Genmab A/S

Hello and welcome to the GenMab Q4 2020 conference call. Throughout the call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. And just to remind you, this conference call is being recorded. 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. GenMab 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 GenMab may hold your personal data as indicated by you as part of our investor relations outreach activities in order to update you on GenMab going forward. Please refer to our website for more information on GenMab and our privacy policy. Today I'm pleased to present Jan van de Winkel. Please go ahead with your meeting.

Hello and welcome to the GenMab conference call to discuss the company's financial results for the period ended December 31st 2020. With me today to present these results is our CFO Anthony Pagano. And then for the Q&A, we will be joined by our Chief Development Officer, Judith Klimovsky, our Chief Operating Officer, Anthony Mancini, and Tahir Mahdi, who, as of March the 1st, will be our Chief Medical Officer. Many of you may already be familiar with Tahir, from his participation in events like our 2020 Capital Markets Day and the 2021 JPMorgan Conference. I would like to take a moment to say how thrilled we are to welcome him as a member of GenMob's executive management team. With his leadership and proven track record of success and innovative thinking, he makes our strong team even stronger. I look forward to working with him and the rest of the team as we continue to grow our organization and evolve into a fully integrated biotech innovation powerhouse. 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 3. GenMob is focused on the development of innovative antibody products with the potential to transform cancer treatments and improve the lives of cancer patients. For over 20 years, we have not wavered in this commitment. In 2010, we linked this core purpose to an extremely effective strategy. By focusing on our core competences of being able to identify the very best disease targets, develop differentiated next-generation antibody technologies, and create unique best-in-class or first-in-class antibodies, we have been able to turn GenMob's world-class science into a robust proprietary pipeline and approved medicines, effectively allowing us to build a sustainably profitable and successful biotech. I'm very pleased with our track record of success, but we are only just getting started. With the first regulatory submission, along with our partner Seagen for Tisotum and Fidotum, we are closer than ever to achieving our ambitious 2025 vision. And all this leads me to slide number four. I'm extremely proud of the recent BLA submission for Tisotamab-Fedotin, the first for our product where GenMob has 50% ownership of the program. If approved, Tisotamab-Fedotin would be the first in class therapy and we believe it has the potential to become an important treatment option for women with recurrent or metastatic cervical cancer who have disease progression on or after chemotherapy. We look forward to providing you with an update on this submission in due course. While this BLA submission was a milestone for our company, it is one of many that we reached over the past 12 months. So now let's move to slide five and take a look at some of our more recent achievements. 2020 was a transformational year for GenMob. We have a strong foundation of innovative science and an unparalleled history of repeated R&D success. Over the course of the past few years, we strategically built on this foundation with the goal of evolving into a fully integrated end-to-end biotech. Because of our exceptionally talented world-class team, we reached an inflection point in this journey in 2020 with a series of key events. First among these is our collaboration with Appfee, which marks a landmark achievement for the company. This collaboration allows us to both expand and accelerate the development and commercialization of three of our bispecific antibody products, including abcorritumab, and it further strengthens our already very strong financial position. 2020 is our eighth year of profitability with an impressive 139% increase in operating profit versus 2019. Our strong balance sheet allows us to continue to strategically invest in our capabilities and differentiated product pipeline, as will be discussed by Anthony in more detail. These investments are already showing themselves in the way our pipeline is expanding and maturing. Thanks to our productive R&D engine, we ended 2020 with seven programs in the clinic, where we have at least 50% ownership, and two of these, Apcoritumab and Tisotamab-Fedotin, are now in phase three. and it's not only in our own pipeline where we see GenMob's innovation in action. Janssen's dual body product Amivantamab became the first dual body to both receive breakthrough therapy designation from the FDA and be submitted for regulatory approval in both the US and in Europe in 2020. Should Amivantamab be approved, it would continue a solid track record of success in creating approved medicines that are developed and commercialized by other companies. So now let's move to slide six and look at these successes. Darzalex, Kesimpta and Tepesa. GenMob created therapies marketed by our partners, all had firsts in 2020. Darzalex is now a mega blockbuster that has redefined the treatment of multiple myeloma. In 2020, a sub-Q formulation was approved in both the U.S. and in Europe, making it the first and only sub-Q CD38 monoclonal antibody approved for the treatment of multiple myeloma. Subsequently, this formulation was approved in the U.S. in AL amyloidosis, making it the very first FDA-approved treatment for this devastating disease. A second sub-Q medicine approved in the U.S. in 2020 was subcutaneous ofatumumab, or Cosimta. for relapsing MS. This is the first basal therapy that can be self-administered by patients at home. With the recent positive opinion from the CHMP, we are hopeful that Casimto will soon become available for relapsing MS patients in Europe as well. Then finally, Tepeza, which became the first and only FDA-approved medicine for the treatment of thyroid eye disease. We are enthusiastic about the future of these medicines as they exemplify our commitment to applying our world-class antibody expertise to create differentiated antibody therapeutics with the potential to fundamentally improve patients' lives. And of course, the collaborations for these three medicines have provided us with the financial foundation of our current success with recurring revenue from royalties on Darcelex to Sympta and Tepeza, which we can use to invest further in the business to deliver our inspirational vision. And at this point, I will now turn the call over to Anthony. Anthony, please go ahead.

