Genmab A/S Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 10, 2023

There are 13 speakers on the call.

Operator

Call. 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 Please also note that Genmab may hold your personal data as indicated by you as part of our Investor Relations 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 Winkel. Please go ahead.

Speaker 1

Hello, and welcome to Genopt's conference call to discuss the company's financial results for the period ending March 31, 2023. With me today to present these results is our CFO, Anthony Pagano. Let's move to Slide 2. As already said, we will be making forward looking statements. So please keep that in mind as we go through this call.

Speaker 1

Let's move to Slide 3. During today's presentation, we will reference products being developed under some of our strategic collaborations. This slide acknowledges those relationships. Let's move to Slide 4. Before we look at our Q1 results, I want to remind you of our consistent track record of success.

Speaker 1

Our proprietary technologies fuel our robust quarter tension, which is both expanding and maturing. By the end of this year, There is the potential for 8 approved medicines powered by our innovation, half of which would be dual body based bispecifics. This is validation of the DuoBody Technologies potential to create truly differentiated bispecific antibody therapeutics And our growing recurring revenue streams allow us to continue to invest in our pipeline and in our people. Our world class team of experienced and dedicated colleagues drives our innovation motivated by their passion for making a difference Let's now turn to recent accomplishments that will support our future success. Slide 5.

Speaker 1

In the Q1 of the year, we continue to lay the groundwork for the potential approval of abcaritumab As we are very excited for the potential upcoming launch and the opportunity to serve patients with 3rd line plus The Alliance Steel teams across sales and marketing, medical and market access are all in place And have been fully prepared for the launch. And our patient services team is also in place and fully ready. We are actively engaging with the FDA and look forward to the future ahead with the May 21 PDUFA date. Pending approval, we anticipate aparitamod will benefit turpline plus diffuse large B cell lymphoma patients, The level of unmet needs remains high. This indication will be the first that will enable adkoritumab to become the potential core therapy is recorded across diffuse large B cell lymphoma, follicular lymphoma and beyond.

Speaker 1

As part of our effort to deliver efgartimab to relapsed So refractory diffuse large B cell lymphoma patients together with AbbVie, we launched our 1st pre approval and expanded access program. This program provides access to abcuritumab to eligible patients in the U. S. And Europe prior to potential regulatory approvals. Looking beyond relapsedrefractory diffuse large piece of the former together with Fc, we are committed will be available to a robust clinical development program evaluating ecuritumab in a variety of patient populations and treatment settings.

Speaker 1

This includes frontline diffuse large B cell lymphoma and I'm just very pleased to say that in February March, The first patients were dosed in 2 frontline diffuse large B cell lymphoma studies. The Phase 3 APCORE diffuse large B cell lymphoma 2 study In combination with our CHOP and the Phase 2 APCORE diffuse large B cell lymphoma 3 study with or without lenalidomide Turning to recent and upcoming data presentations, multiple apkiritumab will be accepted for presentation at ASCO, including an oral presentation of data from one of the arms of the APTCOR NHL2 trial Looking at abcaritumab in combination with creatuximab and lenalidomide in patients with high risk relapsed or refractory follicular lymphoma. We and our partners also had several aspects accepted for presentation at last month's AACR meeting. These included data from an interim analysis of Part C from the Phase 2 Innovative 2 0 7 study of tisotumab vedotin In head and neck cancer or small cell carcinoma of head and neck. Though the number of patients including this in this initial data was small, The results demonstrated encouraging preliminary antitumor activity and an acceptable safety profile, highlighting tisotumab vedotin's potential in solid tumors beyond cervical cancer.

Speaker 1

Regarding programs followed by our innovations, DARZALEX continues to redefine the treatment of multiple myeloma. As you've seen, J and J's net sales for daratumumab were up is 22% over the Q1 of 2022 and that is generating almost DKK 2,000,000,000 in royalties for us, This brings me to the initial resolution of our second arbitration with Janssen Relating to our daratumumab license agreement. As we announced last month, the arbitration panel dismissed our claims The one of the 3 arbitrators dissented. Subsequently, we announced our decision to file a request for review of the awards. And as the arbitration is confidential, we do not intend to comment further and we look forward to our continued collaborations with Janssen.

Speaker 1

I would also like to acknowledge the appointment of Martina Van Voorhees, the Chief Strategy Officer. Martina has been an integral part of Genmab almost from the beginning. In her new role, she will be responsible for overseeing the key areas of corporate strategy, corporate development, business development and licensing And Alliance Management. Martina's addition to executive management further strengthens our already exceptional team And will help us to effectively deliver on our 2,030 vision. Finally, I would like to bring to your attention an announcement in March from Lundbeck Japan.

