Genmab A/S Q1 FY2021 Earnings Call

Hello, and welcome to the Genmab Q1 2021 Conference Call. Throughout the call, all participants will be in listen-mode only, and afterwards, there will be a question-and-answer session. Just to remind you, this conference call is being recorded. During this telephone conference, you may be presented with forward-looking statements that include words such as believes, anticipates, plans, or expects. Actual results may differ materially. For example, as a result of delayed or unsuccessful development of projects. Genmab is not under any obligation to update statements regarding the future nor to confirm such statements in relation to actual results unless this is required by law. Please also note that 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 policy for more information on Genmab and our privacy policy. Today, I'm pleased to present Jan van de Winkel. Please go ahead with your meeting.

So hello and welcome to the Genmab conference call to discuss the company's financial results for the period ended March 31 2021. With me today to present these results is our CFO, Anthony Pagano. Let's move to slide 2. As already said, we will be making forward-looking statements. So please keep that in mind as we go through this call. Let's move to slide 3. Genmab has an innovation-based culture and collaborations and partnerships have always been part of our DNA. During today's presentation, we will reference some of the products being developed under these strategic collaborations, and this slide acknowledges those relationships. Let's move to slide 4. Through our 22-year history, we've had a laser-sharp focus on harnessing the power of human antibodies to develop differentiated cancer therapeutics. This slide provides a review of what is behind that focus. Our core purpose guides our work, our extremely successful strategy, and our ambitious vision for the company. Genmab's evolution into a fully integrated biotechnology powerhouse continued with the events of the first quarter of 2021. So now let's move to slide 5 and look at some of these recent achievements. We continue on our ambitious path to bring our own medicines to patients and are excited about the recent U.S. FDA's acceptance of the tisotumab vedotin BLA for priority review based on the innovaTV 204 Phase II study. If approved, tisotumab vedotin would be a first-in-class therapy, and we believe that it has the potential to become an important treatment option for patients with recurrent or metastatic cervical cancer. The PDUFA target date for a potential U.S. FDA approval is October of this year. Along with pharmaceutical partners, we continue to assess our regulatory strategy for submission of tisotumab vedotin for metastatic cervical cancer with health authorities and plan to prepare the most robust regulatory package to support the potential regulatory approval in Japan and Rest of the World. A submission in Japan will take place later than we initially anticipated to ensure we meet the Japan Health Authority requirements. So our pipeline for potential filing in Japan will reflect the inclusion of data from the innovaTV 301 Phase III study. The first patient was dosed in this study during the first quarter of 2021. Additional pipeline progress included the first patient dosed in the first Phase III study of epcoritamab and the first-ever patient dosed with HexaBody-CD38. The company also expanded our executive management team on March 1. Then, as we discussed during our full-year 2020 results presentation, Dr. Tahi Ahmadi was appointed to the position of Chief Medical Officer for Genmab. In addition to focusing on our pipeline, the power of Genmab's innovation was reflected in important updates for therapies created by Genmab that are being developed by other companies. Let's move to slide 6. As a reminder, there are currently three Genmab-created therapies on the market developed and commercialized by other companies: DARZALEX, Kesimpta, and TEPEZZA. During the first quarter of 2021, there were significant events for both DARZALEX and Kesimpta. In January, Janssen's DARZALEX FASPRO became the first and only FDA-approved treatment for AL amyloidosis. Sales over the quarter were also strong. We reported $1,365 million in net sales by Johnson & Johnson, an increase of 46% over the first quarter of 2020, resulting in DKK 984 million in royalties to Genmab. Turning to Kesimpta. At the end of March, Novartis received approval in Europe for the treatment of relapsing forms of multiple sclerosis in adults with active disease defined by clinical or imaging features. This approval makes Kesimpta the first B-cell therapy that can be self-administered once a month at home, both in the US and in Europe. We are enthusiastic about the future of all three of these medicines as they exemplify our commitment to applying our world-class antibody expertise to create differentiated antibody therapeutics with the potential to fundamentally improve patients' lives. As Anthony will discuss in further detail, the collaborations for these three medicines provide us with the financial foundation of our current success with recurring revenue from royalties, which we can then use to invest further in our business to deliver our inspirational vision. I'm pleased to now turn over the call to Anthony. Anthony, please go ahead.

