Genmab A/S Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2023

There are 12 speakers on the call.

Operator

Hello, and welcome to Genmab's Third Quarter 2023 Financial Results Conference Call. As a reminder, this conference call is being recorded. During this telephone conference, you may be presented with forward looking statements that include words such as beliefs, anticipates, plans or expects. Actual results may differ materially, for example, as a result of delayed or unsuccessful development projects. Genmab is not under any obligation to update statements regarding the future nor to confirm such statements in relation to actual results, unless this is required by law.

Operator

Please also note that Genmab may hold your personal data as indicated by you as as part of our Investor Relations outreach activities. In order to update you on Genmab coin, please Refer to our website for more information on Genmab and our privacy policy. I would now like to hand the conference over to your first speaker today, Jan Van Der Winkle, please go ahead.

Speaker 1

Hello, and welcome to Genmab's conference call to discuss our financial results for the period ending September 30, 2023. With me today to present these results is our CFO, Anthony Pagano. For the Q and A, we will be joined by our Chief Development Officer, Judith Klimovsky our Chief Operating Officer, Anthony Monsini And our Chief Medical Officer, Tay Yamahdi. As already said, we will be making forward looking statements. So please keep that in mind as we go through this During today's presentation, we will reference products being developed under some of our strategic collaborations.

Speaker 1

This slide acknowledges those relationships. Genopt's strong foundation is built on our consistent track record of success. As we near the end of the year, it's a good time to reflect on how far we have come as a company even in the last 12 months. We continue to expand our pipeline with new INDs and new product candidates in the clinic. We also matured our pipeline With new clinical trials and positive data readouts.

Speaker 1

And very excitingly, there are now 8 approved medicines that are followed by our innovations, half of which were created with our proprietary DuoBody technology. Aperitumab, which we are co developing with AbbVie, It's also our first medicine to be approved for patients in territories outside the U. S. These advances are possible because we have a dedicated and an Stoppable team at Yanmab, an international team that has grown to enable us to continue to evolve into a leading Integrated Biotech Innovation Powerhouse. Let's now turn to recent key company events.

Speaker 1

September was an exciting month for eptaritamab as we and AbbVie received approvals in both Japan as AbbVie and Europe as AbbVie. Like the approval in the U. S. Earlier in the year, these approvals were important milestones both for our patients in need and for Genmab as a company. The approval in Japan is especially significant as we at Genmab are the commercial leads for our Kinley there.

Speaker 1

We began growing our presence in Japan in 2019, so we would be ready for just such an opportunity. So we are very pleased to be launching our own product there, especially as Abkilde is the 1st and only bispecific antibody approved in Japan To treat adults with certain types of relapsed or refractory large B cell lymphoma are for 2 or more lines of systemic therapy. And we are excited to note that in addition to the U. S, Japan and Europe, hapkiritumab has now been approved in Canada and the U. K.

Speaker 1

I'm also happy to announce that once again the broad potential of epritumab to become a core therapy for B cell malignancies will be on display At this year's prestigious ASH Conference at the end of at the beginning of December, We have had 15 total abstracts accepted for presentation at ASH, 2 of which are oral presentations. Of the accepted abstracts, 4 will be initial disclosures of clinical data for abcuritumab, including an oral presentation of data from the APKOR NHL5 trial of epritamab in combination with linalizumab as treatment for patients with relapsed or refractory diffuse large cell B cell lymphoma. This data is further support for APCO's combinability and highlights its potential to move into earlier lines of therapy. HexaBody CD38 will also be recognized at ASH with a poster presentation on preliminary results from the expansion cohort at the recommended Phase 2 dose of the ongoing Phase onetwo trial. We are actively enrolling in the head to head portion of the trial.

Speaker 1

We are very encouraged by what we are seeing. And as we said previously, we anticipate the head to head data in 2024. If you look beyond our own pipeline and include all abstracts involving products that are powered by GenMark's innovations, There are nearly 200 total abstracts accepted for presentation at this year's ASH meeting, 36 of them oral presentations. Now I want to turn to some additional exciting updates on the progress of our maturing proprietary antibody product pipeline. 1st, JAN1046.

Speaker 1

It has cleared the high bar that we set. We are very pleased to share that we are now engaging with health authorities to determine next steps. Previously, we shared data from an expansion cohort of patients with non small cell lung cancer who failed prior checkpoint inhibitors. We saw encouraging single agent Activity with responses are not durable. Based on clinical and strong preclinical data that showed that the combination of GEN-ten forty six Plus checkpoint inhibitors resulted in improved efficacy, we embarked on a scientific question, how to most optimally engage 4oneBB activation With checkpoint inhibition, the Phase 2 study of GEN-ten forty six in combination with pembrolizumab in patients with PD L1 positive non small cell lung cancer who failed standard of care therapy with an immune checkpoint inhibitor addressed this question.

Speaker 1

And emerging data from this study has provided a clear answer. So far, The data from this study indicates that we can combine these two mechanisms and that this leads to improved efficacy. Based on this, we believe there is a clear path forward And we are engaging with health authorities to determine next steps. We look forward to sharing the relevant clinical data at a medical conference in the first half of twenty twenty four. As a reminder, we are developing Gen 1046 with BioNTech.

