Genmab A/S

Hello and welcome to the GENMAP Q3 2021 conference call. Throughout the call, all participants will be in a 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. 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 So, hello and welcome to the GenMap conference call to discuss the company financial results for the first nine months of 2021.

With me today to present these results is our CFO Anthony Pagano, and for the Q&A we will be joined by our Chief Development Officer Judith Klimovsky and our Chief Operating Officer Anthony Mancini. 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. GenMob 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. GenMob has never been in a better position to achieve our ambitious vision of transforming cancer treatment. The solid foundation we have built is supporting our evolution into a fully integrated biotech innovation powerhouse. We achieved a major milestone in this evolution during the third quarter with the FDA approval of Tizotin, Afrodotin and StivDak. Let's move to slide five. Throughout GenMabs history, we have been focused on using our deep antibody expertise to create and develop antibody products that have the potential to improve patients' lives. There are now five products on the market that incorporate our innovation and for the first time, we, in collaboration with our partner on TifDak, Seagen, are in a position to bring our own medicine to patients. In September, approximately three weeks before the PDUFA dates, the FDA granted accelerated approval for TifDak for recurrent or metastatic cervical cancer with disease progression on or after chemotherapy. As the first and only ADC approved in this indication, TIVDAC may provide a much-needed new treatment option for patients. This incredible achievement was only possible because of the efforts of our dedicated and talented team, the excellent collaboration with C-GEM, and the patients, families and caregivers, as well as the nurses, physicians and study teams who participated in our clinical trials. TIFDAC was available for qualifying patients 48 hours following approval and JanMab and C-GEN are co-promoting TIFDAC in the USA. We look forward to providing you with further updates on the launch of TIFDAC in due course. So now let's look to slide 6 and look at some of the other recent achievements in our pipeline and beyond. In addition to the exciting approval in collaboration with C-GEN, we also have a broad clinical development program in place for Tisotin and Fidotin. Notably, data from the innovative 205 study, which combines tisotamab for dosing with other therapies and in earlier lines of cervical cancer, was presented during an oral session at ESMO in September. Also in September, dose escalation data from the EBCOR NHL-1 study of EBCORitumab, a product in development with EBCV, was published in the Lancet. More recently, ES announced abstracts accepted for presentation. We are very pleased that there will be multiple presentations of abcaritumab data, including preliminary results at CLL, as well as data for abcaritumab in combination with ArtShop, and in combination with Revlimid and Retuxan. Some of our other dual-body programs will be featured later this week at the SITC conference. Presentations during this event include the first preclinical presentation of a new dual-body program, dual-body CD3-B7-H4, and for the policy we are developing with BioNTech, there will be a rapid oral on those escalation data for Jan 1042 and a poster presentation on the expansion cohort data for Jan 1046. Excitingly, there are also pipeline updates for both of these programs. A Phase 2 study of GEN1046 as monotherapy and in combination with pembrolizumab in patients with recurrent or refractory metastatic non-small cell lung cancer is anticipated to start before the end of this year. In addition, the ongoing Phase 1-2 study of GEN1042 was recently updated to include multiple expansion cohorts in combination and in additional indications. These include GEM1042 in combination with pembrolizumab in first-line non-small-cell lung cancer, in first-line head and neck squamous cell carcinoma, and in first-line melanoma, and in combination with pembrolizumab and chemotherapy in first-line head and neck squamous cell carcinoma, and in first-line pancreatic ductal adenocarcinoma. At this time, I would also like to inform you about some further changes to our pipeline. Following the recommendation of our portfolio board, we have decided that we will not advance the development of Hexabody DR5-DR5, and, in agreement with our partner AbbVie, Duobody CD3-5D4. As I stated previously, at General P we have very high efficacy standards for our clinical pipeline, and we are rigorous in our decision taking. Politicians were driven by data, and initial results for both programs showed that they were insufficiently competitive compared to other product candidates in our robust next-generation antibody product pipeline. With our goal of transforming the lives of patients in mind, we look forward to continuing to progress our strong clinical candidates and to bringing additional candidates into our pipeline as we continue to create and develop truly differentiated antibody products. In this context, I am pleased to inform you that we expect to dose the first patients with dual-body CD3-D7H4 imminently. The power of Genmox innovation is also reflected in products being developed by other companies. Just last month, Janssen received a positive opinion from the CHMP recommending conditional marketing authorization in the EU, for amigantamab for the treatment of adult patients with advanced non-small cell lung cancer with activating EGFR exon 20 insertion mutations after failure of platinum-based therapy. If approved by the European community, it would be the first approval in the European Union for a therapy created using our proprietary dual-body technology. Further validation for the dual-body technology is reflected in two other areas. First, multiple dual body products in development with our collaboration partners are anticipated to enter phase 3 development. These include Janssen's TeclistaMab and Novo Nordisk's MIM-8. These are both published on clinicaltrials.gov. Second, as you may have recently seen, there will be data from Janssen's TeclistaMab and TalquetaMab at ASH, including in combination with Daratumumab. We are very encouraged to see progress in various dual body programs and look forward to seeing data from products leveraging our world-class dual body technology at ASH in December. Darcelex continues to evolve and subcutaneous daratumumab is now the only approved therapy for AL amyloidosis in China and Japan. Sales in the first nine months of the year were also strong. and J&J reported $4,378 million in the net sales, an increase of 49% over the first nine months of 2020, resulting in 4,167 million Danish Krone in royalties to GenMob. I will now turn the call over to Anthony, who will discuss our revenue in more detail. Anthony, the floor is yours.