Great. Thanks, Jan. Let's move to slide 7. To start, I'd like to take a moment and highlight our financial framework and the related key drivers. First off, let's think about our revenue profile. On the left, you can see our current and future recurring revenue streams. You're all very familiar with our three existing approved products: DARZALEX, TEPEZZA, and Kesimpta. Each of these has exceptional growth profiles and is expected to generate significant cash flow for us for the years to come. Then we have two potential revenue streams that could come online later this year. We submitted the BLA for tisotumab vedotin in Q1, and at the end of last year, Janssen submitted a BLA and an MAA for amivantamab. If both are approved, that will bring our total number of approved products to five, which is really exciting for me. Now onto our focused approach to investment shown on the right. We'll continue to invest in our business and capabilities to position us for sustained success and will accelerate and expand the potential winners in our pipeline. And we'll also ensure we are ready to launch should tisotumab vedotin and, in the future, epcoritamab be approved as well as ensuring that we remain focused on the bottom line. Let's take a closer look at an important component of our recurring revenue growth: DARZALEX sales on slide 8. We saw continued strong performance for DARZALEX in Q1, you can see that in the chart on the left. Overall, DARZALEX sales grew by 46%. That's net sales of nearly $1.4 billion, which translates to DKK 984 million in royalty revenue. This exceptional growth was driven by continued strong market shares across all lines and by the strong uptake of the SubQ formulation, so DARZALEX remains a key driver of our revenue as you can see on slide 9. Looking at the graph on the left, you can see our revenues grew by 77% in Q1. There were two main drivers. First, recurring revenue grew by 30%, and that's primarily due to higher DARZALEX royalties. Second, we recognized milestone payments from AbbVie for epcoritamab and from Janssen for daratumumab. Now coming back to our recurring revenues, it's useful to unpack this a bit. We've already spoken about DARZALEX and the very strong performance there. For Kesimpta, we're encouraged by the nice quarter-over-quarter growth seen in Q1 and the recent approvals in Europe and Japan. Now on to TEPEZZA. Here, due to the supply chain disruption, we didn't record any royalties for the quarter, but we believe the strong fundamentals of the product remain intact, and we are pleased to hear the positive commentary from Horizon earlier today that they have started to supply the market again. So our revenue profile continues to get stronger, and we're taking those revenues and investing in a highly focused way, as you can see on the next slide. Total operating expenses grew by 28% in Q1. Here you can see where we invested. We accelerated our investment into our product portfolio, especially the advancement of both epcoritamab and DuoBody-PD-L1x4-1BB. We've also spent more on expanding our team, hiring key members to support our growing product pipeline. Lastly, we've continued to build our commercialization and broader organizational capabilities to support our expansion. Finally, we are leveraging the AbbVie collaboration by utilizing their expertise and significant financial contributions to further expand and accelerate our partnership programs. Now let's look at our financials as a whole on slide 11. Here you can see our summary P&L. For Q1, revenue came in at approximately DKK 1.6 billion, up nearly DKK 700 million. The increase was primarily driven by higher DARZALEX royalties and the milestones related to epcoritamab and daratumumab, I mentioned earlier. Total expenses were slightly north of DKK 1 billion, with 81% being R&D and 19% G&A. Operating income was DKK 532 million compared to DKK 71 million last year. Our net financial items amounted to a gain of DKK 892 million, which was primarily driven by unrealized foreign exchange rate gains related to our U.S. dollar-denominated cash and investments due to the move higher in the dollar during the quarter. Then we have a tax of DKK 328 million, which equates to an effective tax rate of 23%, and that brings us to our net income of DKK 1.1 billion. So by any measure, the first quarter of 2021 was extremely strong. Now let's take a look at our guidance on slide 12. Following our strong Q1 numbers, I want to provide some additional color on where we are headed for the balance of the year. To start, we are confirming our full-year guidance. If we look at our revenues, we're unquestionably off to a strong start. First, with our market products generating royalty revenues. We really like what we've seen here in Q1 from daratumumab and Kesimpta, and we're looking forward to TEPEZZA coming back online. For me moving forward, it will be important to see this momentum continue as we progress into Q2 and Q3. In addition, we have a sizable chunk of revenue to come in order to hit our non-recurring revenue guidance, which includes both milestones and cost reimbursement. For operating expenses, we expect to step up our investments as the year progresses. This is in line with our overall strategy and the key priorities I highlighted at our Capital Markets Day in November and reiterated in February. For us, it starts with our focus on progressing epcoritamab and the rest of our pipeline and preparing for the potential launch of tisotumab vedotin later this year. Putting all this together, we're on track to deliver another year of substantial operating income in a range of DKK 1 billion to DKK 2 billion. Now for my final slide, let me provide a few closing remarks. In summary, we've had a very solid start to the year. We've created growing recurring revenue streams based on products with exceptional growth profiles, and that gives us a strong backbone of significant underlying profitability. We're investing those revenues in a highly focused way to realize our vision and capitalize on the significant growth opportunities in front of us. And on that note, I'll hand you back to Jan to discuss our key priorities.