Speaker 1

Moving to TypTek. We are very pleased that we along with our partner Cigen presented the late breaking results from the innovative 301 trial of tisotumab fedotin in the recurrent For metastatic cervical cancer during the presidential symposium of the ESMO Congress in Madrid in October. This follows the announcement by us and CGM in September that the trial met its primary endpoint of overall survival. As a reminder, the results of this trial are intended to serve as both the pivotal confirmatory trial Likewise, TivDAC has also cleared the high bar that we set. We are optimistic about the data We have seen in head and neck cancer post standard of care.

Speaker 1

Here we will actively engage with health authorities on next steps in this indication. Moving to TEN1042. We are also co developing with BioNTech And we remain very encouraged by the clinical efficacy data that we are seeing across several tumor types. We are currently taking the learnings from GEN1046 on how we can optimally dose and schedule GEN1042. We need more time to do this, so we now anticipate that we will have the data we need to determine next steps for this program in the coming months.

Speaker 1

Looking at some of our earlier stage programs, I have a brief update on GEN-ten forty seven, Our DUOBODY CD3B7H4. We have now completed dose escalation in the Phase III trial and have Transitions to dose expansion. This is an important step in progressing our CD3 based bispecific platform in solid tumors. JAN 2017, our dual body CD30, a program that we announced last quarter, Has now started recruitment for our 1st in human clinical trial. We are also very pleased to announce another IND submission for 2023, GEN-ten fifty nine, our dual body, APCOM-four-1BB, the first preclinical disclosure for this program This will further leverage our knowledge of 4 1BB also took place at ASMO in October in the Emirates.

Speaker 1

This bispecific antibody which we are co developing with BioNTech has potential in solid tumors. We anticipate that JAN10,559 will enter the clinic in 2024. Finally, as we work to progress these New and existing programs, we have also made the decision to cease development of JAN-three thousand and nine or do a HexaBody CD37. This decision was made following its strategic evaluation of the program within the context of our entire portfolio and was not based on any safety or regulatory concerns. Our goal of transforming the lives of patients is always at the center of our decisions and we look forward to continuing to create and develop truly differentiated antibody products.

Speaker 1

The power of our innovation is reflected in programs that apply our DuoBody technology. 2 of these products are Janssen's TULWAY and Ribrovant. In August, Taltzay was approved in both the U. S. And Europe for relapsed or refractory multiple myeloma, Making it the 4th approved dual body based bispecific antibody.

Speaker 1

Also in August, Janssen submitted an SPLA for ribosomes, followed by a Type 2 extension to the EMA in October. Both of these submissions were based on the confirmatory Phase 3 papalon study. So overall, you can see plenty of progress across our business with lots to be excited about as we look forward. And that's a good note of which to hand over to Anthony Parano, and he will take you through our financial. Anthony, the floor

Operator

is yours.

Speaker 2

Great. Thanks Jan. We continue to strengthen our foundation over the 1st 9 months of the year. Of course, top of mind for everyone are the multiple regulatory approvals for F Kinley. And as we'll see, our financials continue to be strong.

Speaker 2

Recurring revenues grew by 22% on a reported basis And impressively 30% on an operational basis. This was principally driven by strong royalties from DARZALEX Along with significant growth from our other 7 approved medicines, our solid balance sheet, Growing recurring revenues and significant underlying profitability allow us to continue to invest in our business and our pipeline in a very focused in a disciplined way. And an important part of this has been to continue to build the team and capabilities we need to succeed. So let's look at those revenues in a bit more detail. We continue to see strong performance for DARZALEX during the 1st 9 months of the year.

Speaker 2

As you can see in the chart, overall net sales grew by 22%. That's net sales of nearly $7,200,000,000 which translates to over DKK8 1,000,000,000 in royalty revenue. This growth was driven by continued share gains and strong performance in the frontline setting. So DARZALEX remains a key driver of our revenue. We grew total revenue to almost DKK 11,800,000,000 in the 1st 9 months of the year.

Speaker 2

And as I've already highlighted, that included a 22% increase in our recurring revenue. And to be clear, that's on a reported basis. Excluding some FX headwinds, recurring revenues grew by 30% on an operational basis. Last year's results make for a somewhat tough comparator as we saw pretty significant FX tailwinds, particularly for our royalty revenue. As a reminder, under our DARZALEX agreement, for purposes of calculating our royalties, Sales outside the United States are translated to U.

Speaker 2

S. Dollars at a specified annual hedged foreign exchange rate. Operational growth in the 1st 9 months of this year continued to be strong, driven by higher DARZALEX royalties as well as royalties from our other products and this really illustrates the power of our recurring revenue. We also recognized the 1st full quarter of sales for Abkinley in Q3. And we're very pleased with how the launch is progressing so far with around $22,000,000 in net sales for the quarter And $28,000,000 year to date.

Speaker 2

Overall, our strong recurring revenue growth enables continued highly focused investment As you can see on the next slide. Back in February, We were very clear that we would continue to invest to capture the opportunities we see in front of us. And that's exactly what we've done, With total OpEx up 42% in the 1st 9 months of the year. At that time back in February, I outlined our top four investment priorities. 1st, securing a successful at Kinley launch by investing in our 2 key markets, the United States and Japan.

