Keytruda generated $29.5 billion in sales in 2024. Merck’s plan for protecting that franchise through its patent expiration was straightforward: convert patients from a 30-minute intravenous infusion to a quick subcutaneous injection, making the drug stickier and harder for biosimilars to dislodge. That plan now has a large hole in it across parts of Europe.
A Dutch court ordered Merck’s European unit to stop making and marketing the subcutaneous version of Keytruda in Belgium, Denmark, France, Ireland, Italy, the Netherlands, Sweden, and Switzerland. The court also rejected Merck’s invalidity argument. For Halozyme, a San Diego company that most investors know mainly as a royalty engine for other companies’ drugs, this is a different kind of win. It is not just a legal outcome. It is leverage.
Why This Ruling Is About More Than Europe
Merck has been counting on the simpler-to-use subcutaneous version of the drug to help drive growth as key patents on its original intravenous version expire later in the decade. Halozyme had already obtained a preliminary injunction in Germany in December 2025 blocking sales of Keytruda SC there, and Merck has appealed that ruling. The Dutch decision is not a preliminary order. A specialized Dutch patent court in The Hague found that Merck infringed one of Halozyme’s patents covering MDASE, its technology for rapid, high-volume under-the-skin drug delivery. Merck now faces blocking orders in two of Europe’s largest markets simultaneously, with U.S. litigation also active.
Keytruda SC leverages Alteogen’s berahyaluronidase alfa, with Halozyme alleging that Alteogen’s technology infringes its broad portfolio of modified hyaluronidase patents known as MDASE. In the U.S. case, Halozyme is alleging infringement of 15 patents by Keytruda Qlex, with the intellectual property in question dating back to 2011.
The Business Behind the Win
Halozyme runs two distinct patent estates, and the distinction matters. The MDASE patents are distinct from Halozyme’s ENHANZE patents and are not included in ENHANZE licenses. That separation means Halozyme can fight Merck aggressively without risking the royalty stream it already collects from partners using ENHANZE to deliver drugs including DARZALEX SC and VYVGART Hytrulo.
The company has guided to total revenue of $1.7 billion to $1.8 billion for 2026, with royalties from partnered products and ENHANZE of about $1.1 billion to $1.2 billion. The MDASE litigation against Merck sits entirely on top of that base.
Halozyme has described its MDASE patent estate as extensive, and in company filings it has said issued European patents in the portfolio expire in 2032, with issued U.S. patents expiring between 2032 and 2034. Licensing agreements for MDASE may include milestone and royalty payments, and management has discussed the possibility of royalties in the low single digits. Applied to Keytruda’s revenue base, even the low end of that range represents a substantial annual figure.
Bull Case and Bear Case
The bull argument is simple: each court that upholds the MDASE patent makes a negotiated license harder for Merck to avoid and more expensive when it comes. Merck said it “strongly disagrees” with the Dutch court’s decision to grant a cross-border injunction and considers Halozyme’s patent “invalid globally.” That language is standard litigation posture, but it also signals Merck will appeal, meaning the injunction may not hold at every stage.
The bear case centers on validity. Merck has filed post-grant challenges at the U.S. Patent and Trademark Office aimed at Halozyme’s MDASE patents, and at least one PTAB decision has found certain challenged claims unpatentable. Patients requiring Keytruda will still have access to the existing intravenous version, which is not affected by the order, which limits the reputational and commercial pressure Merck faces in the near term.
What Investors Should Watch
The German appeal is the next major procedural milestone. A favorable outcome there would mean Merck faces blocking orders in multiple European countries simultaneously and would raise the settlement value of any licensing conversation considerably. The U.S. district court case in New Jersey, where Halozyme is asserting 15 patents, is the long-term arbiter of whether MDASE royalties become a permanent second revenue line for the company.
The combination of a successful patent enforcement action and a larger ENHANZE collaboration could deepen Halozyme’s royalty pipeline and underscores management’s focus on protecting intellectual property and scaling high-margin licensing revenue. Whether Merck ultimately licenses or litigates to the finish, Halozyme walks away from The Hague with something concrete: proof a court found infringement and rejected an invalidity challenge. That changes every negotiation the company enters from here.