Genmab A/S (GMAB) Earnings Call Transcript & Summary

Great. Good morning, everybody, again. Thanks for joining us for the next session. I'm Matthew Harrison, one of the biotech analysts here at Morgan Stanley. Pleased to have Genmab with me for the next session. Just quickly before we get started, I need to read a disclaimer. Please note that this webcast is for Morgan Stanley's clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your sales representative. So very pleased to have Jan van de Winkel, who's the CEO of Genmab; and Anthony Pagano, who is the CFO with me today. And Jan, I'm going to turn it over to you for some opening comments, and then we'll get into Q&A.

Thank you very much, Matthew. Great to be here at your meeting. Let me give a very short summary of what I think was a very successful first half of 2020. In June, we, of course, entered the landmark oncology partnership with AbbVie. And I can tell you that, that partnership is getting more and more momentum, and we are now having 3 bispecific antibodies in the clinic, which are all progressing very nicely. Genmab, in total, has 8 proprietary clinical programs right now and there will be a 9th joining pretty soon with the next-generation CD38, antibody HexaBody CD38. We had very favorable data also in June, the tisotumab vedotin in cervical cancer together with Seattle Genetics and we will present that data next week at ESMO in a late-breaker oral presentation on September 21. We actually expect epcoritamab to come with further data at a major medical meeting in the coming months of the expansion cohorts in different B-cell cancers. And we expect to initiate multiple new studies over the coming months with epcoritamab and several of them, you will see soon appear on Ct.gov. The DuoBody-PD-L1x4-1BB program, which is a joint program with BioNTech, we're looking forward to data at SITC in the coming months and early November. We're very excited about that. And daratumumab is making excellent progress this year. And of course, we got a subcu formulation approved in the U.S. and in Europe. And it's getting more and more traction just as we predicted, Matthew, in the second half of the year, we see it nicely building up now a momentum in the U.S. We, of course, got the on the base of the CONDOR trial, the Kyprolis combination with daratumumab approved, and we filed based on the latest trial in China for daratumumab. Then we had very impressive data with the ANDROMEDA study with daratumumab and amyloidosis as well as the APOLLO trial. APOLLO data, you will see at a major medical conference in the coming months. And we actually submitted now in the U.S. the ANDROMEDA data in amyloidosis. It's now being reviewed on RTOR and Project Orbis review. We had very good sales numbers with daratumumab. Subcu ofa is now approved as Kesimpta by Novartis and is going to be launched in September, and they are very, very optimistic about the potential in relapsing RMS. And then finally, TEPEZZA, this is teprotumumab, now the leadership of Horizon is doing fantastic after being approved in January this year. So we know very soon 3 recovering revenue drivers, which we are very excited about. Then the platforms get more and more traction as those 7 bispecific programs with the DuoBody technology in the clinic with Janssen, one of these programs is already now moving into Phase III, with amivantamab, it got a breakthrough therapy designation and very, very good data up to now. There's actually 2 Phase IIIs now already on Ct.gov for amivantamab but also some other bispecifics are doing really, really well. And Janssen, Novo Nordisk has made 8 in the clinic at this moment. So summing it up, Matthew, Genmab, I think, is in excellent shape, with the best product pipeline in the company's history, an excellent team in place, we are rapidly building up our U.S. and Japan commercial teams, and we have a strongly expanding differentiated clinical pipeline we have a very solid financial position. We have multiple clinical data sets upcoming. I already referred to the TV data, APCO data at a major medical conference, PD-L1x4-1BB data and of course, dara data. We submitted a higher number of abstracts than ever before to ASH, basically, at the end of this year. It's also a virtual conference. So we are well on track to really build the next stage of general purpose fully flexed biotech innovation powerhouse. And now I'll hand it back to you, Matthew. So we can dig into any area you would wish to go in now.

Okay. Perfect. Jan, thanks for that introduction. I don't want to spend a lot of time on DARZALEX because I know people are familiar with the profile, but I think 2 things that investors ask a lot. So one, you referenced subcu maybe just to the extent you can talk a little bit about how that transition is going. And basically, I think the -- is your view unchanged that long-term subcu can actually increase the number of physicians that may be using DARZALEX.

I wanted to ask -- thank you, Matthew, for that question. I wanted to ask Anthony to give his perspective on the launch of DARZALEX subcu, and then I will add to that, Anthony.

Sounds good. So yes, I mean, thinking about DARZALEX, it really is that complete package, right? It starts with the 8 approved indications and the continued investment. Part of our sort of thesis for 2020 in terms of the growth was around continued penetration in frontline, the subcu approval and the sort of broadening out the market penetration in sales globally. As we sort of think about subcu there, we sort of thought about the launch and we're getting ready and thinking about the launch, we really thought that this was going to provide significant value for both patients as well as physicians. And then what we're hearing from the early feedback from the market is that, indeed, this is playing out. It is making a difference for patients in terms of the speed, the convenience and likewise, from a practice perspective, it is providing some value, meaningful value for physicians as well. In terms of the launch, it is off to -- we've heard this from J&J, it's off to a wonderful start. And so thinking about what we're seeing with the sales overall for DARZALEX, as we sort of highlighted, working through COVID-19, we did see some softness. That was followed by rapid stabilization. And as we've exited Q2 and now got into Q3, we've had a return to growth or return to pre-COVID-19 levels and indeed some growth on top of that. And a lot of that, in our opinion, is being driven, at least in part, by the strong subcu launch. So overall, we couldn't be happier where we sort of sit with DARZALEX today, including the subcu launch, but also importantly, the continued investment in the franchise moving forward.

