Genmab A/S

During this telephone conference you may be presented with forward-looking statements that include words such as believes, anticipates, plans or expects. Actual results may differ materially, for example, as a result of delayed or unsuccessful development projects. GENMAP is not under an obligation to update statements regarding the future nor to confirm such statements in relation to actual results unless this is required by law. Please also note that GENMAP may hold your personal data as indicated by you as part of our investor relations outreach activities in order to update you on GENMAP going forward. Please refer to our website for more information on GENMAP and our privacy policy. And now without further delay, I would like to hand the conference over to our speaker today, Jan van de Winkel. Please go ahead, Jan.

So, hello and welcome to the general conference call to discuss the company's financial results for the first half of this year. With me today to present these results is our CFO Anthony Pagano, and we will be joined for the Q&A by our Chief Development Officer Judith Klimovsky and our Chief Operating Officer Anthony Mancini. Let's move to slide two. As already said, we will be making forward-looking statements, so please keep that in mind as we go through this call. Let's move to slide three. I'm proud to say that despite the universal challenges posed by the COVID-19 pandemic, GenMob not only had a strong second quarter, but a transformative one. Two key events have occurred since we presented you with our first quarter results. We reported very favorable top-line results for tisotomypidotin and cervical cancer, and of course, we announced our broad foundational oncology collaboration with AbbVie. Starting with the most recent event, the highly anticipated T-Zotamac vedotum data in late June, we, along with our partner Seattle Geletics, announced that the innovative 204 trial of T-Zotamac vedotum for patients with recurrent or metastatic cervical cancer had met its primary endpoint with a 24% confirmed overall response rate and a median duration of response of 8.3 months. We very much look forward to discussing these results with the FDA and the potential for the first BLA submission for one of our proprietary therapeutic candidates, which would be an important milestone in our company's history. Our landmark EPFI collaboration was also one of the most anticipated events of the year for GenMob. GenMob and EPFI will be equal partners Working together, they jointly make all strategy, clinical development, and commercialization decisions for three general bispecific antibody therapies, Apcoritamab, Durohexabody CD37, and Durobody CD3-5T4, as well as potential novel differentiated cancer therapies created under a discovery research collaboration. So this collaboration sets us on a path to accelerate, broaden, and maximize the development of some of our promising bispecific antibody therapies, including abcorritamab, with the ultimate goal to bring differentiated new potential therapies much faster to cancer patients. So as you can see on the slide, we have advances to report with two of these potential therapies. As we recently dosed, the first patient in an expansion cohort for Apcoritamab and initiated a first in human trial of dual body CD3-5T4. I would also like to mention that there is now a phase three trial by Janssen for amivantamab as first line treatment in non-small cell lung cancer listed on clinicaltrials.gov. This represents the first phase three trial for a dual body therapy and we very much look forward to this study being initiated. In addition, You may have seen the very impressive results from the two Asclepios Phase 3 trials of Ovatumab in relapsing MS that were published on August 6th in the prestigious New England Journal of Medicine. Of course, Darfalex also remains an important factor in our success. Another major 2020 milestone was achieved in the second quarter with the sub-Q formulation of Darfalex called Darfalex FastPro in the US. Approval in both the US and the Europe. This is the first and only sub-Q CD38 antibody approved in the world, and we look forward to potential approval in Japan as well, following Janssen's submission of an NDA there in April. As a reminder, there is also potential for approvals based on Amgen's CANDOR study of daratumumab in combination with carfilzomib and dexamethasone in relapsed or refractory multiple myeloma. with submissions by Janssen to regulatory authorities in the US and Japan in Q1, as well as a submission by Amgen in Europe in the same quarter. And while daratumab may already be considered an important therapy for multiple myeloma, we continue to see the potential for further expansion in positive topline data sets. At the end of May, we saw the first phase 3 results from an indication outside of multiple myeloma with the positive top-line data from the Andromeda study of sub-q-daratumumab in combination with cyclophosphamide, bortezomib, and dexamethasone, or in short, Cybordex, for patients with newly diagnosed AL amyloidosis. This was followed very recently by positive results from the phase 3 Apollo study of daratumumab plus pomalidomide and dexamethasone or POMDEX in relapsed or refractory multiple myeloma. This study was designed to confirm the results from the phase one AQUILUS trial, which investigated the IV or intravenous formulation of daratumab in combination, in the same combination, and which was the basis for an approval in the US in 2017. Finally, and very excitingly, we reported 1838 million dollars in net sales by J&J during the first half of the year, an increase of 31% over the first half of 2019, resulting in 1652 million kronen in royalties to GenMob. Given the challenging coronavirus situation, we are pleased with Darcelex's performance in the first half of 2020, and we look forward to seeing the further impact of the sub-Q formulation as it continues to be rolled out by Janssen. I will now turn the call over to Anthony Pagano to present our detailed financial results for the first half of 2020. Anthony, go ahead.

