Genmab A/S

Hello and welcome to the GEMMAP Q1 2021 conference call, and afterwards there will be a question and answer session. Just to remind you, this conference call is being recorded. During this telephone conference may be presented with forward-looking statements that include such words as believe, anticipate, plan or expect. Actual results may differ materially, for example, as a result of delayed unsuccessful deployment Thank you very much. Thank you very much. So, hello and welcome to the GENMAP conference call to discuss the company's financial results for the period ended March 31st, 2021.

With me today to present these results is our CFO Anthony Pagano. 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 goal. Let's move to slide three. John Muppet has an innovation-based culture, and collaborations and partnerships have always been part of our DNA. During today's presentation, we will reference some of the products being developed under these strategic collaborations, and this slide acknowledges those relationships. Let's move to slide four. Through our 22-year history, we've had a laser-sharp focus on harnessing the power of human antibodies to develop differentiated cancer therapeutics. This slide provides a review of what is behind that focus. Our core purpose, which guides our work, our extremely successful strategy, and our ambitious vision for the company. GenMob's evolution into a fully integrated biotechnology powerhouse continued with the events of the first quarter of 2021. So now let's move to slide five and look at some of these recent achievements. We continue on our ambitious path to bring our own medicines to patients and are excited about the recent US FDA's acceptance of the disotomy of Vidotin BLA for priority review based on the Innovate 204 phase two study. If approved, disotomy of vedotum would be a first-in-class therapy, and we believe that it has the potential to become an important treatment option for patients with recurrent or metastatic cervical cancer. The PDUFA target date for potential US FDA approval is October of this year. Along with our partner CJER, we continue to assess our regulatory strategy for submission of disotomy of vedotum in metastatic cervical cancer with health authorities, and plan to prepare the most robust regulatory package to support the potential regulatory approval in Japan and rest of the world. A submission in Japan will take place later than we initially anticipated to ensure we meet the Japan health authority requirements. So a pipeline for potential filing in Japan will reflect the inclusion of data from the innovative 301 phase three study. The first patient was dosed in this study during the first quarter of 2021. Additional pipeline progress included the first patient dosed in the first phase three study of abcaritumab and the first ever patient dosed with hexabody CD38. The company also expanded our executive management team on March the 1st, when, as we discussed during our full year 2020 results presentation, Dr. Tai Ahmadi, was appointed to the position of Chief Medical Officer for GENMOB. In addition to progress in our own pipeline, the power of GENMOB's innovation was reflected in important updates for therapies created by GENMOB that are being developed by other companies. Let's move to slide six. As a reminder, there are currently three GENMOB-created therapies on the market, developed and commercialized by other companies, Dalsalex, Kesimpta, and Tepesa. During the first quarter of 2021, there were significant events for both Darzalex and Casinta. In January, Janssen's Darzalex Fast Pro became the first and only FDA-approved treatment for AL amyloid doses. Sales over the quarter were also strong, and we reported $1,365 million in net sales by J&J, an increase of 46% over the first quarter of 2020. resulting in 984 million kroner in royalties to GenMob. Turning to Kesimpta, at the end of March, Novartis received approval in Europe for the treatment of relapsing forms of multiple sclerosis in adults with active disease defined by clinical or imaging features. This approval makes Kesimpta the first basal therapy that can be self-administered once a month at home, both in the US and in Europe. We are enthusiastic about the future of all three 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 as Anthony will discuss in further detail, the collaborations for these three medicines provide us with the financial foundation of our current success with recurring revenue from royalties, which we can then use to invest further in our business to deliver our inspirational vision. I'm pleased to now turn over the call to Anthony. Anthony, please go ahead.