Speaker 2

2nd, continuing to advance our pipeline. Here, the lion's share of our investment is being directed to our most advanced programs, including McKinley, TIV DAC, 1046 and 1042, which are all exciting opportunities for us. 3rd, Investing in our world class discovery engine, including focused investments to expand Our therapeutic focus to include INI and 4th, foundational investments in enabling functions To achieve required scale, as you can see, our investments continue to be fully in line with these priorities. And as always, we continue to focus on long term value creation. So with that, let's now take a look At our financials as a whole, here you can see our summary P and L.

Speaker 2

Revenue came in at close to DKK 11,800,000,000. That's up 26% on last year. As mentioned, that's negatively impacted by FX headwinds. Total expenses were around $8,000,000,000 With 71% being R and D and 29% SG and A. And even with the increased investment And significant FX headwinds, we're still delivering around DKK3.7 billion of operating profit.

Speaker 2

Moving now to our net financial items. Here, we have a gain of over $1,000,000,000 so far in 2023. This is driven by an increase in interest income due to higher effective interest rates as well as The strengthening of U. S. Dollar against the Danish kroner in the 1st 9 months of the year.

Speaker 2

Then we have tax expense of about $1,000,000,000 which equates to an effective tax rate of 21.2%. And that brings us to our net profit of over DKK3.7 billion. So as you can see, Continued strong underlying financial performance. With that, let's take a minute to revisit our robust financial framework. First off, our revenue profile on the left.

Speaker 2

With the approval of Akimli in May And Talvi, in August, there are now 8 products on the market that are generating recurring revenues for us, and we expect significant cash inflows for the years to come. Moving to the right, We remain focused on our investments as we evolve our organization for continued success. At the top of the list is accelerating and expanding EPCOR. But that's just one of the exciting opportunities that provide us with a compelling rationale for increasing our investment. As we've told you before, if we want to seize these meaningful opportunities, we've got to invest and that's exactly what we're doing.

Speaker 2

So with that background, let's take a look at our guidance. As you can see, we are adjusting our 2023 financial guidance. In summary, We are lifting the bottom end of our revenue and OpEx ranges. This is due to current year to date performance and the strong U. S.

Speaker 2

Dollar. This of course has the effect of tightening the ranges across the board. We now expect our revenue to be in a range of DKK15,900,000,000 to DKK16,500,000,000. One of the drivers of this increase is higher DARZALEX royalties. So we've increased our guidance here to $11,300,000,000 to $11,500,000,000 Turning to our investments.

Speaker 2

As always, we remain focused on executing against our strategy and key priorities and at the same time Creating long term value. So we're investing to capture the significant growth opportunities in front of us. And here, we're increasing the bottom end of our OpEx guidance to a range of DKK10.6 billion to DKK10.9 billion. This is primarily related to increased and accelerated investment in eptaridumab clinical trials and the progression of other pipeline products, including 1046 and TIV DAC. Putting all this together, we're on track to deliver another year As a reminder, note that these projections are based on an assumed U.

Speaker 2

S. Dollar, Danish kroner exchange rate of 6.8. And finally, to give you a bit more color on FX, Every 10 basis point move in the exchange rate relative to our guidance rate is worth around DKK80 1,000,000 in operating income for the balance of the year. Now before I wrap up, I do want to take a moment to zoom out a bit and take a look at the very high quality of our revenue profile and the power of our discovery engine. We believe this powerful combination sets us up very well for the long term.

Speaker 2

First, let's think about the 8 approved medicines you can see in the box in the top right hand side of the page that are powered by our innovation and technology and that are currently generating significant revenues for us. The top 3 are already blockbusters. The remaining 5 all have meaningful growth profiles and have the potential to become blockbusters. I can say this with confidence because we have the clinical development plans and with our partners we're investing to make this happen. The 6 royalty generating products are marketed by pharma and biotech powerhouses, J and J, Novartis and Amgen.

Speaker 2

And our 2 proprietary products are co marketed with AbbVie and Seagen And moving forward, we anticipate Pfizer. So we're confident you will realize their potential. Now let me turn to the power of our discovery engine. Of around the 40 programs we've moved into the clinic, 8 were already approved and 19 are currently in active clinical development. That's a pretty strong hit rate and it's no accident.

Speaker 2

We understood Very early on, the competitive advantage that our deep antibody science and focused discovery engine could provide. So we've invested more in Discovery to increase the number and quality of our product candidates. This includes investment into our proprietary technology platforms. We believe that these diverse tech platforms are key to our success. They allow us to select the most appropriate modality from our toolbox to tackle a specific disease target.

Speaker 2

We have 4 proprietary tech platforms, including DualBody and Hexabody. And we also have access to a suite of other technologies through our partners. This unique position allows us to bring only the products with the best potential through to development. It's our deep insight into antibodies and our proprietary platforms that have helped us discover, Build or design the 8 products that are currently approved. If all 8 currently approved products We're wholly owned by Genmab.

Speaker 2

We would have the potential to generate estimated revenue here in 2023 of over $14,000,000,000 As we move forward to a model in the future where we have 100 percent ownership of our products, we believe we can continue this track record Our success and further solidify our position as an innovative biotech powerhouse. Now to really wrap up, let me provide a few closing remarks. In summary, we've had a solid 1st 9 months of 2023. We've created growing recurring revenue streams, including now 2 of our own products on the market. And that gives us a strong backbone of significant underlying profitability.

Speaker 2

And we're investing those revenues in a highly focused way to realize our vision and to capitalize on the very significant growth opportunities in front of us. And on that note, I'm going to hand you back over to Jan.

