Welcome to Genmab's 2024 Annual General Meeting. We are pleased to once again see so many of you in person, and welcome also to those of you joining us via webcast. I'm Deirdre Connelly, Chairman of Genmab's Board of Directors. I would like to begin by introducing the other members of our board. Deputy Chair, Pernille Erenbjerg, as well as Anders Gersel, Rolf Hoffmann, and Elizabeth O'Farrell. Dr. Paolo Paoletti is also on our board, but was unable to attend today.
We also have three employee directors. These are Martin Schulz, Takahiro Hamatani, and Mijke Zachariasse. Next, our company's executive management team, Jan van de Winkel, Anthony Pagano. We have Judith Klimovsky, Chief Development Officer, Anthony Mancini, Chief Operating Officer, Tahir Mahmood, Chief Medical Officer, Birgitte Stephensen, Chief Legal Officer, Chris Cozic, Chief People Officer, and Martine van Vugt, Chief Strategy Officer. To officially start the proceedings for today's meeting, I would now like to introduce Jørgen Kjergaard Madsen, Genmab's external legal advisor, who will be the chair of our annual general meeting. Jørgen?
Thank you very much. Thank you for appointing me chair of the meeting. I hope we have a good meeting today, and I just want to apologize for the delay to use the new registration system. Of course, it's a new digital world, but the good thing is that we save a lot of paper in this way, and I guess it's what we have to get used to going forward. First, a few practical comments.
The AGM and Genmab have simultaneous interpretation, as most interventions will be in English, and we have interpreters present who will interpret everything between Danish and English, and vice versa. If you need interpretation, you will need a headset, and you are more than welcome to pick up a headset.
If any of you didn't pick up one and still would like one, please raise your hand, and then we have people who will get headsets for you. If you would like to take the floor during the AGM, I would ask you to come up here to introduce yourself, but also so that we can actually film you, because the AGM is webcasted, and it's also, it's also nice for the people following online to be able to see who's at the rostrum.
And if you take the floor, do please speak slowly and clearly. My first job as chair of the AGM is to ensure that the AGM has been convened correctly and is quorate. The AGM has to be in the right place, that is the Greater Copenhagen area, and the Marriott Hotel is in the Greater Copenhagen area.
It also has to be convened at the latest four months after the expiration of the financial year. That's also correct. It has to be within a minimum of three weeks and maximum of five weeks before the AGM. That's also correct. The convening mode was announcement on the company's website and on Nasdaq Copenhagen's website.
There's also been a written notice to shareholders who have asked for this in advance, and all of the convening business was done on the February 15th this year. The agenda with the complete proposals in the annual report and other documents have also been available on the website of the company within the required time limits. There are no items on the agenda that require a certain degree of share capital to be present.
It's my opinion that the AGM has been correctly convened and is also competent for the transaction of the business on the agenda. If nobody disagrees with me in this, that will be put in the minutes. Thank you. Now, I'll briefly go through the items on the agenda. I think they'll also be on the screen behind me.
The first two items have to do with the annual report from the board of directors and also presentation of the audited annual report 2023, and resolution to discharge the board of directors and executive management. Those two points we typically take as one, and it's the Chairman of the Board, Deirdre Connelly, who will start with that, and after that, Jan van de Winkel will take over, and after that, the CFO of the company, Anthony Pagano.
Then we have item three, resolution on the distribution of profits. Item four, presentation of an advisory vote on the compensation report. Item five, election of members of the Board of Directors. Item six, election of auditor. Item seven, proposals from the Board of Directors. There could also be proposals from the shareholders, but none have been sent in, and the proposals from the board of directors, I'll go through when we get to that item.
I won't start with that now. Item eight is the usual authorization for the chair of the AGM. And finally, item nine, any other business. Today, at the AGM, we have about 70% of the share capital with voting rights. And based on the proxies and postal votes we have received, there's a clear majority for the adoption of all proposals on the agenda today.
So certainly, in principle, there's no need for a formal vote on any of the proposals. But to finalize the result of the vote, I'll propose, as we usually do, that shareholders who are present here and who would like to vote against or abstain from voting on any items on the agenda, they will contact the registration desk just after the AGM, so that they can be recorded correctly.
And in that way, we also don't have to interrupt the AGM, because we know we have a majority for all proposals. Now, I will give the floor to, first, the Chairman of the Board, Deirdre Connelly, and she will be followed by, first, the CEO, Jan van de Winkel, and after that, by the CFO, Anthony Pagano. But first, Deirdre Connelly.
Thank you, Jørgen. I now need to draw your attention to the fact that this presentation will include forward-looking statements. As drug development is not always a straightforward journey, it is important to understand that what we discuss today is our aim, and that you are aware that there may be external events that cause us to change course in the future. I've had the privilege of being on Genmab's board of directors since 2017.
Genmab's story begins earlier than that, in the year 1999, with a small team of determined scientists and colleagues, with a goal of becoming an innovation powerhouse. We stand here today, 25 years later, with eight approved medicines created using our research and technology, two of which we co-commercialize with our partners. We have more product candidates in our robust pipeline and a commitment to invest in our future.
We now have over 2,000 unstoppable team members on three continents, working together towards one common goal: the treatment of cancer and other serious diseases. Working with this board, cross-functional teams of Genmab colleagues, we created our 2030 vision, that by 2030, our Knock Your Socks Off, or KYSO, antibody medicines are fundamentally transforming the lives of people with cancer and other serious diseases.
We are confident that we are achieving this vision, in part because innovative science remains at Genmab's core. Knowing how we got to this point is very important to understanding Genmab's future. So please enjoy this brief preview of a video documentary celebrating our 25th year at Genmab.
I was told that this was a poor little biotech company. We would not have the very great funding, and I thought, "Okay, it's gonna be fine for a year or two until I find something more robust.
This was an adventure from the very beginning.
Lots of ambitions, developing drugs in a new way, and innovative, and all those buzzwords.
If nature can do it, can we do it better? At that time, it was really on the forefront of new antibody technologies that we did at that time. It's gonna be successful in the future, so why don't you just start in my company and do whatever you like to do? It absolutely was that feeling of: Oh, gosh, not sure what I'm gonna do, but I'm gonna learn it quickly, and everyone doing everything.