Speaker 1

LUAF A2422, which was created by Genmab as part of an agreement with Lundbeck, And this designation provides further support for the potential of our innovative antibody therapeutics outside of oncology. Let's move to Slide 6. When we unveiled our updated vision last year, we noted that while we would continue our commitment To antibody therapies for oncology indications, we would also look to move an additional to announce that we are entering the therapeutic area of immunology and information as a stepping stone to achieving our inspirational 2,030 vision. As we announced in April, we entered a multiyear collaboration with argenx to jointly discover, develop and commercialize Novel therapeutic antibodies with applications in immunology as well as in oncology. By partnering with argenx, We will be able to combine our company's deep knowledge of the biology and therapeutic power of antibodies and have an opportunity We look forward to a successful partnership with argenx And to providing you with updates on the progress of this collaboration once we are ready to bring new product candidates to the clinic.

Speaker 1

This of course will take some time. I'm pleased to now hand over the call to Anthony to take you through our Q1 2023 financial results. Anthony, the floor is yours.

Speaker 2

Great. Thanks, Jan. We continue to strengthen our foundation in Q1. And of course, top of mind for everyone is the potential FDA approval of EFCOR later this month. And as we'll see, our financials remain strong.

Speaker 2

Recurring revenues grew by 33% in Q1. This was principally driven by strong royalties from DARZALEX and other 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 and disciplined way. And an important part of this has been to continue to build the team and capabilities that we need to succeed. So let's take a look at those revenues in a bit more detail.

Speaker 2

We saw robust performance for DARZALEX

Speaker 3

is recorded in the Q1 of 2023.

Speaker 2

As you can see in the chart, overall net sales grew by 22%. That's net sales of over $2,200,000,000 which translates to almost DKK 2,000,000,000 in royalty revenue. This growth was driven by continued strong market shares, including strong adoption of the subcu formulation. For our royalties, we benefited from a higher effective royalty rate and an FX tailwind. And this is partially offset by a negative contractual hedge rate adjustment.

Speaker 2

So as you can see DARZALEX remains a key driver of our revenue. We grew total revenue to nearly DKK 2,900,000,000 in Q1. And as I've already highlighted, that included a 33% increase in our recurring revenue. And here, to be clear, That's on a reported basis. Excluding some FX tailwinds, recurring revenues grew by 28% This strong growth was driven by DARZALEX and COSIMTA, was partially offset by lower Topeza net sales, which according to Horizon were negatively impacted by seasonality.

Speaker 2

Now taken together, this growth really illustrates the power of our recurring revenue. In line with our significant growth opportunities, total OpEx grew 51% in Q1. In R and D, we've accelerated our investment into our product portfolio, especially the advancement and expansion of EFCOR and of course We've also further strengthened our team to enhance our commercial capabilities and support our expanding pipeline. And of course, that includes the potential launch for EPCOR. Now, let's take a look at our financials as a whole.

Speaker 2

Here you can see our summary P and L for Q1. Revenue came in at nearly DKK 2,900,000,000. That's up 35% on last year. As mentioned previously, that's favorably impacted by a small FX tailwind. Total expenses were about $2,400,000,000 with 72% being R and D and 28% SG and A.

Speaker 2

And here, even with the increased investment, we're still delivering over DKK 430,000,000 of operating profit for the quarter. Moving to our net financial items. Here we have a loss of around $150,000,000 which was primarily driven is recorded by 2 partially offsetting items. First, we've got the weakening of the U. S.

Speaker 2

Dollar against the Danish kroner in Q1 and this is negatively impacting The value of our cash and investments. On the other side of the ledger, we have an increase in interest income due to higher effective interest rates. Then we have tax expense of $60,000,000 which equates to an effective tax rate of 21.2%. And that brings us to our net profit of over DKK 220,000,000. So as you can see, very solid financial performance So with that, let's take a minute to revisit our robust financial framework.

Speaker 2

First off, our revenue profile on the left. There are currently 6 products on the market With the potential approvals for EPCOR and Janssen's tauquetamab. Taken together, we expect significant cash inflows Now moving to the right. We remain focused in our investments as we evolve our organization for continued success. At the top of the list is accelerating and expanding EPCOR.

Speaker 2

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. So with that background, let's now take a look at our guidance. To start, we're on track to meet the financial targets that we outlined back in February. As a reminder, note these projections are based on an assumed U.