Speaker 1

Thanks, Anthony. We continue to work towards our goals for the year And I'm especially excited about the multiple approvals for abridumab, the positive data for tisotumab vedotin And for the next steps in the development of our earlier stage product pipeline. I'm also pleased to announce that we will hold our annual R and D update and event on December 12th. To ensure the event is accessible to as many people as possible, This year's presentation will be fully virtual. Details are available on our website and we look forward to a lively event.

Speaker 1

So that ends our presentation of Genopt's financial results for the 1st 9 months of 2023. Operator, please open the call for questions.

Operator

Thank We will now take the first question Coming from the line of Vikram Purujit from Morgan Stanley. Please go ahead.

Speaker 3

Great. Thank you for taking our questions. We had 2. First on Gen 3014, so as you mentioned, there was some clinical data that was recently featured for this program through abstract that were posted for ASH. And we were wondering what you think are some of the appropriate benchmarks to compare against here on both efficacy and safety to really frame these initial results.

Speaker 3

And secondly, Just to clarify for the R and D update you'll be hosting alongside ASH, should we expect to see any updates for Jan 1042 or Jan 1046 at this event? Thank you.

Speaker 1

Thanks, Vikram, for the questions. I will hand over the first one to Tahi. He can give you further perspective on the benchmarks, which you need to think about for the Hexa Body CD38 program. And then the question on 1042 and 1046 to give a bit more color and what I will hand it over to you, that's. So let's start with Tay for the Jan 2014.

Speaker 1

Tay?

Speaker 4

Yes. Thank you for the question. So yes, In principle, of

Speaker 1

course, for

Speaker 4

daratumumab, the benchmark would be the 501 study or the SERIES study and then also for the subcutaneous administration, the COLUMBA study. And it gives you a range of efficacy of somewhere between 30% to 40% with 19% data that can follow-up a little bit more, but 19% of the patients Having VGPR better. But it's also important to understand that this data was generated in a setting with completely different treatment And presumably, the data in today's world where patients are more heavily treated with other mechanisms may look differently, probably That's favorable. That's why there is a head to head randomized data set that we are generating. But broadly speaking, that's the efficacy benchmark, and it's important as you think about comparison from an efficacy point of view, not only the aura, but also the depth of response is going to be very important, Certainly for us as we look at the data that we have in our hand.

Speaker 4

The same with safety and I think that safety data issue, of course, is like small data sets in a different environment. There are some factors that are different in today's world. For example, one of the patients that had a great class event was a patient with COVID. There was certainly not a virus existing at the time when the reference data sets were generated some 8 years ago. So again, there I would say the comparison will come from the randomized data set, which is why we're doing randomized study.

Speaker 1

Thanks, Thij. And maybe over to Judith, maybe a bit more color on 1042 and 1046 unit at ASH?

Speaker 5

Yes. Thank you, Jan. So as you alluded, Jan, for 1046, we look forward to share the data of Study 4 In Scientific Congress that will and we are looking for opportunities within the first quarter, Q2 next year. So this is where the data, the actual data will be presented. We expect at ASH to give a little bit more color directionally where we are going.

Speaker 5

But as was discussed several times, at CTSI 21, we presented interesting data of responders in non small cell lung cancer after Failing the current standard of care, which encompass chemo and immunotherapy, responses were always not durable. Interestingly enough, when we analyze the clinical data, we saw that these responders were concentrated in the PD L1 positive. And we also saw that these responders who are mostly in the patient that received a checkpoint inhibitor in the last 8 months. Based on those data points and the strong preclinical synergy between pembro and 1046, We designed the O4 study, which those results allow us to discuss in future meeting with health authorities next steps. So we will see where we are, but we directionally This is 1046.

Speaker 5

1042, we are very encouraged and what we continue See, not just aligned with the 4 responders that we presented, let's see, in head and neck, but in other tumor types. We are also getting the earnings from 1046 in order to understand better how to dose and scale for 1 BB engagement. So we may give more color, but we need to understand where we are to see to what And it will be more directionally because we usually present data in scientific forum before we share with investors and analysts. But we will do our best to directionally give more color.

Speaker 1

Thanks, Judith. Vikram, as you can hear, we are literally streaming about all these 3 programs. So we're very excited and I think we use the coming months to further position the molecules for next steps And more to come from Jan Mob in the coming months for sure.

Speaker 3

Okay. Thank you.

Speaker 1

Thanks, Vikram.

Operator

Thank you. We will now take the next question from the line of Jonathan Chang from Leerink. Please go ahead.

Speaker 6

Hi, guys. Thanks for taking my questions. First question, can you discuss the progress made with the early AKINLE launch? What gives you confidence that AKINLE can become the market leader in the CD20 By CD3 class? And then second question on GEN-ten forty six, what could a path forward in post IO lung cancer look like?

Speaker 6

And can discuss the opportunity for this program in endometrial cancer. Thank you.

Speaker 1

Thanks, Jonathan. Two excellent questions. The first one I will hand over Anthony Monsini will be delighted to speak about the Abkinli launch and next steps. And then 1046, Maybe Judith can give a bit more color on the post checkpoint inhibitor lung cancer landscape and the way to develop the potentially develop the molecule. Anthony, oncini?