Great. Thanks, Jan. Let's move to slide seven. To start, I'd like to take a moment and highlight our financial framework and the related key drivers. First off, let's think about our revenue profile. On the left, you can see our current and future recurring revenue streams. You're all very familiar with our three existing approved products. That's Darzelex, Tepeza, and Cosimpta. Each of these have exceptional growth profiles and are expected to generate significant cash flows for us for the years to come. Then we have two potential revenue streams that could come online later this year. We submitted the BLA for tezodamab vedotin in Q1. And at the end of last year, Janssen submitted a BLA and an MAA for amivantamab. If both are approved, that will bring our total number of approved products to five, which for me is really exciting. Now onto our focus approach to investment shown on the right. We'll continue to invest in our business and capabilities to position us for sustained success. And we'll accelerate and expand the potential winners in our pipeline. And we'll also ensure we're ready to launch should Tezotamab Vodotan and in the future, Epcritimab be approved. As well as investing, we will of course remain focused on the bottom line. Let's take a closer look at an important component of our recurring revenue growth. Darzelex sales on slide eight. We saw continued strong performance for Darzelex in Q1. You can see that in the chart on the left. Overall, Darzelex sales grew by 46%. That's net sales of nearly $1.4 billion, which translates to 984 million kroner in royalty revenue. This exceptional growth was driven by continued strong market shares across all lines and by the strong 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 our revenues grew by 77% in Q1. There were two main drivers. First, recurring revenue grew by 30% and that's primarily due to higher Darzalex royalties. Second, we recognized milestone payments from AbbVie for EFCO and from Janssen for Daratumumab Now coming back to our recurring revenues, it's useful to unpack this a bit. We've already spoken about Darzalex and the very strong performance there. For Kesimpta, we're encouraged by the nice quarter over quarter growth seen in Q1 and the recent approvals in Europe and Japan. Now onto Tepeza. Here, due to the supply chain disruption, we didn't record any royalties for the quarter. However, we believe the strong fundamentals of the product remain intact and we are pleased to hear the positive commentary from Horizon earlier today and that they have started to supply the market again. So our revenue profile continues to get stronger and we're taking those revenues and investing in a highly focused way as you can see on the next slide. Total operating expenses grew by 28% in Q1 and here you can see where we invested. We accelerated our investment into our product portfolio especially the advancement of both EFCO and dual-body PD-L1 for 1BB. 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 commercialization and broader organizational capabilities to support our expansion. Finally, we are leveraging the AbbVie collaboration by utilizing their expertise and significant financial contributions to further expand and accelerate our partnership programs. Now let's look at our financials as a whole on slide 11. Here you can see our summary P&L. For Q1, revenue came in at approximately 1.6 billion kroner, up nearly 700 million. The increase was primarily driven by higher Darzalex royalties and the milestones related to EPCO and DERA I mentioned earlier. Total expenses were slightly north of 1 billion with 81% being R&D and 19% G&A. Operating income was $532 million compared to $71 million last year. Our net financial items amount to a gain of $892 million, which was primarily driven by unrealized foreign exchange rate gains related to our U.S. dollar-denominated cash and investments due to the move higher in the dollar during the quarter. Then we have tax of $328 million, which equates to an effective tax rate of 23%. And that brings us to our net income of $1.1 billion. So by any measure, the first quarter of 2021 was extremely strong. Now let's take a look at our guidance on slide 12. Following our strong Q1 numbers, I want to provide some additional color on where we are headed for the balance of the year. To start, we are confirming our full year guidance. If we look at our revenues, we're unquestionably off to a strong start. First, with our market of products that are generating royalty revenues. We really like what we've seen here in Q1 from Dara and Kasimta, and we're looking forward to TPEZA coming back online. For me, moving forward, it will be important to see this momentum continue as we progress in the Q2 and Q3. In addition, we have a fairly sizable chunk of revenue to come in order to hit our non-recurring revenue guidance, which includes both milestones and cost reimbursement. For operating expenses, We expect to step up our investments as the year progresses. This is in line with our overall strategy and the key priorities I highlighted at our Capital Markets Day in November and reiterated in February. For us, it starts with our focus on progressing EPCO and the rest of our pipeline and preparing for the potential launch of Tizotam Epidotum later this year. Putting all this together, we're on track to deliver another year of substantial operating income in a range of one to two billion kroner. Now for my final slide, let me provide a few closing remarks. In summary, we've had a very solid start to the year. We've created growing recurring revenue streams based on products with exceptional growth profiles. 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 capitalize on the significant growth opportunities in front of us. And on that note, I'll hand you back to Jan to discuss our key priorities.