Speaker 2

S. Dollar Danish kroner exchange rate of 6.8. If we look at our revenues, we're off to a strong start with marketed products that are generating significant recurring revenues. So we continue to expect our revenue to be in the range of DKK 14,600,000,000 to DKK 16,100,000,000 And most of this is made up of recurring revenue where we're expecting 25% of operational growth. As I just noted for Q1, we're at 28%.

Speaker 2

For operating expenses, we expect to be in a range of DKK 9,800,000,000 to DKK 10,600,000,000 As I previously highlighted, this step up in investment is fully in line with our strategy and our focus on creating long term value. Putting all this together, We're on track to deliver another year of substantial operating profit in a range of DKK3.9 billion to DKK6.2 billion. So with that, let me provide a few closing remarks. In summary, We've had a very solid start to the year. We've created growing recurring revenue streams And that gives us a strong backbone of significant underlying profitability 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.

Speaker 2

And on that note, I'm going to hand you back over to Jan.

Speaker 1

Thanks, Anthony. In the Q1 of 2023, we continue to work towards our 2,030 patient As we near the PDUFA date for eperitamab, we are enthusiastic about its potential launch. We are also looking forward to working with Epi to continue to will be recorded for patients with metastatic cervical cancer and together we will continue to broaden the tisotumab vedotin clinical development program. We also very much look forward to data from the clinical expansion cohorts and progress to the next steps for Both dual body molecules targeting 4 1BB that are in development together with BioNTech. And we anticipate is responding and advancing other early stage programs, including the potential for multiple INDs or CTAs this year.

Speaker 1

Fundamental to our success is having the right team and culture in place. We intend to continue to scale our organization On our planned portfolio development and business needs. Finally, we will continue to leverage our solid financial base to support our growth. We have a lot to look forward to in the coming months. So that ends our presentation of Genmab's financial results for the Q1 of 2023.

Speaker 1

Operator, please open the call now for questions.

Operator

Thank Your first question comes from the line of Michael Schmidt. Please go ahead. Your line is open.

Speaker 4

Hey, guys. Good morning. Thanks for taking my questions or good afternoon in Europe. As we head closer to the efgartimab PDUFA date here later this month, could you just talk about your expectation for Potentially required inpatient monitoring around EPCO and hospitalization that may be required, How that might affect commercialization and any other expectations as we sort of look forward to seeing And then secondly, could you just remind us of your go forward plans for filing in other indications This year perhaps for example in follicular lymphoma or other cancer types. Thank you so much.

Speaker 1

Thanks, Michael, for the questions. I can handle both. With regard to the potential label and That is of course a question for the health authorities for the FDA. We are actively discussing with the FDA how to ensure both You will see it from the label discussions what the outcome will be as it relates to hospitalization. I think we're in very We're done with discussions with the authorities and it's up to them to decide and then we'll come back to that once we hear the label, but we are very Please note the progress of the discussions and we look forward to basically the coming weeks, Michael.

Speaker 1

I think it will be exciting times. And as it relates to further submissions, definitely the follicular lymphoma data, turbine data will come this year And we are fully scheduled to actually submit based, of course, on positive data from the study To regulatory authorities and potentially in different territories this year, I will give you further updates, Michael, during this year once

Operator

We will take our next question. Your next question comes from the line of Jonathan Chang. Please go ahead. Your line is open.

Speaker 5

Hi, guys. Thanks for taking my questions. On the appeal of a second arbitration resolution, are you able to provide any color on how we should be thinking about timelines and your level of confidence on the outcome? And then second question, maybe just more specifically on GEN-ten forty seven. Can you discuss how this study is progressing and where we might

Speaker 6

Thank you.

Speaker 1

Thanks, Jonathan, for the questions. Unfortunately, we cannot give you too much information on We definitely will file an appeal to the second arbitration. Time line should still allow for a Zurich on that appeal this year, probably after the summer, immediately after the summer. But this is, of course, up to the Arbitrators, Jonathan, it's inherently uncertain what the exact timing will be, but we hope definitely for an outcome this year and levels of confidence. We believe that we are ethically and morally on the right side of the line.

Speaker 1

And actually, we believe that The awards from the first arbitration is very, very clear and that as we understand it will lead To the conclusion that actually the subcutaneous formulation of DARZALEX is a separate product according to the contract, and that is exactly what we will ask the Arbitrators in the second arbitration to judge on. And I think we are confident that we're doing the right things, but in the end, it's is down to the legal system. I cannot give you any further feedback on that. Then for 1047, we are still doing dose escalation. It's going well.