Speaker 3

Thanks, Jan, and thanks, Jonathan, for the question. As was covered earlier, we're seeing a really healthy uptake of Epkinley and really strong execution of our launch plans in the Q1. And we're also highly encouraged by the launch momentum and overall positive feedback that we're getting From our customers that are using AbkinElaine in the 3rd line plus DLBCL setting, our go to market approach really look to leverage our 1st mover advantage And the strong early update really is driven by a couple of factors that I think give me confidence that we can continue that through the lifecycle. 1st, the solid execution and focus on key accounts and on key customers from our field based teams Across medical affairs, across the sales team, across our alliance with AbbVie and, of course, the market access team. And that really has yielded Strong customer engagement and at Kinley early uptake and it's also resulted in rapid access.

Speaker 3

So what we're seeing Jonathan is 99% of covered medical lives in the United States with functional access to Kinley, which is very encouraging. It's also very clear that there's a high unmet need in later line DLBCL and that Kinley is really filling the void, Enabling an off the shelf access to T cell engaging innovation across diverse sites of care. We feel very good about being the 1st FDA approved T cell engaging bispecific antibody for the treatment of Patients with 3rd line DLBCL, but we really understand it's an important starting point to build from To help Epkinley become the core therapy across B cell malignancies. So overall, we're highly encouraged by the early response in the market to Epkinley And so far, uptake has gone better than expected.

Speaker 1

Thanks very much, Anthony. And Jonathan, we intend to Give further color on the complete development plan this year, potentially at the post Ash event. So we will talk more about how to further build The market and the landscape for use of Abkinli in the coming years. Now let's move To Judith for giving a bit more color on the importance of the post checkpoint inhibitor lung cancer market, We feel that that's a very strongly growing market with a need for new medicines, Judith?

Speaker 5

Yes. So as we all know, with checkpoint inhibitors Moving to the first line, a single agent, if patients have PD L1 above 50% or in combination with chemo for patients with lower expression of PD L1. There's a huge unmet medical need for patients that failing Pembro checkpoint inhibitors and chemo, where the standard of care unfortunately is taxoter that derives an ORR, It's a benchmark vary, but from 12% to 17%, 18%, 20% at the most and with very dismal Prognosis and this segment is growing. As you know, more and more patients receive first line combinatory treatment on even sequential. And it is in this very setting where we conducted the randomized O4 study assessing 2 different Schedules and even 1046 is a single agent, which gives us a strong foundation for a potential Phase in this very setting.

Speaker 5

So we are encouraged about the data, about the methodical follow of this science and this is why we are engaging with health authorities in coming weeks to define better and we will share more as we define better those plans.

Speaker 1

Thanks, Judith. So more to come in the coming weeks months, Jonathan, for sure.

Speaker 6

Understood. Thank you.

Speaker 3

Thank you.

Operator

Thank you. We will now take the next question

Speaker 1

From the

Operator

line of Michael Schmidt from Guggenheim Partners. Please go ahead.

Speaker 7

Hi. This is Paul on for Michael. Thanks for taking our question. First one is on the pivotal data for EPCO and follicular lymphoma at How are you thinking about the opportunity and differentiation from LENSEMIO based on the emerging clinical profile And your conversations with physicians, how much do you think that the evolving duration of response will possibly factor into how the 2 drugs are positioned? And then my second question is sort of building off the prior one on GEN-ten forty six.

Speaker 7

Can you sort of just talk a little bit about your decision to initiate that Phase 2 study For endometrial cancer, whether that was driven by emerging data in Phase 1 or perhaps the non small cell lung cancer combo trial? Thank you.

Speaker 1

Thanks, Paul. The first question, I think, can be handled by Tahi. And then the second one, maybe Judith, you can talk a bit about endometrial and the And the start of that trial and why we are so excited there. Tae?

Speaker 4

Yes. Thank you for the question. So as it relates to the data in follicular lymphoma, There's obviously some public release of our data top lines, but you will see more data. And I think here the most important part will be to pay attention to the optimized Schedule that will be presented at ASH and then the safety profile of EPO in the OPTIMIZE setting, which will, I think, very clearly show that has a profile both from the efficacy but also from the safety profile that is extremely competitive with best in class safety and best in class efficacy Even in follicular lymphoma. The ratio of response is a tricky one to some degree.

Speaker 4

It's a question of follow-up. Obviously, mosituzumab has significantly longer follow-up Because they started about 3 years before us. And so that is also reflected in the duration of response. And then there's other parts that kind of like confirmed us To some degree, the Omicron base certainly played a role on that. But even with that, I think there will be some data in the future continuously showing That patients who are and that's basically the truism about this mechanism, patients who achieve a deep response, particularly CR, Staying very, very long in the SCR.

Speaker 4

And in some cases, we will see if that is actually Reflection of a big word in cancer about a cure because we have patients now who are approximating 5 years in NCR. So broadly speaking on EPO, I would say pay attention So the disclosure of the data will be shared, Ash, and also the updated data and the optimization data set.

Speaker 1

Thanks, Thijs. Let's move to JAN1046 Judith and maybe talk a little bit about rationale for endometrial cancer, why did we start that study, etcetera?

Speaker 5

Yes. Thank you so much. So we started studying endometrial because it's a tumor type where 4 1BB is constitutively over expressed and is a setting to test and hypothesis different from what we We have done in 2004, which I already alluded to. So this is the reason to tackle endometrial cancer. Now we understand that endometrial cancer is not a single disease.