We were all young, inspiring scientists then. We had the feeling that we could do everything together. Putting the patient first, for us isn't just a tagline. It's truly where we spend our resources, time, and effort. The results were spectacular. All the pieces came together at that time.
This is the, let's say, the eureka moment, or the... I like to call it, hey, that's funny moments.
Then the financial banking crisis hit, plus some of our compounds were not as successful as we had hoped, so our pipeline shrank, and that meant that we had to take drastic measures. That was quite a scare for a lot of people.
It was a difficult time, but we learned from that time, and we were able to then adjust to make things better going forward.
Okay, then we need to work tighter, closer, better, faster. So we did.
Then I'd ended up being by myself, approximately one year alone in Japan, in the office.
It's great to look back and say: Hey, that worked out, that worked out. The number of INDs that have been put into the clinic, and then the number of approved medicines, which is eight, that is why we're here today. And the good thing is, we're trying to do it again and again and again, and help bring more medicines to patients.
We wanna be that trusted partner that really can have a huge impact on patient care.
Developing a new medicine is unbelievably challenging, and I think this is probably one of the best teams in the world which is able to do that, and I think the best is yet to come. I think this is only the beginning.
... I would like to take this opportunity to thank you for supporting us as we move closer to achieving our vision of transforming the lives of people with cancer and other serious diseases around the world. Now, I would like to hand the presentation over to Genmab's CEO, the engine behind these 25 years, one of its founders, Jan van de Winkel.
All right. Thank you, Deirdre, and thank you to everybody, everyone joining us today here. I'm really pleased to provide a brief overview of our recent successes and also share a glimpse of what you can expect from Genmab in 2024. As Genmab has grown, we have moved from strength to strength, and we've never been in a better position to achieve our inspirational vision.
We have expanded and matured our innovative product pipeline, we have further solidified our already very strong financial foundation, and we have evolved our organization for continued future success. Our consistent and solid track record is possible because we have a world-class team of unstoppable colleagues, who are driven to improve the lives of patients through innovative and differentiated antibody medicines.
So now let's move to the next slide and look at some of the events from the past year that further build on our track record of success. 2023 was truly a remarkable year, with multiple regulatory approvals for epcoritamab. As a reminder, Genmab is the commercial lead for Epkinly in both the U.S. and in Japan, and we are very pleased with how the launch is progressing so far.
But the current approvals are only the first step to potentially establishing epcoritamab as the core therapy across diffuse large B-cell lymphoma, follicular lymphoma, and beyond. In June, we announced positive top-line results from the follicular lymphoma cohorts of the phase 1/2 EPCORE-NHL1 trial. This data, along with preliminary dose optimization, was presented during the ASH C onference in December last year.
In November, the U.S. FDA granted breakthrough therapy designation for epcoritamab for adults with relapsed or refractory follicular lymphoma after two or more lines of systemic therapy. Last month, the FDA accepted for priority review our submission for this indication, with a target action date of June. Finally, the EMA, so the European organization, also validated a type two variation application for epcoritamab for the same indication.
Together with AbbVie, our partner, we are advancing a robust clinical development program for epcoritamab across B-cell malignancies, and we anticipate to start multiple phase three studies this year. The nice thing is that epcoritamab is just one example of our maturing pipeline. We also saw progress with Tivdak last year.
As we noted in January, the FDA has accepted an sBLA seeking to convert the accelerated approval of Tivdak in recurrent or metastatic cervical cancer into a full approval, and the EMA has also accepted a MAA for Tivdak in this same indication. Both of these regulatory submissions were supported by the positive results from the confirmatory innovaTV 301 study in cervical cancer.
And in 2023, we also saw positive data from the innovaTV 207 study for tisotumab vedotin in head and neck cancer, and we have plans to engage with health authorities on this indication, along with our partner Seagen, which is now part of Pfizer. Another program that has cleared a very high bar for continued investment and development is acasunlimab or GEN1046, which we are co-developing with BioNTech.
We have planned engagement with health authorities on the design of a pivotal trial for acasunlimab in this, in second-line non-small cell lung cancer. We plan to share the data on which this decision was based at a medical conference in the first half of 2024. We are also expanding this program with a phase II trial in endometrial cancer, which is currently recruiting.
Moving to progress that we saw with other pipeline programs, as we also noted already in November last year, we remain very encouraged by the clinical efficacy data we are seeing with GEN1042, and we are anticipating that we will have the data we need to determine next steps for this program also this year.
Looking at some of our earlier stage programs, the phase 1/2 trial of GEN1047 or DuoBody-CD3×B7H4, and I apologize for all the complex, complex names, that is just a matter of the business we are in. This program is currently in the dose expansion phase, which is very important as a step in progressing our CD3-based bispecific platform in solid tumors.
And GEN3017 or DuoBody-CD3×CD30 started recruitment for a first-in-human clinical trial. Finally, we have two IND submissions near the end of 2023, one for GEN1059 or DuoBody-EpCAM×4-1BB, which actually we first saw the first patient in the first phase 1 trial recently, and GEN1055 or HexaBody-OX40. And both of these antibodies are being co-developed again with BioNTech.
The success of the Genmab model is also apparent in our move into the new therapeutic area of I&I, with a partnership with argenx. An expansion into this therapeutic area was a logical next step for the company. And with eight approved medicines on the market that are based on our cutting-edge innovations, we will continue to have growing, recurring revenue streams that we can then strategically invest into our own company.
We are investing, we are investing in our mid- to late-stage pipeline and pursuing growth through targeted business development and acquisitions. Partner-owned programs, powered by our world-class innovation, and especially our proprietary DuoBody platform, also saw great progress in 2023.
Our portfolio includes six royalty medicines, and the royalty revenue amounted to DKK 13.7 billion in 2023, compared to DKK 11.6 billion in 2022, which is an increase of DKK 2.1 billion kroner or 18%. The net sales of DARZALEX by Janssen was $9.7 billion in 2023, compared to around $8 billion in 2022. And this increase of around $1.8 billion, or 22%, was driven by share gains in all regions.
Kesimpta, another product based on our innovation, achieved a continued strong demand growth of $2.2 billion in sales in 2023 for treating relapsing MS, a nearly 100% increase versus 2022. And as affirmed by Novartis, Kesimpta is the market leader currently in seven out of 10 major markets outside the USA.
