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

Hello, and welcome to Genmab's Third Quarter 2023 Financial Results Conference Call. As a reminder, 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. Genmab 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. Please also note that Genmab may hold your personal data, as indicated by you, as part of our Investor Relations outreach activities in order to update you on Genmab, going forward. Please refer to our website for more information on Genmab and our privacy policy. I would now like to hand the conference over to your first speaker today, Jan van de Winkel. Please go ahead.

Hello, and welcome to Genmab's conference call to discuss our financial results for the period ending September 30, 2023. 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. As already said, we will be making forward-looking statements, so please keep that in mind as we go through this call. During today's presentation, we will reference products being developed under some of our strategic collaborations. This slide acknowledges those relationships. Genmab's strong foundation is built on our consistent track record of success. As we near the end of the year, it's a good time to reflect on how far we have come as a company, even in the last 12 months. We continue to expand our pipeline with new INDs and new product candidates in the clinic. We also matured our pipeline with new clinical trials and positive data readouts. And very excitingly, there are now 8 approved medicines that are followed by our innovations, half of which were created with our proprietary DuoBody technology. Epcoritamab, which we are codeveloping with AbbVie, is also our first medicine to be approved for patients and territories outside the U.S. These advances are possible because we have a dedicated and unstoppable team at Genmab, an international team that has grown to enable us to continue to evolve into a leading integrated biotech innovation powerhouse. Let's now turn to recent key company events. September was an exciting month for epcoritamab as we and AbbVie received approvals in both Japan as EPKINLY and in Europe as TEPKINLY. Like the approval in the U.S. earlier in the year, these approvals were important milestones, both for our patients in need and for Genmab as a company. The approval in Japan is especially significant as we at Genmab are the commercial lead for EPKINLY there. We began growing our presence in Japan in 2019. So we would be ready for just such an opportunity. So we are very pleased to be launching our own product there, especially as EPKINLY as the first and only bispecific antibody approved in Japan to treat adults with certain types of relapsed or refractory large B-cell lymphoma after 2 or more lines of systemic therapy. And we are excited to note that in addition to the U.S., Japan and Europe, epcoritamab has now been approved in Canada and the U.K. I'm also happy to announce that once again, the broad potential of epcoritamab to become a core therapy for B-cell malignancies will be on display at this year's prestigious ASH Conference at the end of -- at the beginning of December. We have had 15 total abstracts accepted for presentation at ASH, 2 of which are oral presentations. Of the accepted abstracts, 4 will be initial disclosures of clinical data for epcoritamab, including an oral presentation of data from the EPCORE NHL-5 trial of epcoritamab in combination with lenalidomide as treatment for patients with relapsed or refractory diffused large cell -- B-cell lymphoma. This data is further support for EPCORE's combinability and highlights its potential to move into earlier lines of therapy. HexaBody-CD38 will also be recognized at ASH with a poster presentation on preliminary results from the expansion cohort at the recommended Phase II dose of the ongoing Phase I/II trial. We are actively enrolling in the head-to-head portion of the trial. We are very encouraged by what we are seeing. And as we said previously, we anticipate the head-to-head data in 2024. If we look beyond our own pipeline and include all abstracts involving products that are powered by Genmab's innovations, there are nearly 200 total abstracts accepted for presentation at this year's ASH meeting, 36 of them oral presentations. Now I want to turn to some additional exciting updates on the progress of our maturing proprietary antibody product pipeline. First, GEN1046. It has cleared the high bar that we set. We are very pleased to share that we are now engaging with health authorities to determine next steps. Previously, we shared data from an expansion cohort of patients with non-small cell lung cancer, who failed prior checkpoint inhibitors. We saw encouraging single-agent activity, but responses are not durable. Based on clinical and strong preclinical data that showed that the combination of GEN1046 plus checkpoint inhibitors resulted in improved efficacy, we embarked on a scientific question, how to most optimally engage 4-1BB activation with checkpoint inhibition? The Phase II study of GEN1046 in combination with pembrolizumab in patients with PD-L1-positive non-small cell lung cancer, who failed standard-of-care therapy with an immune checkpoint inhibitor, address this question. And emerging data from this study has provided us a clear answer. So far, the data from this study indicates that we can combine these two mechanisms and that this leads to improved efficacy. Based on this, we believe there is a clear path forward, and we are engaging with health authorities to determine next steps. We look forward to sharing the relevant clinical data at a medical conference in the first half of 2024. As a reminder, we are developing GEN1046 with BioNTech. Moving to TIVDAK. We were very pleased that we, along with our partner, Seagen, presented the late-breaking results from the innovaTV 301 trial of tisotumab vedotin in recurrence or metastatic cervical cancer during the presidential symposium of the Asthma Congress in Madrid in October. This follows the announcement by us and Seagen in September that the trial met its primary endpoint of overall survival. As a reminder, the results of this trial are intended to serve as both the pivotal confirmatory trial for TIVDAK's accelerated approval in the U.S. as well as to support global regulatory applications. Likewise, TIVDAK has also cleared the high bar that we set. We are optimistic about the data we have seen in head and neck cancer post standard of care. Here, we will actively engage with health authorities on next steps in this indication. Moving to GEN1042. We are also codeveloping with BioNTech, and we remain very encouraged by the clinical efficacy data that we are seeing across several tumor types. We are currently taking the learnings from GEN1046 on how we can optimally dose and schedule GEN1042. We need more time to do this, so we now anticipate that we will have the data we need to determine next steps for this program in the coming months. Looking at some of our earlier-stage programs, I have a brief update on GEN1047, our DuoBody CD3B7H4. We have now completed dose escalation in the Phase I/II trial and have transitioned to dose expansion. This is an important step in progressing our CD3-based bispecific platform in solid tumors. Then, GEN3017, our DuoBody-CD3xCD30, a program that we announced last quarter, has now started recruitment for our first-in-human clinical trial. We're also very pleased to announce another IND submission for 2023, GEN1059, our DuoBody-EpCAMx4-1BB. The first preclinical disclosure for this program, which will further leverage our knowledge of 4-1BB, also took place at ESMO in October in Madrid. This bispecific antibody, which we are codeveloping with BioNTech, has potential in solid tumors. We anticipate that GEN1059 will enter the clinic in 2024. Finally, as we work to progress these new and existing programs, we have also made the decision to seize development of GEN3009, our DuoHexaBody-CD37. This decision was made following its strategic evaluation of the program within the context of our entire portfolio and was not based on any safety or regulatory concerns. Our goal of transforming the lives of patients is always at the center of our decisions, and we look forward to continuing to create and develop truly differentiated antibody products. The power of our innovation is reflected in programs that apply our DuoBody technology. 2 of these products are Janssen's TALVEY and RYBREVANT. In August, TALVEY was approved in both the U.S. and Europe for relapsed or refractory multiple myeloma, making it the fourth approved DuoBody-based bispecific antibody. Also in August, Janssen submitted an sBLA for RYBREVANT, followed by a type 2 extension to the EMA in October. Both of these submissions are based on the confirmatory Phase III [ PAPILLON ] study. So overall, you can see plenty of progress across our business, with lots to be excited about as we look forward. And that's a good note on which to hand over to Anthony Pagano, and he will take you through our financials. Anthony, the floor is yours.