Speaker 1

And once we have the whole dose escalation data set in hand, Jonathan, we will actually Present the data as we usually do now for all of our early stage clinical programs, we want to collect all of the data for the dose escalation and then Thanks, Jonathan.

Operator

Thank you. We will take our next question. And the question comes from Peter Welford. Please go ahead. Your line is open.

Operator

Hi.

Speaker 7

Thanks so I've got 3 quick ones, if you don't mind. Firstly, just coming back to epcaritumab on the 3rd line follicular. I wonder if you could possibly set the scene for us as To what you think could be the bar there to enable a regulatory filing this year? And presumably, again, we're talking response rates, complete response rate and the duration of that complete response is maintained. Curious if you can give us an update as to what you think the minimum sort of Volume of data is to basically go to the regulators, particularly FDA.

Speaker 7

Secondly, just on the argenx still are actually more broadly immunology. Is this should we think of this as your big step into immunology, if you like? And then there are going to be I think you've sort of talked about bolt on deals where we look at both targets and other sort of technology, etcetera, that you bring into that. Or should we still think there's likely to be another, perhaps even larger sort of in scale and concept deal to come As you move into this new therapeutic area. And then just finally, the I guess, Thank you.

Speaker 1

Thanks, Peter, for the questions. For the 3rd line follicular lymphoma data, I don't think we have discussed the bar that you want to hit basically At efgartimab, but that will be at the level of our response rate and the duration. The so So we are very excited about what we see in the various follicular lymphoma settings, both monotherapy as in combination. As you know, From last year's ASH, we had spectacular data. I think the data actually gets better and better.

Speaker 1

But we haven't seen the readouts On the 3rd line plus cohort, yes, once we see that readouts, we will definitely present the data and also is actually discussed with the regulators in both U. S. And Europe, potentially as well in Japan, But we haven't given the bar we're aiming for publicly at this moment. Then As it relates to the argenx deal, that is indeed a first step into the immunology and inflammation field. We intend to indeed broaden that with further activity of the company, both organically and inorganically.

Speaker 1

Organically by getting access to targets, we want to actually use our proprietary technology platforms for To create better differentiated antibody based medicines, but also potentially involving inorganic type we think will complement our suite of technology platforms or perhaps even product candidates Into our pipeline to accelerate our move into the immunology and inflammation field. Separate from that, we already have a number of preclinical programs active. These are entirely Genmab programs So we will progress at multiple fronts. The activity profiles get broader and broader in the Immunology and Information field. We are very serious about that therapeutic area and the argenx deal was simply the 1st step into a strategically Working with a leading company with a similar science based focus and purpose driven approach as we have, which we know very well I'm actually working already on 2 targets, 1 for immunology and inflammation, 1 for cancer and a fifty-fifty strategy, but there may be other partnerships following basically further bolting our questions in the immunology and information will show more updates likely to come in the coming time.

Speaker 1

Then 1042, 1046, we are very rapidly progressing now with recruitment in different arms For 1042-ten forty six and you will see data likely in the second half of this year for both programs hopefully Allowing us to move forward to late stage clinical development potentially even for both bispecific programs. So We continue to be very, very impressed by the profiles of both bispecific antibodies, but we need more data also to have productive discussions with the regulators because ideally, Peter, we will first share the data with the regulators already have feedback on the potential move to potential late stage development and then present the data at the medical conference. There is a number of medical conferences in the second half of twenty twenty three. This I think would qualify for some of these data sets. There are multiple Data set being worked on for 1042, we are working in frontline melanoma, lung cancer, head and neck cancer and pancreatic cancer, Together with Pembro or Pembro plus chemo depending on what the standard of care is.

Speaker 1

And you will probably not see all of the cohorts this year. Some of the cohorts will likely come next here will some move more quickly than others and generating more robust data sets. And for 1046, We have also multiple cohorts we are recruiting as we speak. And I can tell you that positive data in several of the cohorts, But not all of these data will likely become available this year, Peter. We will probably do that once we have enough data We are getting more and more enthusiastic about these programs.

Speaker 1

And I think the second half of this year will be the beginning of a data rich era for these programs.

Speaker 2

That's great. Thank you. Thanks, Peter.

Operator

Thank you. We will take our next question. Your next question comes from the line of Emily Field.

Speaker 8

Is coming approval on May 21. How quickly after that do you expect to be launching? And When do you imagine that you would start disclosing revenue or kind of early launch metrics following hopefully an approval? And then Another question on the argenx partnership. It sounds like that that sort of could produce either immunology targeting assets or oncology targeting assets, is that the right way to think about it?