Great. Thanks, Jan. Let's move to slide four. Before I get into the results and the guidance, I'm going to spend a moment reiterating our overarching financial framework. because I think we have materially strengthened what was already a strong foundation with our AbbVie collaboration. First off, let's look at our revenue profile. On the left, you can see the component parts of our current and future recurring revenue streams. It starts with Darzalex. And here, we're looking forward to continued growth and expansion. And you can also see Ophatumumab and Tepezza. We're excited about the potential Ofatumumab approval in RMS that is expected in September. And the Tepesa launch is off to an exceptionally strong start. Next, onto R&D investment shown on the right. And this is one of the areas where our collaboration with AbbVie is going to make a real difference. We'll continue to be focused and disciplined in our approach. And as we've told you before, we're going to continue to expand and Accelerate are potential winners. But clearly, the cash from AbbVie and the fact that we're sharing the investment in the existing clinical programs on a 50-50 basis means we'll be able to do more and faster. Stepping back, what continues to stand out for me from this overall framework is that Gemmab remains a resilient business with a very high quality product pipeline and great growth prospects. and these prospects have now been further strengthened by our collaboration with AbbVie. We see this collaboration kind of like a turbocharger towards our 2025 vision. With that intro, we can turn to slide five. If you attended our call on our transformational collaboration with AbbVie, then the information on this slide will look familiar to you. As a reminder, here are its key elements. This is one of the largest oncology partnerships in history with a potential total deal value of up to $3.9 billion. This includes the upfront payment of $750 million and $3.15 billion related to the achievement of additional development, regulatory, and sales milestones and opt-in payments. The collaboration includes three existing clinical programs. and it is important to remember that we've got material commercialization rights for these potential products, which will enable us to build and increase our commercial footprint. And we'll do that with an initial focus on the US and Japanese markets. We've also agreed a broad research collaboration combining the R&D capabilities of both companies. This is definitely a situation where the whole is greater than the sum of the parts. and we've got the potential to create four additional differentiated next generation antibody product candidates. Overall, this is a partnership that further strengthens our financial position and supports our evolution into a fully integrated biotech powerhouse, all working towards our 2025 vision. Now, let's move to Darzalex on slide six. Here we saw continued strong performance with only a modest COVID impact in the second quarter. You can see that in the chart on the left. As noted by J&J during their first half results call, Darzalex saw continued strong market growth and share gains in the US. And overall, Darzalex worldwide sales grew by 31% year on year. That's net sales of $1.84 billion, which translates to 1.65 billion Danish kroner in royalty income for GenMab. Now calculating the exact impact from COVID-19 is difficult, especially as we have limited insight into sales in countries outside the US. But as we highlighted during our first quarter call, we believe this is a short-term delay and not a fundamental disruption. And that's because of the seriousness of the disease and the need for patients to be treated. coupled with Darzalex's strong product profile. Additionally, we expect to see continued uptake of the sub-Q formulation which was approved in the second quarter. So for the second half of 2020, we anticipate that sales will ramp up and we're already seeing early signs of that in the US. So Darzalex continues to be on a clear path to market leadership in multiple myeloma and remains a key driver of our revenue as you can see on slide seven. Looking at the graph on the left, you can see that there were three significant contributors to the increase in revenue in the first half. First, we recognize nearly 90% of the $750 million upfront payment from AbbVie. Now clearly it's important to remember that that's a one-off contribution. And second, Darzalex worldies grew more than 40% compared to the first half of 2019. Finally, you see other and most of that 97 million comes from Tepeza. And we've seen a really strong start here. As you may have seen, Horizon has now raised its 2020 sales guidance for Tepeza. Of course, it's early days, but we see this as a very promising launch. Now, if we take Darzelex, and to feather together, we're really pleased to have seen recurring revenues grow by 47% in H1. As well as increasing revenues, we also increased investment in our pipeline, in our team and in our capabilities, as you can see on the next slide. On the graph on the left, you can see the major drivers of our increased investment in the first half of the year. In total, Operating expenses increased by 521 million Danish kroner, which was driven by the accelerated investment in our product portfolio, including the advancement of both EPCRITIMAB and dual-body PDL1-41BB. We also spent more on expanding our very talented team. We've continued to hire key team members to support our growing product pipeline, and we've continued to build our commercial capabilities. With the upfront from the AbbVie collaboration, our revenue growth significantly outpaced the higher investment levels, driving 4.57 billion kroner of operating income. Now, having looked at the individual parts, let's look at our first half 2020 financials as a whole on slide nine. Here you'll see a P&L summary. In the first six months of the year, Revenue came in at 6.34 billion Danish kroner, an increase of nearly 5 billion kroner compared to the first half of 2019. The increase was primarily driven by the upfront payment from AbbVie and higher Darzalex royalties. Total expenses in the first half of 2020 were 1.78 billion kroner with 84% being R&D and 16% G&A. Operating income, as I noted, was 4.57 billion kroner compared to 111 million in the first half of 2019, driven by higher revenue. And that brings us to our net income of 3.6 billion kroner. So an extremely strong first half of 2020, despite the COVID-19 pandemic. Which brings me to our guidance on slide 10. We are updating certain aspects of our 2020 guidance previously published on June 10th. We now expect our revenue to be in the range of 9.1 to 9.7 billion Danish kroner, an increase of 200 million to the top end of the previous guidance. This is still driven by the upfront payment from AbbVie and the continued growth of Darzalex, complemented by a strong start from Tepeza. We continue to anticipate our 2020 OpEx to be in the range of 3.85 to 3.95 billion kroner. Putting this together, we're planning for substantial operating income in 2020 in a range of 5.2 to 5.8 billion kroner. Now I'll move to my final slide. Clearly COVID-19 continues to affect everyone's lives. I think in times like this, it's useful to take a step back and reflect on our business and financial position. We have a very strong foundation, even stronger now with our collaboration with AbbVie. Especially important in today's environment, we've got a robust balance sheet, $1.9 billion of cash at the end of the second quarter and no debt. We have great recurring revenues and they're growing and we're using those revenues to invest in a really focused and disciplined way. were investing in our highly innovative and differentiated product pipeline, as well as in the team and capabilities to deliver it, all driving towards our 2025 vision. Now I'll turn it back over to Jan.