Thanks, Anthony. Let's move to slide 14. As we have discussed, our key priorities are essential to our success in 2021. With the submission of the tisotumab vedotin BLA and the subsequent receipt of priority review, we are on track towards reaching these goals, even with the adjustment of our timeline for the tisotumab vedotin regulatory submission in Japan. While other goals remain on track, thanks to the excellent work and tireless dedication of our team members, we will continue to focus our resources on further progressing, expanding, and developing a world-class antibody product pipeline. We very much look forward to providing you with updates on a number of our clinical programs over the course of this year as we evolve into a leading, fully integrated biotech innovation powerhouse. Let's move to our final slide, slide 15. That ends our presentation of Genmab's first quarter 2021 financial results. Operator, please open the call for questions.

Thank you. Our first question comes from Wimal Kapadia from Bernstein. Please go ahead.

Thank you for taking my question. I'm Wimal Kapadia from Bernstein. First, could you provide some clarity on the Halozyme royalty impact? I see a DKK 64 million impact in Q1. Can you confirm what percentage of your sales for the quarter came from the SubQ? Also, how does Genmab view that number by the end of the year, and what do you anticipate will be a steady state? My second question is about amivantamab. I understand this is a J&J asset, but I'm interested in Genmab's perspective on the drug's potential. The initial target is Exon 20, but since J&J is conducting trials in a broader population and head-to-head against Tagrisso, the product profiles may change significantly. How are you assessing the contribution of this asset, and what impact does it have for Genmab? Thank you.

Thanks, Wimal for the questions. And I will definitely park the first one for Anthony so he can think about that one for the Halozyme royalty rates. Let me take the amivantamab one. As we both know, the initial population in lung cancer is quite small. It's a subset of patients and a very small subset, but there is already a trial ongoing in a much larger population with amivantamab and over 1,000 patient trials as we know, which is representing about 20% of the lung cancer patients. So, we think that the contribution of amivantamab to our income stream, Wimal, for this year will be very limited. We assume an approval in mid this year for a subset of lung cancer patients. But if actually that larger population would read out positively, then the income profile is quite substantial, especially when we realize that we will get royalties from the high single-digit to the low double-digit percentage range. So that's pretty substantial and has potential. So, I think I'm going to park it here. I think we will first need to see the data from the Phase 3 trial, the larger Phase 3 trial before we can really project income streams more reliably. I think next year we will probably guide, in our guidance, take into account the amivantamab contribution if the drug is approved, Wimal. But for this year, it will be small, and we will update you hopefully in Q3 and Q4 of this year, assuming that we get a mid-2021 approval for amivantamab as the first DuoBody-generated antibody products. And the nice thing is just now 13 DuoBody molecules in the clinic, five by Genmab and seven by Janssen and one by Novo Nordisk. I think this will be the year that DuoBody will become very, very hot on the radar screen as a key technology for driving excellent next-generation antibody products not only for Genmab but also for partners of Genmab. We see that list getting longer for sure already within 2021. Having said that, I'm going to hand over to Anthony to see what you can say about the Halozyme contribution now and potentially near the end of the year. Anthony, the floor is yours.

Great. Thanks, Jan and Wimal. First of all, I certainly appreciate that you want to fine-tune your models and I'll try to be as helpful as I can, but I think you can also appreciate I really can't comment on the specific royalty that J&J is paying to Halozyme. That's really a relationship between the two of them. But maybe I'll try to walk you through some additional pieces of information and we can hopefully still be helpful. The key message I want to leave you with here today is that the guidance that we gave on this back in February remains intact. Here what I said was that the full-year impact would be around DKK 450 million. For Q1, the headwind was DKK 64 million. For 2021, we expect more than 50% of global DARZALEX sales will be SubQ. So far what we've seen is a rapid uptake of the SubQ in the US and in other parts of the world. To provide a little bit more context in the US market, where we have the best visibility to some data, currently SubQ accounts for around 60% of DARZALEX gross sales according to IMS, and this compares to around 50% at the beginning of the year. As a reminder, we do have limited access to timely info in terms of splits of sales between IV and SubQ in markets outside the US. I think to get to the other part of your question, if we step back for a moment, we continue to believe the overall growth profile for DARZALEX, including the SubQ version, is exceptional. We expect the trend towards strong SubQ conversion to continue. So hopefully that gives you some context now in terms of where we're headed for the balance of the year and where we landed in Q1.

Great, much appreciated. Thank you.

Our next question comes from Michael Schmidt from Guggenheim. Please go ahead.