Speaker 8

And then it's more just combining complementary technologies? Or should we think about this really as geared towards producing immunology assets? Thank you.

Speaker 1

Thanks, Emily, for the questions. For At Karitimov, we hope that we actually get the approval from the U. S. Authorities quite quickly and hopefully At the latest, by May 21st, this is in the weekend, but hopefully before that. So And what I understand from the team is that we're actually ready to launch very, very quickly after we get a potential approval, always ready to go.

Speaker 1

But of course, it depends On how ready we are based on the feedback on the package inserts, how quickly we can launch, but it would be likely within a matter of weeks, if not shorter, I understand. And the revenue reporting, I think we will get some color, I think, in Q2, hopefully, On revenue, and I don't know whether how detailed we will do the reporting. We will definitely give you color, Emily, on how the launch initial launch is going. There's a lot of Positive feedback from the hospitals and from the doctors. And we are already in discussions with health care providers On the positioning of the drug and on the need for that medicine for some time.

Speaker 1

So I think we have a pretty good feeling for For the level of enthusiasm, but I think we will probably in the second half of this year start to give some further detailed color on the launch is under the assumption that the product will be approved in the United States. Then argenx, this is basically all about combining The suites of proprietary antibody technologies, which are non overlapping, they are complementary between both companies and then together work on pathways, This could actually entail both immunology targets as well as oncology targets. And we actually started already, Emily, on one Oncology and 1 immunology target as we speak. So I think it will feed both pipelines for both the cancer and the immunology and inflammation Franchise for both companies and this is a true fifty-fifty where we would equally Share the expenses and upside from these potential products. And we are already having working on concrete programs as we speak.

Speaker 1

And I think there's great complementarity. We have, of course, a lot more cancer models and cancer expertise based on Genov's track record up to now. Andogenix has very, very good immunology expertise and models already operational. So this will actually accelerate, I think can synergize the activities already ongoing and new activities for both companies. So we're very excited, Emily, about this strategic partnership, I think, is a very good alignment in the scientific focus.

Speaker 1

And I think this bodes quite well for the future.

Speaker 3

Thank you.

Operator

Thank you. We will take our next question. Your next question comes from the line of Asthika Gurdwader. Please go ahead. Your line is open.

Speaker 6

Hi, guys. Thanks for taking my questions. Jan, I wanted to just maybe touch on the question on Oncology. Just want to clarify something. You said you already have 1 oncology asset that you're sort of working on right now.

Speaker 6

If this goes into a full provision and maybe To market, is there a scenario that argenx will actually act on that and co promote this product with you, given that they don't really have much of an oncology franchise? And then I want to back up on the question on 1042 and 1046 and make sure I heard this right. Did you say that by the end of the year that You think that you're optimistic that the path forward for both those assets to go forward. Just want to make sure I heard that right because I think there was some understanding that It might have been one or the other. So just want to clarify that too.

Speaker 6

Thank you.

Speaker 1

All right, Astika, that's very nice questions. Thank you very much. Now let me start with the argenx partnership. We actually have very well defined who will take the lead of its programs and very likely For our cancer products, we will definitely share the upside Astika, but Janma will likely be leading the commercialization, but the other party, so argenx in this case can co promote for sure. And the same for immunology and information, It's very likely that initially AgenX would lead the commercialization of programs in that area, in the immunology area, But GenMark would be entitled to copper mode in a fifty-fifty basis.

Speaker 1

So it would be actually for both disease areas for both companies, but the lead will likely We're lying with 1 of the parties and it has been very clearly defined in the agreement here. So both companies have the option to actually sort of scale up in commercialization in the disease area where they're currently not Then as it relates to 10421046, we hope that at least one of those programs can be moved to late stage clinical development, if not both. And what I said in my answer to, I believe it was to Peter Welford, is that both of the programs are doing very well. And of course, you need more data. And as I already explained before, data is not only response rate, it's also depth of response and duration In the various cohorts for both of the bispecific approaches, but there is a good chance that actually both would move will forward to a late stage clinical development based on data, but it's entirely data driven Astika.

Speaker 1

So we'll let the data speak for itself And then take rational decisions also potentially after we already have shared the data with the regulator And have some feedback on the potential next steps.

Speaker 2

Great. Thanks so much for the clarity, Jan.

Speaker 1

All right. You're welcome.

Operator

Thank you. We will take our next question. Your next question comes from the line of Matthew Phipps. Please go ahead. Your line is open.