Those are only a few of the medicines that our partnerships have produced, which are producing revenue that is allowing us to invest in ourselves in 2024 and beyond. In 2023, Genmab made great strides towards our 2030 vision, making for a transformative year in our company's history and our patients' care.
Our KYSO antibody medicines have begun a new chapter in transforming the lives of people with cancer and other diseases. In 2024, we will continue to work diligently towards this vision with a number of key goals for the company. Starting with our currently approved medicines, Epkinly and Tivdak.
As I mentioned, we will work with our partner, AbbVie, to continue to maximize the potential of epcoritamab with the initiation of new trials, as well as an expanded label, with the potential to move into relapsed or, or refractory follicular lymphoma, as I stated earlier. We will also work with our new partner, Pfizer, pending health authority feedback, to advance the development of Tivdak in head and neck cancer.
Turning to our clinical stage programs, along with our partner, BioNTech, we plan to progress both acasunlimab or GEN1046 and GEN1042. For acasunlimab, we see the potential to initiate a phase III trial in second-line non-small cell lung cancer, and for GEN1042, we anticipate phase II data in frontline head and neck cancer that will allow us to determine next steps for the program.
So we anticipate expanding and advancing these and other clinical stage programs in our KYSO product portfolio. And I think there's a mobile phone going off now, so we'll wait. So fundamental to the success of these programs is having the right team and culture in place. We are well prepared to continue to scale our company based on our planned portfolio development and business needs, and we will be maintaining and enhancing the science-driven and patient-focused, courageous and inspirational Genmab culture, and doing so with integrity.
Finally, we will continue to leverage our solid financial base to support our growth, including to grow and broaden our exciting product and, and technology portfolio. We will look at both our existing strategy and new opportunities to do just that. We have much to look forward to in 2024.
So then summing it up, and our inspirational vision will continue to act as a guiding light, anchored in our core purpose, where our unstoppable team will improve the lives of patients through innovative and differentiated antibody therapeutics. Our first two Genmab-owned medicines are now on the market, giving us strong rationale to make focused investments to make the most of opportunities ahead of us, and we will continue to be disciplined in our approach to this investment.
We have never been in a better position to achieve our vision of transforming the lives of people with cancer and other serious diseases. So thank you all for your support. And at this is the right moment, and this... I'm now pleased to hand over to my colleague, Anthony Pagano, our CFO, to discuss the 2023 financials and our twenty, twenty-four financial guidance. Enjoy.
All right. Well, first of all, thank you so much, Jan, and it's really a pleasure to be here with you all today. We've really continued to strengthen our foundation during 2023. To start, together with our partner, AbbVie, we achieved our goal of regulatory approvals for Epkinly, not only in the U.S. and Europe, but also Japan.
As you're gonna see, our financials for the year were really strong. Recurring revenues grew by 22% on a reported basis. This was principally driven by strong royalties from Darzalex, along with significant growth from other approved medicines based upon our innovations, including Tivdak and Epkinly. Our solid balance sheet, our growing recurring revenues, and significant underlying profitability really allow us to invest in our business and our pipeline in a highly focused and disciplined way.
Of course, as you heard from Jan, an important part of this has been to continue to build out the team and the capabilities that we need to succeed. With that background, let's now take a look at our 2023 financial performance.
Here you can see our summary P&L. Revenue came in at around DKK 16.5 billion, and overall, that's up 14% compared to last year. Importantly, our recurring revenue is up 22% on a reported basis, and impressively and importantly, 31% on an operational basis. Our growth in 2023 continued to be strong, driven by higher DARZALEX royalties, as well as royalties from other products, including and especially Kesimpta.
We also recognize the first quarters of net product sales for Epkinly, and we're really pleased with how the launch is progressing so far, with around DKK 421 million of sales since launch. And of note, Epkinly net, Epkinly net product sales contributed more than 20% of our overall revenue growth in 2023.
Total expenses were about DKK 10.9 billion, with 70% being R&D and 30% SG&A, and that compares favorably to 68% in R&D and 32% in SG&A in 2022. And even with this increased investment, we still delivered around DKK 5.3 billion of operating profit for the year. Moving now to our net financial items. Here we have a gain of DKK 316 million.
This is driven by an increase in interest income due to higher effective interest rates, which offset the negative impact of the weakening U.S. dollar against the Danish kroner. Then we have tax expense of about DKK 1.3 billion, which equates to an effective tax rate of 22.8%. And that brings us to our net profit of nearly DKK 4.4 billion.
So as you can see, continued strong underlying financial performance for the year. So with that, having looked at our 2023 financial performance, let's move to the next page and take a look at our 2024 guidance. So here, let's really focus on the highlights. We anticipate strong growth in revenue and operating profit for 2024, at 19% and 10%, respectively, at the midpoint.
For revenue, a significant part of our growth will come from recurring revenue, where we expect an increase of 25%. We anticipate that DARZALEX sales will continue to ramp up and be in the range of $10.9 billion-$11.5 billion. So here we're projecting DARZALEX royalties to be between DKK 12.6 billion and DKK 13.3 billion.
And most excitingly, we're gonna have over DKK 1.2 billion of growth from EPKINLY and Tivdak. And in fact, EPKINLY and Tivdak are driving nearly 40% of our total revenue growth in 2024. And note, as you can see here, our total revenue growth of 19% is gonna exceed our projected OpEx growth of 18%. On the investment side, our OpEx growth is projected to moderate significantly year-over-year.
Last year, we saw a growth of 33%, and now we're projecting 18% for 2024. Likewise, our projected DKK 2 billion increase in OpEx for 2024 at the midpoint is down from the DKK 2.7 billion increase that we saw in 2023. So clearly, this is a significant reduction, both in percentage terms as well as absolute Danish kroner terms. As you can see, the vast majority of our increase in investments for 2024 is directly related to mid- to late-stage R&D investments.
And the increase in SG&A, it's muted, and it's really primarily related to the annualization or the timing impact of some important investments that came online in 2023 related to the launches of Epkinly in the United States and Japan.
And finally, the significant revenue growth and our continued focused approach to managing our investments translates to a projected double-digit or 10% growth in operating income at the midpoint of our guidance range. So now, having looked at our results for 2023 and our guidance for 2024, let me now walk you through our focused capital allocation strategy, which is really aimed at fueling growth and enhancing shareholder value.