Speaker 5

You have the MSI high and MSI low. We are gathering data as we And based on the data, we plan to tackle these different subtypes and go from there. And so it's very preliminary to say what is the path forward because we are gathering data in this Phase 2 program to understand The data and where there could be a path forward. As another point To flag is endometrial cancer in the Phase 1, we saw long durable responses

Speaker 1

Excellent, Jorde. Thank you very much. Thanks, Paul, for the questions.

Operator

Thank you. We will now take the next question from the line of Edsar Darrouts from BMO. Please go ahead.

Speaker 8

Great. Thanks for taking the question. First one on sort of, gen1046 again. You have data next year sort of at a medical meeting. Just how are you thinking about sort of the target relative to other agents that we've seen now being combined with PD-one like what we're seeing sort of from the TIGIT class, just how you See the PDU-one hundred and forty one BB mechanism relative to that.

Speaker 8

And then maybe Quickly on Hexabody CD38, just if you could sort of remind us sort of the opt in rights for J and J with respect to that program, Just so we could think a little bit about more or less when that could be triggered potentially by J and J. Thank you.

Speaker 1

Thanks, Ed, for the questions. The first one, I will hand over to Judith to talk a bit about 401BB targeting versus TEGIT and other Immune checkpoint targets. And I can take the hexaBody CD38 question myself. Judith, why don't you go ahead?

Speaker 5

Yes. So I first have to say that there is no precedent of I IO as a single agent provided Responses in patients that fail checkpoint inhibition PIV1 innovators. So if you think about the array of It's 0 or in a handful. So with PD L1-four-1BB, We showed in the first cohort that there were responses. And we there was 17% and we enrolled all Then we presented in SITC 21 when we segmented this Population based on the PD L1 presence, the response rate was higher albeit not durable.

Speaker 5

However, we had this preclinical data that show this synergy additivity with pembro And this is what promised us to do the offer. So to reinforce The fact that IO single agent activity post IO, it's almost unheard But we saw it with 1046. To overcome the durability and Through strength and signal, the right next step to combine with Pembro was the next step, and this is what we have done, The digits are all going to first line in period 1 high. This is where the data show that there is stronger activity. So even in the hypothetical case that digit go to the first line, it won't change the huge unmet

Speaker 1

Thank you, Jurgen. I think that's very clear. Let me take the Hexa Body CD38 opt in rights for J and J. They have the right To take a decision yes or no for opting in ATSO, after we give them the data from the dose escalation, the dose expansion data, which we already have And the head to head data against the subcuDara, which we are gathering now very, very rapidly, we believe that we have the head to head data next year And then basically hand over that data packets to J and J and then they have only a very limited time to say yes or no. When they opt in, they are going to develop commit to develop that molecule in any Indication they want to, but I think multiple myeloma is now the number one, I think, indication for exobody CD38 definitely with the new data Now from the extension cohort,

Speaker 4

and then we will get

Speaker 1

a $150,000,000 upfront payments and they pay for all and we get a straight 20% royalty Rather than 12% to 20% royalty until some point in 2031, where we go from 13% to 20% in a tiered fashion. So next year will be an important year at Absol because then we will hand over the head to head data packets on top of the dose Dose escalation and the dose expansion cohort data, which we already have in our hands, but we keep following that The data at ASH, which we will present on a poster will be updated data from the abstract. So please watch out for that and Tay already Gave you some color on what to look for versus years ago daratumumab monotherapy data, but you can hear from the enthusiasm of the team here But we are really we can't wait. Tobian, San Diego and can present that data because we believe it's very, very encouraging. I think we should probably leave it to that, Afzal, for the time being.

Speaker 8

Bruno, thank you. Thank you for the additional color.

Speaker 1

All right. Thank you. Thank

Operator

you. We will now take the next question From the line of Sajun Jain from Bank of America. Please go ahead.

Speaker 9

Hi, there. Thanks for taking my questions. Just more follow ons on the same topics, if I may. So firstly, Gustaf Tahi on the CD38 grade 5 events. Thank you for clarifying.

Speaker 9

1 of the 2 was COVID. Was that the respiratory event? And any color on the patient characteristics for the CV event, Just to get some color as to whether that was treatment related or not in your mind. And then just to follow on, on the grade 5s, the abstract was obviously a May cutoff. Have you seen any grade 5 events since that May cutoff?

Speaker 9

So that's on the CD58. 2nd topic is the 1046. You said more color on ash. Just to clarify, will you have met with the regulators by then? So could you confirm your Phase 3 program at the ASH event?

Speaker 9

And then a follow on, on your clear efficacy comment. Do I infer that as a response rate above the 20% for taxitae you referenced? And any color on the duration of response you're seeing? Thank you.

Speaker 1

Thanks, Sachin. Let's see what my colleagues are willing to give you as information. I can definitely comment further on the Grade 5 event for hexapodicity38 and I will ask Judith to think carefully about how to answer the question on 1046 and the ASH data as it relates to clarity on a potential Phase III trial as well as the bar For responses, Tay, maybe you can start.

Speaker 4

Yes. So as I said, I think earlier, right, in the one patient there was a patient who Pass away due to COVID, the other one was a cardiac event. Neither of the two events were in our adjustment and the adjustment of the investigators or in the adjustment of the DMC related to Sorry, I see it. Exacency38. In these studies and if you look at the CONUMER study that I referenced earlier, you'll see There is roughly like a 7% TISH rate of grade 5 events on these trials of patients passing away All kinds of reasons are not always related to the drug.

