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

Good Afternoon, welcome. My name is Peter Welford. I'm one of the European pharma and biotech analysts at Jefferies in London. It's my great pleasure to be hosting the next company in this track, which is Genmab. And here from Genmab today, we have both the CEO and the CFO. So Jan van de Winkel and Anthony Pagano, the CFO at the end there. So it's a fireside chat. [Operator Instructions]

So let me kick off at the start. So first of all, I guess, can we talk about Epkinly first? Your -- I guess, the product that you are probably spending most emphasis at the moment from a commercial standpoint in partnership with AbbVie. Can you just talk about the strategy together with AbbVie? Obviously, it's a competitive market. And what the feedback has been so far from physicians and how that rollout is going in both the U.S. and Japan, I guess, where you've got a role there?

Thanks, Peter. So delighted to be here and delighted to actually kick off with Epkinly. Epkinly is doing really, really well. It's a very potent T-cell engager. The feedback has been incredibly positive from both patients as well as from doctors and the health care system. It's doing really well. It's actually quarter-by-quarter beating the competitors in the sales in the U.S. and for sure, in Japan because in Japan, we're actually having a head start of over a year over the other T-cell engagers targeting CD20. And actually, Epkinly right now in Japan is the fastest launching hematology drug ever. It's even faster than darzalex. So it's really doing very, very well. And in the U.S., it's also going broader for broader and broader markets. We have now 5 Phase IIIs ongoing and more to come for Epkinly. So together with AbbVie, we're actually rolling out a massive program for Epkinly. It's a T-cell engager, which can be easily combined with other medicines. It has a very good safety profile. It's incredibly rapid in debulking cancer. And it is -- you can give it in literally a 2-second subcu injection. So it's really easy to give. So we think that on the longer term, Epkinly has a lot of potential to potentially roll from the large cancer centers and academic hospitals into the community health care centers, which is a very important component in the U.S. health care system. And I think it's an ideal drug there to really be moving into that part of the market. We are going to combine it with oral specific next-generation cancer drugs. So we are trying to get away from chemo-containing regimens in the coming years, which is also, I think, a big plus. And as we actually described in the Q3 update 2 weeks ago, we are going to prioritize this program as one of the winners and going to do more rather than less together with our partners, AbbVie. So I think in short, Peter, the drug is doing really well. What I want to flag up is the upcoming ASH conference in December in San Diego. We have over 20 presentations based on Epkinly, 4 oral presentations. One of these oral presentations has been selected as best of ASH, the so-called ASH press program on December 8, and that is the CLL data, the monotherapy data in CLL with Epkinly. So we believe that Epkinly can go a lot broader than follicular lymphoma and diffuse large B-cell lymphoma for sure, in CLL, we're also now contemplating moving into autoimmune with Epkinly together with our partner, AbbVie, and that's the perfect partner to do that with because they are actually an I&I company, which is really with a very big -- good track record in that area. So I think a lot more to come on EPKINLY. That's where I want to leave it at. Do you want to add anything there, Anthony?

I think maybe in addition to what Jan has covered, another thing that's sort of, I think, resonating in the marketplace is Epkinly representing a single option across the B-cell malignancies. We know some of the competition has a couple of products they use to attack the market. We think the combination of the overall product characteristics, efficacy, safety, subcu and a single option really allow us to differentiate Epkinly.

And perhaps, obviously, the initial indication, both in follicular as well as large B-cell is obviously the relapsed/refractory is a relatively small patient subset. Can you just talk a little bit about the time line and how we should think about the shift into earlier lines? Because I guess the one thing certainly your competitor emphasizes is they've already got one second-line study. They're going to have at least 2 more second-line studies reading out in 2025. How are you going to catch up with that because they're obviously the bigger segments.

Yes, that's a very good question. And what we really want to do, and that's, I think, what competitors are also trying to do, Peter, is to moving to second line and frontline because that's where the real markets are for the T-cell engagers targeting CD20. And we have actually a chance also in the new year and definitely in '26 to come with readouts in the second-line setting for multiple studies, both in follicular lymphoma and diffuse large B-cell lymphoma. From the new year on, we will be far more granular in describing to the market when these trials are potentially reading out, what the potential addressable market size will be for these settings. So we believe that we are positioning EPKINLY more and more competitively also with -- versus the competitors. But we need to stay active. We need to do more rather than less, Peter. We are going to move into other B-cell cancers, as I already alluded to, and we are going to actually add more and more trials, not only Phase III trials, but also a lot of investigator-initiated studies so that investigators can get more and more used to using different combinations of epcoritamab. So more of that to come in the new year, and we will be very, very detailed and granular I can assure you. But for the time being, we hold some of the cards close to our chest. I think some of the Phase III trials have interims built in. It's very difficult to predict when an interim can potentially hit for some of these studies. But there will be, I think, a chance for surprises. I think surprises to the upside for epcoritamab in the coming year.