First, we're gonna absolutely continue to invest in our proprietary pipeline and technology platforms. In particular, we're focused on investing in our mid- and late-stage programs. In addition, we absolutely need to maintain our investments to maintain our leadership in innovation in antibody tech, and absolutely delivering on our promise of groundbreaking KYSO medicines.
Second, we're pursuing focused BD and M&A opportunities, and here our objective is really clear: to accelerate our growth trajectory and broaden our portfolio.... And here we're going to seek out opportunities that absolutely fit within our core focus areas. As you know, historically, we've focused on external opportunities, where we brought in tools and components to really augment our research and discovery engine.
As now, as we've further built out our development and commercial organization and capabilities, we're absolutely now very well positioned to also consider development and commercial stage product opportunities. And finally, at today's AGM, as you all know, we're asking for authorization to launch a share buyback program. This really underscores our confidence in Genmab's, in Genmab's future, and absolutely our commitment to delivering value to our shareholders, not only in the short term, but also the long term.
In summary, our capital allocation strategy is very clear and straightforward: invest in our business, and in particular, our mid-to-late stage pipeline, and to seek growth through focused BD and acquisitions. And after these two priorities are evaluated, we can then consider return of capital to our shareholders. So really, taken together, this balanced approach really positions us for sustained success and long-term value creation. So in summary, we've had a very solid 2023, and our 2024 guidance highlights our highly compelling growth profile.
We've created additional growing, recurring revenue streams, increasingly from our proprietary products, including Tivdak and Epkinly. 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 that are in front of us. Thank you very, very much for your attention today, and thank you again, as always, for your continued support. On that note, I'm going to hand you back over to Jørgen. Jørgen, the floor is yours.
Thank you very much. That was the report by the board of directors on the company's activities and the presentation of the audited annual report. And at this time, as per usual, we will open for a debate for any questions and comments. And our first speaker is Mr. Bjarne Kongsted, representing the Association of Danish Shareholders.
Thank you, and good afternoon. As mentioned, my name is Bjarne Kongsted, and I've asked to take the floor representing the Association of Danish Shareholders. We're an association in with about 17,000 members, representing private investors. We've previously participated in the AGMs of Genmab, and we are happy to do so again this year. The February 15th this year was an important day for Genmab.
It was the day after the launch of the annual report for 2023, and it wasn't as much the publishing of the annual report that made it an important day. You do so every day. It was more the reaction at the stock exchange. The share price, at one point, increased by over 12%, which was the biggest increase since March 2020.
In connection with the publishing of the annual accounts, you could read that the company wanted to propose to the general meeting to initiate a share buyback program of up to DKK 3.5 billion. Perhaps that was what made the share price go up. When the company proposes a share buyback program, it must be in confidence to your own product portfolio and with a belief in the financial basis in 2024.
However, we are not going to see any dividend for shareholders this year, in spite of the fact that that was a large part of the debate on last year's AGM. The lack of any dividend for the shareholders and the dissatisfaction with the increased fees and salaries for the board of directors and executive management, made several shareholders take the rust from last year and voice their dissatisfaction.
We have seen the board of directors, show some leniency towards these, points of view. We've seen a share buyback program now, yes, but still no dividend for shareholders. And perhaps it is this dissatisfaction among the shareholders that can be seen on the share price, which has plummeted from about DKK 3,000 by the beginning of the financial year to about DKK 2,000 by the end of the year, and we have seen further decreases over recent months.
I know that there have been other events recently that have affected this result. The share price is often reflected in the company's expectations for the future. Genmab is not on par with analysts when it comes to the operating profit for 2024. The company's guidance shows a midpoint of about DKK 5.85 billion, where analysts had expected DKK 6.4 billion, and that in spite of increased revenues.
The reason for this, according to Genmab, is the development of increased operating costs and because of the costs of the continued progress in the portfolio and coming product launches. As a leading biotech company, Genmab has seen impressive growth and success in recent years. By now, you have a handful of medicines on the market, mainly via your partners.
I believe you have reached about seven different medicines, but today in the report we just heard, we were told that it's in fact eight. That just goes to show that it is still valid to say that medicine will never really go out of fashion. Unfortunately, you might say. Seen in isolation and from a Genmab perspective, the company has developed medicines, well, several drugs, in fact, that help people with diseases that are life-threatening and incapacitating.
The guidance for 2024 is conservative and falls behind analysts' expectations when it comes to revenue as well as operating profit. On the cost side, we can see a significant increase as well, but of course, creating growth will also cost you some money.
We still live in a time with rapidly changing health needs and technological progress, which challenges companies to adapt and adjust in order to retain their position in the market. I believe it's important to Genmab to continue to focus on research and development to ensure continued growth and innovation.
Through the years, the company has demonstrated its ability and skill when it comes to developing innovative treatments and therapies for a broad number of diseases, and therefore, you can be groundbreaking within biotech. Before I round off, I will encourage you to continue to be open and transparent in your communication with your shareholders, also, the small shareholders. We're always open to information about the company's strategy, results, progress, sustainability, and CSR.
I'm convinced that if the company continues to focus on research and development, you will be headed towards a promising future, which will make a difference to patients as well as civil society. And this difference that you're going to make will, of course, have a spillover effect on the company's share price, and that way also for the many shareholders.
So finally, I would like to ask the management of the company whether these uncertain times that we are seeing lately have affected the guidance and the expectations that we read about when you published your annual account for 2023. And finally, I want to wish Genmab's management, board, and employees a good work, a good year ahead in 2024. Thank you.
Thank you for those comments from the Association of Danish Shareholders. There were a few concrete questions. Jan van de Winkel?
Thank you very much, Mr. Kongstad. I cannot find you, but you must be somewhere there in the audience. Thank you very much for the constructive comments. And I agree with you that the track record of the company is really, really good, and we hope that the best is yet to come, as we said already in the video.
And then one aspect you raised in your speech was the impact on the share of the share repurchase on the share price. And we of course cannot comment on that because we have no influence over the share price, but we hope that actually the market reaction, which has been very positive on our annual report overall, is actually reflected by the excellent progress we made with the pipeline.
That is in the end, what builds value for a company like Genmab, and a very solid guidance for 2024. We also hear this repeatedly from investors, and this year, actually, we have seen a far different market reaction than last year. But I want to leave it to Anthony here to give you a bit of reflection on how the geopolitical uncertainty and the financial uncertainty in this world with high interest rates, et cetera, has impacted our outlook for 2024. Anthony?