Thanks, Anthony. Nothing further to add, Matthew. I think it's -- the traction is really getting more and more clear, and we follow the IMS data. And the most recent IMS state is very encouraging. You really see it picking up and your question, Matthew, is it going to help you to also reach out to new patients? The answer is absolutely yes. I think that's beginning to click into gear. And summing it all up, we think that actually the guidance we provided to the markets earlier in the year, we fully stick to that because we believe that we will actually have Janssen ending up between $3.9 billion and $4.2 billion in total sales for daratumumab and an increasingly significant part, Matthew, will come from subcu.

And then can you talk about amyloidosis as a newer indication where you had some positive data? What kind of impact can that have on the overall franchise?

Yes, I can definitely take that question. I think we had fantastic data with the ANDROMEDA study. I mean, this is really, really good data. And we now have the data submitted in the U.S., as I already said, my introduction is now reviewed on RTOR, and we believe it may go very quick. And also on the Project Orbis, so you can get potentially regulatory approvals in other territories very quickly based on this data. I mean, this is about, like, 4,000 patients in the U.S. We've developed AL amyloidosis each year. And worldwide, of course, the population is quite a bit bigger. So I think it can become a very nice and sizable market. There's a lot of undiagnosed, Matthew. Because actually, up to now, there's not a drug approved basically for that disease. I mean other treatments are being used right now like often they use chemotherapy or dexamethasone, stem cell transplants and some supportive therapies, there is nothing approved for amyloidosis. This could become the very first drug ever approved in the U.S. for this indication. And since it's about 12% to 15% of all the multiple myeloma patients, Matthew, it will develop in the end AL amyloidosis. We think there's under diagnosis actually of this disease. So I believe that very likely we see a good drug because this is like phenomenal data which we have seen in the ANDROMEDA study will actually more or less create its own market, as we have seen before for several other medicines. So I think this will become very meaningful, and the number of patients will go up and potentially the treatment length or the duration will also be longer than what we think at this moment.

Okay. Very helpful. And then I guess, finally, before we move on to [ ofatumumab ], the CD38 HexaBody, obviously, an important potential life cycle opportunity there. Just remind investors where you are there and what you think those differentiating factors could be as you move into the clinic?

Absolutely. Because this is a super exciting next-generation CD38. It's actually a different antibody than daratumumab with a very different characteristic. I mean, it's much more potent in blocking the actual enzymatic activity of CD38 than daratumumab is. And it is far more potent in complement killing and some other mechanisms of action. You will see further preclinical data, Matthew, at upcoming medical conferences because we have submitted quite a few abstracts. And preclinically, it's between 10 to 100-fold better and more potent than daratumumab, which is like almost shocking because dara is such a good antibody, it can potentially bring the application of this antibody, if it is safe in human beings, to other tumors like diffuse large B-cell lymphoma, AML, which are absolutely not sensitive to daratumumab in a preclinical test. So we increasingly get better and better data preclinically. We are basically on schedule to file CTAs and INDs this year, Matthew. So it will either go into the clinic this year in multiple myeloma, where we will start, and we will also now think about broadening that already at the beginning into other rare cancers because we believe that this molecule may either make the market for CD38 therapeutics broader and bigger. For example, the diffuse large B-cell lymphoma AML where dara is not really making a dent in the preclinical setting and also we have some limited clinical data there. But potentially, you could also see that this would, in the end, replace daratumumab into a much more potent next-generation CD38. So Janssen has an option to actually opt into this program. Right now, it's 100% Genmab program that we did at the last year just before the IPO, Matthew, because this was one of the antibodies, which is in HexaBody CD38, which was part of the original panel Janssen looked at and -- when we did the deal in 2012. So if Janssen opts in, and they can do that at any time, Matthew, maybe already after 10 patients, and the difference is obvious from dara, they will take over the complete development, put a big military machine on a development of HexaBody CD38, then we get $150 million as a compensation for us taking the risk and creating this molecule. And then Janssen will pay for everything, we get a straight 20% royalty. So now stepping up between 12% and 20%. And then basically, they will develop that. We have another $125 million in milestones to go to further compensate Genmab. And I don't know what Janssen will do, but I'm pretty sure that if the data looks good, that they will be looking at that very, very actively. And what we will do in the Phase I/II, Matthew, we will first do a dose escalation to see whether it's safe. And new patients, which are most are myeloma patients, and then we run it in the part 2 of that study, straight head-to-head with subcu dara. And we only want to develop this molecule, Matthew, when it's like [ over time ] for more potent than daratumumab, basically in the clinic. So I think it's super exciting. It will become our ninth proprietary clinical program. And yes, our scientists are really, really excited about the preclinical data. We cannot wait, Matthew, to test it out in the clinic and see whether it's safe in patients and then hopefully get some feeling for efficacy.