Great. Thanks, Jan. We continue to strengthen our foundation over the first 9 months of the year. Of course, top of mind for everyone are the multiple regulatory approvals for EPKINLY. And as we'll see, our financials continue to be strong. Recurring revenues grew by 22% on a reported basis and impressively, 30% on an operational basis. This was principally driven by strong royalties from DARZALEX, along with significant growth from our other 7 approved medicines. Our solid balance sheet, growing recurring revenues and significant underlying profitability allow 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 the team and capabilities we need to succeed. So let's look at those revenues in a bit more detail. We continued to see strong performance for DARZALEX during the first 9 months of the year. As you can see in the chart, overall, net sales grew by 22%. That's net sales of nearly $7.2 billion, which translates to over DKK 8 billion in royalty revenue. This growth was driven by continued share gains and strong performance in the frontline setting. So DARZALEX remains a key driver of our revenue. We grew total revenue to almost DKK 11.8 billion in the first 9 months of the year. And as I've already highlighted, that included a 22% increase in our recurring revenue. And to be clear, that's on a reported basis. Excluding some FX headwinds, recurring revenues grew by 30% on an operational basis. Last year's results make for a somewhat tough comparator as we saw pretty significant FX tailwinds, particularly for our royalty revenue. As a reminder, under our DARZALEX agreement, for purposes of calculating our royalties, sales outside the United States are translated to U.S. dollars at a specified annual hedged foreign exchange rate. Operational growth in the first 9 months of this year continued to be strong, driven by higher DARZALEX royalties as well as royalties from our other products, and this really illustrates the power of our recurring revenue. We also recognized the first full quarter of sales for EPKINLY in [ Q3 ]. And we're very pleased with how the launch is progressing so far, with around $22 million in net sales for the quarter and $28 million year-to-date. Overall, our strong recurring revenue growth enables continued highly focused investment, as you can see on the next slide. Back in February, we were very clear that we would continue to invest to capture the opportunities we see in front of us. And that's exactly what we've done with total OpEx up 42% in the first 9 months of the year. At that time back in February, I outlined our top 4 investment priorities. First, securing a successful EPKINLY launch by investing in our 2 key markets, the United States and Japan. Second, continuing to advance our pipeline. Here, the lion's share of our investment is being directed to our most advanced programs, including EPKINLY, TIVDAK, 1046 and 1042, which are all exciting opportunities for us. Third, investing in our world-class discovery engine, including focused investments to expand our therapeutic focus to include I&I. And fourth, foundational investments in enabling functions to achieve required scale. As you can see, our investments continue to be fully in line with these priorities. And as always, we continue to focus on long-term value creation. So with that, let's now take a look at our financials as a whole. Here, you can see our summary P&L. Revenue came in at close to DKK 11.8 billion. That's up 26% on last year. As mentioned, that's negatively impacted by FX headwinds. Total expenses were around DKK 8 billion, with 71% being R&D and 29% SG&A. And even with the increased investment and significant FX headwinds, we're still delivering around DKK 3.7 billion of operating profit. Moving now to our net financial items. Here, we have a gain of over [ DKK 1 billion ] so far in 2023. This is driven by an increase in interest income due to higher effective interest rates as well as the strengthening of U.S. dollar against the Danish kroner in the first 9 months of the year. Then we have tax expense of about DKK 1 billion, which equates to an effective tax rate of 21.2%. And that brings us to our net profit of over DKK 3.7 billion. So as you can see, continued strong underlying financial performance. With that, let's take a minute to revisit our robust financial framework. First off, our revenue profile on the left. With the approval of EPKINLY in May and TALVEY in August, there are now 8 products on the market that are generating recurring revenues for us, and we expect significant cash inflows for the years to come. Moving to the right. We remain focused on our investments as we evolve our organization for continued success. At the top of the list is accelerating and expanding