Genmab A/S

Hello and welcome to the GENMAP Q4 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 four 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 it is required by law. And 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 period ended December 31st, 2021. With me today to present these results is our CFO Anthony Pagano. For the Q&A, We will be joined by our Chief Operating Officer Anthony Mancini and our Chief Medical Officer Tai Yamadi. 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. JanMab 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. Due to our extraordinarily solid foundation, GenMob is extremely well positioned to achieve our ambitious vision of making a difference for patients by transforming the treatment of cancer. I would like to start today with a reminder of some of the many successes that will fuel our future growth, beginning with slide five. The 39 INDs created by GenMob, Orbador Technologies, have led to a robust and expanding clinical pipeline with five approved medicines, including TivTec, the first GenMob-owned product on the market, which we are co-developing and co-promoting in the US with C-Gen. Royalties from partner-owned medicines plus key partnerships with companies like Epvi have expanded our revenue significantly. Our strong recurring revenue allows us to continue to invest in next-generation technologies and truly differentiated new antibody therapies and in our company where we added commercialization capabilities and are further strengthening our unstoppable world-class team with key talents Our growing internal competencies are enabling us to evolve into an integrated end-to-end international biotech led by an experienced and diverse leadership team. We built on this solid track record with the events of 2021, so now let's move to slide 6 and take a look at some of our recent achievements. 2021 Our strong balance sheet allows us to strategically invest in our capabilities and differentiated product pipeline, including our first product launch. While we are evolving into a fully integrated end-to-end biotech, We know that we can accelerate innovation by strategically investing in collaborations with partners across the pharma and biotech ecosystem, which can provide us with building blocks that support our future pipeline expansion, novel targets, novel payloads, and technology that complements our own. In 2021, we entered into more than 10 collaborations that will add to the breadth of our suite of technologies, and support the rapid growth of our innovative next-generation pipeline of antibody therapeutics. For example, we partnered with BOLTS on its immunostimulatory antibody drug conjugates, or ADCs, and with Senafix on its topoisomerase-1 inhibitor ADCs. We are seeing the results of our investments in collaboration and capabilities in our expanding and progressively maturing pipeline. Examples of recent investigational medicines entering the clinic are Hexabody CD38 and DuoBody CD3-B7H4, both the products of a highly productive R&D engine. In addition to growth, our product pipeline also matured over the past 12 months. The highlight of the year was undoubtedly the FDA's accelerated approval of TIFDAC, our first regulatory approval and a much needed new potential treatment for patients with metastatic cervical cancer. With our partner for TIFDAC, Cigen, we have a robust development plan for TIFDAC, including the first phase three study initiated in 2021. which is intended to confirm Tifdex benefit in recurrent and or metastatic cervical cancer and to support global regulatory applications. Abcorritumab also entered phase 3 development in 2021, the first of multiple phase 3 studies that we and our partner AbbVie are planning for Abcorritumab. Both of our investigational medicines under development with BioNTech also advanced last year with the first Phase 2 study for dual-body PD-L1-4-1-BB and multiple expansion cohorts initiated in the Phase 1-2 study of dual-body CD40-4-1-BB. New and updated data from all of these programs and others were presented at a variety of prestigious conferences throughout the year, and we are anticipating additional data presentations this year, including data from the De Sotomayor-Verdoten Innovative 207 study, which is scheduled to be presented in a plenary session at the upcoming ASTRO Head and Neck Cancer Symposium in Arizona on February 25th. In addition to our own pipeline, Genmops innovations are applied in the pipelines of multiple global pharmaceutical and biotechnology companies. In particular, our dual-body technology platform has powered a variety of bispecific antibody therapies and developments. The most advanced of these, amivotamab and teclistamab, are the result of our dual-body collaboration with Janssen. In 2021, Janssen's amivantamab was approved as ribofant in the US, Europe, and other markets for the treatment of certain patients with non-small cell lung cancer with EGFR exon 20 insertion mutations. These are the first regulatory approvals for a therapy that was created using the duobody bispecific technology platform. Subsequently, at the end of 2021, Janssen submitted a BLA to the FDA for teclistamab. for the treatment of relapsed or refractory multiple myeloma. Last month, Janssen Furthermore submitted a marketing authorization application, or MAA, for teclistamab to the European Medicines Agency. These events provided further validation for our dual-body technology platform, which also powers the majority of our own product pipeline. Janssen's Darzalex, which has redefined the treatment of multiple myeloma, continued to evolve in 2021 with new approvals, including the approval of the subcutaneous formulation of daratumumab as the first and only approved therapy for AL-MLY doses. Sales of Darzalex for the year were very strong, with J&J reporting $6,023 million in net sales An increase of 44% over 2020, resulting in 6,135 million kronen in royalties to JanMob. 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. My objective today is twofold. First, to explain why 2021 has been yet another remarkable year for GenMap. And second, to provide our guidance for 2022, which is set to be another very strong year. Overall, we continue to strengthen our foundation and drive towards our 2025 vision. We executed our first commercial launch, bringing TIVDAC to cervical cancer patients. We grew recurring revenue by 48% in 2021. This was driven by strong royalties from Darzalex and other approved medicines. And as Jan said, that's in short our ninth 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 2021. You can see that in the chart on the left. Overall, Darzalex sales grew by 44%. That's net sales of over $6 billion, which translates to 6.1 billion kroner in royalty revenue. This exceptional growth was driven by continued strong market shares across all lines and the continued 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 48% in 2021. We've already spoken about Darzalex and the very strong performance there. We're also encouraged by the growth of Kesimpta and Tepeza, which generated 828 million kroner of royalties for 2021. And that's an increase of more than 500 million compared to last year. This growth really illustrates the power of our recurring revenues. So our revenue profile continues to get stronger with increases both in recurring and non-recurring revenue after excluding, of course, the AbbVie one-off. 