Hey, guys. Thanks for taking my questions. I had a few on epcoritamab. Perhaps first, I know you have an update coming up here at the ASCO conference. Could you just help us understand how significant this update will be perhaps relative to what we've seen at ASH last year? Will there be a focus on the Phase II expansion cohorts perhaps? Or is it a longer-term follow-up still on the dose escalation portion of the study? Secondly, could you remind us what the target size is of the three planned expansion cohorts in this study? And what duration follow-up perhaps is required for potentially filing for accelerated approval in those indications? And lastly, where are you with respect to meeting potential CMC manufacturing requirements for potential approval down the road? Thanks so much.

Thanks, Michael for the questions. The aspect you've seen the title for ASCO will be a follow-up, an update on the dose expansion cohorts in follicular lymphoma, diffuse large B-cell lymphoma, and mantle cell lymphoma. It will give you more information and clarity on duration of responses, the development of the depth of the responses, etc., but no data from the expansion products. It's from the dose escalation part from the Phase I/II, and the other data in different tumors, potentially also in CLL maybe are scheduled for the second half of the year, Michael. So that's what I can say right now on epcors data at ASCO. The expansion cohorts will be over 100 patients for each of the expansion cohorts. The diffuse large B-cell lymphoma one is the most advanced, followed by follicular lymphoma and then mantle cell lymphoma. So hopefully, updates also during this year on how that progresses. We think that each of these could potentially be used for potential accelerated filing if the data would allow that. We certainly will have interactions with the regulatory authorities on that. Your CMC question is in full swing, potentially supporting us to assuming that the expansion cohorts will read out positively, that we can potentially file in 2022 for an accelerated pathway for at least one of these expansion cohorts, perhaps more depending on how recruitment will go in the coming time. CMC is completely on board and in line with the potential product filing and approval within 2022. I think certain news will probably come during this year, Michael. We'll keep you very firmly updated. What I can tell you also is that the more data we see, the more we become encouraged by the potential of epcoritamab. We think it's a fantastic candidate therapeutic, and we actually get more and more reassurance that we put a potential real best-in-class in this category.

Thank you, Jan. Appreciate it.

Alright. Thank you.

Our next question comes from Jonathan Chang from SVB. Please go ahead.

Hi, guys. Thanks for taking my questions. First question, when should we expect to see updated GEN1046 data this year?

We have not yet decided on the exact timing, but it will be in the second half of this year. We expect you will see data from different expansion cohorts at the right dose, Jonathan, but we're going to pick one of the conferences likely in the second half of this year.

Understood. And second question, I wanted to touch on a topic that we haven't heard much about. I'd love to get your latest thoughts on your partnership with Immatics and the ongoing efforts there. What's the latest status of those early-stage initiatives? And more broadly, what are your thoughts on the promise and risks associated with PCR bispecifics? Thank you.

Thank you for your question, Jonathan. It's been a while since we discussed this. The partnership is progressing very well. We have developed panels against several targets and created bispecifics, which we are now comparing to empirically identify the most potent molecule. Our strategy with the DuoBody technology platform is to generate many candidates and then empirically screen for the most effective one. Currently, some of the Immatics programs are running concurrently. We believe that these unique antibodies, developed through Immatics technology, which target tumor-specific epitopes in the context of MHC molecules, are very promising for achieving specific bispecific-mediated tumor cell targeting. We are excited about the potential of this technology. The partnership is going well and making progress. We hope to finalize our clinical candidates this year, allowing for more detailed discussions about the path to the clinic. The potential is certainly there, although we are still focused on generating strong therapeutic candidates from panels of bispecific antibodies. One of Genmab's strengths is our ability to select truly differentiated product candidates, thanks to the robust DuoBody platform. This has been key to our success in advancing IND candidates to market so far. We expect the hedge rate to improve going forward, as we gain a better understanding of the characteristics of effective candidate antibody components for next-generation antibody drugs. We anticipate seeing several promising candidates from both external partnerships and our in-house pipeline moving to the clinic swiftly. There will definitely be updates this year. We plan to expand our pipeline from eight proprietary clinical programs to a larger number this year, with some being bispecifics and others potentially emerging from different technology platforms like our HexaBody platform. That’s all I can share for now.

Thank you.

Thank you.

Our next question comes from Emily Field from Barclays. Please go ahead.

Hi. Thank you. I was just wondering if you could provide any color on the increase in the expected enrollment in the ongoing GEN1046 study. And whether you think that any of the data from that trial could be registrational? Thank you.

Thanks, Emily. We have I think right now nine expansion cohorts, which are recruiting patients for you. You will see more expansion cohorts for GEN1046 in the coming time. I think each of these expansion cohorts can be expanded to a number of patients that could potentially support an accelerated regulatory approval path. I think it's still a bit too early. I don't need to say more about it right now. But I think there's definitely potential that we could find data in some of these expansion cohorts which would allow us up on discussion with the regulatory authorities to go for a rapid accelerated approval path. More data will be presented this year in the second half of this year and then more next year. So we continue to be very, very excited about that molecule. You've already seen a combination between 1046 and a Taxotere chemotherapeutic in one of the cohorts. There will be other new expansion cohorts added in the coming times. So we look forward to presenting data to you all within this year at a medical conference.