EPCORE. But that's just one of the exciting opportunities that provide us with a compelling rationale for increasing our investment. As we've told you before, if we want to seize these meaningful opportunities, we've got to invest, and that's exactly what we're doing. So with that background, let's take a look at our guidance. As you can see, we are adjusting our 2023 financial guidance. In summary, we are lifting the bottom end of our revenue and OpEx ranges. This is due to current year-to-date performance and the strong U.S. dollar. This, of course, has the effect of tightening the ranges across the board. We now expect our revenue to be in a range of DKK 15.9 billion to DKK 16.5 billion. One of the drivers of this increase is higher DARZALEX royalties. So we've increased our guidance here to DKK 11.3 billion to DKK 11.5 billion. Turning to our investments. As always, we remain focused on executing against our strategy and key priorities and at the same time, creating long-term value. So we're investing to capture the significant growth opportunities in front of us. And here, we're increasing the bottom end of our OpEx guidance to a range of DKK 10.6 billion to DKK 10.9 billion. This is primarily related to increased and accelerated investment in epcoritamab clinical trials and the progression of other pipeline products, including 1046 and TIVDAK. Putting all this together, we're on track to deliver another year of substantial operating profit in a range of DKK 4.8 billion to nearly DKK 5.8 billion. As a reminder, note that these projections are based on an assumed U.S. dollar-Danish kroner exchange rate of 6.8. And finally, to give you a bit more color on FX, every 10 basis point move in the exchange rate relative to our guidance rate is worth around DKK 80 million in operating income for the balance of the year. Now before I wrap up, I do want to take a moment to zoom out a bit and take a look at the very high quality of our revenue profile and the power of our discovery engine. We believe this powerful combination sets us up very well for the long term. First, let's think about the 8 approved medicines you can see in the box in the top right-hand side of the page that are powered by our innovation and technology and that are currently generating significant revenues for us. The top 3 are already blockbusters. The remaining 5 all have meaningful growth profiles and have the potential to become blockbusters. I can say this with confidence because we have the clinical development plans, and with our partners, we're investing to make this happen. The 6 royalty-generating products are marketed by pharma and biotech powerhouses, J&J, Novartis and Amgen. And our 2 proprietary products are co-marketed with AbbVie and Seagen, and moving forward, we anticipate Pfizer. So we're confident we will realize their potential. Now let me turn to the power of our discovery engine. Of around the [ 40 ] programs we've moved into the clinic, 8 are already approved and 19 are currently in active clinical development. That's a pretty strong hit rate, and it's no accident. We understood very early on the competitive advantage that our deep antibody science and focused discovery engine could provide. So we've invested more in discovery to increase the number and quality of our product candidates. This includes investment into our proprietary technology platforms. We believe that these diverse tech platforms are key to our success. They allow us to select the most appropriate modality from our [ toolbox ] to tackle a specific disease target. We have 4 proprietary tech platforms, including DuoBody and HexaBody, and we also have access to a suite of other technologies through our partners. This unique position allows us to bring only the products with the best potential through to development. It's our deep insight into antibodies and our proprietary platforms that have helped us discover, build or design the 8 products that are currently approved. If all 8 currently approved products were wholly owned by Genmab, we would have the potential to generate estimated revenue here in 2023 of over $14 billion. As we move forward to a model in the future where we have 100% ownership of our products, we believe we can continue this track record of success and further solidify our position as an innovative biotech powerhouse. Now to really wrap up, let me provide a few closing remarks. In summary, we've had a solid first 9 months of 2023. We've created growing recurring revenue streams, including now 2 of our own products on the market, 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 to capitalize on the very significant growth opportunities in front of us. And on that note, I'm going to hand you back over to Jan.