That's very clear. Let's shift to acasunlimab, the DuoBody-PD-L1x4-1BB. Can you just talk a little bit about and frame for us the -- first of all, the Phase II data you saw in lung cancer? And I guess, how you view those data and sort of set the scene, I guess, for this product in the future?

Yes, for sure, the second-line lung cancer data which were presented at ASCO was a 3-arm study, either acasunlimab alone or acasunlimab plus pembrolizumab and then dosed every 3 weeks or acasunlimab plus pembrolizumab dosed every 6 weeks. And we saw a very, very clear data sets showing that every 6-week dosing is optimal in actually leading to very, very significantly prolonged survival versus the other 2 arms and versus the historical benchmark. So we believe that there's actually a very solid overall survival benefit there with the acasunlimab data in a setting where the standard of care is still docetaxel. I mean that is shameful, but that is a drug from the '70s from last century, that tells you how difficult it is to actually make a difference in that setting. And we believe that the data is very strong. We added more data in the every 6-week cohort, Peter. So in that data set, that data readout will come next year. So there will be an update from that survival data from the data presented at ASCO initially this year. But we already have moved towards a Phase III. And the Phase III is running it against docetaxel and then combining it with pembrolizumab every 6-week dosing. That trial is -- has already started. So it's already recruiting in multiple countries, multiple sites. And in the new year, we will also move the drug into other settings. We will add at least one more cancer cell. Well, acasunlimab, we think that there's no reason to believe that this drug would only work in the second-line plus lung cancer setting after patients have been basically trying chemo or chemo plus checkpoint inhibitor. There's no reason why it couldn't work in other settings where activation of the immune system really already in other settings has led to improved treatment of patients. So we are going to add more cancer cells in the new year and more of that to come.

And then I guess related to that, we've just seen before this, your partner for this program, BioNTech, they opted out of this after seeing the Phase II data in terms of the profit share. Can you just talk a little bit about what drove that decision, I guess, and perhaps emphasize you're still confident in this program?

Yes, absolutely. I think you probably missed the opportunity to ask Ryan. I don't know whether he's still here. I think it's basically a BioNTech question. But what I understand is that they had at least 2 competing programs. And one of the programs was discussed very actively. I listened to the fireside chat from Ryan Richardson here just before this one, where they're discussing the new bispecific VEGF PD-L1 molecule. That was clearly competing for the same -- exactly the same patient set where they essentially owned now what we now know 100% of the ownership. And they had also an ADC also competing for the same patient population. For acasunlimab, there was a strategic decision from BioNTech to not go into a third Phase III program with a molecule where they actually owned not 100%, but 50% of the rights and Genmab had already negotiated the dominant commercialization rights in the U.S. and Japan, so making it even less attractive for a partner to invest in parallel in 3 programs, all competing for the same market. So we believe this is a business decision. But again, you should ask our friends and partners at BioNTech about the motivation there. We are happy about it. We are very, very pleased about 100% ownership of acasunlimab. We believe the data holds up really, really nicely. We can follow the overall survival data, but there will be an update next year of the new cohort of patients which we added to the every 6-week dosing cohort. We got an okay from the regulators to move forward with the Phase III. So we believe this could be a potential game changer actually in the second-line lung cancer setting, Peter, but also in other cancer settings. So very, very pleased with the progress. We are moving forward with Phase III now rapidly. And to have 100% of the rights, I think it fits perfectly in the new model for Genmab to move from a royalty-based model to a proprietary product-owned model -- business model, and we are well on track now with 200% owned programs and a 50-50. We already discussed that program epcoritamab or Epkinly, which goes for a larger and larger market to more and more settings with a fantastic partner, AbbVie, which is really doing an excellent job there and helping us with speedy recruitment of the Phase IIIs in order to keep up with competitors. So I think we're in a very good shape actually, very upbeat mode for the company.

Then the last thing on acasunlimab, can you just talk a little bit about what we get a lot of questions on as well is obviously 4-1BB is in this, the liver safety risks that have been associated with some of the competing programs in the past here. What is being done in your program to mitigate the potential liver safety that you must be having with this target?

I mean the most impactful difference is that this is a conditional activator of 4-1BB. This one can only work once PD-L1 arm is bound to a tumor or PD-L1 positive cell. And in that way, you activate the T cells and NK cells. So in that way, you prevent already a lot of the potential toxicity in the liver. We think it's actually a very manageable toxicity profile here with a potential large benefit. So this is a fundamentally different approach from the naked 4-1BB antibody approaches, which have been tested before, which ended up for some of them with very large liver toxicity. But we're also now using a dosing regimen that further limits the liver toxicity. We actually started with that earlier this year. We have not run into liver toxicity after that. So I believe that we are in a very safe setting here because of the different format and it's actually very manageable tox profile.