Great. Thanks, Jan. Let's move to slide seven. We've never been in a better position to achieve our vision of transforming the lives of cancer patients. And in 2020, we've continued to execute against our priorities despite the challenges of COVID. My objective today is twofold. First, to explain why 2020 has been yet another remarkable year for GENMAP. And second, to provide our guidance for 2021, which is set to be another very strong year. I want to start by reminding you of the robust foundation we've continued to strengthen. We grew recurring revenue by 50% in 2020. That's due to royalties from Darzelex, Tepeza, and Cosimpta. And that's ensured an eighth consecutive year of profitability. Our strong balance sheet and growing recurring revenues allowed us to continue to invest in our business and our pipeline in a very focused and disciplined way. And an important part of this has been to continue to build a team and capabilities to enable us to succeed. So let's look at those revenues in a bit more detail on the next slide. We saw continued strong performance for Darzalex in 2020. You can see that in the chart on the left. Overall, Darzalex sales grew by 40%. That's net sales of nearly $4.2 billion, which translates to 4.4 billion kroner in royalty revenue. This exceptional growth was driven by continued strong market shares across all lines. The softness you can see in Q2 was a direct effect of COVID. Sales quickly recovered with significant growth in H2 fueled in part by the continued uptake of the sub-Q formulation. So Darzalex remains a key driver of our revenue, as you can see on slide nine. Looking at the graph on the left, you can see that there were two main drivers for the higher revenue in 2020. First, as previously noted, we recognized 90% of the upfront payment from AbbVie. Now clearly, that's a one-off contribution. Second, recurring revenue grew by 50%. That's primarily due to Darzalex world fees, which were up 41%. and we also saw additional recurring revenue growth from Tepeza and Kesimpta royalties. Partially offsetting these two items was lower milestones in 2020. As well as increasing revenues, we also increased investment as you can see on the next slide. Total operating expenses came in just a touch below 3.8 billion kroner in 2020. And here you can see where we invested. We accelerated our investment into our product portfolio, especially the advancement of both EPCO and dual-body PDL-1-4-1-BB. We've also spent more on expanding our team, hiring key team members to support our growing product pipeline. And we've continued to build our commercial capabilities and invest in systems to support our expansion. Finally, we are leveraging the ABDI collaboration by utilizing their expertise and significant financial contributions to further accelerate and broaden our partnership programs. Now, let's look at our financials as a whole on slide 11. Here you can see our summary P&L. In 2020, revenue came in at 10.1 billion kroner, an increase of over 4.7 billion compared to 2019. The increase was primarily driven by the upfront payment from AbbVie and higher Darzalex royalties. Total expenses were approximately 3.8 billion with 83% being R&D and 17% G&A. Operating income was 6.3 billion compared to 2.6 billion in 2019. Our net financial items amount to a loss of 409 million, which was primarily driven by two partially offsetting items. First, unrealized foreign exchange rate losses related to our US dollar denominated cash and investments due to the move lower in the dollar. And second, and unrealized gain on our investment in CureVac. Then we have tax of 1.1 billion, which equates to an effective tax rate of 19.4%. It's important to note that this rate is positively impacted by some one-time items in 2020. By contrast, our rate was around 24% in 2019, and this is probably more reflective of what we would expect moving forward. And that brings us to our net income of 4.8 billion. So by any measure, 2020 was an extremely strong year. And I'll turn the call back over to Jan to discuss our pipeline and our investment plans for the coming year.