Yeah. So thanks, Jan, and thank you for the question. As you would expect, when we formulate our financial guidance for any particular year, and this, of course, includes 2024, we look at a lot of factors, internal factors, external factors, competition, some of the risks that you highlight. As we formulated our guidance for 2024,
I wouldn't really say that... I would not say that any of these geopolitical uncertainties or these financial risks that you had highlighted really featured in any material way into the formulation of our 2024 guidance. But of course, as we would do in any year, certainly we'd consider these factors, but nothing was sort of jumping off the page at all, as we finalized the guidance that we published on February 24.
Thank you very much. The shareholder, Lars Skov Andersen, has also asked for the floor.
... Thank you for the floor. Shareholders, together we have 100-140 shares. I'm sure that many of you are in a similar position. One year ago, we shareholders had to listen to a long presentation, stating that the 2022 company revenue was best invested in further development, staying within the company, rather than return to the shareholders.
An equally long presentation of a remuneration policy that would increase the salaries or the remuneration of the board and senior management. Taking into account a 28% decline in the share value during 2023, and 23% since last AGM, the management has obviously failed. So I expect that in accord with the remuneration policy, there has been no increase in the remuneration of the board and management for this performance during the past year.
In the 138-page 2023 report, I found no mention of dividends to the shareholders. But in the 54-page compensation proposal, I found a general change of policy to increase the performance-based part of the remuneration. I consider both an affront to the shareholders. After an abysmal 2023 performance, the likelihood of a better 2024 performance is obvious.
So again, with favor to the board and management. I cannot make any change to the proposals this year, but I propose that the revenue for 2024 is distributed in three equal parts, one for the dividends to the shareholders, and two to be shared between company development and remuneration of board and management.
As far as I can read, the 2023 financial report, the earnings per share was DKK 66 , which should have given a dividend to shareholders of DKK 22 if they followed my, my proposal. This is a dividend that is comparable to companies in the health sector. We found, after the last year's general meeting, we actually decided to sell our shares.
But then we, we decided to keep them in order to get on the board, on the speaking, give this note to you today. This decision cost us DKK 63,000. It's obvious that I hope to recover some of this in the coming year, and I will therefore keep a few of my shares in order to be able to give an official comment or proposal for next year's annual general meeting. Yeah, so thank you for having the opportunity to come, and I certainly hope that your plans for 2024 will come out well, in order for us to recover our losses during the past year. Thank you.
Thank you to Lars Skov Andersen for those comments on the development of the company, and also some suggestions for consideration for the board of directors and the executive board. I don't know, were there any comments? Deirdre Connelly, and we need a microphone.
Thank you. I'll address the remuneration, and I'll have Jan discuss other matters that were brought up. As we've mentioned before, to be able to deliver what we have, the first shareholder speaker referenced eight medicines in the marketplace, a very robust pipeline, and really strong results in 2023.
To be able to deliver that kind of performance, we need to attract and retain the best talent available, and we have to compensate, we have to have packages, compensation packages, that are competitive, not only in Europe, in Denmark, in Europe, but also in the United States.
The oncology sector, where we participate, and increasingly other areas, a lot of that talent is in the U.S., and we don't propose to necessarily pay greater than U.S. salaries, but definitely we must, we must present competitive packages to be able to get the best talent available for us.
It's a very competitive world, the biotech world for talent. It is not insurmountable. Genmab is a great company, so people are attracted to great companies, but those companies have to offer competitive packages for us to get that talent, on board. Jan?
So thank you very much for the comments and the reflections and the questions to us. What I want to actually reiterate is that... When we actually generate income, we really want to invest that in our pipeline as a first priority. And this company has done that really well over the years. Over the 25 years, we actually tested 44 new molecules in the clinic together with our partners.
Today, there are 20 in full-blown clinical development, and out of the 20, there are eight on the market, which is an unparalleled record when you look at other companies in biotechnology. And the last product, Epkinly, I want to remind everybody here in the room, is actually developed in less than five years from the first injection in a patient to a market approval.
That is an unbelievable record, basically, in speed to bring medicines to the markets. But you need to invest in biotech. You really need to invest first before you can actually afford to enjoy the income. That takes many, many, many years, and that can be out of sync with individual investments over much shorter time periods.
I think it's very difficult to balance that, but we are confident that we have a good track record and that we actually, in the future, will build far bigger value for the shareholders. So, my recommendation would be to hold on to your shares if you are clever and look at the track record of the company.
I'm not going to come back into detail to your distribution proposal for the revenue. I think our CFO is not going to agree with the one-third, one-third, one-third here, because of what I just explained. We need to invest in our pipeline and our products. We are in a better position than ever before in our history. And yes, at times, the markets can be rough. I mean, we have gone through the longest bear market in biotech history.
I've not seen it longer in over 30 years that I follow the market very actively, and we cannot comment further on the market, because usually there's many components going into that. And this year, I can tell you that the shares are actually increased versus the beginning of the year. So apparently, we're doing something right. I want to keep it at that. Thank you very much for your input and comments.
Does anyone else wish to speak? We have two speakers.
As I usually say, my website is kjeldbajer.dk, but what I would like to emphasize is about the dividend. I'm helping a foundation, but they're not allowed to invest in Genmab because it doesn't give any dividend, and therefore, it's a bad idea not to pay out any dividend.
Therefore, I would propose that you start paying out a dividend to the shareholders so that foundations could be allowed to buy your shares as well. That would help to boost the share price. When you buy shares, I often think that you gear the market too much, perhaps, creating too much of a leverage. When you enter a bad period of time, you can't afford to purchase treasury shares, and then the share price will fall even more.
Perhaps you should give it some more thought how to allocate your resources. Employees who receive free shares are, of course, happy because they will get more out of their share options, but it's not fair to ordinary shareholders, I think. I would also like to say that I'm glad that you have an actual physical general meeting where you can look each other in the eye.
A.P. Møller-Mærsk and DS Norden no longer do that, and I really think that's a shame, because I don't feel that the Danish government is in touch with the Danish population anymore. They're far too focused on what the World Economic Forum says, that is trying to take over the world, and they shouldn't be allowed to do that.