Speaker 4

So at this point, we don't really have The assessment of the DMC safety signal with small patients that in any way or shape or form seems to deviate from what is known for the class of CD38 antibodies. Hope that answers it.

Speaker 1

Thanks, Thij. And then Judith on 1046 and ASH, potential updates there or further clarity on the program?

Speaker 5

Yes. So thank you for the question. I think that we will try directionally to give more color just to share the design. We I'd like to have more certainty on that, and this usually happens after discussions with health authorities. So we will give as much as we can Predicated on where we stand in the process.

Speaker 5

As related to the benchmark, I alluded to the multiple datasets In this setting that unfortunately fail and fail because they haven't done or they didn't do this rigorous Scientific approach question by question to connect the dots and have the best potential hypothesis. And this allow us to wait a little bit to have not only order, but duration, which is critical Because time to event is the right endpoint in the Phase III setting. So I mean, I want to reinforce that We will share as much as we can, whenever we can. The commitment is there, but we are bound to when these meetings will happen.

Speaker 1

Thanks, Jurett. And thanks, Sachin, for the questions.

Operator

Thank you. Thank you. We will now take the next question from the line of Kaveri Polsmann from BTIG. Please go ahead. Yes.

Operator

Good afternoon. Thanks for taking my questions. My first question is for GEN-three thousand and fourteen. Can you provide any insight into your expectations for its efficacy in CD38 pretreated patients, Given that previous studies have shown that these patients develop resistance via overexpression of complement inhibitory proteins. And my second question is for Abkinley.

Operator

Can you provide any color on your plans for follicular lymphoma and any timelines around that? Also for Abkinley, in the LBCL, especially from the safety standpoint, are you planning to have some real world data collected that could

Speaker 1

Thanks, Kaffiri for the questions. I think I will hand them both over to Tahi. Before Tay starts, I already said in an earlier comment that we will intend to actually describe the compound development plan For AbkinEl in more detail or apiritumab, I should say, in more detail at the Postas Semoran update. But Tay, maybe you can Give us a bit more color on the efficacy or the potential for efficacy in CD38 pretreated patients.

Speaker 4

Yes. Thank you. And you're absolutely right, right? And there was a subgroup analysis worked on on the combined data set So serious in the five zero one study that actually looked at the impact of in those cases, there are tumor treatment On CD38 expression, which actually gets kind of shredded off the surface, so to speak, to the process called trophocytosis And then the upregulation of complement individual proteins, that's absolutely correct. And so this is why the study that we're conducting is actually MCA38 naive patients.

Speaker 4

I had a comparison We have had some signals of efficacy in daratumumab exposed patient and the dose escalation. There were 2 patients who had a response. But broadly speaking, that's not where we're focusing right now because the focus is right now, as in the original agreement With Janssen to generate data that allows us and Janssen, frankly, to elucidate whether the single point mutation that is underlying the hexamerization Meeting has the impact that we have pre clinically seen and that we believe to be seeing in the clinical data so far. And then, sorry, the second part of the question was about positioning of echo in follicular lymphoma. So, yes, To some degree, there's already a Phase 3 in combination with NAND in the second line.

Speaker 4

And we have talked about that we are actively working with AbbVie on plans on So there will be some news to come in the near future. That is in follicular lymphoma. And then in the Fusaj B cell lymphoma, there are multiple We have our data sets, attempted to generate data both to show also the impact of epovirimab In comparison to cards, right? And driving on the point that actually this modality that despite specific antibody, the Accessibility of it, the ease of its administration and the safety of it compare quite favorably to card Therapies in the real world data. Hope that answered the question.

Speaker 1

Thanks, Tay. I think that was a good question. Kaffiri, thank you very much for the questions.

Operator

Thank you. Thank you. We will now take the next question From the line of Michael Novod from Nordea. Please go ahead.

Speaker 10

Thank you very much. Just a few follow-up questions, especially to timing. If we take Gen 10 42 first, just need To understand, so I think Judith said some directional guidance also on 1042. When do you expect To sort of have more clear data on 1042 and also for some of the potentially larger indications, I think we all had expected it Would be around on ESMO IO, but is that also sort of then later in 2024? And to HexaBody CD38, There was a question earlier on relating to the J and J potential opt in.

Speaker 10

Timing wise, Is it most realistic that you need to complete the head to head, which says October 24 on clinicaltrials.gov? Or could that happen sort of For midway in that trial also, maybe just to clarify. Thank you very much.

Speaker 1

Thanks, Michael, for the questions. So I will Lee, I will hand over to Judith for 1042 to give you a bit further feeling for the timing. When do we have the data enhanced? We believe that in some of the You must be actually have the data in the coming months, if not sooner. But Julia can give you a bit further color, Michael.

Speaker 1

Then for Hexibody CD38, Timing of the potential opt in for J and J, I mean, they have the right to wait for all of the data from the head to head cohorts, Michael, I don't know whether they need to, to make a long story short, because we think the data is shaping up very nicely, as you can see from the expansion cohort, But it's up to them. So it's very difficult to actually give you an estimate of when J and J would like to opt in Because it's basically in their corner, but the full head to head data will likely come in the second half of twenty twenty four, Not before, but there will be a lot of data already by that time in the first half. Whether that's enough, it's up to J and J. But maybe I can hand over the 1042 timing question and some of the tumor cohorts to Judith. Judith?

