Good. Okay. Morning, everyone. My name is Rajan Sharma. I'm one of the healthcare research analysts here at Goldman Sachs. Pleased to present Genmab. We've got Anthony Pagano, CFO, joining us. Thank you, Anthony. Maybe do you want to just kick off with a bit of background on yourself and then just some high-level comments on kind of year-to-date?
Sure. No, happy to do so. T hanks, Rajan, for having us back at this wonderful conference. It's great to be, you know, here with everybody in the room and those listening virtually. Maybe just sort of to start off, it's really a super exciting time for us at Genmab, especially if you think about the recent approval of EPKINLY in the United States, there's a lot more to be excited about with EPKINLY moving forward. On top of that, we really are expanding, accelerating our entire pipeline and indeed our entire business. That's really on top of a super strong foundation, whether it be our team, our technology platforms, our financials, or our pipeline. Super strong foundation. Let me just unpack that foundation a little bit more for you.
Really, first, at the very core of Genmab, is great science and technology. We're really focused on building a novel platform and novel, tech platforms and a really exciting pipeline. In addition or second, we're leveraging partnerships with industry leaders and innovators. Here, the idea is to do more and to go faster, and a great example of this is our recent partnership with argenx. Third is really our focus and discipline approach to investment and capital allocation. Here, we're really focused on driving better patient outcomes and delivering long-term value. Fourth, of course, is the strength of our financials. This strong financial profile really provides us with a platform to invest for the future.
If you drill into those financials just a bit, to remind everybody, we've got a super strong and robust balance sheet, $3.5 billion of cash, no debt, and in addition, we have wonderful recurring revenues. We now have seven products that are on the market, generating very significant and growing recurring revenues. As a reminder, that compares to only one product that was on the market at the beginning of 2020. We see this come to life in terms of the strong Q1 performance, where we saw 28% growth in our recurring revenues on an operational basis. Very strong recurring revenues today and a lot to look forward as we move forward. Finally, maybe to conclude on our key priorities for 2023, and there are three that are top of the list.
First is absolute focus on commercial execution for both Epcor or EPKINLY and as well as TIVDAK. Secondly, we continue to really put our foot on the gas pedal or the accelerator for Epcor development. Third, really expanding two of our mid-stage programs, DuoBody-PD-L1x4-1BB, and DuoBody-CD40x4-1BB, and at the same time, really progressing our early-stage pipeline and generating the next wave of IND candidates. In summation, we really do have all of the ingredients to become a biotech, fully integrated biotech innovation powerhouse, and we're building the team and the capabilities to do just that. Rajan, with that, maybe we dive into your questions.
Yeah. There's clearly a lot to get through there. Maybe we'll start on EPKINLY, and I guess it's probably the first time that we've really heard from you since the approval. I guess, firstly, any comments on the label there? Was that in line with the expectations?
Overall, we're really super pleased with the overall progress of EPKINLY. Think about this, first patient, first dose in July of 2018, and now an approval in May of 2023. There's a lot to be excited about, and in particular there, the team that made this happen, both on the development front and now commercially getting you to your question. The team did a lot of work to figure out, you know, how EPKINLY could be safely administered and dosed. That resulted in the label that we got with one day of hospitalization or where the patients should be hospitalized at the first full dose. We think that's overall a manageable profile, as well as something that was overall in line with expectations.
Okay. In terms of kind of launch progress, could you just give us an update as to where you are? I think prior to the launch, you kind of talked about potentially being ready within weeks. How are you tracking versus that?
Going back to the team, this was something we really focused on in terms of launch readiness now going on since we saw the data last year in April of 2022, making sure that the team was in place and that they were launch-ready. In fact, I'm happy to tell you that when EPKINLY was approved in a couple of weeks ago, I think it was May 19th, the team was fully ready to go and excited, more importantly, very excited to get EPKINLY to patients, of course, in a compliant way. They were ready to go within minutes, hours of launch in terms of our overall digital footprint, and then in terms of doing all of the logistics to then get that product shipped out to patients.
I can confirm that EPKINLY has now been shipped, and first commercial shipment has indeed taken place.
All right.