Thank you.

Thank you, Emily.

Our next question comes from Sachin Jain from Bank of America. Please go ahead.

Hello, it's Sachin Jain. I have a couple of questions. Firstly, regarding epcoritamab, Jan, you mentioned the potential CLL data in the second half of the year. Could you provide any early insights on the efficacy you're observing in that context? Are you aware of any other CD3, CD20 therapies that have shown efficacy in this setting? Secondly, about the 4-1BB, I’d like to follow up on the previous question regarding the expansion of the recent study size. What can you share about what this indicates regarding your confidence about liver toxicity? Are you seeing efficacy signals beyond the lung? Additionally, I’d like to ask about the accelerated filing. Some physician feedback suggests that the long data in a very refractory population, with data from 80 to 100 patients showing roughly a 20% response rate, could provide a reasonable basis for an early filing. Do you have any comments on this or any discussions that have taken place in this regard? Thank you.

Thank you, Sachin, for your questions. Regarding CLL, it's still early in the process. We are currently enrolling patients in one of the studies with epcoritamab, and I can confirm that we have a promising active drug. I think that's where I'd like to leave it for now. This represents new and unique data for CD3 and CD20 or CD20-targeted antibodies, and we need to observe how the data evolves. We are testing two different doses of epcoritamab in CLL, and we hope to present results for the initial group of patients treated with epcoritamab in the latter half of this year. Moving on to 1046, the PD-L1x4-1BB antibody has shown liver toxicity, but as I mentioned to Emily, we are advancing with various expansion cohorts, indicating that we can manage the toxicity effectively. We find it to be quite manageable. With 1046, we believe it's a unique and very potent bispecific antibody targeting immune checkpoints. You inquired about evidence related to tumors other than lung cancer, and the answer is definitely yes. We previously reported at a safety readout last November that we have observed responses in patients with triple-negative breast cancer and ovarian cancer. This is actually the first 4-1BB-targeted antibody to show responses in patients who were resistant to immune checkpoint targeting in the past. Although it’s still early, we need to see more data on the duration of responses before we can make further conclusions, but we are genuinely excited. This excitement is not limited to 1046; the CD40 4-1BB antibody, 1042, is also performing very well. We anticipate presenting dose escalation data from that bispecific antibody in the second half of this year. It represents a different approach by targeting the CD40 agonistic antibody arm along with 4-1BB on T-cells. We are observing clear responses at various dose levels and will progress that bispecific in partnership with BioNTech. We are looking forward to sharing initial clinical data on that, probably also in the second half of this year. Regarding your third question about contact with regulatory authorities concerning some of the expansion cohorts of 1046, the answer is no, not at this point. However, we are making excellent progress, and we will provide updates once we have them, likely in the latter half of this year, Sachin.

Thank you.

Our next question comes from Trung Huynh from Crédit Suisse. Please go ahead.

Hi guys. It's Trung from Crédit Suisse. Just three questions for me please. First one just following up on Wimal's question on subcutaneous share. Can you just give us a bit more help or ballpark of the share of SubQ DARZALEX ex-US for Q1 that you saw? Then on epcoritamab and Roche's POLARIX study in first-line DLBCL which we'll see later this year. If it becomes the new standard of care, how does that change your thinking on epcoritamab's development program? And what's your targeting later lines of therapy? Are you still committed to your multiple-line strategy here with combinations? And then finally, earlier this week, we saw Pfizer pause the enrollment of their BCMA CD3 due to neuropathy. I'm aware J&J is handling the development of tisotumab. But can you perhaps give us your thoughts on peripheral neuropathy safety? And if there is any potential this could be a class effect? Thank you so much.