Okay. Great. Maybe it's a good time to transition to CD3/CD20. Clearly, a key program that investors are focused on. I guess, a broad question, you obviously signed up AbbVie because you wanted to be able to explore a wide range of indications and have a best-in-class sort of profile. This is obviously a very competitive field, though. There are other bispecifics out there. So maybe give people your view on differentiation for this molecule and how you think that may play out?

I mean, preclinically, this molecule was made with the DuoBody technology, we made many, many candidates. We actually selected empirically, Matthew, the most potent molecule in preclinical killing experiment. And we have about 100-fold more potency, better potency preclinically than the Xencor antibody, the lead Roche antibody, the Regeneron antibody and roughly similar potency as glofitamab, the most potent antibody from Roche. But this antibody is much more actively silent. I mean, we have knocked out the complete Fc-receptor interaction site and the complement interaction site. So there's no tendency to cross link, basically CD3. And remember, that is the way these antibodies become potentially toxic in patients that they activate T cells polyclonally, you get cytokine balise, you get actually neurotoxicity and then because that is the type of toxicity you can't see with anti-CD3 antibodies. And this one is, I think, more effectively silenced. And on top of that, we actually give it subcutaneously. We now hear that Roche is also moving with subcutaneous application with one of the antibodies, the least potent one. So I think to sum it up, I think on 3 factors, this one is differentiated. It's much more potent preclinically. And we have early hints that it is also clinically differentiated. Hopefully, more data at the optimal dose, the 48-milligram dose, at a major medical conference in the coming months. Then it is actually potentially safer. And we see that actually as a cytokine release syndrome, we have not seen any grade 3s or higher cytokine release syndrome with this antibody up to now, and we can rapidly dose escalate. I want to remind you, Matthew, that we actually, in less than 2 years after we brought them into the clinic, had already the recommended Phase II dose, which is far quicker than Roche or Regeneron had with their antibody, and that usually is reflection how quickly can you dose escalate with your molecule and its given subcu. And subcu is a huge advantage in the future because we believe that actually, in the future, Matthew, not all patients will get chemotherapy. For chemotherapy, you have an intravenous line. But when you don't have an intravenous line, it makes a big difference whether you can actually inject the antibody under the skin, which will also give it better safety again. So we have a good potential, I think, to both safer and more effective. And then the last factor is, of course, convenience. I mean, it's far more convenient for patients. You can -- with this small dose, you could potentially think about on how to inject or self application for patients in the future. And you can see from the interest Roche now suddenly displays for mosunetuzumab also as a subcu that it must have an advantage in the future because I think we're moving in hematology to regimens, which are going to be chemo-free in the very near future. Combinations of an antibody with another antibody, Matthew, or an antibody with a small molecule drug and then actually, it makes a lot of sense suddenly to have a subcu formulation of the drug. So we are very enthusiastic. And the more data we see, Matthew, the more enthusiastic we become. We see a massively unfolding development program. And you will see that appear on Ct.gov very soon. I can tell you the majority of these programs are Phase III. So we go straight into Phase III in a number of indications. And of course, we have also already expanded the Phase I/II trial to almost 400 patients. So there are potentially some arms where we can go to very rapidly towards the market if the data would support that. Because there's still a very high unmet medical need in some of the B-cell cancers, which cannot be treated very effectively with any antibody drug at this moment. So we are super enthusiastic about the potential of APCO. And the more data we see, the more enthusiastic we become, Matthew. And hopefully, you and other listeners can share that at some point.

Okay. Great. I think that's an excellent overview. On the safety front, I mean, how convinced are you that you will continue to have significant safety differentiation, especially on CRS as you broaden out to more groups of patients or patients at different lines of therapy, et cetera?

We are pretty confident. I mean, you will have to await the data, which will come in the coming months. We have definitely submitted them to conferences already. And we expect that, that will be accepted. And I can tell you, from the speed at which we now very rapidly build up the program. And the speed at which we are recruiting these patients, you can probably draw the conclusion that the safety profile looks very good. And we have more and more patients at the optimal dose, Matthew. We've only seen very limited data from the dose escalation up to now. So I think it will become more and more solid over the coming time. And we also begin to see very good safe profiles in tumors, which a very, very sensitive to side effects by antibodies. And there are especially areas, Matthew, where I think we can really much more rapidly move towards the market and some other products. And of course, on top of that, what is -- what remains is very good potency because we need to see, of course, very nice differentiated potency. So I think up to now, the profile all in all looks very, very good. And the more data we see, the more convinced we become that we actually have a potential best-in-class in our hands here.

Okay. That's helpful. And then on the efficacy side, I mean, do you expect most of these antibodies to have similar levels of efficacy across key tumors? Or do you think there's going to be major differentiation on efficacy, too?

I think I have to be very careful now. I think there's a potential of differentiation here. And what I can reiterate, Matthew, is that we increasingly believe that we have a best-in-class in our hands here.