A huge accomplishment for Genmab and AbbVie, our partner, AbbVie. We shouldn't forget about them, but at the same time, bringing to life and bringing a needed treatment option to patients with late-line DLBCL.
Okay. Well, congratulations on that. Kind of to bring the exciting science to the financials, how are you thinking about the initial rollout there? Kind of could you potentially talk about how you see the trajectory of the launch and as we get the additional indications for EPKINLY?
Sure. The level set everybody, you know, EPKINLY is an important product, we think, for patients with certain B-cell malignancies. This initial indication is on the smaller side, so we have to make sure expectations stay in the right place. Here, we did not provide specific guidance for EPKINLY in our 2023 financial guidance or in our revenues. It is included, but it's not just overall material to our business. In terms of patient numbers, we're talking probably around 3,500 in the United States, so to start off with a more of a smaller financial opportunity. Nonetheless, EPKINLY does represent a needed treatment alternative for patients with late-line DLBCL.
Okay. There's obviously a few other kinda CD20 bispecifics in development. How do you think about competitive positioning of Epkinly?
Yeah, I think this overall class of CD3 bispecifics, whether it be in DLBCL, moving forward, FL, multiple myeloma, we do think that CD3-based bispecifics in B-cell malignancies really are gonna be in a position to provide a very important treatment alternative for patients. Looking now, zooming in on the EPKINLY opportunity, there, together with the competition, we think that this class of drugs, CD3, CD20-based bispecifics, do represent, again, a needed and important treatment alternative. We're hopeful that the class will help grow the market for all of us.
Within the class, EPKINLY, we do believe, has potential best-in-class characteristics, whether that be on safety, efficacy, or ease of administration, and really, it's a function of combining all three of those that do give us confidence that over time, EPKINLY can distinguish itself as a best-in-class treatment option for patients.
Okay. As we think about kind of the additional indications and as that roll out, could you just maybe bring us up to speed with where you are in terms of trials and key timelines that we should be looking out for?
Sure. We're really excited about the overall development program for EPKINLY together with AbbVie. As we know, we have this sort of fast-to-market phase II registrational trial that has three arms. There's the DLBCL, which we've now filed. As a reminder, not only do we file in the United States, we also sort of somewhat simultaneously, at least all in 2022, not only filed EPKINLY in the United States, but also filed in Europe and Japan. We have that phase II registration trial that led to the DLBCL approval in the U.S. There's also an FL arm, and there's also an MCL arm. On top of that, we have a phase III, confirmatory phase III in DLBCL, looking at Epcor or EPKINLY monotherapy, and second-line plus DLBCL.
On top of that, we have two additional ongoing phase III trials, one in FL and one in DLBCL, and over time, we very much look forward to working with AbbVie to add to the number of phase IIIs.
Where are those trials coming from? There's really a robust phase II multi-combo trial, where we're testing out EPKINLY or Epcor in combination with existing standard of care, as well as new treatment options. Over time, we really look to solidify EPKINLY's position through a robust development program.
Okay. Those new treatment options, what are you thinking are kind of the key combination options?
You know, to start off with, in DLBCL, we're looking at R-CHOP as really being the place where we can start, but we're looking for new treatment options over time. We really will let the clinical data that's being generated out of this multi-combo phase II trial to really dictate where we should take epcoritamab moving forward.
Okay. Then I guess you've also flagged clearly that 2023 is kind of a year investment, particularly around epcoritamab. Could you just help us understand where that investment is positioned on, you know, from an R&D perspective versus SG&A?
When we provided our guidance for 2023, we had an uplift of our investment level from the low eights in terms of billions of kroner, up to DKK 10.2 billion this year at the midpoint of our guidance. As you may have heard on our earnings call in February, I spent a lot of time explaining where that DKK 2 billion increment was exactly going. You're right, a lot of it was really directed towards epcoritamab, GEN1042, GEN1046, and further building out our U.S. commercialization footprint, make sure that we're well-positioned for the EPKINLY launch, and also our Japanese commercial footprint. Really spent a lot of time making sure the market understood what our investment priorities and our opportunities are, and where we'd be investing that capital in 2023.