Thank you for your questions, Trung. I will ask Anthony to provide more details about the SubQ share outside the U.S. since he previously discussed the share in the U.S., which is currently over 60%. Now, regarding our development strategy, we are continuously adjusting our plan in response to the changing landscape. You can expect a quick increase in the number of epcoritamab studies listed on clinicaltrials.gov soon, and we'll be actively discussing that. We will introduce novel combinations that haven't been demonstrated before with other CD3 CD20 bispecifics. Regarding your inquiry about multiple lines of therapy, we are indeed planning Phase III trials for various B-cell cancers across different lines of therapy. This aspect is increasing rather than decreasing, even with the evolving landscape. This year should bring more clarity on how we position epcoritamab. You will see more data at ASCO initially, followed by additional data on various B-cell cancers in the latter half of the year, which should help in appreciating the full potential of epcoritamab. We are becoming more optimistic about the unique attributes of this bispecific compared to other CD20-targeted antibodies. As for your question about the Pfizer BCMA CD3 bispecific, I cannot comment on daclizumab since I don’t have detailed oversight of the data. However, there will be an oral presentation on daclizumab at ASCO, as well as on Talquetamab, another bispecific antibody for multiple myeloma developed by Janssen, the GPRC5B CD3 bispecific. If there had been issues with toxicity similar to those seen with other compounds, you likely would have heard about it. The technological approach used by Janssen is significantly different. They have developed seven bispecifics in the clinic using the DuoBody technology from nine clinical candidates across different programs, from which hundreds of candidates were generated—something that requires a solid technology like DuoBody. This contrasts with Pfizer's approach, which is more simplistic in nature. Therefore, there’s a strong possibility that daclizumab is quite different from Pfizer's antibodies. For information on the toxicity profile of Talquetamab, I recommend reaching out to Janssen for further details. At the very least, you can expect to see an abstract and an oral presentation by May 19th, along with additional presentations related to Talquetamab at ASCO. I can't provide further comments on that at this moment. Anthony, would you like to elaborate on the ex-U.S. shares of SubQ daratumumab for Trung?

Sure. Thanks, Jan. Yes, Trung, I'd try to be helpful here. Again, I do appreciate, similar to I said to the malls, you want to fine-tune your models, but just I'll walk you through the way I think about this. It starts with that. We certainly expect the trend towards strong SubQ conversion to continue. To update about the specific metrics in the US, here's where we actually have access to what we think is good data by IMS on a real-time basis. For the Rest of the World, we really don't have access to the same quality of information. What I can say is that in some markets following the reimbursement, it almost becomes a little bit binary not where it goes from 0 to 100, but zero to a very high number rather quickly. This is on a market-by-market basis. It depends on the individual markets in terms of particular market dynamics and also a function of reimbursement approvals. So, to conclude here, we see the overall trend towards SubQ adoption to continue.

Thanks, Anthony. I can probably share with you Trung that in some countries there's over 90% usage already for SubQ daratumumab like in the Nordic countries and some other larger European countries. In other countries, it's closer to 30%, but building up rapidly. Janssen can give you further color on that. We are not allowed to share anything further. But I think it’s rapidly progressing towards SubQ now in Europe. Thank you, Trung. Are you still there? I think the operator we can probably go to the next question.

Yes. Our next question comes from Peter Welford from Jefferies. Please go ahead.

Hi. Thanks so much for taking questions. Let me start with tisotumab. Just curious if you can talk a little bit about whether you've had discussions yet in other markets outside of the US and Japan regarding what sort of clinical data is potentially required to consider a conditional accelerated type of pathway in those countries? And whether or not the decision in Japan to wait for 301 data impacts at all your thinking with regards to building your own commercial infrastructure given the agreement with CGEN? And how that impacts thinking? If I could then just ask on DARZALEX. Just with regards to the guidance, I don't think J&J made much comments about this, but I'm curious if you have insights into the first-quarter trend ex-US. Obviously, you're reiterating your aim which tepidly at the first-quarter sales were flat for the remaining quarters, you'd be above the midpoint of that. So curious as to what your hue with regards to the trend and what we should infer from the first-quarter ex-US number? And then just finally, sorry, a quick point of clarification just on amivantamab. I think, Jan said it was royalties of high single to low double. Is that an equivalent per term for all of the J&J Duo bodies? Or does the royalty rate potentially vary by DuoBody? Thank you.

Thank you, Peter, for the questions. I'll address the first and third questions and then pass the guidance on DARZALEX to Anthony. Starting with tisotumab vedotin, the situation in Japan is not affecting our strategy in other markets. In Europe, we feel that data from the 301 Phase III study, which is currently closing, is necessary. This study compares tisotumab vedotin with chemotherapy in second and third-line cervical cancer patients. This year, we expect additional data from other cohorts and believe we can expand the market beyond second and third-line treatments. Regarding the delay in Japan that I mentioned, it will impact the development of our commercial teams, but not significantly. The commercial introduction in Japan will be later than we initially anticipated. However, under the AbbVie agreement for epcoritamab, we must prepare the commercial team in Japan to potentially start treating patients as early as next year or the year after. We will build up our team regardless, though it may proceed a bit slower now due to the longer timeline for tisotumab vedotin. We are committed to our two priority markets, and this will not alter our commercial arrangements with CGEN. We are very excited to collaborate with CGEN in the U.S., aiming to launch shortly after summer and hopefully receive approval around October for tisotumab vedotin, followed by co-promotion of the drug with CGEN. While there may be some slowdown in Japan, it is not substantial. We remain focused on establishing our commercial presence, starting with Japan and the U.S., and potentially considering other markets in the future. Regarding amivantamab, the royalty rates vary for different DuoBody molecules. As you may recall, we have two sets of agreements with Janssen established in 2012 and a broader set for DuoBody candidates in 2013. Amivantamab provides us with the highest royalty among all DuoBody molecules. This is because we not only granted access to the DuoBody technology platform but also developed the eGFR and CSN arms that Janssen utilized to create amivantamab. Thus, our royalty for amivantamab is higher compared to the other Janssen bispecifics that fall within the single-digit royalty range. I can't provide further specifics, but we are fortunate that amivantamab requires Janssen to pay us the highest royalty rate. We plan to present more exciting data at ASCO. Now, I'll pass it to Anthony for the DARZALEX guidance.

