Genmab A/S

Hello and welcome to the GENMAP Q2 2021 conference call. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a question and a 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. Action results may differ differ materially, for example, as a result of delayed or unsuccessful development projects. GENMAP is not under any 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. Today I'm pleased to present Jan van de Winkel. Please go ahead with your meeting.

Hello and welcome to the GenMap conference call to discuss the company's financial results for the first half of 2021. With me today to present these results is our CFO Anthony Pagano, For the Q&A we will be joined by our Chief Development Officer Judith Klimovsky, our Chief Operating Officer Anthony Mancini, and our Chief Medical Officer Tahi Ahmadi. Let's move to slide 2. 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. TNMOC has a science-focused and 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. Referenced from this slide are some of the many successes that propelled our growth throughout our 22-year history. One key factor in our future growth is the breadth and depth of our proprietary pipeline, which we anticipate will expand to nine programs in the clinic by the end of this year. So now let's move to slide five and look at some of the recent achievements in our pipeline and beyond. We moved a major step closer to our goal of bringing our own medicines to patients with the FDA's acceptance of the Disultim of Bedotin BLA for priority review. Data from the clinical trial on which the BLA was based, the innovative 204 Phase 2 study, was also recently published in the Lancet Oncology. As we shared with you last quarter, the PDUFA target date for a potential U.S. FDA approval is October of this year. Along with our partner, C-GEM, we look forward to updating you on the progress of Tisotum afrodotum in metastatic cervical cancer in due course. Data from two of our other pipeline products was also featured at recent medical conferences, including multiple presentations of updated dose escalation data for abcaritumab and a presentation of preclinical data for GEN1042, one of our dual-body products in co-development with BioNTech. Excitingly, we are anticipating an additional DuoBody product in the clinic by the end of the year, following a recent CTA submission for DuoBody CD3-B7H4 or GEN1047. This may have potential in solid tumors. We look forward to additional pipeline expansion in the future, including potentially for more oncology research and development collaboration with Bolt Biotherapeutics. In addition to products in our own pipeline, the power of GenMabs innovation was reflected in important updates of products being developed by other companies. Enclarcumab, formerly in development with Roche, is now in Phase 3 development with Global Blood Therapeutics. The pivotal studies are assessing the safety and efficacy of Enclarcumab in reducing the frequency of vaso-occlusive crisis, or VOC-related hospital readmissions, in patients with sickle cell disease. There were also exciting updates for clinical stage products that incorporate our dual-body technology. NOVA Nordisk published preclinical data on the dual-body based MIM-8 in the journal Blood, and multiple abstracts evaluating Janssen's bi-specific program leveraging GenMob's dual-body technology platform were presented at this year's ESCO. In June, Janssen also announced that the FDA granted breakthrough therapy designation for teclistamab in the treatment of relapsed or refractory multiple myeloma. So now let's move to slide 6 and look at the most significant milestones to date for GENMOB's dual-body technology. In May this year, Janssen received FDA approval for ribothons. For patients with metastatic non-small cell lung cancer with epidermal growth factor receptor exon 20 insertion mutations. This is the first regulatory approval for a therapy created using our proprietary dual body technology. And we hope this is the first validation of many of the major potential of this innovative technology to create truly differentiated bispecific antibody therapeutics. With the approval of Ribrovant, there are now four therapies on the market that incorporate GenMabs innovation. Darzelex, which is now being part of the treatment regimen for over 200,000 patients, continues to evolve with additional approvals in both Europe and the US. The approved indications for multiple myeloma expanded in both territories based on the Phase III Apollo study, and subcutaneous daratumumab is now the only approved therapy for AL amyloid doses in both the US and in Europe. Darcelex was also granted an approval in China. based on the Phase 3 Lepus study which examined Daratumab in combination with Velcate and Dexamethasone in patients with relapsed or refractory multiple myeloma. Sales in the first half of the year were also strong and we reported $2,798 million in net sales by J&J, an increase of 52% over the first half of 2020, resulting in 2,360 million kronen in royalties to GenMob. We are enthusiastic about the future of all four 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. The collaborations for these medicines provide us with recurring revenue from royalties, which we can then use to invest further in our business to deliver on our inspirational vision. I'm now pleased to turn the call over to Anthony, who will discuss our revenue in more detail. Anthony?

Great. Thanks, Jan. Let's move to slide seven. As I've done in the past, I'd like to start with an overview of 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. There are now four approved products created using our innovation. That's Darzelex, Casimta, Cepesa, and most recently, Vibrovan. Each of these have exceptional growth profiles. Taken together, we expect them to generate significant cash flows for us in the years to come. Then we have an additional potential revenue stream that could come online later this year as we submitted the VLA for Tizotamab, Vidotin in Q1. If TESO is approved, that will bring the total number of approved products to five, which for me is really exciting. Now onto our focused 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 TESO and in the future F-Pyridamab be approved. As well as investing, we will of course remain focused on the bottom line. Now with this context set, let's take a closer look at an important component of our recurring revenue growth, Darzalex sales on slide eight. We saw continued strong performance for Darzalex in the first half of 2021. You can see that in the chart on the left. Overall, Darzalex sales grew by 52%. That's net sales of approximately $2.8 billion, which translates to 2.36 billion 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 recurring revenues grew by 49% in the first half of the year, primarily due to higher Darzalex royalties. We've already spoken about Darzalex and the very strong performance there. Moving to Kesimpta, we're encouraged by the nice quarter over quarter growth seen in the first half of the year. For Tepeza, due to the supply chain disruption, we didn't record any royalties for the first quarter. However, Horizon started to supply the market again in April with strong sales reported in Q2. We're also enthusiastic about the recent approval of Ribervent and look forward to seeing how sales progress. So our revenue profile continues to get stronger with increases both in recurring and non-recurring revenue after excluding, of course, the one-time upfront payment from AbbVie in 2020. And we're taking our strong recurring revenues and investing in a highly focused way as you can see on the next slide. Total operating expenses grew 26% in the first half of the year. And here you can see where we invested. We continue to accelerate our investment in our product portfolio, especially the advancement of both ECCO and dual body PDL-1-4-1-BB. We've also continued to strategically spend 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 H1, revenue came in at approximately 3.6 billion kroner. That's up 83% on last year if we exclude the one-off payment from AbbVie in 2020. Total expenses were about 2.2 billion with 79% being RMD and 21% G&A. Operating income was 1.3 billion compared to 4.6 billion last year. This was also impacted by the upfront payment for MAPI. Our net financial items amount to a gain of $527 million, which was primarily driven by the strengthening of the US dollar against the Danish kroner on our US dollar denominated cash and investments. Then we have tax expense of $444 million, which equates to an effective tax rate of 24%. And that brings us to our net income of around $1.4 billion. So as you can see, extremely strong financial performance for the first half of 2021. Now, let's look at our guidance on slide 12. Following our strong first half numbers, we are improving certain aspects of our 2021 guidance. We now expect our revenue to be in the range of 7.3 to 7.9 billion kroner, driven primarily by the continued strong growth of Darzalex. Our OpEx guidance will stay in the range of 5.5 to 5.8 billion as we continue to step up our investments in the second half of the year in line with our overall strategy and our 2021 key priorities. Putting this together, we're planning for substantial operating income in 2021 in a range of 1.5 to 2.4 billion. Now, for my final slide, let me provide a few closing remarks. In summary, we've had a very solid first half. 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.