Moving forward, I really think it's a lot more of the same. To provide a little bit of sort of direction-of-travel guidance for 2024, thinking about R&D, we fully expect, based upon seeing a lot of continuous data from epcoritamab, fully expect epcoritamab or EPKINLY to be in growth mode from a development perspective for the foreseeable future as we add on many more phase III trials moving forward. Epcoritamab is absolutely gonna be in growth mode for the foreseeable future. Moving forward, you could also think about what additional programs we may put into late-stage clinical development. There's three programs I think I'd ask you to focus on. One would be TIVDAK. As everybody knows, TIVDAK is currently marketed in the United States in late-line cervical cancer.
Here we have an ongoing phase III to potentially take that late-line cervical cancer label to areas or geographies outside the United States. We're really focused on seeing where else we can take TIVDAK, and there are two different paths we're considering. One would be to take TIVDAK to earlier lines of treatment for cervical cancer. S econdly, would potentially take TIVDAK to an additional solid tumor. We're really excited about some of the data that we presented at AACR, where we saw some pretty encouraging data in second-line head and neck cancer patients. Potential in terms of investment moving forward, epcoritamab is a definite. I think you have then potential for TIVDAK, as I just outlined.
On top of that, we have mid-stage programs together with our partner, BioNTech, so-called GEN1042 and GEN1046 , where we're doing a ton of phase II work at present, and we're hopeful, based upon that data, we can take one or both of these programs into late-stage development at some point next year. That's on the R&D front. The summary message is that based upon all of the wonderful growth opportunities, we fully expect our R&D investment levels to continue to increase moving forward. Hopefully that's crystal clear. Secondly, on the SG&A side, I think it's really useful to break that into its two components, S and then G&A.
G&A, as our business has kind of tripled over the last number of years, based upon whatever metrics you look at, number of team members, number of trials, revenue, we've had to ramp up our G&A investment to make sure that we have the right systems, the right teams in place, right compliance initiatives to make sure we're supporting growth and managing risks. On the G&A side, we are starting now to approach some level of scale. For our existing size, geographic footprint, breadth of activities, I think G&A is now approaching scale. We're down to S. It's really that S should be thought about as commercialization. There, if you take our commercialization investment and break it into two key markets, the United States and Japan.
We all know about the EPKINLY launch here in May. I think as we exit 2023, I think we're gonna be approaching some level of scale for our U.S. commercialization footprint, particularly as it relates to these later line opportunities for EPKINLY. In Japan, it's gonna be more of the same. There, we're expecting an approval maybe later this year or early next year. Really, as we exit 2024, we'll be approaching some level of scale for our Japanese commercial footprint and investment. Overall, you should really be thinking about Genmab as a growth business, and we'll continue to invest back into our pipeline.
Okay, I guess just on the kind of SG&A piece again, in terms of as you get to kind of the earlier lines for EPKINLY, is that where there may be some more incremental, but we're kind of looking at a longer horizon there?
Yeah, it's a great distinction. I was very careful with what I said. I think, for the later line opportunities, as we exit 2023, get into 2024, that will be most likely be right-sized. We have to continue to evaluate this together with our partners, look at the competitive landscape. Certainly, as we get closer to earlier lines, whether it be second line or front line, of course, we should and we will reevaluate what that overall investment profile looks like to make sure we're competitively investing in terms of our commercialization activities.
Okay.
That'll be more, I think, here in the next couple of years, not something that would view as a 2023 or 2024 event. Then, of course, the wild card would be on the SG&A side, what does our geographic footprint look like moving forward? Do we make the decision at some point to get into a new territory outside the U.S. or Japan, or do we get to really look to scale up, say, GEN1042 or GEN1046 into a completely new therapeutic area?
Okay. Maybe if you talked about kind of the transformation as you've grown in scale. Could you just help us quantify that in terms of, for example, number of employees as it stands today versus a year or so ago, and how you expect that may move?
Sure. I mean, thinking back, the number that really jumps off the top of mind for me is the number at the end of 2019, which is 547 FTEs or team members, and today we're probably approaching the 2,000 mark. It goes back to what I talked about, our overall business tripling or quadrupling, and this has been across the entire business. We made a conscious decision a few years ago to really scale up our discovery activities. Thought that was really an underutilized and under-tapped asset, we scaled up discovery and preclinical.