Thanks, Anthony. We continue to work towards our goal for the year and are especially excited about the multiple approvals for epcoritamab, the positive data for tisotumab vedotin and for the next steps in the development of our earlier-stage product pipeline. I'm also pleased to announce that we will hold our annual R&D Update and ASH Data Review event on December 12. To ensure the event is accessible to as many people as possible, this year's presentation will be fully virtual. Details are available on our website, and we look forward to a lively event. So that ends our presentation of Genmab's financial results for the first 9 months of 2023. Operator, please open the call for questions.

[Operator Instructions] We will now take the first question, coming from the line of Vikram Purohit from Morgan Stanley.

Great. We had two. First, on GEN3014. So as you mentioned, there were some clinical data that was recently featured for this program through abstracts that were posted for ASH. And we were wondering, what you think are some of the appropriate benchmarks to compare against here on both efficacy and safety to really frame these initial results? And secondly, just to clarify for the R&D update you'll be hosting alongside ASH, should we expect to see any updates for GEN1042 or GEN1046 at this event?

Thanks, Vikram, for the questions. I will hand over the first one to Tahi. He can give you further perspective on the benchmarks, which you need to think about for the HexaBody-CD38 program. And then the question on 1042 and 1046, to give a bit more color, I will hand it over to Judith. So let's start with Tahi for the GEN3014. Tahi?

Yes. Thank you for the question. So yes, in principle, of course, for daratumumab, a benchmark would be the 501 study the [ SIRIUS ] study and then also for the subcutaneous administration, the COLUMBA study. And it gives you a range of efficacy of somewhere between 30% to 40%, with 19% data that can follow up a little bit more about 90% of the patients having VGPR better. But it's also important to understand that this data was generated in a setting with completely different treatment paradigms. And presumably, the data in today's world with patients that are more heavily treated with other mechanisms, may look differently, probably less favorable. That's why there is a head-to-head randomized data set that we are generating. But broadly speaking, that's the efficacy benchmark. And I think it's important as you think about comparison from an efficacy point of view, not only the [ ORR ], but also the depth of response is going to be very important and certainly for us, as we look at the data that we have on our hand. The same with safety. And I think the safety data issue, of course, is like small data sets in a different environment. There are some factors that are different in today's world. For example, one of the patients that had a great [indiscernible] was a patient with COVID that was certainly not a virus existing at the time when the reference data sets were generated from 8 years ago. So again, there, I would say the comparison will come from the randomized asset, which is why we're doing randomized study.

Thanks, Tahi. And maybe over to Judith, maybe a bit more color on 1042 and 1046, Judith, at ASH?

Yes. Thank you, Jan. So as you alluded, Jan, for 1046, we look forward to share the data of [ study 04 ] in a scientific congress that will -- and we are looking for opportunities within the first quarter, second quarter next year. So this is where the data -- the actual data will be presented. We expect at ASH to give a little bit more color directionally, where we are going. But as was discussed several times at [ 03/03/2021 ], we presented interesting data of responders in non-small cell lung cancer after failing the current standard of care, which encompass chemo and immunotherapy. Responses were always not durable. Interestingly enough, when we analyzed the clinical data, we saw that this responders were concentrated in the period 1 positive. And we also saw that these responders who are mostly the patients that received a checkpoint inhibitor in the last 8 months. Based on those data points and the strong preclinical synergy between pembro and 1046, we designed the 04 study, which those results allow us to discuss in future meetings with health authorities next steps. So we will see where we are, but we've directionally plan to present a little bit more color. This is 1046. 1042, we are very encouraged. And what we continue to see, not just aligned with the 4 responders that we presented in head and neck, but in other tumor types. We're also getting the learnings from 1046 in order to understand better how to dose and [ schedule ] 4-1BB engagement. So we may give more color, but we need to understand where we are to see to what degree. And it will be more directionally because we usually present data in a scientific forum before we share with investors and analysts, but we will do our best to directionally give more color.

Thanks, Judith. Vikram, as you can hear, we are literally [ steaming ] about all these 3 programs. So we're very excited, and I think we'll use the coming months to further position the molecules for next steps. And more to come from Genmab in the coming months, for sure.

We will now take the next question from the line of Jonathan Chang from Leerink.

First question, can you discuss the progress made with the early EPKINLY launch? What gives you confidence that EPKINLY can become the market leader in the CD20xCD3 class? And then second question on GEN1046, what could a path forward in post-IO lung cancer look like? And can you discuss the opportunity for this program in endometrial cancer?

Thanks, Jonathan, two excellent questions. The first one, I will hand over to Anthony Mancini, who will be delighted to speak about the EPKINLY launch and next steps. And then 1046, maybe Judith can give a bit more color on both checkpoint inhibitor lung cancer landscape and the way to develop a -- potentially develop the molecule. Anthony Mancini?