That's great. Let's move on then to the third sort of key focus asset that I think you've emphasized is where your dollars are going, which is Rina-S. So you obviously acquired ProfoundBio for that. Can you perhaps talk us through, I mean, what was it that you saw in the data here that drove the acquisition? And why is this an asset you wanted to bring in-house?

So this is indeed the lead asset of what is now in total 4 clinical programs, which were brought in by the acquisition of ProfoundBio. So the first is that we were already engaged in ADC programs for many, many years with Seattle Genetics, with Synaffix, with Bolt, with several other companies. And we actually -- in those years, Peter, we actually figured out that actually a large complication with ADCs is the linker. The linker is actually the secret in creating very efficient ADC concepts. And the first thing we actually noticed when we engaged with ProfoundBio for the first time in April '23 is they had a unique approach to the linker, a very hydrophilic linker, which allows you to actually attach a lot of hydrophobic payload molecules to an antibody molecule and not change the PK/PD profile of the molecule extensively, which is what happens usually when you add hydrophobic payloads to antibody molecules. They get very short half-lives, -- they're very difficult to work with. So we were incredibly impressed by the technology platform, by the elegance of the new hydrophilic linkers, but they had no clinical data. So we actually decided to wait until November last year at SITC, where they had the first data in the second-line plus [ POC ] setting, ovarian cancer setting with fantastic early data, which really triggered our interest in Rina-S with that molecule. This is a molecule which has 8 hydrophobic topoisomerase inhibitor molecules linked to an antibody molecule, a very good antibody against the folate receptor alpha. And the net-net is very good efficacy in early clinical testing, but also very good safety. And that is, again, a consequence of the unique linker used here. And we have given an update of the data in September this year at ESMO, where we showed a very good safety profile, no ocular toxicities, no ILD and some other toxicities were also seen with other ADC concepts and that actually can mean that the patients actually are on the drug for a much longer period of time. Essentially, all of the responders at the ESMO presentation were still on in treatment at the time of the data capture, which is quite unique. So it's not only a very good technology for Rina-S, Peter, but also for other compounds. We also saw the company as having a platform, which is completely complementary to the suite of technologies Genmab had its own suite of technologies. So we could actually see a concept of mixing and matching Genmab antibody-based therapeutic candidates with new payloads, not only from ProfoundBio, but also other payloads. We have a relationship with Bolt Biotherapeutics the TLR7/8 agonist, so-called ISACs, and we're also now combining that via the hydrophilic linkers with Genmab antibodies. And behind Rina-S, there were 2 programs already in the clinic, one targeting CD70 and the other targeting PTK7. And as of today, I can tell you that also there's a third program behind Rina-S in the clinic. Today, you can see on clinicaltrials.gov, a concept which we actually understand really, really well. It's a bispecific antibody created by ProfoundBio targeting c-Met and EGFR with 5 topoisomerase hydrophobic payloads because that seems to be the optimal ratio for this molecule. And we already know the c-MET EGFR bispecific programs really well because we actually created together with J&J, a molecule called amivantamab, where we get a very good royalty for, which is now called Rybrevant, which is doing quite well, not only in some subsets of lung cancer patients, but also recent data at ESMO showed in colorectal cancer, some very good data. This new bispecific ADC which is now Genmab-owned molecule is actually a molecule which preclinically is far outperforming amivantamab and other c-MET EGFR antibodies. So we are very excited about the prospects of that molecule. So not only did we bring in complementary technologies, which synergize with our antibody technologies, Peter, but we also brought in 1 Phase III ready program and 3 other clinical programs, which is quite good when you think about complementarity here. And there is a good chance that at least one of these other programs can also work like Rina-S, and that would make the acquisition completely worthwhile. And on top of that, one of the key priorities this year has been to integrate the team from ProfoundBio into the Genmab family, and that has been very, very successful. We have now a beautiful site near Suzhou, which is a biotech area near Shanghai, which it's called BioBAY. And this is a group of about 130 individuals, which are now forming our ADC center of excellence for Genmab worldwide. So we actually added a complementary technology suite there by this acquisition and a lead candidate, which is now in Phase III and several other clinical programs. So we actually think that, that adds up quite well.

And then we've got to ask, obviously, the question that everyone wants to know, HexaBody-CD38. So can you please give us an update in terms of your expectation for the time line and the decision and what data it is that the partner, J&J will see to inform their potential opt-in decision?