As our pipeline has matured and expanded, we've built out our development capabilities, importantly, our translational medicine and research capabilities, our late-stage development capabilities, and then more recently, our commercialization capabilities, all leading to the team members that are probably hovering around that 2,000 mark as we sit here today.
Okay. How does that reconcile with the kind of comments that you made earlier in the sense that you're able to execute so quickly on epcoritamab, how do you ensure that that kind of fast-moving culture is maintained as the business grows?
We're very proud of all of the hard work of all of our team members of how they built this business over the last couple of years. Also very proud of how quickly EPKINLY was developed. However, at the same time, I'm not sure you can take what we did with EPKINLY in terms of first patient, first dose to approval in less than five years, and then put that as a new baseline for products moving forward. I think it was a special circumstance. At the same time, your point is very well taken. As we built out our business, maintaining the culture at Genmab, this teamwork, this sort of keeping science at the center of everything that we do, that culture I just described is absolutely top of the agenda.
As we think about having short communication lines from the our team members all the way up through management, keeping those communication lines and those decision lines as short as possible is, again, also absolutely top of the agenda. The other thing we're also very thoughtful about is that feedback loop from discovery to development, from development to late-stage development, translational research and medicine, back to discovery, and now commercialization feeding back. It's not only the up and down, sort of the vertical short lines of communication decision-making, it's also those short lines of decision-making communication going across the value chain of drug development and commercialization. It's absolutely top of mind, and it's one of the things we're super proud of. We talked about the evolution of our business also in terms of now adding commercialization.
We're able to sort of start down that path with TIVDAK back in 2021, and really building out an absolutely fabulous team for TIVDAK. More recently, building on a strong foundation, building out the commercialization team and the sales force for EPKINLY. There, we were really able to go up through the industry and handpick the team members that we wanted to join Genmab. Linking this back to what you were saying around culture and really keeping the culture, you know, the right way, the Genmab way, I would highlight, as we've integrated these sales team members into the Genmab team, what I talked about around the teamwork, the team mindset, and the science-first approach really does resonate with these salespeople as well, and these new colleagues, our oncology account managers and our overall commercialization team.
That culture, we do think, is a distinguishing feature of Genmab, and we'll very much be focused on retaining that as we move forward.
Okay. I just want to pause and just check in the room if there are any questions. Doesn't look like it, although I'm a bit blinded by the light.
Yeah
I can't really tell. Maybe we should touch on DARZALEX, and probably not long ago, it would be a surprise that we could get this long through a conversation without talking about DARZALEX. Obviously, again, topical coming off the back of ASCO and EHA, where we've seen kind of data in the in the multiple myeloma space. Could you kind of just provide us your thoughts and the way Genmab's thinking about the evolution of the treatment landscape in multiple myeloma, and specifically how DARZALEX fits into that?
You know, our view around DARZALEX remains, you know, unchanged. If you were to ask me this question back in 2017, 2018, particularly once we saw the MAIA data, my view was, and still is today, that a patient is most likely either going to get daratumumab in front line or in second line. As I sit here today, that continues to remain equally true. Why is that? I think it's a function of at least two things. One is the accumulated knowledge and experience of DARZALEX with that physicians now have.
Secondly, looking at all the product features and attributes of DARZALEX, whether it be the safety, the efficacy, the ease of administration, the combinability, and really adding up all of those product features, really brings me back to what I said in terms of it being very likely a patient's either going to get daratumumab in front line or second line. That remains equally true today. I mean, some of the data we're seeing from some of the bispecifics in the CAR-T really would be well-positioned to provide needed treatment options, but our view is that daratumumab will remain a backbone part of the overall treatment regime for multiple myeloma moving forward.
Okay. I guess penetration in those earlier lines, how is that progressing, and what could be kind of potential pushbacks to limit the penetration there?
Yeah. Overall, you know, frontline market shares continue to move in the right direction. Here, I can provide some brand impact data, which is rolling three-month survey data, so that comes with all of the caveats, but it's the data that we've been quoting now for several years. As we exited Q1, overall, daratumumab market share in the United States was at 40%, and that compares to 33% a year prior. Adding 7 full percentage points in total market share. That's being driven by very strong performance in the front line, where we exited Q1 at 36%, and that compares to 25% a year ago. We can see that CSIS is continuing to play out in terms of the market shares. That's fueled again by continued experience, accumulated knowledge and experience with DARZALEX.