Thanks, Jan, and thanks, Jonathan, for the question. As was covered earlier, we're seeing a really healthy uptake of EPKINLY and really strong execution of our launch plans in the first quarter. And we're also highly encouraged by the launch momentum and the overall positive feedback that we're getting from our customers that are using EPKINLY in the third line plus DLBCL setting. Our go-to-market approach really look to leverage our first-mover advantage. And the strong early uptake really is driven by a couple of factors that I think give me confidence that we can continue that through the life cycle: First, the solid execution and focus on key accounts and on key customers from our field-based teams, across medical affairs, across the sales team, across our alliance with AbbVie and, of course, the market access team. And that really has yielded strong customer engagement and EPKINLY early uptake. And it's also resulted in rapid access. So what we're seeing, Jonathan, is 99% of covered medical lives in the United States with functional access to EPKINLY, which is very encouraging. It's also very clear that there's a high unmet need in later-line DLBCL. And EPKINLY is really filling the void, enabling an off-the-shelf access to T cell engaging innovation across diverse sites of care. We feel very good about being the first FDA-approved T cell-engaging bispecific antibody for the treatment of patients with third-line DLBCL, but we really understand it's an important starting point to build from to help EPKINLY become the core therapy across B-cell malignancies. So overall, we're highly encouraged by the early response in the market to EPKINLY. And so far, uptake has gone better than expected.

Thanks very much, Anthony. And Jonathan, we intend to actually give further color on the complete development plan this year potentially at the post-ASH event. So we will talk more about how to further build the market and the landscape for use of EPKINLY in the coming years. Now let's move to Judith for giving a bit more color on the importance of the post checkpoint inhibitor lung cancer market because we feel that, that's a very strongly growing market with a need for new medicines. Judith?

Yes. So as we all know, with checkpoint inhibitors moving to the first line, a single agent, if patients have PD-L1 above 50% or in combination with chemo for patients with lower expression of PD-L1, there is a huge unmet medical need for patients that failing pembro checkpoint inhibitors and chemo, where the standard of care, unfortunately, is [ Taxotere ] that derives an ORR. Let's say, benchmark vary, but from 12% to 17%, 18%, 20% at the most and with [ variable ] prognosis, and this segment is growing. As you know, more and more patients received first-line combinatory treatment [ or even ] sequential. And it is in this very setting where we conducted the randomized 04 study, assessing 2 different [ schedules ] and even 1046 as a single agent, which gives us a strong foundation for a potential Phase III in this very setting. So we are encouraged about the data, about the methodical follow of the science, and this is where we are engaging with health authorities in coming weeks to define better. And we will share more as we define better those plans.

Thanks, Judith. So more to come in the coming weeks and months, Jonathan, for sure.

We will now take the next question from the line of Michael Schmidt from Guggenheim Partners.

This is Paul on for Michael. First one is on the pivotal data for EPCORE in follicular lymphoma at ASH. How are you thinking about the opportunity and differentiation from [ lymphoma ], based on the emerging clinical profile and your conversations with physicians? How much do you think that the evolving duration of response will possibly factor into how the two drugs are positioned? And then my second question is sort of building off the prior one on GEN1046. Can you sort of just talk a little bit about your decision to initiate that Phase II study for endometrial cancer, whether that was driven by emerging data in Phase I or perhaps the non-small cell lung cancer combo trial?

Thanks, Paul. The first question, I think, can be handled by Tahi. And then the second one, maybe Judith, you can talk a bit about endometrial on the start of that trial and why we are so excited there. Tahi?

Yes. Thank you for the question. So as it relates to the data in follicular lymphoma, there's obviously some public release of our data top lines, but you will see more data. And I think, here, the most important part will be to pay attention to the optimized schedule that will be presented at ASH and then the safety profile of EPCORE in the optimized setting, which will, I think, very clearly show that EPCORE has a profile both on efficacy but also from a safety profile that is extremely competitive with best-in-class safety and best-in-class efficacy, even in follicular lymphoma. Duration of response is a tricky one. To some degree, it's a question of follow-up. Obviously, mosunetuzumab has significantly longer follow-up in EPCORE because they started about 3 years before us. And so that is also reflected in the duration of response. And then there's other parts that are kind of like compounders to some degree. The [ Omicron ] base certainly played a role in that. But even with that, I think there will be some data in the future and continuously showing that patients who are -- and that's basically the truism about this mechanism. Patients who achieved a deep response, particularly as CR, are staying very, very long in their CR. And in some cases, we will oversee if that is actually reflection of a big word in cancer cure because we have patients now who are approximating 5 years in CR. So broadly speaking on EPCORE, I would say, pay attention to the disclosure of data where we'll share at ASH and also the updated data and the optimization data set.

Thanks, Tahi. Let's move to GEN1046, Judith, and then maybe talk a bit about rationale for endometrial cancel, why did we start that study, et cetera.

Thank you so much. So we started studying endometrial because it's a tumor type where 4-1BB is constitutively overexpressed and is a setting to test a hypothesis difference from what we have done in 04, which I already alluded to. So this is the reason to target endometrial cancer. Now we understand that endometrial cancer is not a single disease. You have the [ MSL ] high and [ MSL ] low. We are gathering data as we speak. And based on the data, we plan to daggle this different subtypes and go from there. And so it's very preliminary to say what is the path forward because we are gathering data in this Phase II program to understand the data and where there could be a path forward. As another point to flag is endometrial cancer in the Phase I, we saw long, durable responses with 1046 as a single agent, which, again, [ prompted ] us to investigate a more. So again, we expect to have this data in coming months to allow us to make decisions.