Yes, thanks, Jan. Hi Peter. Certainly after a strong Q1, I can see why you’d ask this question. For me, at this stage and from my perspective, our guidance continues to be appropriate. Let me spend a few moments explaining why. To start, I think it's really useful to drill down into the geographic split in sales. For the US, sales of 691 million were up 49% compared to Q1 in the previous year, but the sequential quarter-over-quarter performance was more muted. It’s not uncommon for us to experience lower to modest sequential growth in the US in Q1 compared to Q4, so let’s take this into account. Looking at the rest of the world, this was the real driver of the strong Q1 performance with sales of 674 million, which was up 20% compared to Q4 and up 42% year-over-year. We’re encouraged by the strong growth here. However, as we've previously highlighted, we have less visibility as to the individual markets and their growth drivers. In Q1, there were some tailwinds from FX. I want to highlight that it has been reported by several companies that COVID continues to represent a challenge in terms of diagnosing new cancer patients and getting needed treatment to existing cancer patients. So far, this doesn't seem to have been a significant barrier for DARZALEX, but it's something we need to consider. Overall, if I sort of step back from this, what we want to see here is the strong momentum that we observed in Q1 continue as we move forward into Q2 and Q3. Taking all this together, I hope you see why we feel our guidance continues to be appropriate.

Yes, that’s great. Thank you.

Thank you. The next question comes from Peter Verdult from Citi. Please go ahead.

Yes, Thanks. Peter Verdult, Citi. Jan take you briefly away from the pipeline and then we can dive back in. The share price by our calculations is fully pricing in the downside from your spat with J&J. No DARZALEX royalties beyond 2030 despite you paying 50% of the Halozyme royalty for the foreseeable future. Just wanted to check in on arbitration; I know you're not going to say much and you can't say much, but is there anything you can say on timelines or even willingness to seek resolution through alternative avenues? That's question number one. And then on to the more interesting pipeline questions just checking in on Mim8, any sense or feel as to whether the emerging data is strong enough for a move into Phase III? Just interested to hear your views on the asset. I realize your technology is in the hands of a partner. And then the last question, this will just require a yes or no answer. Any chance we will see HexaBody CD38 data that could lead to an opt-in this year, or is that very much a 2022 event? Thank you.

Thanks Peter for the questions. Interesting questions for sure. Let me start with the arbitration. I can tell you that we are feeling very strongly that we are morally and ethically doing the right thing here by defending our position. Timing is uncertain as I already said before Peter. But I can tell you the process is progressing very rapidly. Lots of documents are being exchanged. Both parties are working on the case. We would very much like you to have that perceived overhang disappear as quickly as possible, but it's in the hands of the judges and the process. I cannot comment any further on timelines. There is clear activity, and I can tell you that we are doing all we can to complete that case in the shortest possible timeframe. Yes, I think we have been hit by the uncertainty here, but in life, you sometimes have to keep your back straight, and you feel that you're doing the right thing. This is one of those situations. Of course, we will be open to resolve this in any way possible, but we have to defend our proposition, and we feel that we are doing the right thing. Regarding Mim8, I don't know the data that well, but I know the preclinical data actually very well. This is a superbly well-differentiated molecule for hemophilia created with the DuoBody technology platform, where Novo has seen over 15-fold better activity than tisotumab vedotin in vitro studies. I think the clinical data people will have to give you the guidance for how rapidly this can move to Phase III. Novo is super enthusiastic about what they see clinically. I have not seen that data and I hope it will be presented pretty soon. That's definitely something we also look forward to quite eagerly. On the last question about HexaBody CD38, I think it’s a full-known yes. Of course, Janssen could potentially decide to wait for data from the comparison between HexaBody CD38 and SubQ DARZALEX because they are entitled to wait for that data before deciding on the potential opt-in. I can tell you we are now treating patients, and we think that this molecule is potentially 10-fold or more potent than DARZALEX. We could potentially see that this is a much more potent molecule during the dose escalation, and with the right safety profile, it is definitely possible that a company like Janssen who wants to work on a follow-up on an expansion from daratumumab could opt-in. So, there is definitely potential, but I think the likelihood is very low. They likely want to see more data. We hope to show you some data in the second half of this HexaBody molecule. This will be a good year; as I already said, 13 DuoBody molecules in the clinic and more to come. We have three HexaBody molecules in the clinic now, and we are super enthusiastic about what we see with the different molecules. Also, the CD371 is doing really, really well. I can assure you it is clinically impressive. This could be a good year for Genmab's technology platforms to put them firmly on the radar screen as technologies for generating truly differentiated excellent antibody therapeutics.