I'm very pleased to do this today for the -- only for the 100th time. So I'm very much into this in answering this question. So what we have messaged 2 weeks ago at our Q3 update is that we will hand over all the data, and this is a data set of a head-to-head study, a Phase I/II study in multiple myeloma, running the next-generation CD38 targeting molecule, HexaBody-CD38 against subcu daratumumab, the gold standards in multiple myeloma. We have actually, in December, all the data from both arms, which were contractually agreed with J&J, which relates to response rates, type of responses and also the follow-up of the response duration of a response, which we jointly agreed with J&J as needed in order for them to take an objective opt-in decision. That data will be shared with J&J in December. We will also explain all the data in great detail. So we will definitely speak with the team at that time. Then the clock starts ticking in early January as per the contract, and then they have maximally 60 days, 60 days to make a decision yes or no on whether they opt in or not. What they want to see? I think, again, you need to ask J&J because they are in charge of making that opt-in call for HexaBody-CD38. But I think they would like to see is clinically differentiated data. And then the next question from you, Peter is, of course, what is clinically differentiated data? I think you need to ask J&J because I think it's really important for J&J in order to opt in to this program that they can convince doctors and the health care system that is clinically differentiated molecule from daratumumab to gold standards, which can lead to better data in patients and likely in combination with other medicines. And I think that is a call only J&J can make. And what we will do -- we decided to do, Peter, is at the time that they take a decision, we will flag that up in a press release for the market because I think it's an important binary point which is really important for the market to understand what the outcome is. At that time, we will give you top line data, headline data so that you can immediately see on what basis J&J has made that opt-in decision. And then the fully detailed data will, of course, then be presented next year at a medical meeting in a proper format because we really owe that to the doctors who have done the clinical study, so this can be looked at in full detail, but this will be a bit later, I think, in the year because we have to submit that data to a conference stand at that point.

And then perhaps final sort of pipeline one is if we think about immunology, it's an area you flagged as an area you want to take Genmab into beyond oncology. If we think about immunology, when might we see the first potential lead candidates from immunology come forward? And how does Genmab consider this?

I mean we have a number of programs active in the I&I field because we feel that, that is an area where our antibody technology can also lead to very good differentiated medicines because that is the only category we want to work on. We have a number of programs which we own 100%, Peter, which are all in preclinical stage, trying to find the lead candidate to select the lead molecules in different autoimmune models for autoimmunity. In I&I, you need to do far more extensive testing also for safety than for cancer. So they tend to take a bit longer. We have also a number of programs. I think it's right now, it's 3 programs in I&I, which where we work together with argenx, which is a very, very good company in that area with a lot of expertise, which is complementary, again, to the expertise from Genmab. These are all preclinical, Peter. So I don't know the exact stage of these programs, but we will flag up when they move towards the clinic. But you asked me, well, when is the first molecule in the I&I field going to the clinic, it may very well be Epkinly when we actually move forward to the autoimmune field. We have a fantastic B-cell depleting molecule, which you can give subcutaneously, which is having a very good safety profile. We are currently discussing that together with our partner, AbbVie, as whether that wouldn't make a good molecule to move in certain I&I settings. And I&I is very broad. You have very large markets. You have also patients sectors where you have a much more defined approach possible. And I think we could actually position ourselves really well in some of these areas. So more to come. I think in the future, we are now in active discussions with AbbVie on the I&I use of Epkinly and other programs also marching forward. But we also, I think, flagged up at Q3 2 weeks ago that we're also not shying away, Peter to kill programs early on when they are not having the potential to be clinically differentiated because the only molecules we want to focus our attention on is clinically differentiated molecules because we know -- we probably all know how difficult it is to develop new medicines. And once you have a winner, it's much easier to broaden the impact of that. We know when to find the next winner. And we are not shying away from killing programs because I think we need to only end up with the 1 or 2 really differentiated molecules because that can actually create a lot of value for patients as well as for the markets.

And perhaps finally, because I know conscious that Anthony hasn't got too much opportunity to say anything there. So can we just talk about spend going into 2025? You gave a few comments as well on the 3Q call regarding this. Can we just talk about what sort of things should we be considering when we look at both R&D and SG&A spend going into next year?

Yes. Thanks, Peter. As a starting point, what I commented on in the Q3 call is that total OpEx per consensus for 2025 is in a reasonable place. As we think about 2025, a key theme is prioritization. You just heard from Jan that we're not going to shy away from terminating programs that don't meet our very, very high bar. Prioritization also means prioritizing our Phase III programs. Right now, we have 7 ongoing Phase III trials, 5 for Epkinly, 1 for Rina-S, and 1 for acasunlimab. So absolutely prioritizing there. What that means by inference is that we will be moderating growth or moderating investment in research through Phase I or Phase II. Another key theme is really around driving efficiency and scale benefits. You've seen the performance on our SG&A line. We'll continue to rigorously prioritize our investments there as well to overall manage our investment levels. But the key message that we wanted to communicate is that 2025 consensus for OpEx is in a reasonable place.

That's great. We've run the clock down with that. Thank you very much all for attending. Thank you, especially, obviously, Jan and Anthony. With that, we'll close the session. Thank you.