Excellent, Judith. Thank you very much. Thanks, Paul, for the questions.

We will now take the next question from the line of Etzer Darout from BMO.

The first one on sort of GEN1046 again. You have data next year sort of at a medical meeting. Just how are you thinking about sort of the target relative to other IO agents that we've seen now being combined with PD-1 like what we're seeing sort of from the TIGIT class? Just how you see the PD-L1 4-1BB mechanism relative to that? And then maybe quickly on HexaBody-CD38. Just if you could sort of remind us sort of the opt-in rights for J&J with respect to that program, just so we could think a little bit about more or less when that could be triggered potentially by J&J?

Thanks, Etzer, for the questions. The first one, I will hand over to Judith to talk a bit about 4-1BB targeting versus TIGIT and other immune checkpoint targets. And I can take the HexaBody-CD38 question myself. Judith, why don't you go ahead?

Yes. So I first tried to say that there is no precedent of IO as a single agent-provided responses in patients that failed checkpoint inhibition, PD-1 inhibitors. So if you think about the RA of TIGIT or other targets, the response rate in patients that failed checkpoint inhibitor is [ zero ] or in a handful. So we -- for PD-L1 4-1BB, we showed in the first cohort that there were responses. And we -- there was 17%, and we enrolled all comers. Then we presented in [ CTC '21 ] when we segmented this population based on the PD-L1 presence. Their response rate was higher, albeit not durable. However, we had this preclinical data that showed this synergy additivity with pembro. And this is what [ prompted ] us to do the [ offer ]. So to reinforce the fact that IO single-agent activity post-IO, it's almost unheard of. But we saw it with 1046 to overcome the durability and strengthened signal, the right next step to combine with pembro as the next step, and this is what we have done, which results are emerging, and we will share. So there is no precedent of IO in a post-IO. The TIGITs are all going to first line in PD-L1 high. This is where the data show that there is a stronger activity. So even in the hypothetical case that TIGIT go to the first line, it won't change the huge unmet medical need in a post-IO for non-small cell lung cancer in particular.

Thank you, Judith. I think that's very clear. Let me take the HexaBody-CD38 opt-in rights for J&J. They have the right to take a decision, yes or no, for opting in. So after we give them the data from the dose escalation, the dose expansion data, which we already have, and the head-to-head data against the subcu data, which we are gathering very rapidly. We believe that we'll have the head-to-head data next year and then basically hand over that data package to J&J. And then they have only a very limited time to say yes or no. And the opt-in, they want to develop -- commit to develop that molecule in any indication they want to, but I think multiple myeloma is now the number one, I think, indication for HexaBody-CD38, definitely, with the new data now from the expansion cohort. And then we will get a $150 million upfront payment, and they pay for all, and we get straight 20% royalty rather than a 12% to 20% royalty until some point in 2031, where we go from 13% to 20% in the tiered fashion. So next year will be an important year because then we will hand over the head-to-head data package on top of the dose escalation and the dose expansion cohort data, which we already have in our hands. And keep following the data at ASH, which we will present on a poster, will be updated data from the abstract. So please watch out for that. And Tahi already gave you some color on what to look for versus years ago, daratumumab monotherapy data. But you can hear from the enthusiasm of the team here that we are really -- we can't wait till we're in San Diego and can present that data because we believe it's very, very encouraging. I think we should probably leave it to that upsell for the time being.

We will now take the next question from the line of Sachin Jain from Bank of America.

Just more follow-ons on the same topics, if I may. So firstly, Tahi, on the CD38 [ Grade 5 ] events, thank you for clarifying one of the 2 was COVID. Was that the respiratory event? And any color on the patient characteristics with [ CV ] event, just to get some color as to whether that was treatment related or not, in your mind? And then just a follow-on on the [ Grade 5s] . The abstract was obviously a May cutoff. Have you seen any [ Grade 5 ] events since that May cutoff? So that's on the CD38. Second topic is the 1046. You said more color at ASH. Just to clarify, will you've met with the regulators by then? So could you confirm your Phase III program at the ASH event? And then a follow-on on your clear efficacy comment, do I infer that as a response rate above the 20% of [ Taxotere ] you referenced? And any color on the duration of response you're seeing ?

Thanks, Sachin. Let's see what my colleagues are willing to give you this information. Tahi can definitely comment further on the [ Grade 5 ] events for HexaBody-CD38, and I will ask Judith to think carefully about how to answer the question on 1046 and the ASH data as it relates to clarity on a potential Phase III trial as well as the bar for responses. Tahi, maybe you can start

Yes. So as I said, I think earlier, right, there's one patient was a patient who postulated to COVID and the other one was cardiac event. Neither of the two events were, in our judgment and the judgment of the investigators or in the judgment of the [ DMC ] related to that -- sorry, [indiscernible] in these studies. And if you look at the [indiscernible] study that I referenced earlier, you'll see there is roughly like a 7%-ish rate of Grade 5 events on these trials of patients passing away of all kinds of business, not always related to drug. So at this point, we don't really have, in the assessment of the [ DMC ], safety signal with small patients that in any way or shape or form seems to deviate for what is known for the class of CD38 antibodies. I hope that answers it.