Speaker 9

Good afternoon. Thank you for taking my questions. 1 on TIVDAC, Just curious, how much more data you would want to see in head and neck to make a decision on moving that forward? And the rationale for a different dose in head and neck versus cervical, is that Exposure or safety related? And then kind of lastly, is the pending Cision acquisition make it a little bit more difficult to come to these joint decisions

Speaker 1

So thank you very much for the questions. For 2 questions basically, TIFFtec, The data is very, very encouraging. It's early data in head and neck and second line plus head and neck. By this time, we already have more data and I think the Yes, and in the labels dosing for cervical cancer and that is actually to get actually A higher amount of the medicine in the patients more effectively With still acceptable safety profile, so we are very encouraged by this data. And we think that we actually will collect in the coming months enough data to allow us to make a rational decision on next steps and we have firm plans for that together with CGM.

Speaker 1

What I can also tell you is that we heard from Cision by this time that the potential acquirer of Pfizer CGN is also very excited about the data. In the meantime, I think we have already spoken with some of the colleagues from Pfizer and assuming That transaction goes through. I think that actually I think there's a very, very good level of enthusiasm for Tivtec to move to the next stage is in the 2nd solid cancer outside of cervical cancer. And then in the second half of this year, we also hope to online data in cervical cancer and combinations in triplets and quadruplets regimens, but also there, I think the data shapes up very nicely. So I think that hopefully with Cision or with Cision and the new ownership, we will actually move not only later on perhaps even first line head and neck cancer a bit further from that.

Speaker 1

So we are actually very encouraged by the profile of the medicine. It's very, very That we have a good chance of creating a much and much more impact for the medicine here with Tivtec in the coming time

Operator

Thank you. We will take our next question. Your next question comes from the line of James Gordon. Please go ahead. Your line is open.

Speaker 10

Hello, James Gordon, JPMorgan. Thanks for taking the questions. Two questions, please. One was about CD38 and competition. So can you just remind us how much of DARZALEX sales are still coming from using refractory patients?

Speaker 10

And I ask if some people have been a bit worried about CARVXI competition. Do you think Aravcte is going to have any impact on DARZALEX in the next couple of years as it moves into earlier treatment lines? And assuming we do get competition in the front line is potentially around 2027. How much of a headwind do you think that would be given I know there are some manufacturing issues and administration issues, so how much of a threat there? Another part of that question also just there were new therapies coming along in multiple myeloma including CAR T.

Speaker 10

Do you think that does mean J and J are any less likely to want to go for HexaBody CD38 if there's other things like CAR T that may be a little more promising? And then the second question was on M and A. In terms of inorganic and deal making, do you have what you need in house to do your own ADCs? Because I know you did a deal there. Or might you actually hunt for getting a link for the new payloads that your ADCs might be where you want to expand into?

Speaker 10

And a final clarification is on deal making. Are you done in terms of immunology in terms of looking for a larger partner? Or could you also, as well as argenx, try and do an immunology deal with a large cat pharma company?

Speaker 1

Thanks, James. I think there are more than 2 questions for sure.

Speaker 10

Not anymore.

Speaker 1

But Let me try to go over that in an orderly manner. So first, and then to all DARZALEX and CD38 competition, What I clearly see is that actually maybe I should go first over the brand back to data because you asked about basically the second line. Overall, in the U. S, in March, was 40% of the patients are treated with DARZALEX and 39% of the new patients starts in the frontline, 36% of the patients are getting treated with DARZALEX, but 39% of the new patients start and the second line 53% of the patients and the same 53% in the third line setting. So there's still a lot of usage In combination and what I understand is that actually DARZALEX is the perfect combination drug not only for The bispecifics like now Teckviley and potentially soon talquetamab, but also for potential combination with CAR T.

Speaker 1

And Janssen is already having a Phase 3 trial combining CAR T with DARZALEX. So I don't think that actually That there will be a lot of competition for the position of CD38. And then the question for you asked as well, Would Johnson be interested in HexaBody CD38? I think so because of several reasons. One is If Hexa Body CD38 would be much more potent in the clinic than DARZALEX, That could be a fantastic next generation combination partner for all of these other medicines in multiple myeloma And also in the context of IRA legislation and complexity from that perspective, it could be very smart For Janssen to actually switch at some point DARZALEX for a next generation CD38 targeted medicines.