Moving forward, we're very excited about the continued robust clinical development plan for DARZALEX. With existing standards of care, there's two ongoing phase III trials, so-called CEPHEUS and PERSEUS, combining daratumumab with REVLIMID, VELCADE, and dexamethasone, both in the treatment-eligible and ineligible landscape. Also, as you, I think, also referenced, combining daratumumab with some of the newer modalities in the bispecifics and the CAR-T. I think daratumumab has a strong position today, but also that will be added on to based upon the clinical development program that's currently ongoing.
Okay. I guess, related to DARZALEX, just on the arbitration, if you could maybe give us an update on that and just your kind of rationale for the latest appeal.
Certainly appreciate this is top of mind. There's really not much I can add on to. Unfortunately, the level set expectations here, you know, we did lose the second arbitration, which was announced a couple of weeks, a couple of months ago now. Based upon the ruling, the split decision, we thought it made good sense, based upon discussion with our lawyers in-house counsel, outside counsel, made good sense to appeal that decision. We now have to let that appeal process play out. One thing I've learned here, being through these two arbitration processes, that one thing that is certainly not in our control, and that's the timeline. It's clearly in the hands of the arbitration panels historically, and now in the hands of the appellate single arbitration person.
Okay. Okay. I'm conscious that the, you know, you don't have the specific visibility on the timeline, but is it something that you're expecting will be kind of cleared this year?
Yeah, I mean, I would hope so, but again, it's outside of our control.
Okay.
I would just encourage people to look at how long the arbitration one and arbitration two took. That can be a proxy if you want to take that as a proxy. Putting this in the context of what we're currently going through, which is an appeal. Now, having said all of that, it is 100% outside of our control.
Okay.
It's really in the hands of the, our overall arbitration, process.
All right. Then maybe moving on to maybe talk about Immunology and Inflammation, those are kind of a new area for Genmab. What would be helpful is maybe to get your thoughts and kind of the rationale for moving into those indications or that broader therapeutic area.
Yeah, I mean, I really view this as an evolution of Genmab. We've talked about how we've evolved the business along multiple dimensions over the last couple of years. I talked about the decision to scale up our discovery activities. I view this as another layer, another lever to grow Genmab. You think about it this way, there's really no reason why we should limit ourselves to simply oncology. That was a conscious decision that we made all the way back in 2010. Looking at our business and the oncology business that we built out over the last number of years, we thought that we absolutely had that super strong foundation to now go into a new therapeutic area.
Again, bringing it back to my discovery kind of thought process, it's untapped value in our business that we think we should go ahead and seize. We're very excited to do that, both obviously organically at Genmab, inside the four walls of Genmab, but as I mentioned in my opening remarks, we're also very excited now to do this together with our partner, argenx, in the collaboration we announced a few weeks ago.
Okay. On the argenx piece, in terms of kind of how did that come about, and be interested also kind of... It also covers oncology, the rationale, is it that you guys would commercialize in oncology, argenx would do that in inflammatory diseases?
I think a great parallel, and it's not a perfect parallel, but look at what we're doing together with our partner, BioNTech. The key word for me is co-creation. With BioNTech, we sat together in 2015, figured out what these two companies could do together. Now, fast forward, we have four programs in the clinic, with potentially more to come. Likewise, for us getting into a therapeutic area outside of oncology, of course, we could follow a go-it-alone strategy, but we thought we could, you know, couple that with a partnering strategy, and we thought a company like argenx, we're very much a, you know, shared culture, focused on teamwork, focused on high science. A natural fit to bring these two companies together in this partnership.
You're right, there is a program where we would be focusing in I&I, and there will be one program where we will be focusing in oncology. The way to think about this partnership, like our BioNTech one, is that this will be absolutely a 50/50 partnership across the board, where we're going to be sharing in the overall investment decision-making, overall strategy for the programs, and ultimately, figuring out who will be leading which activities. That's a little bit premature. As a reminder for everybody, this is still a very much a discovery stage collaboration. It'll take a couple of years for this to really get to a place where something can get into the clinic.
