals this year. We are not stopping here. Let me say that we have line of sight to additional agreements in 2026 based on the status of our ongoing discussions. We are delighted that with these agreements, we receive upfront milestones and have the potential to earn milestones and up to mid-single-digit royalties.
Royalties being the most important recurring and the largest revenue stream for each product. Each of these deals includes one or more targets that represent multi-billion-dollar total sales potential. In May, we entered a new ENHANZE collaboration agreement with GSK for multiple promising oncology targets, including with antibody drug conjugates. This collaboration with GSK expands our ENHANZE footprint with another global pharmaceutical leader and marks our first ENHANZE collaboration for antibody drug conjugates, extending our ENHANZE technology into one of the fastest-growing and largest TAM areas of oncology. We believe ENHANZE has the potential to meaningfully improve the benefit risk profile of these therapies by enabling subcutaneous administration and reducing the treatment burden for patients. We look forward to the initiation of the first clinical trial under this agreement.
Thank you, Helen. Let me start by saying how excited I am to be back at Halozyme and to step into this role at such a strong point in the company's evolution. I was pleasantly surprised to learn about our deal pipeline and how we are still in the early stages of realizing the full potential of our ENHANZE royalties. Halozyme is operating from a position of strength, and my focus is on maintaining the disciplined framework and execution already in place, supporting our partners, investing in our core business, and working to ensure the long-term growth and durability of our royalty businesses. We delivered a strong start to the year, with results consistent with expectations and robust year-over-year royalty growth.
Adjusted EBITDA grew meaningfully, even as we continue to invest in Hypercon and SurfBio, which is a clear demonstration of the opportunity we have to invest in our core businesses while maintaining the operating leverage inherent in our high-margin, royalty-driven business model. Let me now turn to our detailed first quarter results on slide 13. Revenue increased approximately 42% to $376.7 million, compared to $264.9 million in the prior year period. This performance was driven by broad-based strength across the business, including strong growth in royalty revenue and higher product sales to partners.
Royalty revenue of $240.7 million increased approximately 43% from $168.2 million in the prior year period, reflecting the continued commercial success of key ENHANZE partnered products, including subcutaneous DARZALEX, VYVGART Hytrulo, and Phesgo, as well as the continued ramp from recently launched SC therapies OCREVUS, Opdivo, TECENTRIQ, and RYBREVANT. Research and development expenses were $25.6 million compared to $14.8 million in the prior year period as we integrate our Hypercon and SurfBio acquisitions. Selling, general, and administrative expenses were $57.9 million in the quarter compared to $42.4 million in the prior year period. Adjusted EBITDA increased 42% to $229.5 million from $162 million in the prior year period, driven by continued strong royalty growth.
GAAP diluted earnings per share was $1.22 compared to $0.93 in the prior year period, and non-GAAP diluted earnings per share was $1.60 compared to $1.11 in the first quarter of 2025. We ended the quarter with net leverage of approximately 2.5 times, reflecting the acquisitions of Hypercon and SurfBio. Following our announced plan to buy back at least $400 million in shares this year, we project our net leverage will be approximately 1.2 times by the end of 2026, supported by our strong cash generation. Turning to our 2026 outlook, as Helen briefly touched upon, we are reiterating the strong financial guidance the company provided earlier this year.
As shown on slide 14, we continue to expect total revenue of $1.71 billion-$1.81 billion, representing year-over-year growth of 22%-30%, driven by royalty revenues and product sales from API. Royalty revenues of $1.13 billion-$1.17 billion, representing year-over-year growth of 30%-35%. We continue to expect DARZALEX SC, VYVGART Hytrulo, and Phesgo to drive these strong expectations with a growing contribution from recently launched ENHANZE products. We expect adjusted EBITDA of between $1.125 billion and $1.205 billion, which includes approximately $60 million of planned investment in Hypercon and SurfBio. Non-GAAP diluted EPS of $7.75-$8.25, which does not assume the impact of any potential future share repurchases.
I am pleased with the continued strength of our business as reflected in our strong first quarter performance and the team's execution. We are still in the early stages of realizing the value from our ENHANZE business, and we are investing in Hypercon and SurfBio to drive the next blockbuster royalty business. Our business model positions us well to sustain long-term value creation, and I look forward to contributing to that progress. With that, I'll turn the call back to Helen.
Thank you, David. In conclusion, let me just close by reiterating what makes Halozyme such a compelling investment. We demonstrate our conviction today with our new $1 billion share repurchase program. The continued strong performance of our currently approved products and the increasing number of indications gives us strong confidence in the 2026-2028 financial guidance. We plan to stun skeptics and bend the curve in the 2029 plus period, building on top of the durable, substantial revenue of our 10 approved products, where we have realized only 25% of the revenue to date and project to receive 66% of the total projected royalties between 2026 and 2032. That's a 2.5 times still to come.
On top of this strong base of revenue, our four drivers of revenue, the continued contribution of our currently launched 10 products, the potential launches of up to 13 additional ENHANZE products beginning in 2029, the two projected Hypercon launches in 2030 and 2031, and the additional launches arising from currently signed agreement new nominations and new CLAs for ENHANZE, Hypercon and SurfBio all add long-term, durable revenue streams. The business momentum is resulting in strong free cash flow. I shared that we have clear priorities for disciplined capital allocations, and we're deploying this to create new value and return value to our shareholders. Thank you very much for your attention today, and operator, you can now open the line for questions.