Speaker 1

So I think the interest level should go up and not go down. We are now doing the HETORET trial against subcu DARZALEX as we reflected in the Q1 report, James. So I think with more data next year, I think the interest level should potentially go up rather than go down. And we're not that worried about competition for DARZALEX. In DARZALEX has found a place as a core therapy, as a backbone therapy in multiple myeloma and not only with The current agents with the image and proteasome inhibitors, but also with the bispecifics, the new bispecifics and Potentially even with CAR T.

Speaker 1

Then your second question as it relates to M and A, the ADCs, we are actually having a lot of deals in place for ADCs and reflect of several actually not only WarHats like with Sanofix and with we also work together with AbbVie In the ADC field, but also we actually also have access to immune activator feed the BOLT Therapeutics interaction And actually a number of other deals have been done in the ADC field, which we have not even flagged up publicly because there were early stage deals on building blocks conference we need for building ADC next generation antibody therapeutic. But ADCs are a very, very Significant part already of our preclinical pipeline, James. So potentially we could go broader Because we like ADCs, you just heard my enthusiasm about TifDAC, the dsotumab vedotin ADC together with CGM is doing better and better and this will become a very meaningful medicine we believe Not only for cervical cancer, but also for other solid tumors in the future, but we see actually a lot of potential for ADCs that we already have a fair number in our And a preclinical pipeline and some of them will likely move to the clinic in the coming time.

Speaker 1

And your third question is about immunology and information potentially deals with LargeCap. That would be possible. I think there is a lot of interest for our technology platforms. I mean that is one of the reasons that we move into immunology and information is that we believe that by having access to our proprietary antibody technology platforms, James, we can actually make much better therapeutics for immunology and inflammation The current generation of naked antibody approaches, this already make a big impact in some of these areas. Think about the TNF alpha blockers, the IL-seventeen blockers, IL-twenty three, the targeted antibody therapeutics.

Speaker 1

We believe that by Having smart use of our proprietary technology platform, we can actually make much, much better targeted medicines For immunology and information diseases, and I could say there is a lot of interest from also from large cap pharma and working with us In these areas, but of course, the pitfall is that we are not going to do any deal unless we actually can hold on to 50% product ownership To the end, if not more, James, and that is going to be more difficult and challenging, we believe, at a large cap pharma because they would Like to own more of the products than we are willing to give to them. So in that context, I think it is actually likely that we More deals and more activity from Genmab, perhaps even in the M and A field, but Not necessarily with LargeCap Pharma, because they are likely not going to be very enthusiastic of giving up 50% of the upside Or more to a biotech company, but times are changing. I think we will see more activity in this area. We're very enthusiastic of now more

Speaker 2

Thank you.

Operator

Thank you. We will take our next question. And the question comes from the line of Peter Vidal. Please go ahead. Your line is open.

Speaker 11

Thank you. Steve with Ault Citi. Two questions please. First for Tahiti or for Jan. Just with the Bolivia approval now frontline DLBCL done and dusted.

Speaker 11

Could you remind us how quickly do you intend to initiate Frontline DLBCL study with Bolivia and EFCO. That's question number 1. And then question number 2 for So, Anthony, I think I know the answer, but just with the cash pile growing ever bigger, is there a point in time going forward, is there a tipping point where There'll be a change in your cash allocation priorities or do we should we just assume that you continue piling up the cash Should give you full flexibility to follow the science and push things into Phase 3 of the EBITDA. I just wanted to know whether there's a tipping point where you would perhaps consider other

Speaker 1

Thanks, Peter, for the two questions. I can tell you that we are planning a number of online studies as we speak, And we will absolutely detail them at the point that we get regulatory feedback so that we can initiate those studies. And that actually is also not only other antibodies or antibody drug conjugates, The few slides piece of the phone, we already have the art shop combination with EPCO ongoing and recruiting as we speak. But there will be more frontline studies, and we will give you further You want to combine a bit efgartimab, but clinical programs for EPCO will become quite a bit broader in the coming time. So then handing over to Anthony for the second question.

Speaker 2

Yes. Thanks, Pete. To be clear, our capital allocation priorities absolutely remain unchanged. As you highlighted, as we continue on this Growth trajectory and looking at the really exciting growth opportunities that we have, we think having that full flexibility of our balance sheet, that strong balance sheet to be absolutely essential To make sure we have the capital to invest in all of the exciting organic opportunities. And as Jan highlighted, if the right opportunity presents itself From a BD and L perspective or otherwise that we have that balance sheet and deploy that capital appropriately.

Speaker 2

So the headline message, Pete, to answer your question directly is that our capital allocation priorities remains unchanged. And again, that balance sheet strength is going to be important as we continue to build out our business on multiple fronts for the next couple of years and potentially beyond.