Okay. On the kind of Biotech partnered assets, you have the two 4-1BB bispecifics, could you just maybe give us your thoughts on what your internal expectations are as we get the updated data later this year?
Yeah, I mean, I would like to first bring it back to this co-creation model, where, you know, two companies, amongst other things, were looking, could we come together in leveraging our technologies, make a next step in immuno-oncology, and particularly unleash the power of 4-1BB? It was a target that a lot of people tried to go after. We think we've come up with some product concepts, both GEN1042 and GEN1046, that could potentially unleash the power of 4-1BB. That's what we sort of set out to do. Where are we today? Both companies, and for both of the programs, are doing a fair amount of, I would say, pretty significant phase II development work.
Multiple combinations, multiple solid tumor types, really with the objective for 2023, and it's a clear objective, to take at least one of the programs and one of the indications to late-stage clinical development. That's what we're absolutely focused on. We'll look at the data that these programs generate. We'll look at the competitive landscape, look at the opportunity, and hopefully, if we can, get some regulatory feedback, and then make that decision to take, again, one of the products in one of the areas to late-stage development. Something we're super excited about. It's no small task, but again, it is one of the priorities for us and for Biotech here in 2023.
Here, I think it's important for us to explain that objective, which is sort of one track, and then explain a parallel objective, which is to present the data at a major medical conference. These are two separate activities, and we make sure that people understand them as two separate activities. Our objective for 2023 is the former, which is focused on product development and taking that product to late-stage development. If at the same time we can present the data at a conference, we will do that, but it's not the primary objective for 2023.
Okay. Okay. Kind of just thinking on the BD and M&A piece, and it's probably not a question that you probably get asked, so you don't like the question. I think it'd be helpful that it's been talked about, and particularly against the backdrop of the move into I&I. Could you just maybe explain how you're thinking about the external opportunities that may come about?
Yeah, absolutely. I think you think about our inorganic, our potential inorganic investments in kind of three categories. That, this is all just a reiteration of what we've said, you know, previously. If you go back to 2017 and prior, Genmab was really not making any inorganic or BD investments of any size or scale. Then really it's hard to talk through the three areas. The first is where historically we've been a natural owner of external assets, meaning that we'd be good evaluators and then good owners, meaning adding value once we own it. That's really been in the discovery space. Good evaluators of antibody-related technologies, early-stage targets, bringing those in, providing that to all of our discovery scientists to potentially come up with new product concepts. That's number one.
Over time, as you think about it, that concept of natural ownership as a function of our capabilities expanding could increase. That could be number two, whether that be, you know, preclinical stage assets or maybe even further moving out the value chain. That would be number two. Third, on the I&I concept, if you think about it this way, really over the last number of years, we have forgone investment outside of oncology. If there was absolutely the right opportunity that ticked all of the boxes to kind of accelerate that investment into I&I, we would potentially consider that for inorganic investment as well.
Okay.
Those are the three things you should be thinking about as it relates to inorganic investment for Genmab. The final thought on that is, to be clear, we never really set targets where we're chasing deals. It really is bottom-up, science-driven, looking at programs and technologies where we can be good, again, good evaluators and then very good owners once we have the asset in our hands.
Okay. just in the last minute, could I just ask on HexaBody-CD38 and just timelines there, and specifically, what your internal expectations are?
Again, this is another exciting program. Really thinking once we saw DARZALEX starting to progress, we did ask ourself, "What could be next in the CD38 space?" Together with Janssen, we have this HexaBody-CD38-based concept that we ultimately put into the clinic. We presented the initial dose escalation data at ASH last year. We expanded that recommended phase II dose, and now we're running the head-to-head HexaBody-CD38 versus DARZALEX sub Q. To be clear, that data will not come this year. That'll be a 2024 event. I mean, ultimately, what we're looking to see is hopefully, you know, meaningful clinical differentiation between HexaBody-CD38 and DARZALEX.
Okay. Well, I think we are just at time. Anthony, thank you very much. I know you have a busy afternoon.
Yeah.
We'll make sure we end on time.
Great.
Thank you.
Thank you very much, Rajan.
Okay.
Thank you for your time. Thank you.