Speaker 5

Yes, thank you. So as you know, Michael, we are collecting data to assist the hypothesis That checkpoint inhibition pembro adds to 1042 and this is further This is the basic hypothesis that guided us to collect to address in different tumor types, among them, head and neck And non small cell lung cancer squamous and non squamous mainly. This hypothesis is the same. So the data sets are complementary from one each other. So the goal is to have a kind of Good number of patients with some level of durability for more than one cohort because this would make the data stronger.

Speaker 5

So this is why there is no firm Congress to when we are presenting. But I can tell you that enrollment is going very well. So it will be in 2024, depends on when The abstract is closed to submission and the data we have enhanced to decide the venue. So I cannot provide you a firm date at this point.

Speaker 1

Okay. Thanks, Michael.

Operator

Thank you. We will now take the last question From the line of Emily Field from Barclays. Please go ahead.

Speaker 11

Great. Thank you so much for fitting me in. I will ask a quick financial question. I believe that for OpEx Going into 2024, I think consensus is modeling about half the growth rate of OpEx for 2023. Obviously, it's It's going

Speaker 1

to be off

Speaker 11

of a larger base for next year, but maybe Anthony, if you have any comments on just how we should think about modeling OpEx going to 2024 before you officially guide for it?

Speaker 1

Thanks, Emily, for the question. And Anthony will be delighted, Anthony Berhan, to answer a question on finances. So Anthony, floor is yours.

Speaker 2

Yes. Thanks, Emilio and thanks, Jan. Yes, you're right, Emilio. Of course, we'll, at the appropriate time in the year To take the time to really contextualize our overall guidance, including our investment levels, I can summarize for you now though Really what our message has been consistently throughout 2023 about how we should think about our overall OpEx levels Moving forward, I'll take the next minute or 2 to summarize that. As always, given our strong position, we're going to continue to invest And the significant growth opportunities in a focused and disciplined way.

Speaker 2

It's something that we do take very, very seriously. As I think about that investment profile moving forward, particularly as it relates to, let's say, call it the transition from 2023 to next year in the midterm, There are 3 drivers here now, particularly as it relates to R and D. First, EFCO R and D It's still in growth mode, so I fully expect EPCO investment to go up as we add new Phase 3 trials over the coming years. Here it's really important to remember that this is grounded in our conviction of EPCO's potential to help a large number of people Living with cancer and of course, we'll continue to be data driven. And here I mean looking at the clinical data and the landscape And also resourcing and sizing our investment accordingly given this potential very meaningful opportunity.

Speaker 2

2nd, again, still thinking about R and D and this is kind of the swing factor, which additional programs will transition to later stage development. As a reminder, you heard a lot about this today. We're doing some significant, let's call it, Phase 2 work for both CD44-1BB and PD L1-four-1BB during the course of 2023 and as just announced the emerging data from 1046 leads us to believe There's a path forward here in terms of late stage development. Also for TIVDAC, based upon what you heard today, we also believe that there's a path forward here, particularly in terms of And the development into head and neck, which also we think warrants further late stage development. Now with that, hopefully, We'll come larger revenue opportunities in the medium term.

Speaker 2

Sticking with R and D and the third factor, we're going to continue to invest to maximize the value of our current tech platforms and here we're going to continue to invest to generate the next wave of IND candidates As well as progress some of our early stage pipeline and Jan shared with you some of the exciting progress there. So that takes care of R and D. Now let's talk about SG and A and starting on the G and A side. Here we are starting to increasingly approach scale Based on our existing footprint, so growth here is already starting to moderate and we expect it to further moderate here as we transition from Q4 2023 into 2024. Now if we think about the S part of SG and A As it relates to EPCO, there's a couple of things that you should all be thinking about as you start to model for 2024 and beyond.

Speaker 2

First for the U. S, to be clear, the 2023 P and L reflects nearly a full year of costs for the initial indication. There will be some annualization impact next year, but that's going to be more on the moderate side. And here as we potentially build out the EFCO label over time, Of course, there's going to be some incremental investments. However, we will be able to leverage existing investments in many cases.

Speaker 2

Now shifting to our other priority market, in terms of Japan, the same for what I just went through for the United States also applies. However, everything is just pushed out a bit based on the potential approval date or the approval date we've now seen with eprinimab in Japan It's coming at a much later point in the year. So the incremental impact in 2024 will be higher. So maybe just to wrap up the comments on our investment levels. So everything I just covered of course is directional in nature.

Speaker 2

As always, we're going to continue to be very focused and very disciplined in our approach And we're going to continue to take a detailed bottom up approach and make sure that we're putting the appropriate amount of resource into our most important Priorities and certainly look forward in February in conjunction with our full year results, we're really sharing what our investment priorities will look like for 2024. But we heard today hopefully was conveyed a lot of excitement across our entire pipeline.

Speaker 1

Thanks, Anthony. Thanks, Emily, for the financial question.

Operator

Thank you. I would now like turn the conference back to Jan van der Winkle for closing remarks.

Speaker 1

So thank you for calling in today to discuss Jan Mod financial results for the 1st 9 months of If you have additional questions, please reach out to our Investor Relations team. We hope that you all stay

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Earnings Conference Call
Genmab A/S Q3 2023
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