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 by 44% in 2021. 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 CD40-41BB. We've also spent more on expanding our team to support our growth in commercialization, enhanced technology and systems, and other areas related to our expanding pipeline. That includes supporting the launch of TIVDAC and preparing for the filing and potential launch for EPCO. 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. In 2021, revenue came in at approximately 8.5 billion kroner. That's up 48% on last year, excluding the AbbVie one off. Total expenses were about $5.5 billion, with 77% being R&D and 23% SG&A. And we reported a very strong operating profit at around $3 billion. Our net financial items amounts to income of $965 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 $975 million, which equates to an effective tax rate of 24.5%. And that brings us to our net profit of around 3 billion. So as you can see, extremely strong financial performance for 2021. Let's move now to reminder of our robust financial framework on the next slide. First off, let's think about our revenue profile which you can see on the left. At the beginning of 2020, Darzalex was the only product on the market. And today we have five. And that provides us with expected recurring revenue growth of 39% in 2022. And there's a clear path to potentially expand the number of approved products with Janssen's recent BLA for teclistamab and our planned submission for EPCO in 2022. Taken together, we expect significant cash inflows for us in the years to come. Moving to the right, We continue to be focused on our investments as we evolve our organization for continued success. At the top of the list is accelerating and expanding the development of EPCO. I'll come back to this and some other exciting opportunities which provide a compelling rationale for increasing investment shortly. So with that background, let's take a closer look at Darzalex sales on slide 13. We're on a clear path to market leadership in multiple myeloma. For 2022, we anticipate that Darzalex sales will continue to ramp up, and we expect sales to be in the range of $7.3 to $8 billion. There are three drivers underpinning this growth. First, there is significant opportunity for further market share gains in frontline. Second, we expect the continued conversion to the sub-Q version. And third, with 10 approved indications in the US, we anticipate continued strong market shares across all lines of therapy. So Darzalex is really continuing to deliver. Now let's take a look at the components of our strong recurring revenue on slide 14. For 2022, we anticipate another year of strong revenue growth. Looking at our total revenue, we're expecting to be in the range of 10.8 to 12 billion kroner. and the majority of this will come from recurring revenues which are anticipated to increase 39%. We're projecting DARS VEX royalties to be between 7.7 and 8.5 billion kroner, an increase of 32%. As a reminder, consistent with how we handled this last year, our guidance reflects around a 700 million kroner reduction in royalties due to the ongoing arbitration. Recurring revenues also include a 71% increase in royalties from Tepeza and Cosimta. Turning to non-recurring revenue, the growth here will be driven by reimbursement revenue from our collaborations and other milestones. In particular, our 2022 guidance does include a significant milestone associated with the filing and acceptance of a regulatory submission for EFCO. I said to come back to our ever stronger rationale for investment. And this next slide shows you why. What you can see here on the left is a powerful combination of both our technologies and our pipeline. And these are what underpin our imperative to invest. And then on the right, you can see the real progress we're making. 2021 was a great year with more than 20 active clinical trials. as well as bringing our first product to market with TIVDAC. And then building on that foundation, 2022 is going to see another real step up in terms of our opportunity set with more than 30 active clinical trials anticipated and preparation for a potential EPCO regulatory submission and commercialization in the US. And to be clear, based upon the work we've done so far and the data we've seen, we're convinced that EPCO is a drug that has the potential to make a real difference for patients. And as we've told you before, if we want to seize this meaningful opportunity, we've got to invest, and that's exactly what we're going to do. And that of course also includes investing in our team, technology, and infrastructure to deliver. So let's take a look at that in a bit more detail on slide 16. Our total OPEX, is expected to be between 7.2 and 7.8 billion kroner. This fully reflects the evolution of our pipeline and indeed our entire business that I just described. There are four near-term investment priorities for us. First is initiating new phase three EFCO trials to maximize its potential. Second is the filing and standing up our commercial organization for EFCO. is generating the next wave of data for dual-body PDL1-41BB and dual-body CD40-41BB. And priority number four is continuing to build our infrastructure, teams, and systems. This is essential to our continued success and realizing our full potential. So these are our immediate priorities. But we're not just focused on today. In line with our vision, we're also very focused on long-term value creation. So here we're investing to progress our early stage pipeline and to generate the next wave of IND candidates. We're also investing to ensure that we maximize the value of our current technologies and that we stay right at the forefront of antibody science. Now, having looked at the framework and the constituent parts, let's look at how this all comes together on slide 17. Here you can see our 2022 guidance. We expect our revenue to be in the range of 10.8 to 12 billion kroner, and most of this is made up of recurring revenue. For operating expenses, we expect to be in a range of 7.2 to 7.8 billion kroner. As I previously highlighted, this step up in investment is fully in line with our strategy and our focus on creating long-term value. Putting all this together, we're planning for substantial operating profit in a range of three the 4.8 billion kroner. Now for my final slide, let me provide a few closing remarks. In summary, we have a clear path to reach our 2025 vision. We've created growing recurring revenue streams 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 very significant growth opportunities in front of us. And on that note, I'll hand you back to Jan to discuss our key priorities for 2022.