We should retain the rights that we have, and one of our rights is that we should keep our cash. The day we no longer have cash, then it is the system that owns the money, because they can just close your account. So you should be very aware of all of these strange initiatives and steps that are taken. And then you should have a real AGM. I think you should continue to do that. Thank you very much.
Thank you very much to Mr. Kjeld Bayer. Those were some remarks concerning dividend. I think you've already addressed it. Perhaps Jan van de Winkel wants to comment.
Yes. So, I'm not going to comment on the dividend question, because the priorities are really, really clear for the company. We need to invest in our pipeline and our future, and also bring in potential other products in that pipeline to accelerate our future. I call that turbo accelerate in my presentations to investors.
If the situation allows us, if we have any excess cash position, we can potentially buy back some shares, which is what we are proposing for this AGM. And that should be the priorities for the company, to build further value, to tremendous further value for shareholders.
Then I want to comment on one point which was raised by Kjeld, and that is that the employees actually get free shares and enjoy them. We actually want all of our team members which are vital to the future of the company to be co-owners of the success we are creating together. So they don't get it for free, Kjeld, I can tell you. They have to work for it very, very hard, and many of them already complain to me about work-life balance, so they actually may have to work too hard, actually, for those shares.
We see that as a very important part of their compensation to be competitive and to make them all feel part of this winning team, jointly sharing in the success of the company. So we want to absolutely keep doing that, and we think that is actually appropriate and fair to all the stakeholders. And then the in-person AGM, this is something we always look forward to every year. I also look forward to that, so we want to keep that in person, of course, because then we have this nice interaction with all of you. So you don't have to be worried that we will give that up. Give it back to the chair.
[Foreign language]
Anybody else wants the floor? There's one more shareholder.
[Foreign language]
My name is Peter Nørgaard, and I've also owned Genmab shares for a number of years, and I saw last year the share price dropped. My question is regarding risks. I'm told there are always risks when acquiring shares, but I would like to ask, where does management see the risks regarding the Genmab shares? I understand that there are more expenses this year and remuneration is increasing, but then there should are also greater there's greater revenue through more products or greater demand for products.
But what will happen if the competition situation changes so other companies can deliver the same products? I mean, are there risks in the development of the products should you go one way or the other with a new molecule? And my next question, where's the competition? Who's the greatest competitor, and what about setting the price?
Can you continue to have a realistic, good price for the products? Will the hospitals have money enough to buy the products? I would like to have a few comments about that to understand what are the risks for this share.
[Foreign language]
Thank you very much, Mr. Peter Nørgaard. The question to the company about risks and the share price, et cetera, Jan van de Winkel.
Peter, we already chatted before the AGM a bit about some, some of these issues. There's lots of risks, associated for, for companies like Genmab and share, and shares. Of course, there is lots of, geopolitical and, risks, the situation in the world, the interest rate, this is impacting any company and also companies like Genmab.
But let me focus a bit more on product risks. I mean, that is where the, I, I think the greatest risk is for, for Genmab. We need to create products, and products which help patients in a very, very meaningful way, and also are well received in the market and used by doctors, basically.
So there is, of course, always safety risks. There is efficacy risks that products don't work as good as you wish them to to work, or they have side effects that you don't want to see. So we have to balance and navigate this very, very carefully. As I said in the video, drug development is incredibly difficult, incredibly difficult.
But here you're speaking with a company which has done this repeatedly, and I think we're getting better and better in evaluating these risks and determining the right balance, how to develop these these molecules. Competition, of course, there can always be areas where competitors come up with a better product or a competing product which is easier to give or is more efficacious in combination with your than your candidate product.
So there is always a change in dynamics in the landscape, and we have to navigate that really carefully. That is why we need over 2,000 colleagues to really do this really, really well. And I think we have been good up to now. We have been very good, and we are increasingly profitable already for the last 11 years, also this year.
We expect to be profitable based on all of the models and invest, step up our investments again. So, pricing of products is one of the other points you raised. We believe that there will be increased price by sale for all medicines in the future, because actually the cost of medicines are going up for mankind.
I think when people get older and older, in the last years of people's lives, you actually spend more of the healthcare costs or consume more of the healthcare cost than before. And also our products will of course be impacted by that, but our products are all very, very innovative, differentiated medicines.
They're the only ones we are working on, and they will always have a better price and have less competition from easier to make than easier to make medicines. So we believe we will do well in that whole competition. But as I explained to you before we started the presentation, we're using a lot of AI and digital technologies in this company.
We have spoken very little about that, so we actually understand the landscape much better, I think, than some other companies do. And we believe that we can be as innovative in bringing these medicines to the market as we are in the creation and development part of the business. So we are actually scaling up very well, and we do very well.
There's very early days for Epkinly and Tivdak, but Tivdak is in a very small market, has shown nine quarters of consecutive growth, which we're very proud of, and we actually do sell more than our partner. So we actually have figured out how to commercialize these products in the right way. And Epkinly has been fantastic, absolutely fantastic. Much, much better than some of our key competitors.
And you asked me, "Well, who are your key, key competitors?" And that actually differs from product to product. And for some products, that's companies like Roche and Regeneron, and for other products, these are other companies, depending on the product you're talking about. But we believe we are very strongly positioned to compete and compete effectively.
When you ask me, Peter, will it be easy? Absolutely not. It will be very difficult, and it will be a challenging landscape to navigate, and probably increasingly challenging because of the geopolitical uncertainties. The situation in the world is not getting easier, it's getting more complex, I think, in the future. And it may even be different in different territories. The U.S. may be easier than Europe.
Europe may be more challenging than Japan, for example, a market where we have chosen to be present in, 'cause it's for many medicines, it's the second biggest market in the world for some of the medicines. So we believe that markets like the U.S. and Japan are really willing to pay for innovation, and that's exactly our sweet spot.
So we are positioning ourselves cleverly, Peter, but we have to navigate it also in an intelligent manner. I should probably stop here, otherwise you get enough of me, and you don't show up next year anymore. Maybe I will hand it over to Anthony to maybe talk a little, a little bit more about the risks and how we deal with them in a company like Genmab. Anthony?
Yeah. So thanks, Jan, and thank you for the question. Maybe a good framework to sort of think about the risk is to look at our eight approved medicines, and maybe I'll highlight three of them and kind of build out how we sort of think about those products. The first one, of course, there's no getting around it, the most important product in terms of our revenue profile is Darzalex.