Thanks very much. Understand.

Thanks, Peter.

Our next question comes from Michael Novod from Nordea. Please go ahead.

Yes. Just a few follow-up questions. So first of all on the cash position. You're accumulating a lot of cash, and you're going to be extremely cash-rich in the years to come. Please provide a brief update on how you intend to deploy it in terms of targeting M&A, etc. That would be very interesting. And then just a housekeeping question on the modeling in terms of net financials for the full year. Maybe Anthony has some comments on how we should expect that to pan out given the major boost we saw in Q1?

Thanks Michael for the questions. Perhaps I can start off with the first one, and then Anthony can step in for the second. Genmab is going to focus on the creation and development of differentiated antibody therapeutics. Yes, we are getting more and more cash-rich, and we will focus on accelerating the potential winners, like we are doing now with 1046 and with epcoritamab. Potentially this year, we will actually identify another potential winner from our pipeline of now eight proprietary clinical programs, Michael. We'll further build the pipeline, and in that process, we have already discussed the Immatics collaboration. We will do new agreements with other companies to give us access to components that we can then use together with that partner to create differentiated next-generation antibody therapeutic candidates. That's an area where we will undoubtedly be spending money; you could see from the Q1 report that CureVac is a company we work with. We closed a deal a number of years ago; we decided to sell 30% of the shares that we accumulated in our deal to access our mRNA-based technology for potential future delivery of antibody therapeutics. We know now how enthusiastic the pharma field is about mRNA-based therapeutics. Expect Genmab to spend money in the coming time proactively on getting access to components, which we can use as building blocks to create truly differentiated next-generation antibody therapeutics. We could even potentially acquire a technology platform if it fits well with our portfolio of platforms already in the company, but we'll do this carefully and spend the majority of the cash on accelerating potential winners and bringing them to market and then commercializing them in the key markets, initially focusing on the US and Japan and later on also looking at other markets. Michael, I think that's where I want to leave it at this point, and then I’ll ask Anthony to chip in here.

Great. Yes. Thanks, Jan. Michael, let me see if I can add onto what Jan said. The first thing would be that overall I think historically having this strong cash position has really served us well. Looking back a year ago when the pandemic was emerging, our strong cash position and recurring revenue profile allowed us to stay focused on executing our strategy and key priorities. I believe it has served us well in the past. As we consider the current growth cycle we are experiencing, having a robust balance sheet will continue to support our success moving forward. Overall, this level of cash on our balance sheet remains appropriate for running our business as we have been. So, that provides some insight into our cash position, Michael. Regarding the net financial items, if you have any predictions about the direction of the dollar compared to the euro, that would be useful. The Q1 numbers were largely influenced by foreign exchange movements, primarily a reversal of the FX loss we encountered in Q4. Most of our cash and investments are in U.S. dollar-denominated securities, resulting in unrealized gains depending on the euro-dollar exchange. To provide context, we ended the year at DKK 6.05, which increased to DKK 6.34 at the end of the quarter. I believe we are at DKK 6.20 today. This will influence the figures, Michael. While I can't provide exact guidance, this should give you an idea of what is going on. Additionally, as Jan mentioned, you can find details in our interim report. We took the opportunity to divest some of our investment in CureVac, selling approximately 30% of our position. We are now holding around 1.5 million shares at the end of the quarter. I hope this gives you a clearer picture. If you have any insights on the euro-dollar exchange rates, please let me know.

Thanks.

Thanks, Michael. Operator, are there any further questions?

Thank you. Unfortunately, that's all we have questions for at this time. Yes, questions over, so I'm going to hand back to the speakers.

Alright. Thank you all for calling in today to discuss Genmab's financial results for the first quarter of 2021. If we are not able to get to your question or you’re thinking about a question right now, please reach out to our Investor Relations team. We hope that you all stay safe and remain healthy and optimistic. We very much look forward to speaking with you all again soon.