Thanks, Tahi. And then, Judith, on 1046 and ASH potential updates there or further clarity on the program.

Yes. So thank you for the question. I think that we will try directionally to give more color. Just to share the design, we expect to have more certainty on that, and this usually happens after discussions with health authorities. So we will give as much as we can, predicated on where we stand in the process. As related to the benchmark, I alluded to the multiple data sets in this setting that unfortunately, failed and failed because they haven't done or they didn't do this rigorous scientific approach question-by-question to connect the dots and have the best potential hypothesis. And this allow us to wait a little bit to have not only ORR but duration, which is critical because time to event is the right endpoint in a Phase III setting. So I mean, I want to reinforce that we will share as much as we can, whenever we can. The commitment is there, but we are bound to when these meetings will happen.

Thanks, Judith, and thanks, Sachin, for the questions.

We will now take the next question from the line of Kaveri Pohlman from BTIG.

My first question is for GEN3014. Can you provide any insight into your expectations for its efficacy in CD38 pretreated patients, given that previous studies have shown that these patients develop resistance via overexpression of complement inhibitory proteins? And my second question is for EPKINLY. Can you provide any color on your plans for follicular lymphoma and any timelines around that? Also, for EPKINLY in DLBCL, especially from the safety standpoint, are you planning to have some real-world data collected that could further differentiate it from its competitors?

Thanks, Kaveri, for the questions. I think I will hand both over to Tahi. Before Tahi starts, I already stated in an earlier comment that we will intend to actually describe the compound development plan for EPKINLY in more detail -- or, epcoritamab, I should say, in more detail at the post-ASH update. But Tahi, maybe you can give us a bit more color on the efficacy -- or the potential efficacy in CD38 pretreated patients.

Yes. Thank you, and you're absolutely right, right? And there was a subgroup analysis worked on the combined data set for SIRIUS and 501 study that actually looked at the impact of -- in those cases, there are tumor treatment on the CD38 expression, which actually gets kind of shredded off the surface, so to speak, to the process called [ thrombocytosis ] and then the upregulation of complement inhibitory proteins, and that's absolutely correct. And so this is why the study that we're conducting is actually in CD38-naive patients, with the head-to-head comparison against subcu. We have had some signals of efficacy in daratumumab-exposed patients. And the dose escalation, there were 2 patients who had a response. But broadly speaking, that's not where we're focusing right now because the focus is, right now, as in the original agreement with Janssen, to generate data that allows us and Janssen, frankly, to elucidate whether the single point mutation that is underlying hexamerization, really has the impact that we have preclinically seen and that we believe to be seeing in the clinical data so far. And then sorry, the second part of the question was about positioning of EPCORE in follicular lymphoma. So yes, to some degree, there is already a Phase III in combination with LEN in the second line, and we have talked about that we are actively working with AbbVie on plans on a frontline study. So there will be some news to come in the near future. That is in fully follicular lymphoma. And then in the B-cell lymphoma, there are multiple [ viable ] data sets attempted to generate data, both to show also the impact of epcoritamab in comparison to [ CAR-Ts ], right, and driving on the point that actually this modality that this bispecific antibody, the accessibility of it, the ease of the administration and the safety of it compare quite favorably to [ CAR-T ] therapies in the real-world data. I hope that answered the question.

Thanks, Tahi. I think that was a good question, Kaveri. Thank you very much for the questions.

We will now take the next question from the line of Michael Novod from Nordea.

Just a few follow-up questions, especially to timing. If we take GEN1042 first, I just need to understand. So I think Judith said some directional guidance also on 1042. When do you expect to sort of have more clear data on 1042 and also for some of the potentially larger indications? I think we all had expected it would be around till ESMO, IO. But is that also sort of, then, later in 2024? And to HexaBody-CD38, there was a question earlier on relating to the J&J potential opt-in. Timing-wise, is it most realistic that you need to complete the head-to-head, which says October '24 on clinicaltrials.gov? Or could that happen sort of midway in that trial also? Maybe just to clarify.

Thanks, Michael, for the question. So I will hand over to Judith for 1042 to give you a bit further drilling for the timing, when do we have the data in hand. We believe that in some of the tumors, we actually have the data in the coming months, if not sooner. But Judith can give you a bit further color, Michael. Then for HexaBody-CD38 timing of the potential opt-in for J&J, I mean, they have the right to wait for all of the data from the head-to-head cohorts, Michael. I don't know whether they need to, to make a long story short, because we think the data is shaping up very nicely, as you can see from the expansion cohorts, but it's up to them. So it's very difficult to actually give you an estimate of when J&J would like to obtain because it's basically in their corner. But the full head-to-head data will likely come in the second half of '24, not before. But there will be a lot of data already by that time in the first half. Whether that's an [ opt ] is up to J&J. But maybe I can hand over the 1042 timing question and some of the tumor cohorts to Judith. Judith?