Think about Darzalex now being in the market since 2015 and how it's worked its way up through the various lines of treatment, and now establishing itself as clearly a backbone therapy across multiple myeloma. Through the investment made by J&J, it's now really led to very strong market shares, particularly in the United States, in second line and front line.
So we like very much how DARZALEX is positioned today, but very much view this to be continue to be a backbone and a partner of choice for multiple myeloma patients moving forward. And that translates into a very significant set of cash inflows and revenues for Genmab moving forward. So as we like our thinking about our positioning for DARZALEX as the anchor, we think it's in very good position.
What's happened over the last number of years, if you would have talked to us at the beginning of January 2020, we had exactly one product on the market. And today, through diversification, we now have additional seven products, bringing the total number of products to eight. So the second product I would talk about as part of that eight would be Kesimpta.
As you heard Jan in his remarks today, Kesimpta, over the last number of years, has really moved up and now exceeded $2 billion of sales in 2023, and it's earned a leadership position in seven of the 10 territories, leading territories outside the United States. And we've heard a lot of commentary from Novartis, how they view the growth profile moving forward there.
And a key element of Kesimpta, of course, is the product differentiation in terms of the auto-injector and the convenience. So one of our second products, Kesimpta, again, very well-positioned with a very strong partner with Novartis. And the third one I highlight out of the eight is Epkinly. And this is a nice link back to the investments we've had to make.
First, on the development side, how did we catch up with the likes of Roche and Regeneron, get that product to market in less than five years? It didn't happen by accident. There were important investments in team members, resources, partnerships, and there bringing on AbbVie certainly did help us, let's call it in some respects, de-risk that. And those same investments on the development side, we absolutely had to replicate in our two key markets, United States and Japan.
The early returns are positive in terms of how we've been competing against Roche in terms of, U.S. market share and overall U.S. business performance. Likewise, in terms of, let's call it an element of risk, is we, we also went to market in Japan rather quickly. Look at how the, some of the competitors have thought about entering in the Japanese market. We had the U.S.
approval, approval in May, and we had the Japanese approval in September 2023, and we have a pretty good head start relative to the competition. So in summary, as Jan said, there's no way getting around it, the biotech industry is. There's tons of risks out there. Our job is to make the appropriate investments and to allocate resources to reduce that risk to the greatest degree possible. And if we look at our revenue profile, by way of the three examples I gave you out of the eight, and I think it holds true for the remaining five as well, we're very well positioned here today and moving forward.
Yeah, tack.
Does anyone else wish to take the floor under this item? That does not seem to be the case. That means that I can conclude that the AGM has taken note of the report on the company's activities, and that the annual report 2023 has been adopted. On page 32 to 34, the company auditor has given an unqualified auditor's report.
We have adopted the annual report, and we have discharged the board of directors and executive management from liability. That leads me to item three, which is the resolution on the distribution of profits. As you know, here it is proposed that the profit for the accounting year 2023 be carried forward by transfer to retained earnings, the DKK 4.3 billion. Any comments? That's not the case. Then that is adopted.
That leads me to item four on the agenda, which is a presentation of the compensation report, which was sent out with the annual report and which can also be seen on the company's website. Any questions or comments in that regard? That is not the case. That means we approve the compensation report. It is an advisory vote. Item five is the election of members for the board of directors, and here I give the floor to Chairman Deirdre Connelly.
... Thank you. Each year, we evaluate the composition of the Genmab board to ensure we have the right mix of competencies for an international biotech company, and consider whether changes need to be made. Each year, we also evaluate the performance and achievements of the board of directors with the assistance of an external consultant.
This annual evaluation is based on questionnaires and interviews with each member of the board of directors and the executive management team. I am pleased to say that in line with previous years, the outcome of the board of directors' 2023 self-assessment was positive, with only minor areas for improvement identified. We also continue to believe we have a very good mix of competencies, and I am therefore pleased to recommend re-electing all of our current AGM-elected board members.
I will now run through the competencies and biographies of all the board members for election. I was elected to the board in 2017, and have been board chair since 2020. I am standing for re-election for a one-year period. I have extensive experience in drug launches and corporate governance, both of which are increasingly important as Genmab continues to grow. Pernille Erenbjerg was elected to the Genmab board in 2015.
She has been deputy chair of the board since 2020, and is standing for re-election for a one-year period. Pernille qualifies as an audit committee financial expert, and adds valuable financial, digital, and cybersecurity expertise to our board. Rolf Hoffmann was elected to the Genmab board in 2017, and is also standing for re-election for a one-year period. Rolf's significant commercial experience is a valuable competency Genmab will need as a commercial stage company.
Paolo Paoletti was elected to the Genmab board in 2015, and is also standing for re-election for a one-year period. Paolo's broad pharma and oncology experience, gained during his tenures at GlaxoSmithKline and Eli Lilly, make him a valuable board member for Genmab. Anders Gersel Pedersen has served on Genmab's board since 2003, and is also standing for re-election for a one-year period.
Anders continues to provide important insights into the biotech industry and the Danish investment community to our board. Elizabeth O'Farrell was elected to the Genmab board in 2022, and is also standing for re-election for a one-year period.
Having served as CFO of various global markets at Eli Lilly, Elizabeth's extensive experience in corporate finance, including in financial strategy and operations, as well as managing across the value chain, are valuable competencies that Genmab will need as we work toward achieving our 2030 vision.
In addition to the board members elected by the general meeting, we also have three employee-elected board members, Martin Schultz, Takahiro Hamatani, and Mijke Zachariasse. All three of the employee board members were elected to the board in 2022 for a three-year period. I will now hand it back to the chair of the meeting, so he can lead the election of the board of directors.
Thank you very much. This is the proposal for election of members for the board. Are there any other proposals? That is not the case, and that means that we can congratulate all of the members who are now elected for the board. That leads me to item six on the agenda, election of auditor.
So far, the company has used the auditor PricewaterhouseCoopers, but under applicable EU legislation, the company is required to transition, and the company proposes Deloitte as the new auditor, and I here refer to the comments and recommendations from the Audit and Finance Committee. That this also means that Deloitte will report on sustainability in the company, in accordance with the rules that are expected to be adopted later this year. Are there any comments or other proposals for auditor?