Speaker 11

Thank you. Very clear. Thank you.

Speaker 1

Thanks, Pete.

Operator

Thank you. We will take our next question. The next question comes from the line of Yaron Werber. Please go ahead. Your line is open.

Speaker 3

Hi. This is Jaina on for Yaron. Going back to your GEM-three thousand and fourteen, the Hecate CD38, Can you give us any more details on the trial design, just how many patients you have in your head to head and other arms for the trial? And then also what you think are the efficacy and safety benchmarks And also as a follow-up kind of second question, going back to GEN-one hundred and forty two and GEN-one hundred and forty six, Given that you think that there's a possibility for advancing both of these into late stage clinical, have you thought about how you want to position these two assets relative to each other?

Speaker 1

Thank you for the question. So with HexaBody CD38 or 3,014, The head to head is 2 arms with CD38 naiverelapsedrefractory multiple myeloma. We haven't specified the size of the arms, but we hope that we actually can recruit them both this year and actually recruitment is going well At this moment and you will hear next year, the clinical data is very likely also of that head to head arm with HexaBody CD38. Then second question as it relates to 1042, 1046, the 2 401BB targeted bispecifics. We believe that we can actually position them differently in different solid tumors and different lines of treatments.

Speaker 1

As you know, we are testing 1042 in frontline Melanoma, front line lung cancer, front line, head and neck, front line pancreatic. At this moment, you have only seen few patients data in head and neck, But very likely, 1042 will be positioned in the frontline area for 1 or more of these solid tumors. And 1046, I think the most likely is that we will actually conference call initially for lung cancer for non small cell lung carcinoma, collapsed refractory after checkpoint inhibitor. For That's because we have the most impressive data there up to now, but there's also other cancers that we have not yet specified where we see very good responses were 1046. So we have no worries about the positioning of these 2 bispecifics.

Speaker 1

We think that they will be positioned in the end

Operator

We will take our next question. And the question comes from the line of Rajan Sharma. Please go ahead. Your line is open.

Speaker 12

Hi. Thanks for taking my questions. First one just on OpEx and could you just help us think about kind of phasing through 2023 and if there could be potentially a peak quarter through the year? And then secondly, just on DARZALEX. And could you provide any clarity on kind of what proportion of revenues were subcut in Q1 and how you see that Thank you.

Speaker 1

Thanks, Anton. I will hand over both questions to Anthony. Anthony, please.

Speaker 2

Yes, sure thing. I mean maybe sort of stepping back and looking at our overall investment profile, particularly the drivers as we sort of thought about transitioning from 2022 and 2023, I highlighted back in February 4 key areas We're really looking to deploy that capital and what was the drivers of the increase in OpEx year over year. As a reminder, those four areas, number 1 was the portfolio advancement that was making up around DKK1.3 billion of the increase on a year over year basis at our guidance midpoint. We then had the further build out and market build for U. S.

Speaker 2

And Japan of around DKK 400,000,000. Then we had really investing and scaling up our world class discovery engine, including the investments to move into a new therapeutic area Of around $100,000,000 And then finally, in the enabling function, some very important foundational investments in these functions to achieve the required scale. So these are the 4 areas As I look at the results in Q1 so far, that's exactly where that increase is as I look at the year over year figures. As I sit here today, That absolutely remains true. Now particularly your question on phasing, look, this can be lumpy as a function of various spend, CMC or Manufacturing Investments, so no explicit quarterly phasing guidance, Rajan, but other than to reiterate our full year guidance in the overall range of 9.8 In terms of the subcu split in Q1, Here our commentary is going to be very limited, just limited to the U.

Speaker 2

S. Market. And more recently, we've seen that in the high 80s or around 88% Being subcu, now outside of the U. S, our visibility is much more limited and they're not in a position to really share that information. What I can say is that in terms of the 88%, that's in line with our overall thinking and projections for a year.

Speaker 2

Again, what I highlighted back in February when we gave our full year guidance

Speaker 1

Thanks, Anthony. I think we can go to the next speaker. Next question.

Operator

There are no further questions at this time, so would like to hand back for closing remarks.

Speaker 1

Thank you all for calling in today to discuss is Genworth's financial results for the Q1 of 2023. If you have any additional questions, please reach out to our Investor Relations team. We hope that you all stay safe, keep optimistic and remain healthy. And we very much look forward to speaking with you again soon.

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Earnings Conference Call
Genmab A/S Q1 2023
00:00 / 00:00