Yes. So as you know, Michael, we are collecting data to assess the hypothesis that a checkpoint inhibition pembro adds to 1042, and this is further potentiated by the addition of chemotherapy and the creation of immunogenic cell [ death ]. This is the basic hypothesis that guided us to collect to address in different tumor types. Among them, head and neck and non-small cell lung cancer, squamous and non-squamous mainly. This hypothesis is the same. So the data sets are complementary from one each other. So the goal is to have a kind of a good number of patients with some level of durability for more than one cohort because this will make the data stronger. So this is why there is no firm congress to when we are presenting. But I can tell you that enrollment is going very well. So it will be in 2024, depends on when the abstract is close to submission and the data we have in hand to decide the venue. So I cannot provide you a firm date at this point.

Thanks, Judith.

We will now take the last question from the line of Emily Field from Barclays.

Great. I will ask a quick financial question. I believe that for OpEx going into 2024, I think consensus is modeling about half the growth rate of OpEx for 2023. Obviously, it's going to be off of a larger base for next year. But maybe, Anthony, if you have any comments on just how we should think about modeling OpEx going to 2024 before you officially guide for it?

Thanks, Emily, for the question. And Anthony will be delighted, Anthony Pagano, to answer a question on finances. So Anthony, floor is yours.

Yes, thanks, Emily. Thanks, Jan. Yes, you're right, Emily, of course, we'll, at the appropriate time and end of the year, take the time to really contextualize our overall guidance, including our investment levels. I can summarize for you now, though, really what our message has been consistently throughout 2023 about how we should think about our overall OpEx levels, moving forward. So I'll take the next minute or 2 to summarize that. As always, given our strong position, we're going to continue to invest in the significant growth opportunities in a focused and disciplined way. It's something that we do take very, very seriously. As I think about that investment profile moving forward, particularly as it relates to, let's say, call it, the transition from 2023 to next year in the midterm, there are three drivers here now, particularly as it relates to R&D. First, EPCORE R&D is still in growth mode, so I fully expect EPCORE investment to go up as we add new Phase III trials over the coming years. And here, it's really important to remember that this is grounded in our conviction of EPCORE's potential to help a large number of people living with cancer and of course, will continue to be data-driven. And here, I mean looking at the clinical data and the landscape and also resourcing and sizing our investment accordingly, given this potential very meaningful opportunity. Second, again, still thinking about R&D, and this is kind of the swing factor, which additional programs will transition to later-stage development? As a reminder, you heard a lot about this today, we're doing some significant, let's call it, Phase II work for both CD40/4-1BB and PD-L1/4-1BB during the course of 2023. And as just announced, the emerging data from 1046 leads us to believe there is a path forward here in terms of late-stage development. Also for TIVDAK, based on what you've heard today, we also believe that there's a path forward here, particularly in terms of expanded development into head and neck, which also, we think, warrants further late-stage development. Now with that, hopefully, we'll come larger revenue opportunities in the medium term. Sticking with R&D and the third factor, we're going to continue to invest to maximize the value of our current tech platforms. And here, we're going to continue to invest to generate the next wave of IND candidates as well as progress some of our early-stage pipeline. And Jan shared with you some of the exciting progress there. So that takes care of R&D. Now let's talk about SG&A and starting on the G&A side. Here, we are starting to increasingly approach scale, based on our existing footprint. So growth here is already starting to moderate, and we expect it to further moderate here as we transition from Q4 '23 into 2024. Now if we think about the S part of SG&A., as it relates to EPCORE, there's a couple of things that you should all be thinking about as you start to model for 2024 and beyond. First, for the U.S., to be clear, the 2023 P&L reflects nearly a full year of costs for the initial indication. There will be some annualization impact next year, but that's going to be more on the moderate side. And here, as we potentially build out the EPCORE label over time, of course, there's going to be some incremental investments. However, we will be able to leverage existing investments in many cases. Now shifting to our other priority market. In terms of Japan, the same for what I just went through; for the United States, also applies. However, everything is just pushed out a bit, based on the potential approval date that we've now seen with epcoritamab in Japan, is coming at a much later point in the year. So the incremental impact in 2024 will be higher. So maybe just to wrap up the comments on our investment levels, so everything I just covered, of course, is directional in nature. As always, we're going to continue to be very focused and very disciplined in our approach, and we're going to continue to take a detailed bottom-up approach and make sure that we're putting the appropriate amount of resource into our most important priorities. And certainly look forward in February in conjunction with our full-year results we're really sharing what our investment priorities will look like for 2024. But what we heard today, hopefully, was conveyed a lot of excitement across our entire pipeline.

Thanks, Anthony. Thanks, Emily, for the financial question.

I would now like to turn the conference back to Jan van de Winkel for closing remarks.

So thank you for calling in today to discuss Genmab's financial results for the first 9 months of 2023. If you have additional questions, please reach out to our Investor Relations team. We hope that you all stay safe, keep optimistic and remain healthy. And we very much look forward to speaking with you all again soon.

This concludes today's conference call. Thank you for participating. You may now disconnect.