That does not seem to be the case, so we congratulate Deloitte with the election, and they're represented here today. That brings us to item seven on the agenda, proposals from the board of directors. I will just generally refer to all the explanations that are in the agenda. The first is the approval of remuneration for the board of directors for 2024.
That's 7A. Here, there are no changes in comparison to last year in the cash remuneration, but there are changes in the share-based remuneration, which is also described in the company's remuneration policy, which we will come to under item 7D. Are there any questions or comments to item 7A, remuneration to the board of directors for 2024?
Of course, we've already heard comments in the general debate, but there are no further comments, so therefore, this is adopted. Then we move to 7B and 7C. I propose that we take those jointly, because it's an update and adjustment of the indemnification scheme for the Board of Directors. And again, if you read the convening notes, as you'll find all the details and the exact wording for the changes to the Articles of Association.
So formally, it's both the scheme in itself and also the amendment of the Articles of Association. That's why there are two separate items here, but the two things are interlinked, and therefore, I propose we take these two points jointly.
Are there any comments or questions to 7B or 7C? That is not the case, so this is also approved. Seven D, adoption of some changes of the remuneration policy and presentation of the remuneration policy. Here, I again give the floor to the Chairman of the Board, Deirdre P. Connelly.
Thank you. Item 7 D on the agenda is in regards to the adoption of a new remuneration policy for the board of directors and executive management. The new remuneration policy includes certain changes that are designed to take account of the views expressed by some of our larger shareholders during the engagement process in 2023 and 2024.
The elements of the proposed new remuneration policy are designed to be competitive when compared to the compensation programs and levels of compensation in other similar international biotech and biopharmaceutical companies in the U.S. and in Europe, and to align the interest of shareholders and the company's board of directors and executive management.
The new policy will allow the company to position pay, not at U.S. levels, but in a way that enables us to create compensation packages which are attractive internationally and at the same time, are in alignment with our values.
Compared to the 2023 remuneration policy, the main proposed changes are as follows: Number one, the elimination of the election grant of restricted stock units to members of the board of directors, so that newly elected members of the board of directors may no longer be granted RSUs of up to 4x the fixed annual base fee upon their election. An increase of the annual grant of RSUs for members of the board of directors from 1x to 2.5x the fixed annual base fee.
The deputy chair from 1.5x to 2.5x the fixed annual base fee, and for the chair, from 2x to 3x the fixed annual base fee. The annual grant of RSUs from members of the board of directors will be made at the constituting board meeting immediately following the annual general meeting. Three, an increased shareholding requirement for members of the board of directors, so that members of the board of directors elected by the general meeting are required to hold a number of Genmab shares corresponding to 4x the annual base fee, an increase from 3x the annual base fee.
Four, the introduction of a shareholding built-up requirement for members of the board of directors, so that members of the board of directors elected by the general meeting who have not yet satisfied the shareholding requirement, are only allowed to sell shares to cover tax liabilities applicable to shares received on the basis of vested RSUs.
Number five, the introduction of a post-service shareholding requirement for members of the board of directors, so that the shareholding requirement applicable to members of the board of directors elected by the general meeting, will continue to apply for six months after a member ceases to be part of the board, and other various minor updates or linguistic changes to the current policy. I will now hand back to Jørgen, who will continue proceedings regarding this agenda item.
Thank you very much. That was the background and the reasoning behind the proposal. Are there any comments or questions regarding this? That does not seem to be the case, so this proposal has also been adopted. We move on to the next item, which is 7E, authorizations to the board of directors to increase the share capital of the company and to let the company issue convertible debt instruments, if that is considered a good thing to do.
And again, I refer you to the convening notice for all the details in the proposal. Are there any questions or comments regarding this? That is not the case, so this authorization is also granted. Next item is 7F, which is a proposal to issue warrants to the company employees, but not the executive management.
And here, I again refer you to the complete proposal in the convening notice. Are there any comments or questions regarding this? That is not the case, so that authorization is granted. 7G, authorization to the board of directors to mandate the company to acquire treasury shares up to a maximum of 3.5 million, and further limitations in the number and the share price, etc. Any comments or questions regarding this?
That is not the case, so that authorization is also approved. Finally, we are at item eight, the usual authorization to the chair of the general meeting, for the chair to register resolutions and other changes to the articles of association with the Danish Business Authority. This is a standard authorization. Are there any comments? Nope, that is not the case, so that authorization is also granted. Which brings us to the last item on the agenda, any other business. And we have a shareholder, Mr. Kjeld Bayer, who wants the floor.
Yeah, this is an in practice.
Well, this is a practical issue. The company wants to save money, and the rest of us want to save money as well. But when I print the annual report, which I do with all annual reports, I spend half a cartridge on a blue color that doesn't serve any purpose. So couldn't you make a printer-friendly annual report, so that the rest of us can save on ink? That would be very much appreciated.
Yeah, it might practice-
Well, that really was a very practical comment, and I'm sure the company has noted the issue. There's another comment. Well, my comment is also practical. The EU makes a lot of decisions, and they also make water plans for parts of Denmark. And one of the good things about that is that there's also a requirement that there has to be a layman's report with water plans.
So something that's very clear to ordinary people, just one or two pages. I've been through all 181 pages of publications that have been discussed today, and there were maybe 10 sentences I fully understood and appreciated. So a layman's report would be very much appreciated. So just a few pages for the layman, where you, in a few sentences, explain which direction the company is going in. Also, my wife wants me to let you know that she'll sell her shares tomorrow, and I'll keep ten, so that I can take the floor at next year's AGM.
Thank you for that. So another suggestion to management with the proposal for a layman's report next year. Does anybody else want the floor to any other business? That's not the case, so that means we've come to the end of the agenda. I can lay down my baton, and I'll give the floor to Deirdre Connelly to close the meeting.
Thank you, Jørgen, for leading us through the proceedings. Thank you all for your participation in this meeting. I wanna take this opportunity to thank my colleagues and teammates in Genmab, for the extraordinary work that you do every day on behalf of patients and our shareholders.
We very much appreciate all of your shareholders' continued support, and we remind all of you that we have refreshments that will be served outside the room. And we look forward to meeting you during this time and chatting, and having a good couple of discussions or debates, or questions that we will be able and wanting to answer for you. So we'll see you outside. Thank you so much.