Great. Thanks, Jan. Let's move to slide seven. As I've done in the past, I'll start with an overview of our financial framework and the related key drivers. First off, let's think about our revenue profile. At the beginning of 2020, we had just one product on the market, which was Darzalex. And today, we have five. For me, that's just remarkable to go from one to five products in less than 24 months. Now, on the left, you can see our recurring revenue streams. That's Kivdak, Darzalex, Kesimpta, Tepeza, and Ribervan. Taken together, we expect them to generate significant cash flows for us in the years to come. Moving to the right-hand side of the page, as always, we continue to be focused in our investments. In particular, we're accelerating and expanding the potential winners in our pipeline. And we're also investing in our commercialization capabilities for TIDDAC and ensuring we are ready to launch should EPCR to MAB be approved. So with that background, let's jump into our Q3 numbers and take a look at Darzalex sales on slide eight. We saw continued strong performance for Darzalex in the first nine months of the year. You can see that in the chart on the left. Overall, Darzalex sales grew by 49%. That's net sales of approximately $4.4 billion, which translates to 4.2 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. Our recurring revenues grew by 52% in the first nine months of the year, primarily due to higher Darzalex royalties. We've already spoken about Darzalex and the very strong performance there. So, moving to Casinta. We're encouraged by the nice quarter-over-quarter growth seen in the first nine months of the year. Here, sales grew by 64% in Q3 versus Q2. As you know, we didn't record any royalties for Tepeza in the first quarter due to the supply chain disruption. But, Horizon recommenced supply in April and reported strong sales in the second and third quarters. sales grew by 36% in Q3 versus Q2. Taken together, Casinta and Tepeza generated 524 million kroner of royalties for the nine months ended 2021, compared to 179 million for the same period last year. That's growth of 345 million. And this really illustrates the power of our recurring revenues. We're also enthusiastic about the approvals of Ribervent and TivDec and look forward to seeing how sales progress for both of these. 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 38% in the first nine months of the year. And here you can see where we invested. We continue to accelerate our investment in our product portfolio, especially the expansion of both ETCO and dual-body PDL-1-4-1-DB. We've also continued to invest strategically 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 expanding pipeline and increasing capabilities for our own commercial products. And finally, we're leveraging the AbbVie collaboration by utilizing their expertise and significant financial contributions to further expand and accelerate our partnership programs. Now let's take a look at our financials as a whole on slide 11. Here you can see our summary P&L. For the first nine months of the year, revenue came in at approximately 5.9 billion kroner. That's up 60% on last year, if we exclude the one-off payment from AbbVie in 2020. Total expenses were about 3.7 billion, with 79% being R&D and 21% G&A. And our operating income came in at a very strong 2.2 billion. Our net financial items amounts to income of $808 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 our tax expense of $725 million, which equates to an effective tax rate of 24%. And that brings us to our net income of around $2.3 billion. So as you can see, extremely strong financial performance for the first nine months of the year. Now, let's take a look at our guidance on slide 12. Given the continued strong numbers in the last quarter, we once again improved our 2021 guidance. We now expect our revenue to be in the range of 7.9 to 8.5 billion kroner, driven primarily by the continued strong growth of Darzalex. Our OpEx guidance is now in a range of 5.3 to 5.6 billion, a decrease compared to the previous guidance, driven primarily by the timing of some of our investments in R&D activities and organizational capability build. We anticipate that we'll continue to step up our investments in Q4 and the following quarters in line with our overall strategy and key priorities. Putting this all together, we're planning for substantial operating income in 2021 in a range of 2.3 to 3.2 billion. And now for my final slide, let me provide a few closing remarks. In summary, we've had a very strong first nine months. We've created growing recurring revenue streams based on products with exceptional growth profiles. And that gives us a 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. On that note, I'll hand it back to Jan to discuss our key priorities.